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The Safety Net: Supporting Working Families and Promoting Work

A House Budget Committee hearing today is looking at how anti-poverty programs have worked over the last 50 years.  As I explained yesterday, safety net programs lifted 40 million people — including almost 9 million children — out of poverty in 2011, according to the Census Bureau’s Supplemental Poverty Measure.  Today, we’ll look at how these programs promote work and support millions of low-income working families.

Efforts to reduce poverty over the past three decades, have shifted so that programs like SNAP (Supplemental Nutrition Assistance Program, formerly food stamps), the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and Medicaid now do much more to promote work and support low-income working families whose earnings aren’t high enough to make ends meet, as our new paper explains:

Thirty years ago, the main assistance programs for families with children were the Aid to Families with Dependent Children (AFDC) program, Medicaid, food stamps, and a very small EITC.  AFDC provided assistance largely to single mothers during periods of joblessness; if a mother earned too much to qualify, she would lose not only income assistance but also Medicaid.  Medicaid generally covered only parents and their children as well as elderly and disabled people who received cash welfare benefits; the working poor did not qualify.  Far fewer households with children that received food stamps were working.  The EITC did little more than offset some of the payroll taxes that working poor families owed.

Today, the situation is very different.

  • SNAP: The number of SNAP households that have earnings while participating in SNAP has more than tripled over the past decade, from about 2 million in 2000 to about 6.4 million in 2011.  And, among families with children that receive SNAP and include an adult who isn’t elderly or disabled, 87 percent worked in the prior year or will work the following year.
  • EITC and CTC: The EITC and CTC both offset payroll taxes and lift a family of four with a full-time, minimum-wage worker from 61 percent of the federal poverty line to 87 percent, a significant improvement in that family’s economic well-being.  And, by boosting employment among single mothers, the EITC has produced large declines in the receipt of cash welfare assistance (see chart).

  • Medicaid: Most children covered by Medicaid or CHIP are in low-income working families.  Though many working-poor parents are currently ineligible for Medicaid, states that adopt health reform’s Medicaid expansion will be able to provide access to affordable coverage for nearly all of the working poor.

To be sure, not all the changes have been positive.  In fact, the safety net has weakened over time for the very poorest families with children, and poverty remains high, particularly compared to other wealthy nations.  We’ll be back with more about that in a future post.

Click here to read our new paper and here and here for 50-state data on the number of people that public programs lifted out of poverty in 2009-2011.