Social Security Keeps 20 Million Americans Out of Poverty:
A State-By-State Analysis

PDF of this report (5pp.)

By Paul N. Van de Water and Arloc Sherman

August 11, 2010

Social Security benefits play a vital role in reducing poverty. Without Social Security, according to the latest available Census data (for 2008), 19.8 million more Americans would be poor. Although most of those kept out of poverty by Social Security are elderly, nearly a third are under age 65, including 1.1 million children. (See Table 1.) Depending on their design, reductions in Social Security benefits could significantly increase poverty, particularly among the elderly.

TABLE 1:
Effect of Social Security on Poverty, 2008
Age Group Percent in Poverty Number Lifted Out of Poverty by Social Security
Excluding
Social Security
Including
Social Security
Children Under 18 20.5 19.0 1,117,000
Adults Aged 18-64 14.5 11.7 5,281,000
Elderly Aged 65 and Over 45.2 9.7 13,410,000
Total, All Ages 19.8 13.2 19,808,000
Memorandum:
Women Aged 65 and Over 49.7 11.9 8,120,000
Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2009.

Social Security Lifts 13 Million Elderly Americans Out of Poverty

Almost 90 percent of people aged 65 and older receive some of their family income from Social Security. [1] Without Social Security benefits, 45.2 percent of elderly Americans would have incomes below the poverty line, all else being equal. With Social Security benefits, only 9.7 percent are poor. Some 13.2 million elderly Americans are lifted out of poverty by Social Security.

Social Security reduces elderly poverty dramatically in every state in the nation, as shown in Figure 1 and Table 2. Without Social Security, the poverty rate for those aged 65 and over would exceed 40 percent in 42 states. With Social Security, the elderly poverty rate in the large majority of states is less than 10 percent. Social Security lifts 1.1 million elderly people out of poverty in California and Florida, almost 900,000 in Texas, and 800,000 in New York.

Social Security Lifts More Than 1 Million Children Out of Poverty

Social Security is important for children and their families as well as for the elderly. About 6 million children under age 18 (8 percent of all U.S. children) lived in families that received income from Social Security in 2008, according to Census data. Over 3 million children received their own benefits as dependents of retired, disabled, or deceased workers. Others lived with parents or relatives who received Social Security benefits. In all, 1.1 million children are lifted out of poverty by Social Security.

Social Security records show that 3.2 million children under age 18 qualified for Social Security payments themselves in December 2009. (See Table 3.) Of these, 1.3 million were the survivor of a deceased worker. Another 1.6 million received payments because their parent had a severe disability. And 301,000 children under 18 received payments because their parent or, in some cases, grandparent was retired. [2]

Technical Note

This analysis uses the official definition of poverty used by the Census Bureau. In determining poverty status, the Census Bureau compares a family’s cash income before taxes with poverty thresholds that vary by the size and age of the family. The poverty thresholds in 2008 were $10,326 for an elderly individual, $13,014 for an elderly couple, and $22,025 for an average family of four. To calculate the anti-poverty effects of Social Security, we determined each family’s poverty status twice — first excluding and then including the family’s Social Security benefits.

Our analysis uses data from the Census Bureau’s Current Population Survey (CPS), the survey that is used to produce official poverty estimates. [3] Each March the CPS collects information on personal income, health coverage, and other social and economic characteristics for the previous year. The national estimates reported here are for 2008. The state-by-state estimates are based on a three-year average (for 2006, 2007, and 2008) to improve the reliability of the results.

One critic of estimates such as these argues that they “do nothing to answer the question of what would have happened if Social Security had not existed.”[4] Indeed, this analysis does not take into account other changes that would occur in the absence of Social Security. If Social Security did not exist, most elderly individuals likely would have saved somewhat more and worked somewhat longer.

Other studies confirm, however, that Social Security has made a very large contribution to reducing poverty, and that cutting Social Security benefits could substantially increase poverty among the elderly.[5]

TABLE 2:
Effect of Social Security on Poverty Among the Elderly by State, 2006-2008
  Percent in Poverty Number Lifted Out of Poverty by Social Security
Excluding Social Security Including Social Security
Alabama 49.2 10.9 244,000
Alaska 28.9 5.3 11,000
Arizona 40.3 9.1 223,000
Arkansas 53.0 12.7 140,000
California 37.4 8.1 1,148,000
Colorado 37.1 9.9 132,000
Connecticut 40.8 6.9 153,000
Delaware 40.3 6.6 39,000
District of Columbia 37.4 15.6 14,000
Florida 46.4 10.3 1,070,000
Georgia 46.8 10.5 309,000
Hawaii 27.0 7.4 36,000
Idaho 43.9 7.6 69,000
Illinois 44.7 8.0 514,000
Indiana 49.8 9.1 313,000
Iowa 46.8 6.3 157,000
Kansas 44.5 7.0 128,000
Kentucky 55.0 11.9 229,000
Louisiana 56.7 13.1 241,000
Maine 47.9 8.8 78,000
Maryland 34.1 9.2 161,000
Massachusetts 41.9 9.8 275,000
Michigan 45.9 7.7 492,000
Minnesota 42.9 5.7 234,000
Mississippi 55.4 18.2 130,000
Missouri 47.5 6.8 314,000
Montana 56.0 8.1 62,000
Nebraska 43.6 6.5 77,000
Nevada 37.5 6.5 94,000
New Hampshire 41.5 6.0 57,000
New Jersey 40.2 9.1 343,000
New Mexico 44.3 12.7 77,000
New York 45.0 12.5 813,000
North Carolina 51.7 10.6 461,000
North Dakota 46.1 8.6 29,000
Ohio 46.7 8.0 556,000
Oklahoma 46.9 10.2 177,000
Oregon 47.1 7.9 188,000
Pennsylvania 47.7 8.7 717,000
Rhode Island 41.9 8.3 45,000
South Carolina 50.7 11.0 233,000
South Dakota 43.1 8.2 39,000
Tennessee 49.3 11.6 315,000
Texas 46.8 12.6 860,000
Utah 41.3 6.8 77,000
Vermont 47.8 10.7 30,000
Virginia 39.8 10.1 260,000
Washington 38.0 7.8 219,000
West Virginia 55.8 9.6 120,000
Wisconsin 49.5 8.8 276,000
Wyoming 45.9 8.8 25,000
Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2007-2009.
TABLE 3:
Social Security Beneficiaries by State and Age, December 2009
  Total Age 65 and Older Children Under Age 18
Alabama 983,341 603,628 77,421
Alaska 74,678 47,821 7,256
Arizona 1,028,442 730,645 60,002
Arkansas 620,040 386,480 48,425
California 4,835,164 3,488,517 275,719
Colorado 663,894 477,256 36,436
Connecticut 611,276 459,881 30,435
Delaware 167,530 116,913 9,564
District of Columbia 73,093 51,479 4,883
Florida 3,669,375 2,694,725 183,594
Georgia 1,412,978 916,186 103,659
Hawaii 220,491 166,593 11,396
Idaho 258,691 180,265 15,583
Illinois 1,993,199 1,433,411 114,201
Indiana 1,157,821 791,781 71,067
Iowa 574,315 427,910 25,476
Kansas 478,138 344,378 27,072
Kentucky 870,206 526,606 65,771
Louisiana 770,217 489,625 64,442
Maine 293,011 195,853 17,382
Maryland 826,497 598,985 49,498
Massachusetts 1,117,870 796,641 64,843
Michigan 1,905,342 1,283,186 115,516
Minnesota 857,805 629,056 40,494
Mississippi 583,515 349,830 52,689
Missouri 1,137,581 767,694 72,053
Montana 187,197 133,236 9,877
Nebraska 303,880 226,192 15,153
Nevada 390,553 277,638 22,894
New Hampshire 245,563 169,238 15,598
New Jersey 1,440,943 1,069,348 75,891
New Mexico 347,976 234,380 23,888
New York 3,214,780 2,273,704 183,947
North Carolina 1,698,677 1,123,672 105,219
North Dakota 118,493 90,175 5,008
Ohio 2,074,384 1,466,804 110,919
Oklahoma 688,545 463,341 45,713
Oregon 686,777 491,947 30,953
Pennsylvania 2,530,211 1,814,653 133,362
Rhode Island 200,202 141,141 10,982
South Carolina 889,876 578,014 58,268
South Dakota 150,432 113,148 6,956
Tennessee 1,212,968 787,049 82,232
Texas 3,320,462 2,259,018 239,675
Utah 312,029 221,174 23,172
Vermont 124,585 86,174 6,984
Virginia 1,246,366 863,903 75,461
Washington 1,049,039 745,854 52,041
West Virginia 436,445 270,612 28,611
Wisconsin 1,033,096 739,768 51,408
Wyoming 88,514 63,654 4,876
Totala 52,522,819 36,594,122 3,157,987
Source: Social Security Administration, Annual Statistical Supplement, 2010, Table 5.J5, and OASDI Beneficiaries by State and County, 2009. a Includes outlying areas and foreign countries (not shown).

End Notes:

[1] Kathy A. Ruffing and Paul N. Van de Water, Top Ten Facts About Social Security, Center on Budget and Policy Priorities, forthcoming.

[2] Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2010, Table 5.J10.

[3] U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2008, Series P60-236, September 2009.

[4] Charles P. Blahous III, Reforming Social Security for Ourselves and Our Posterity, Westport, CT: Praeger, 2000, p. 13.

[5] Eugene Smolensky, Sheldon Danziger, and Peter Gottschalk, “The Declining Significance of Age in the United States: Trends in the Well-Being of Children and the Elderly Since 1939,” in John L. Palmer, Timothy Smeeding, and Barbara Boyle Torrey, eds., The Vulnerable, Washington: Urban Institute, 1988; Gary V. Engelhardt and Jonathan Gruber, “Social Security and the Evolution of Elderly Poverty,” National Bureau of Economic Research Working Paper 10466, May 2004.

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