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Safety Net Has Shifted — Lifting Some Families, Leaving Others Behind

We’ve explained how our closer look at government data shows that the safety net was even more effective in 2012 than earlier studies had shown.  Our new follow-up paper reveals important shifts in the safety net’s performance between 1995 and 2010. 

In the decade following the 1996 federal welfare overhaul, the safety net became more effective at helping low-income working families climb out of poverty but less effective at protecting children from “deep poverty” — income below half of the poverty line, or less than $13,800 for a two-child couple in an average cost community in 2010 dollars.  During the Great Recession of 2007-9, by contrast, safety net policies for both the poor and deeply poor grew much stronger, bolstered by temporary economic recovery measures, and prevented a likely large surge in deep poverty. 

The paper uses an expanded poverty measure to address well-known weaknesses in the official poverty measure.  Like the federal government’s Supplemental Poverty Measure (SPM), this expanded poverty measure counts more types of income than the official poverty measure, subtracts work-related and medical expenses that the official measure ignores, and uses a modernized poverty line, which we adjust each year for inflation.  We also correct for the underreporting of key government benefits in Census data.

Those data show that:

  • Between 1995 and 2005, while overall child poverty fell significantly, the share of children in deep poverty rose from 2.1 percent to 3.0 percent (see chart).
  • Also between 1995 and 2005, the safety net became less effective at protecting against deep poverty.  In 1995, among children in families below half the poverty line before counting government benefits, income from safety net programs lifted 88 percent of them above half the poverty line.  By 2005, the figure had dropped to 78 percent, leaving nearly one in four deeply poor.
  • Consequently, in 2005, 1 million additional children lived in deep poverty because the safety net was not as effective at protecting them from deep poverty as it was a decade earlier.

During the Great Recession, the safety net for the very poor regained some of its previous strength.  That partly reflected the temporary measures of the 2009 Recovery Act to bolster the struggling economy and help struggling households, such as emergency federal unemployment benefits, expanded tax credits for working families (the Child Tax Credit and Earned Income Tax Credit), and higher monthly benefit levels in SNAP (food stamps).  It also reflected the growth in various safety net programs that expand automatically to meet rising need.

The strengthened safety net prevented poverty and deep poverty from surging in the recession.   The safety net’s revival may prove short-lived, however, as most of the temporary recovery measures have expired.  Their expiration could push deep poverty upward again.

Click here for the full paper.