The World Bank draws one of its “extreme poverty” lines at $2.00 per person per day — the equivalent of $2,190 a year for a family of three.
This is a level of deprivation we associate with villages in sub-Saharan Africa or the slums of New Delhi. It’s about 12% of the Census Bureau’s official poverty threshold for the three-member family.
But by one measure, an estimated 1.65 million U.S. households with children were at or below the Bank’s threshold in 2011 — 4.3% of all households with children headed by someone who wasn’t elderly.
They came to their project from Edin’s earlier interview-intensive studies of poor single-mother families. “She mentioned that she felt like she was going into more and more homes where there was really nothing in income,” Shaefer says.
So the two decided to find out how many families were in such straits and how they survived.
To do this, they analyzed years of data from the Census Bureau’s ongoing Survey of Income and Program Participation, using the Bank’s $2.00 a day threshold.
They started in 1996, just before states began implementing “welfare reform,” and ended in 2011, when the Great Recession was officially over, but not its effects on the labor market.
Various complex statistical maneuvers I won’t even try to account for. This paper is not for popular consumption.
What we need to know to understand the findings is that the Shaefer-Edin team looked at households in extreme poverty based first on their cash income, including what they received (or didn’t) from the Temporary Assistance for Needy Families program and the program it replaced.
They then sequentially added in the largest federal means-tested benefits — SNAP (the food stamp program), housing subsidies and refundable tax credits, i.e., the Earned Income Tax Credit and Child Tax Credit.
The results clearly document what the team refers to as “the virtual disappearance of a cash safety net for non-workers.” Also, I should add, for some low-wage workers without full-time, year round jobs.
In 1966, cash assistance lifted about 1.15 million families above the extreme poverty line in any given month. By mid-2011, it lifted only about 291,000.
Though means-tested benefits expanded over this period, they couldn’t offset the combined impacts of the deliberate shrinkage of welfare caseloads and the recessions and sluggish recoveries during the 2000s, including the last and biggest.
We see, for example, that extreme poverty among households with children increased by 50%, even when all the means-tested benefits are factored in.
For single-mother families — the single largest type in TANF — the extreme poverty rate increased by nearly 68%, again after adjustments for the means-tested benefits.
Leave them out and the increase soars to 229% — a clear reflection of the end of a cash assistance guarantee for extremely poor families.
On the brighter side, SNAP reduced extreme poverty among households with children by 48% in mid-2011. This is with the soon-to-expire benefits boost that was part of the Recovery Act.
Fold in the rest of the means-tested benefits and 2.38 million children lived in families where they and their parents had somewhat more than $2.00 a day to live on.
But 1.17 million children still didn’t.
No policymaker, I suppose, deliberately decided to let any of America’s children live at a poverty level defined as “extreme” for developing countries.
But our policymakers share bipartisan responsibility because they decided to focus anti-poverty efforts on “the working poor” and let families headed by parents with the greatest barriers to ongoing gainful employment fend for themselves.
We see this in the Census Bureau’s own poverty figures.
In the past two decades, Shaefer and Edin report, families in deep poverty, i.e., below 50% of the applicable threshold, have received substantially less aid from public programs, while those at 50% to 150% of the threshold have, on average, gotten more.
Thus, the team concludes, “our current major safety-net programs are blunting some of the hardship that … households [“at the very bottom”] would otherwise face. However, it would be wrong to conclude that the U.S. safety net is strong, or even adequate.”
We knew this, of course, but perhaps not how shockingly inadequate it is.