Social Security Keeps 21 Million Americans Out of Poverty: A State-by-State Analysis

PDF of this report (6pp.)

By Paul N. Van de Water and Arloc Sherman[1]

October 16, 2012

Social Security benefits play a vital role in reducing poverty.  Without Social Security, 21.4 million more Americans would be poor, according to the latest available Census data (for 2011).  Although most of those whom Social Security keeps out of poverty 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, 2011
Age Group Percent in Poverty Number Lifted Out of Poverty
by Social Security
  Excluding
Social Security
Including
Social Security
 
Children Under 18 23.4 21.9  1,107,000
Adults Ages 18-64 16.7 13.7  5,829,000
Elderly Age 65 and Over 43.6 8.7  14,480,000
Total, All Ages 21.9 15.0  21,415,000
Addendum:
Women Age 65 and Over
48.3 10.7  8,696,000
Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2012.

Social Security Lifts 14 Million Elderly Americans Out of Poverty

Almost 90 percent of people aged 65 and older receive some of their family income from Social Security.[2]   Without Social Security benefits, 43.6 percent of elderly Americans would have incomes below the official poverty line, all else being equal; with Social Security benefits, only 8.7 percent do.  These benefits lift some 14.5 million elderly Americans — including 8.7 million women — above the poverty line.

Social Security reduces elderly poverty dramatically in every state in the nation, as Figure 1 and Table 2 show.  Without Social Security, the poverty rate for those aged 65 and over would meet or exceed 40 percent in 41 states; with Social Security, it is less than 10 percent in the large majority of states.  Social Security lifts 1.2 million elderly people out of poverty in California and Florida, about 800,000 in New York, Texas, and Pennsylvania, and over half a million in Ohio, Illinois, and Michigan.

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 2011, according to Census data.  This figure includes children who received their own benefits as dependents of retired, disabled, or deceased workers, as well as those who lived with parents or relatives who received Social Security benefits.  In all, Social Security lifts 1.1 million children out of poverty.

Social Security records show that 3.2 million children under age 18 qualified for Social Security payments themselves in December 2011.  (See Table 3.)  Of these, 1.2 million were the survivor of a deceased worker.  Another 1.7 million received payments because their parent had a severe disability.  And 315,000 children under 18 received payments because their parent or guardian was retired.[3]

Technical Note

This analysis uses the Census Bureau’s official definition of poverty.  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 2011 were $10,788 for an elderly individual, $13,596 for an elderly couple, and $23,021 for an average family of four.[4]   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 considers the non-institutionalized population using data from the Census Bureau’s Current Population Survey (CPS), the survey that is used to produce official poverty estimates.[5]   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 2011.  The state-by-state estimates are based on a three-year average (for 2009, 2010, and 2011) 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.”[6]   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, many elderly individuals likely would have saved somewhat more and worked somewhat longer, and many might live with their adult children rather than in their own households.  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.[7]

Table 2
Effect of Social Security on Poverty Among the Elderly by State, 2009-2011
  Percent in Poverty Number Lifted Out of Poverty by Social Security
  Excluding Social Security Including Social Security
Alabama 49.4 9.1 262,000
Alaska 36.8 10.4 15,000
Arizona 41.7 9.1 263,000
Arkansas 55.0 11.9 187,000
California 37.8 8.5 1,246,000
Colorado 36.9 7.2 168,000
Connecticut 37.6 6.2 149,000
Delaware 38.8 7.7 41,000
District of Columbia 34.9 15.6 14,000
Florida 45.8 8.9 1,196,000
Georgia 52.8 11.9 379,000
Hawaii 33.6 8.2 49,000
Idaho 46.8 8.5 74,000
Illinois 44.2 7.5 579,000
Indiana 48.8 8.0 354,000
Iowa 47.3 5.6 157,000
Kansas 46.9 6.7 148,000
Kentucky 51.4 9.2 235,000
Louisiana 50.3 15.0 198,000
Maine 47.4 8.0 81,000
Maryland 35.6 8.2 191,000
Massachusetts 40.7 7.4 322,000
Michigan 47.6 7.4 529,000
Minnesota 45.2 6.9 267,000
Mississippi 54.8 12.5 163,000
Missouri 47.3 6.9 325,000
Montana 50.1 7.8 67,000
Nebraska 42.1 6.6 82,000
Nevada 42.1 9.4 106,000
New Hampshire 45.1 6.5 68,000
New Jersey 39.4 7.8 357,000
New Mexico 42.1 10.4 91,000
New York 42.8 10.9 820,000
North Carolina 50.9 10.0 498,000
North Dakota 42.1 8.7 28,000
Ohio 48.3 8.1 622,000
Oklahoma 46.1 7.2 199,000
Oregon 40.8 7.0 183,000
Pennsylvania 47.4 9.1 753,000
Rhode Island 47.9 8.3 60,000
South Carolina 51.9 11.4 261,000
South Dakota 42.8 7.3 40,000
Tennessee 54.8 11.5 361,000
Texas 41.4 10.7 789,000
Utah 42.1 7.3 94,000
Vermont 49.1 8.5 34,000
Virginia 37.8 9.5 270,000
Washington 40.0 6.7 279,000
West Virginia 51.8 9.0 113,000
Wisconsin 42.6 5.1 307,000
Wyoming 41.2 6.6 22,000
Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2010-2012.
Table 3
Social Security Beneficiaries by State and Age, December 2011
  Total Age 65 and Older Age 18-64 Children Under Age 18
Alabama 1,037,438 627,589 329,654 80,195
Alaska 82,109 52,635 21,732 7,742
Arizona 1,104,545 783,759 259,461 61,325
Arkansas 647,077 399,589 197,044 50,444
California 5,129,529 3,692,234 1,160,957 276,338
Colorado 721,274 514,038 168,796 38,440
Connecticut 630,447 472,762 127,539 30,146
Delaware 176,885 123,940 43,496 9,449
District of Columbia 75,755 52,578 18,618 4,559
Florida 3,894,179 2,835,182 867,238 191,759
Georgia 1,524,263 982,617 434,226 107,420
Hawaii 234,314 177,767 44,908 11,639
Idaho 278,563 192,561 69,890 16,112
Illinois 2,065,432 1,475,030 477,476 112,926
Indiana 1,219,879 820,232 324,861 74,786
Iowa 592,000 435,929 130,205 25,866
Kansas 498,707 353,505 116,734 28,468
Kentucky 913,548 547,184 297,965 68,399
Louisiana 809,450 509,036 234,569 65,845
Maine 306,600 204,129 84,964 17,507
Maryland 872,919 627,752 195,228 49,939
Massachusetts 1,161,122 819,775 275,084 66,263
Michigan 2,016,684 1,331,766 563,127 121,791
Minnesota 904,803 656,491 206,106 42,206
Mississippi 609,651 363,797 193,116 52,738
Missouri 1,188,437 791,322 323,531 73,584
Montana 198,230 139,855 48,113 10,262
Nebraska 313,087 230,834 66,888 15,365
Nevada 424,836 300,676 100,435 23,725
New Hampshire 262,952 178,509 67,821 16,622
New Jersey 1,500,403 1,104,066 318,478 77,859
New Mexico 370,911 248,606 97,585 24,720
New York 3,337,276 2,347,514 805,485 184,277
North Carolina 1,808,331 1,193,445 507,017 107,869
North Dakota 121,335 91,509 24,675 5,151
Ohio 2,166,271 1,499,952 549,988 116,331
Oklahoma 717,398 478,397 191,215 47,786
Oregon 734,841 522,183 180,428 32,230
Pennsylvania 2,617,879 1,850,453 631,965 135,461
Rhode Island 207,122 144,356 51,525 11,241
South Carolina 956,097 620,923 275,039 60,135
South Dakota 156,102 116,417 32,606 7,079
Tennessee 1,287,683 827,555 374,766 85,362
Texas 3,551,961 2,406,196 896,302 249,463
Utah 335,444 235,011 76,034 24,399
Vermont 132,268 90,916 34,149 7,203
Virginia 1,318,580 913,142 329,364 76,074
Washington 1,127,126 796,472 276,144 54,510
West Virginia 451,039 277,734 144,242 29,063
Wisconsin 1,085,632 766,501 265,677 53,454
Wyoming 93,748 66,999 21,782 4,967
Totala. 55,404,480 38,292,328 13,866,846 3,245,306
Source: Social Security Administration, Annual Statistical Supplement, 2012, Table 5.J5.
a. Includes outlying areas and foreign countries (not shown).

End notes:

[1] The authors wish to thank William Chen for his assistance in preparing this paper.

[2] Kathy A. Ruffing and Paul N. Van de Water, Top Ten Facts About Social Security, Center on Budget and Policy Priorities, August 2010 (update forthcoming).

[3] Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2012, Table 5.J10.

[4] Poverty thresholds depend on the size of the family and the ages of its members; this figure is a weighted average for families of four.  For more information, see http://www.census.gov/hhes/www/poverty/data/threshld/index.html.

[5] U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2011, Series P60-243, September 2012.

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

[7] 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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