FOR IMMEDIATE RELEASE:
Thursday, April 8, 1999, 10:30 a.m. (ET)
SOCIAL SECURITY REDUCES PROPORTION OF ELDERLY WHO ARE
POOR FROM NEARLY ONE IN TWO TO LESS THAN ONE IN EIGHT
More than 60 Percent of Those Lifted From Poverty Are Women
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State Fact Sheets:
Social Security reduces the proportion of elderly people living in poverty from nearly one in two to fewer than one in eight, according to a new study released today of Census data. The study found that in 1997, nearly half of all elderly people 47.6 percent had incomes below the poverty line before receipt of Social Security benefits. After receiving Social Security benefits, only 11.9 percent remained poor.
As a result, the study said, Social Security raised out of poverty more than one in every three elderly Americans. The program lifted 11.4 million elderly people above the poverty line.
Without Social Security, the study found, 15.3 million elderly had incomes below the poverty line. After Social Security, only 3.8 million elderly did. Three-fourths of those elderly people who would have been poor without Social Security were lifted from poverty by it.
The study, "Social Security and Poverty Among the Elderly," found Social Security's effects in shrinking poverty to be most striking among elderly women. Seven million of the 11.4 million elderly people whom Social Security lifted from poverty in 1997 more than 60 percent were women.
Prepared by the Center on Budget and Policy Priorities, a research and policy analysis institute in Washington, the study also includes data on a state-by-state basis on the effects of Social Security in reducing poverty among both the overall elderly population and elderly women. The state-by-state figures are based on Census data for the five years from 1993 through 1997 and mark the first time such figures have been available. The data show Social Security has a large effect in reducing poverty in every state and lifts more than one-quarter million elderly out of poverty in 14 states. (Tables of the state data are included on pages 3-4 and 7-8 of the study's executive summary.)
The study also found that Social Security has a much larger effect in reducing elderly poverty than all other government programs combined. Of the 12.9 million elderly people lifted from poverty by the full array of government benefit programs, 11.4 million nearly 90 percent are lifted out by Social Security.
Effects Most Pronounced on Women
Without Social Security, 52.6 percent of all elderly women were below the poverty line in 1997, the study said. Social Security reduced the poverty rate for elderly women from 52.6 percent to 14.7 percent. It reduced the number of elderly poor women from 9.8 million to 2.7 million.
Among elderly men, Social Security lowered the poverty rate from 40.8 percent to 8.2 percent. The program reduced the number of elderly men living in poverty from 5.5 million to 1.1 million.
The study explained that the Social Security benefit structure is beneficial to women in several respects. Social Security provides benefits that are fully indexed for inflation and last until a beneficiary dies; this feature is favorable to women since, on average, they live longer than men. In addition, Social Security benefits replace a higher percentage of the wages of low-wage workers than of highly paid workers. This, too, is beneficial to women since they have lower average wages than men. Finally, Social Security provides special protections for widows (and widowers), spouses whose average earnings during their working years were low because they were paid low wages or missed years of work caring for children or aging relatives, and divorced spouses who were married at least 10 years and have not remarried.
The study reported that women receive 53 percent of Social Security retirement and survivor benefits while paying 38 percent of Social Security payroll taxes. The study found Social Security cuts nearly in half the gap between the poverty rate for elderly women and the rate for elderly men.
Kathryn Porter, the study's principal author, commented that "these features of Social Security are of particular importance because elderly women receive substantially less income than elderly men do from other sources, such as earnings, pensions, and investments. Elderly women also have fewer financial assets than elderly men."
The Center's study found that more than three-fifths of all income that elderly women receive comes from Social Security. The study also reported that two-thirds of elderly women rely upon Social Security for a majority of their income, and one-third rely on it for at least 90 percent of their income. For one elderly women in five, Social Security is the sole source of income.
For elderly widows, as well as for all women 85 and over, the role of Social Security looms even larger. Three-fourths of the women in both groups receive a majority of their income from Social Security. In addition, Social Security reduces the poverty rate for both groups from more than 60 percent to about 20 percent.
The study also found that Social Security cuts poverty rates by about half or more for elderly non-Hispanic whites, elderly African Americans, and elderly Hispanic Americans.
Social Security has strong effects in reducing poverty in all 43 states the study examined, reducing the number of elderly poor by more than 100,000 in 33 of these states. Combining Census data for each state for the five years from 1993 through 1997, the study's authors were able to examine the effects of Social Security on elderly poverty in all but the seven states (plus the District of Columbia) with the smallest elderly populations.
In California, Social Security lowered the number of elderly people living in poverty by more than one million, from 1.45 million to 421,000. Without Social Security, 43.2 percent of elderly Californians would be poor. After Social Security, 12.5 percent were.
Some 635,000 of the elderly Californians whom Social Security lifted from poverty were women. More than two of every three elderly women in California who would have been poor without Social Security were lifted from poverty by it.
Elderly Poverty Rates Before and After Social Security* Elderly Group Elderly
11.9% 15.3 3.8 11.4
40.8% 8.2% 5.5 1.1 4.4
52.6% 14.7% 9.8 2.7 7.0 Married
42.2% 4.8% 3.1 0.4 2.8
62.1% 20.3% 5.3 1.7 3.6
56.7% 27.0% 1.4 0.7 0.7 Women
46.0% 12.7% 4.6 1.3 3.3
61.0% 16.6% 4.0 1.1 2.9 Women
65.3% 20.6% 1.3 0.4 0.9 * Estimates for all elderly, all elderly men, and all elderly women are for 1997. For subgroups of women, a three-year average of Census data for 1995 - 1997 is used to increase sample size and thus improve the accuracy of the estimates.
In Florida, Social Security reduced the number of elderly poor people by nearly 900,000, from nearly 1.2 million to slightly less than 300,000, and lowered the elderly poverty rate from 48.7 percent to 11.7 percent. More than half a million elderly women about three of every four elderly women who would have been poor without Social Security were lifted from poverty by it.
In another example, Social Security reduced the proportion of elderly New Yorkers living in poverty from 50 percent to 15.1 percent, lifting more than 800,000 elderly people from poverty. Social Security lifted from poverty 732,000 elderly people in Pennsylvania, 607,000 in Texas, 537,000 in Ohio, 517,000 in Illinois, 339,000 in North Carolina, and 337,000 in New Jersey.
The nonprofit organizations listed below are assisting with state-level distribution of this report. All but one of these are state policy organizations that analyze the effects of fiscal policies and government programs on poverty and the well-being of vulnerable populations. While much of the work these organizations conduct entails analysis of state programs and policies, most of these organizations also consider issues of federalism and the impact of federal budget, tax, and income support policies such as Social Security on residents of their states.
Children's Action Alliance
Minnesota Budget Project
California Budget Project
Fiscal Policy Institute
Connecticut Voices for Children
North Carolina Budget & Tax Center
United Vision for Idaho
Oregon Center for Public Policy
Christopher St. John
Maine Center for Economic Policy
Tennessee Budget Project
Maryland Budget & Tax Policy Institute
Center for Public Policy Priorities
Jim St. George
Commonwealth Center for Fiscal Policy
Coalition of Wisconsin Aging Groups
Michigan League for Human Services
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