The social safety net is broken

By Felix Salmon
November 8, 2011
coverage of the Census Bureau's new Supplemental Poverty Measure treats it as a bit of a wash -- child poverty down, poverty among the elderly up. But for me the big news is that America's safety net isn't working.

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poverty.tiff

A lot of the coverage of the Census Bureau’s new Supplemental Poverty Measure treats it as a bit of a wash — child poverty down, poverty among the elderly up. But for me the big news is that America’s safety net isn’t working.

The old poverty measure — which is still the official measure — excluded a lot of the programs designed to reduce the effects of poverty — things like food stamps and the Earned Income Tax Credit. On the other hand, it also excluded things which increase the effects of poverty, like payroll taxes, transportation costs of getting to work, and childcare and healthcare costs.

Put the two together, and you get the changes spelled out in the chart above. There are more people living in poverty than we thought — 16% of the population rather than 15.2%. A lot of people didn’t take the urgency of America’s poverty crisis seriously, given the old methodology, because they reckoned the “real” rate was lower, once you took into account things like the EITC. But it turns out that in reality, the poverty rate is even worse than we thought — much worse, in fact.

It’s true that the poverty rate for children has come down — but it’s still unconscionably high. There are 13.6 million children under the age of 18 living in poverty — that’s 18.2% of all the children in the country.

And most egregiously, even after taking into account food stamps and the like, 5.4% of the population — and fully 8.6% of the Hispanic population — is living on less than half the poverty level.

What does that mean, in practice? Here are the new poverty levels:

threshhold.tiff

To live on less half the poverty level means that a family of four — two adults and two children — would have a total household income of no more than $12,172 per year. Call it $1,000 per month. And that’s after accounting for aid from the government.

Is it possible to feed and clothe and house four people on $1,000 a month? Evidently it is, because millions of Americans do. But I certainly wouldn’t want to attempt it. And it can’t be good for the kids in such families.

Up until now, I thought that the US social safety net, such as it is, was at least managing to catch people at the very bottom of the distribution. If you were earning less than half the poverty level, you’d be looked after somehow. But in fact, fully 80% of the ultra-poor in the official poverty statistics stay in the same place when you look at the new numbers. And that’s just unacceptable. As politicians try to compete for areas to cut spending, let’s at the same time try to increase the amount of aid going to the country’s poorest, through food stamps and Medicaid and the like. Because if America really aspires to be the greatest country in the world, it can’t have 16.1% of its population living in poverty.

Comments
12 comments so far

“A lot of people didn’t take the urgency of America’s poverty crisis seriously, given the old methodology, because they reckoned the “real” rate was lower, once you took into account things like the EITC. But it turns out that in reality, the poverty rate is even worse than we thought — much worse, in fact.”

Anyone who has ever applied for, or used, those services could have told them that. But that would have required paying attention.

Posted by klhoughton | Report as abusive

It’s sad that 16.1% of the population is living in poverty, and immensely sadder that so many children are the victims. But I don’t think for one minute that the root of this problem is not enough government programs and transfer payments to the poor.

Posted by maynardGkeynes | Report as abusive

Felix, whatever gave you the impression that the US has a ‘safety net’? There are far too many people in high places who only care about getting their own taxes down, despite earning many times the SPM themselves. All you have to do is even mention the idea and someone will blow their top and call it socialism (they’ll be referring to communism, mind you).

Posted by FifthDecade | Report as abusive

“Because if America really aspires to be the greatest country in the world, it can’t have 16.1% of its population living in poverty.”

Yup. That’s as clean a statement as you could ask for. But rather than talk about gov programs &etc, why not just peg the minimum wage at (the poverty line)/2080?

Posted by majkmushrm | Report as abusive

One of the reasons may be that even if you work full-time (i.e. 40 hrs/week for 50 weeks a year) at the federal minimum wage ($7.25), your annual earnings ($14,500) still leave you significantly below the poverty line.

Always thought that there was something wrong with the fact that someone could work full-time and still be living in poverty. Maybe it’s time to link the minimum wage to the poverty line.

Posted by mfw13 | Report as abusive

>>It’s true that the poverty rate for children has come down — but it’s still unconscionably high.

You’re doing it again, Felix. You ignore the trend, and make a value judgment. It may be a worthwhile value judgment, but it doesn’t justify the title of the post.

Posted by Curmudgeon | Report as abusive

The more effective route would be to give everyone a base check and tax it back for those above that level, but too many think the poor must be starved to work.

Posted by MyLord | Report as abusive

“The social safety net is broken?”

In my state a parent with a minor child is automatically eligible for:

-Housing via section 8 (there is a wait list)
-Emergency health care
-Preventitive health care
-Food Assistance via the SNAP program
-Access to food banks for additional food items
-Free Cell phone with 250 anytime minutes monthly
-Heating assistance via LIHEAT
-Free child care while working or learning

I support all of those programs. A civilized society requires that the fortunate support the less fortunate. Out of the 120+ countries in the world our social safety net is stronger than roughly 100.

If you want to argue that our safety net should be further strengthened with the most wealthy footing the bill… I’m listening.

If you want to argue that those at the bottom of the income distribution in the U.S. do not have it better now than they have ever had in the 235 year history of the country… well then I’m inclined to disagree.

Posted by y2kurtus | Report as abusive

@y2kurtus: well done! Without a proper diagnosis of the causes of poverty, which are now largely social and cultural, as opposed to a lack of government support, we will never ‘cure’ poverty.

Posted by maynardGkeynes | Report as abusive

You cannot cure poverty without education. Education in the skills necessary to compete in the job market today. (Unemployment among young college graduates is higher than normal, but unemployment among young adults without a degree is three times that.) Education in the culture of responsibility. Education in self-confidence and assertiveness, qualities that are in excess among our middle-class but in short supply among the less advantaged. Begin with the young and they will infect their communities with these values, enriching all.

Standardized testing, however, is not the answer. It only addresses academic skills (and only a narrow slice of academic skills), not the broader educational needs for culture change. At this point we need to step back and look at the larger picture, before we can again move forward.

Posted by TFF | Report as abusive

I have only two requests TFF…

#1 move to my community.
#2 run for office!

…spot on as usual!

Posted by y2kurtus | Report as abusive

Can’t take credit for that, y2kurtus. Am lucky to have found a school that makes this recipe work!!! Might not believe it if I didn’t see it daily.

Now if only we can find the money to stay open. :) Serving the disadvantaged isn’t a terribly profitable industry.

Posted by TFF | Report as abusive
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