Off the Charts Blog | Center on Budget and Policy Priorities

Even as the House prepares this week to cut SNAP (formerly food stamps) by $21 billion and push 2 million low-income people off the program, new research shows that SNAP is the most effective program pushing against the steep rise in extreme poverty.

The number of households with children living on $2 or less per person per day — one definition of poverty the World Bank uses for developing nations — more than doubled between 1996 and 2011, to 1.6 million, according to research by the University of Michigan’s H. Luke Shaefer and Harvard University’s Kathryn Edin.

While these findings are troubling, the authors also show that SNAP kept more households with children out of extreme poverty than any other government program.

Counting SNAP benefits as income cuts the number of households with children in extreme poverty in 2011 by 48 percent, from 1.6 million to 857,000 (see graph).

SNAP also cut, by roughly half, the rise in extreme poverty among households with children between 1996 and 2011, the study found.

The study provides strong evidence that one of the main drivers of rising extreme poverty was the decline in cash assistance since the 1996 welfare reform.  Aid to Families with Dependent Children (AFDC) cut extreme poverty significantly in 1996, the study found, but Temporary Assistance to Needy Families (TANF) — which replaced AFDC after 1996 and reaches many fewer needy families — had a much smaller impact in 2011.

For many of the poorest Americans, SNAP has become the only form of income assistance they receive.

One reason SNAP is so effective in fighting extreme poverty is that it focuses its benefits on many of the poorest households.  Roughly 91 percent of monthly SNAP benefits go to households below the poverty line, and 55 percent go to households below half of the poverty line (about $9,800 for a family of three).  One in five SNAP households lives on cash income of less than $2 per person a day.

The farm bill before the House would move SNAP in the wrong direction by cutting or eliminating food assistance to large numbers of low-income families.

For several decades, policy debates about cash assistance for very low-income families have focused almost exclusively on work requirements:  what work activities should welfare recipients have to perform, and for how many hours, to remain eligible?  These work requirements, in turn, are rooted in a basic assumption:  that mothers who have never been married and who have a high school education or less — a high-poverty group that comprises the majority of cash assistance recipients — are much less likely to work than others with comparable levels of education.

That assumption is wrong — and it’s been wrong for the last decade.  Among women with a high school education or less, never-married mothers are just as likely to work as single women without children and more likely to work than married women with children.  (See graph.)

The share of never-married mothers who worked jumped from 51 percent in 1992 to 76 percent in 2000, eliminating a 25 percentage-point gap between their employment rate and that of single women without children.

This sharp improvement reflected a combination of factors, including a very strong labor market (with unemployment as low as 4 percent), expansions in work supports such as the Earned Income Tax Credit (EITC) and child care assistance, and welfare reform.

A highly regarded study by University of Chicago economist Jeffrey Grogger found that the EITC (which policymakers expanded in 1990 and 1993) accounted for about 34 percent of the increase, the strong economy accounted for about 21 percent, and welfare reform accounted for about 13 percent.

Since 2000, the employment rate has fallen considerably among never-married mothers.  But it’s also dropped among other women with limited education, which suggests that the causes are the economy and low education levels — not the availability of public benefits or anything particular to single mothers.

The recession hit people with a high school education or less especially hard and they are still losing ground, according to a recent report from Georgetown University’s Center on Education and the Workforce.  Women with a high school education or less lost 2 million jobs during the recession and an additional 600,000 jobs since the recovery started.

These job losses, combined with low wages in available jobs, meant that 59 percent of never-married mothers with a high school education or less lived below the poverty line in 2011.  Moreover, cash benefit levels are lower, and benefits are harder to get, than ever.  (Indeed, that has driven an increase in deep poverty for jobless single mothers.)

These findings suggest that if we want more single mothers with limited education to work, simply reducing welfare benefits or tightening work requirements won’t likely succeed.  Instead, we need to help them compete for jobs in a period when there are three times as many job seekers as job openings — or provide jobs when jobs are not available.  Possibilities include:

• Subsidized jobs. During the recession, states placed about 260,000 unemployed low-income parents and young adults in subsidized jobs — but Congress allowed the federal funding that supported these programs to expire.  Transforming TANF’s Contingency Fund, which is supposed to help states respond to periods of economic distress but is poorly designed, into a Subsidized Employment Fund would be a good step towards helping unemployed single mothers find jobs.

• More access to education and training to build marketable skills. The TANF work requirements discourage participation in education and training.  Policymakers should eliminate these constraints.  All individuals, regardless of whether they are on welfare, should be encouraged to complete high school or earn a GED or to attend industry-based or community college programs to earn a credential that will help them qualify for better-paying, more stable jobs.

• More funding for child care. Child care is essential for single mothers — many of whom have young children — to succeed in the labor market.  Yet, funding for child care and early education for low-income families is inadequate.  The Child Care and Development Block Grant serves only one in six children eligible for help under federal rules, for example, and Head Start serves only 40 percent of eligible preschoolers.

Given all the talk about who does or doesn’t pay federal income taxes and what this means for tax policy, here are a few basic facts.

• The vast majority (83 percent) of households who owe no federal income taxes are either working households that pay payroll taxes (61 percent) or elderly (22 percent).

  To make those people pay federal income taxes, you’d have to take steps that would make the tax code less fair and sensible.  For example, it would require steps like cutting the Earned Income Tax Credit (EITC) or the Child Tax Credit, which would reduce work incentives and increase child poverty and welfare use; lowering the standard deduction or personal exemption, which could tax many low-income working families into (or deeper into) poverty; or taxing limited-income elderly people on their Social Security benefits.



• The remaining 17 percent of those who don’t pay federal income taxes are mostly those who are not working due to illness or disability, or are in school.

  Analyzing data from the Census Bureau’s Current Population Survey and estimates from the Urban-Brookings Tax Policy Center, we found that this group includes about 5 million households in which the head of household has an illness or disability and about 2 million households in which the head of household is in school.

  These two groups make up 7 percent and 3 percent of all households that didn’t pay federal income tax in 2011, respectively.  The remaining households include early retirees and those who can’t find work, which has been an especially difficult challenge since the onset of the Great Recession.  (For household heads who fall into more than one category, we assigned them to a single category in the order in which we’ve listed them in this post.  This means, for example, that a student working part-time would be included in the 61 percent of households that pay payroll taxes.)