Better Poverty Measure Changes Rates, Strengthens Case for Safety Net

As I noted last week, the Census Bureau published the results of its latest Supplemental Poverty Measure analysis at the same time as its official poverty measure rates for 2014.

As in the past, the SPM produces a somewhat higher nationwide poverty rate — 15.3%. Though a tad lower than the comparable rate last year, slides from the Bureau say it’s not enough to pass the statistical test.

We also see different rates, both higher and lower, for the major population groups the Bureau breaks out. For example, the child poverty rate is 4.8% lower — 3.5 million or so fewer children. At the same time, the senior poverty rate rises by nearly as much.

We see shifts among major race/ethnicity groups as well. The largest are for blacks (3% lower) and for Asians (4.8% higher).

All these shifts and others reflect four major ways the SPM differs from the official measure — the base it proceeds from, adjustments it makes for certain basic living and other “necessary” costs, whom it includes as part of a family and what it counts as income.

This last gives us a glimpse — imperfect, but the best we’ve got — of how well some of our major federal anti-poverty measures work. And once again, we get reliable hard data proving that they do work, right-wing canards notwithstanding.

For example, we generally see lower deep poverty rates, i.e., the percent of the population overall or of a particular group that lived on incomes no greater than half the applicable poverty threshold — about $9,535 for a parent with two children.

The overall deep poverty rate is 1.6% lower than what the official measure produces. The deep poverty rate for children drops more markedly — from 9.7% to 4.3%.

The Census Bureau attributes the lower deep poverty rates to non-cash benefits targeted to low-income people — a type of income the SPM captures, while the official measure doesn’t. Seniors are the exception here, it notes.

Their deep poverty rate goes up to 5.1%, making it the same as the rate for the population as a whole. This is mainly because both the official measure and the SPM count Social Security benefits as income, but only the latter adjusts for medical out-of-pocket costs, along with others deducted from the base.

It’s nevertheless still the case that Social Security proves the single most effective anti-poverty program we’ve got. Without Social Security benefits, half of all people 65 and over would fall below the poverty threshold.

The Census Bureau shows this and the effects of other benefits — mostly parts of the safety net — by deducting their value and displaying the new poverty rate.

So we learn, for example, that not counting the refundable Earned Income Tax Credit and Child Tax Credit would make the SPM poverty rate 3.1% higher. Little back-of-the-envelope math tells us that the tax credits effectively lifted about 9.8 million people out of poverty, including more than 5.2 million children.

SNAP (food stamp) benefits rank third among the anti-poverty impacts. They account for about 4.7 million fewer poor people, almost half of them children.

On the other hand, LIHEAP (Low Income Home Energy Assistance Program) benefits lifted only about 316,000 people above the poverty threshold — and so few in the working-age (18-64) group as to make no nick in their poverty rate whatever.

Now, the analysis doesn’t reflect the way benefits work in the real world. Most families that receive federally-funded help with their heating bills probably also get SNAP benefits, for example. Likewise low-income working families that get an annual budget boost from the refundable tax credits.

We don’t yet have an analysis that rolls all such safety net benefits together, though we do have one for 2012 that shows they cut the SPM poverty rate by nearly half and the child poverty rate by even more.

Do we nonetheless have policy lessons here? Well, of course, we do. Don’t want to try your patience, followers, but can’t restrain myself from flagging (flogging?) a few.

LIHEAP has become a pitiful thing, partly because it got whacked by the 2013 across-the-board cuts, partly because this came on top of earlier cuts and partly because, in case you hadn’t noticed, home heating costs have increased.

So fewer households are getting such help as LIHEAP provides and they’re getting less — so much less that the average grant didn’t cover even two months of heating during the 2014-15 winter season.

Not going to see much improvement, if any so long as the Congressional Republican majority insists on keeping appropriations for non-defense programs below the caps set by the Budget Control Act. The House Appropriations Committee has, in fact, approved a $25 million cut for LIHEAP.

Changes in the refundable tax credits that help account for the effectiveness the SPM analysis indicates will expire at the end of 2017. And what seems a bipartisan sentiment in favor of expanding the EITC for childless workers is thus far little more than that — and not all that bipartisan, if we judge by cosponsors of bills pending in Congress.

Though SNAP clearly lifts people of all ages out of poverty, it doesn’t prevent a goodly number from going hungry at least some of the time. More about this in an upcoming post — and more perhaps about other issues one can tease out of the new SPM report.

 

One Response to Better Poverty Measure Changes Rates, Strengthens Case for Safety Net

  1. […] I’ve said before, the Bureau shows the impacts of major social insurance and safety net programs by […]

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