Off the Charts Blog | Center on Budget and Policy Priorities

Note:  With Thanksgiving right around the corner, the Center thought this was a good time to look at the latest figures on various indicators of hardship. This is the first in a series of posts on this subject that CBPP will do this week.

Poverty rates rose in 2010 under a variety of poverty measures, as the economic downturn continued and long-term unemployment hit record highs.  Lest anyone doubt that this is a serious problem requiring attention, new CBPP analysis finds that more than half (52 percent) of poor children last year lived in households that faced one or more of the following:

• hunger (what the Agriculture Department now terms “very low food security”),
• overcrowded living conditions (more than one person per room),
• failure to pay rent or mortgage on time, or
• failure to receive needed medical care.

That’s three times the 17 percent rate for households with incomes at or above twice the poverty line, as the graph shows.  (Not all of these hardships affect the children; some affect other household members.)

Fortunately, government assistance can make a difference in poverty — and, it is fair to conclude, hardship.

Earlier this month, Census reported that while poverty rose significantly in 2010 under a new poverty measure (the Supplemental Poverty Measure) that takes both cash income and government assistance into account, government assistance kept poverty from being even higher.

Also, a CBPP analysis found that nearly twice as many people would count as poor in 2010 if one leaves out the income they received from assistance programs.  In particular, a handful of government initiatives enacted in 2009 and 2010 kept nearly 7 million people out of poverty in 2010.

Unfortunately, those initiatives are expiring, many states have cut programs that help low-income families, and some budget-cutters in Congress are targeting such programs for further cuts.

Related Posts:

• Hardship in America, Part 4: SNAP Helping Millions Afford an Adequate Diet
• Hardship in America, Part 3: Homelessness Growing Among Families with Children
• Hardship in America, Part 2: Safety Net Withering for Poor Families with Children

I pointed out earlier this week that six recession-fighting initiatives enacted in 2009 and 2010 kept nearly 7 million people out of poverty in 2010 — under an alternative measure of poverty that takes into account the impact of government benefit programs and taxes.

Our report also shows that if the government safety net as a whole — these temporary initiatives (all were featured in the 2009 Recovery Act) plus safety-net policies already in place when the recession hit — hadn’t existed in 2010, the poverty rate would have been 28.6 percent, nearly twice the actual 15.5 percent (see graph).

This shows the powerful anti-poverty impact of policies ranging from tax credits like the Earned Income Tax Credit and Child Tax Credit to unemployment insurance, SNAP (food stamps), Social Security, Supplemental Security Income, veterans’ benefits, public assistance (including Temporary Assistance for Needy Families), and housing assistance.

Read more…

Six temporary stimulus initiatives that Congress enacted in 2009 and 2010 kept 6.9 million Americans out of poverty in 2010, according to a report that we issued today based on newly released Census data.

The six provisions — three new or expanded tax credits, two enhancements of unemployment insurance, and an expansion of SNAP (food stamp) benefits — were originally part of the 2009 Recovery Act, though Congress later extended or expanded some of them.

The official poverty measure counts only cash income, so to see how these measures affected poverty, we used an alternative poverty measure that also takes into account the impact of government benefit programs like SNAP and taxes.  Most experts prefer this broader measure, which adopts recommendations of the National Academy of Sciences.

Looking at the six initiatives individually, we found that:

• Expansions in the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) kept 1.6 million people out of poverty.

• The Making Work Pay tax credit, which expired at the end of 2010, kept another 1.5 million people out of poverty.

• Expansions in the duration and level of unemployment insurance benefits kept 3.4 million people out of poverty.

• Expansions in SNAP benefits kept 1.0 million people out of poverty.

(The figures outlined above, and also reflected in the chart below, total more than 6.9 million in part because some people were kept above the poverty line by more than one program, but in the total we counted each person only once.)

Read more…

We previously described the 2009 American Recovery and Reinvestment Act (ARRA) as one of the “most effective pieces of anti-poverty legislation in decades,” saying its temporary expansion of the safety net kept 4.5 million people out of poverty in 2009.  Actually, the impact was greater than we thought.

We now know that, when one follows recommendations from the National Academy of Sciences (NAS) on how to measure poverty more comprehensively, seven of ARRA’s provisions kept more than 6 million Americans above the NAS poverty line – that is, out of poverty – in 2009.

These ARRA effects (shown in the graph in red) included two new benefits — the Making Work Pay tax credit and a one-time payment of $250 to certain recipients of retirement and disability benefits — as well as expansions of existing benefits, such as the Child Tax Credit, Earned Income Tax Credit, unemployment insurance, and SNAP (formerly known as food  stamps).

Unlike the official poverty figures, which count family income from cash, the NAS-based measures count family income from both cash and cash-like sources and tax credits.  They also subtract child care and other necessary expenses from income and use a slightly modernized poverty line.  (The newest refinement of the NAS-based measures is called the Supplemental Poverty Measure, which the Census Bureau will unveil later this month.)

NAS-based poverty measures generate poverty rates that are modestly above the official 14.3 percent poverty rate (in this case, 15.7 percent in 2009 under the NAS version that most closely matches the original NAS recommendations) but are designed to reveal more accurately the composition of who is poor and who is not.  A major reason that our revised ARRA estimate is so much larger appears to be that the NAS measure — with its deductions for child care and other necessary expenses and its slightly higher poverty line — focuses more than the non-NAS measure we originally used on identifying the needs of low-income working families, a group that received substantial help from ARRA.

Later this month, the Census Bureau will release 2010 data under a variety of experimental poverty measures that are based on the NAS recommendations, including the new Supplemental Poverty Measure.  Like the official poverty figures released last month, these figures are likely to show that poverty got worse in 2010.  But they also will enable analysts to identify the effects on poverty of assistance that ARRA provided to families and individuals in the form of tax credits, nutrition assistance, and other programs.

In addition, in a paper for an upcoming academic conference, I note that, compared with the official poverty measure, the NAS measures show much less of an increase in poverty between 2008 and 2009.  That’s both because the safety net responded automatically — as it should — to the collapsing economy, absorbing growing numbers of increasingly impoverished applicants and participants, and because of the ARRA provisions discussed above.

Deep poverty — that is, the share of the population with incomes below half the poverty line — rose by a statistically significant amount in 40 states (including the District of Columbia) from 2007 to 2010 and fell in none, Census Bureau data released today show.

Half of the poverty line corresponds to an income of $5,570 for an individual and $11,157 for a family of four.

The number of people in deep poverty rose to 20.4 million in 2010, up 4 million (25 percent) since 2007.  The national poverty data that Census released last week, based on a different survey (see our analysis) showed that the deep poverty rate hit a record 6.7 percent in 2010, with data going back to 1975.

The states with the highest deep poverty rates in 2010 were Mississippi and New Mexico, at 9.7 percent and 8.7 percent, respectively.  (The District of Columbia, which — unlike a state — consists entirely of a central city, had a deep poverty rate of 10.7 percent.)  The largest increase in deep poverty since the start of the recession occurred in Nevada, where the rate rose from 4.6 percent in 2007 to 7.0 percent in 2010 — an increase of more than half.

Studies have found that deep poverty has a particularly strong negative effect on the education and development of young children.  Even relatively small changes in incomes among low-income young children have been found to trigger significant changes in school achievement.

The new deep poverty figures, based on the Census Bureau’s official poverty definition, are for pre-tax cash income.  They don’t include the value of tax credits or non-cash benefits such as SNAP (food stamps), which have increased in value since 1975.  Alternative poverty data that Census will release next month will account for these benefits, as well as work expenses; we expect them to show a substantially smaller increase in deep poverty during the downturn, thanks in large measure to SNAP’s effective response to the increase in need.

But even if one accounts for tax credits and non-cash benefits, economists have found an increase in deep poverty over the last two decades, as we have noted.  A major reason, they find, is that public safety-net expenditures have shifted away from those with the lowest incomes over the past two decades.  For example, average safety-net benefits for out-of-work low-income families fell by 41 percent in inflation-adjusted terms between 1984 and 2004.