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.

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