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The Power of the Safety Net: What the Supplemental Poverty Measure Shows

Arloc Sherman, Center on Budget and Policy Priorities - Posted November 14, 2012


The safety net – both permanent provisions and recent expansions enacted to help respond to the recession – kicked in to fight rising poverty in recent years, and a new measure shows how much it accomplished.

The Census Bureau today released data on a new poverty measure, the Supplemental Poverty Measure (SPM), that reveals a broader view of the safety net.  Building on recommendations from a National Academy of Sciences panel in 1995, the SPM counts non-cash benefits and tax credits as income. The official poverty measure only counts cash benefits and other cash income. The SPM also subtracts taxes, child care and other work expenses, and out-of-pocket medical expenses from income and modestly revises the poverty line.

 

A CBPP analysis of the SPM data finds that:

 

·         The safety net (all government benefit payments net of taxes) cut poverty nearly in half in 2011, or by 40 million people.  That is, if you don’t count safety net benefits and taxes, 90 million people were below the SPM poverty line in 2011. But if you do count these benefits and taxes, that number falls to 50 million.

 

·         The 40 million people that the safety net kept above the poverty line include 9 million children, 16.5 million seniors (primarily through Social Security), and 22 million women. They also include 25 million non-Hispanic whites, 6 million non-Hispanic African Americans, and 7 million Hispanics.

 

For specific programs, our analysis of the SPM data finds that in 2011:

 

·         The Earned Income Tax Credit (EITC) kept 6.1 million people above the SPM poverty line, including 3.1 million children.

 

·         SNAP (formerly food stamps) kept 4.7 million people above SPM poverty line, including 2.1 million children.

 

·         Unemployment benefits kept 3.5 million people out of poverty, including 1 million children.

 

The figures are particularly timely for three reasons. First, in coming weeks policymakers will likely consider deep program cuts as part of major budget negotiations. Second, key measures that account for part of the safety net’s large anti-poverty impact are poised to expire. These include federal emergency unemployment insurance and the 2009 Recovery Act’s improvements in refundable tax credits like the EITC. Third, this is all happening at a time when joblessness – particularly long-term joblessness – remains elevated and the need for safety net programs remains strong, both to reduce hardship for jobless households and to maintain the strength of the economy overall.

 

The SPM makes clear that, to help avert any rise in poverty going forward, federal and state policymakers need to protect programs like unemployment insurance, housing assistance, and nutrition programs. And they should extend key recent, recession-related improvements to these programs, such as those in unemployment benefits and working-family tax credits like the EITC.

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Arloc Sherman is a Senior Researcher at the Center on Budget and Policy Priorities.

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