Special Report

Poverty in America


1) Government programs

Social assistance programs such as EITC and SNAP, and especially Social Security, have significantly reduced poverty levels for low-income Americans and their families. A 2018 Urban Institute analysis estimated SNAP lifted 8.4 million people out of poverty in 2015 and reduced child poverty by 28%.

According to the U.S. Census Bureau, 21.3% of Americans receive some form of state or federal income assistance, such as unemployment insurance, SNAP benefits, Medicaid, TANF, and Supplemental Security Income.

Based on U.S. Census data released in September 2018, Social Security continues to be the most important social assistance program — it helped move 27 million individuals out of poverty in 2017. The program was implemented as part of the New Deal measures enacted in 1935, and later rolled out nationally with increased investment in the early 1960. It helped reduce poverty considerably, especially among elderly Americans.

Because of the relatively high likelihood of underreporting among program recipients, the benefits of these programs is likely underestimated. “Adjusting for underreporting increases the effects of SNAP especially on poverty,” wrote Smeeding. It shows “that these programs are even more important than we thought in reducing poverty especially amongst children.”

2) Charities

Government assistance programs help alleviate poverty for millions of Americans every year, but they are not enough. Private aid programs help make up the difference.

According to statistics by food pantry network and nonprofit group Feeding America, about 73% of food-insecure individuals are eligible for at least one of the major federal food assistance programs. This leaves about 27% of food-insecure individuals who do not qualify for federal assistance, many of whom must turn to charitable organizations.

Charities play a critical role in American society, helping answer needs unmet by public assistance programs. The government spent $2.7 trillion on public assistance programs in its fiscal 2016. The charity data and research group Giving USA estimated in its annual report that charitable donations totaled $410 billion in 2017.

Though the resources charities direct to the injustice of poverty are considerable, it can be difficult to gauge their value. Not all charities do as much good as donors likely believe they do. The charity world is dominated by private organizations that do not disclose all of their activities, so it is very hard for donors to know which groups have the most impact.

3) Economic factors

Poverty remains a serious problem in the United States despite nine years of economic recovery. Commenting on this observation, Smeeding said, “The lack of progress over the last few years of strong recovery means that the economy alone will not solve poverty.”

For most Americans, wages are their sole source of income, and employment is one of the surest ways to escape poverty. Emphasizing the connection between less time spent working and greater reliance on welfare in its July 2018 report, the U.S. Executive Branch’s Council of Economic Advisors proposed to expand work requirements in welfare programs to encourage recipients to join the workforce.

Finding work is not always a matter of choice, however. The likelihood of obtaining gainful employment relies heavily on local economic factors. In an interview with 24/7 Wall St., Elise Gould, senior economist with the EPI, said, “The labor market can serve as an anti-poverty vehicle.” For instance, in tight labor markets — while not always advantageous for business owners who may wish to more freely replace workers — lower-wage people frequently get raises and more hours of work. As the U.S. labor market has tightened, the nationwide poverty rate has declined.

Similarly, Gould explained, “[Minimum wage policies] that set labor standards will disproportionately impact low-income folks and therefore are more likely to pull them out of poverty.” Many states and cities have indeed increased the minimum wage well above the federally mandated $7.25 per hour set in 2009.

Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio, and South Dakota regularly increase the minimum wage base on the cost of living. Arizona, California, Colorado, Hawaii, Maine, Michigan, New York, Rhode Island, Vermont, and Washington have enacted legislation the increased minimum wages this year. Massachusetts and Delaware enacted measures to increase state minimum wages over several years.

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