In September of each year, the U.S. Census Bureau releases data from the Annual Social and Economic Supplement of the Current Population Survey (CPS ASEC). The CPS ASEC is a nationally representative survey of more than 60,000 American households, and among other things, it is used to calculate the official and supplemental poverty rate for the nation. This year’s release will reflect the 2014 poverty rates and will be the last until right before the Presidential election, setting the tone on poverty for the rest of the campaign.
Both the official and supplemental poverty measures have certain strengths and flaws, but each are still important indicators of how well American families are doing and government’s role in helping them. The official poverty rate primarily relies on market income – income people say they earn through work or social security – and measures the ability of families to earn their way out of poverty. The supplemental poverty measure includes non-cash government benefits as income (such as the earned income tax credit and supplemental nutrition assistance program benefits) and highlights the importance of government transfer programs for reducing poverty, especially for children.
With the economy improving, the 2014 poverty rates will likely go down, but not to levels seen before the recession. At no time in the past 50 years has the official poverty rate declined by 2 percentage points in one year, which is what is needed this year to return to pre-recession levels. This provides an opportunity for the presidential candidates to outline their anti-poverty policies. More than five years into the economic recovery, the rate of families in poverty is still worse than before President Obama took office. Our next president should articulate an approach that will do better.
At the top of any credible agenda should be policies aimed at creating more jobs and providing effective government supports for low-wage work. While it’s true that work alone cannot solve poverty for every family, too many Americans want to work but can’t find full-time employment. A strong economy and work supports for low-income families have proven most effective at reducing poverty.
Take existing safety net programs as an example. Research from the U.S. Census Bureau shows that refundable tax credits for low-income working families such as the earned income tax credit (EITC) reduced the poverty rate by 2.9 percentage points and lifted more than 9 million people out of poverty in 2013. The Supplemental Nutrition Assistance Program (SNAP) lifted more than 5 million people out of poverty and reduced the poverty rate by almost 2 points that same year. And an analysis by the Center for Budget and Policy Priorities (CBPP) in 2010 found that the government’s social safety net reduced child poverty by almost 7 percentage points once underreporting was factored in, and deep child poverty was almost non-existent at less than 3% in 2010 once these benefits were included.
Unfortunately, the stickiness of the official poverty measure shows that the ability of families to earn their own way out of poverty has become increasingly hard. And the extent to which government might hold people back deserves a serious look. But even though the safety net in the U.S. may be more expensive than is necessary, and might foster dependency on government for some, it has an important poverty-reducing role for many.
Presidential candidates on both sides should make their views clear on these issues, as well as what government can and can’t do to help families in poverty. With over 45 million Americans in poverty, we need a president to make poverty reduction a priority.
