Safety Net Lifted 39 Million Americans out of Poverty in 2013

As the House Ways and Means Committee holds a hearing today on empirical evidence for poverty programs, it’s worth recalling that safety net programs cut poverty nearly in half in 2013, lifting 39 million people out of poverty.  The figures rebut claims that government programs do little to reduce poverty.

Our analysis of Census data shows that, in 2013:

• Government policies cut the number of poor Americans by 39 million — from 88 million to 49 million.

  Of the 39 million people, “universal” assistance programs such as Social Security and unemployment insurance, which are widely available irrespective of income, cut poverty by 19 million. “Means-tested” benefits such as rent subsidies, SNAP (formerly food stamps), and the Earned Income Tax Credit (EITC), which target households of limited means, cut poverty by another 20 million.

• For millions more people, government assistance makes poverty less severe: 34 million poor people were less deeply poor because of safety net benefits.

These figures use the federal government’s new Supplemental Poverty Measure (SPM), which — unlike the official poverty measure — accounts for taxes and non-cash benefits as well as cash income.  (The SPM also makes other adjustments, such as taking into account out-of-pocket medical and work expenses and differences in living costs across the country.) Because the SPM includes taxes and non-cash benefits, it gives a more accurate picture of the impact of anti-poverty programs than the official poverty measure.

Other analysts have recently used SPM data to show the strong impact of poverty programs.  For example,

• Safety net programs lift thousands of children above the poverty line in every state, from 15,000 in Wyoming to 1.3 million in California, according to the Annie E. Casey Foundation’s Kids Count project.
• Two tax credits for working families — the EITC and Child Tax Credit — combine to lift more than 9 million people in working families out of poverty, including more than 1 million each in Texas and California, according to the Brookings Metropolitan Policy Program.

If anything, these figures, understate the safety net’s impact. That’s because survey data miss a large share of safety net income due to underreporting by participating households, who often have trouble recalling benefits received months earlier or may feel embarrassed about receiving help.