January 5, 2016

Safety net programs have dramatically cut poverty

Center on Budget & Policy Priorities - The safety net was nearly ten times more effective at reducing poverty in 2014 as in 1967, new data show.

Safety net programs reduced the number of otherwise-poor people by 42 percent in 2014.  In sharp contrast, safety net programs cut the number of otherwise-poor people by just a little more than 4 percent in 1967, the first year for which this data is available. 

In 2014, before accounting for government benefits and taxes (including tax credits), about 87 million people had incomes below the poverty line.  Counting benefits and taxes, however, lowers that number by 36 million people — a drop of 42 percent.

The new data confirm a notable finding of Columbia researchers.  If measured without considering the effects of taxes and government income support, the poverty rate is now similar to its 1967 level.  But after accounting for these benefits and tax credits, the poverty rate fell from 26 percent in 1967 to 16 percent in 2014.

Moreover, these impressive figures understate the current safety net’s anti-poverty effect.  That’s because they don’t account for the benefits that households receive but don’t report when surveyed by the Census Bureau.  It’s possible to correct for some of this underreporting of benefits for as recently as 2012.  Doing so shows that the safety net reduced poverty by 52 percent, or slightly more than half, that year. 

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