Welfare Indicators and Risk Factors: Fourteenth Report to Congress. Economic Security Risk Factor 4. Poverty Rates with Various Means-tested Transfers Counted as Income

09/22/2015

Figure ECON 4.  Percentage of Total Population Below the Official Poverty Line with Various Means-Tested Transfers Counted as Income: 1979-2012

Figure ECON 4.  Percentage of Total Population Below the Official Poverty Line with Various Means-Tested Transfers Counted as Income: 1979-2012

Note:  The four measures of income are as follows: (1) “Cash income plus all social insurance” is earnings and cash income, plus social security, workers compensation, disability, unemployment, public and private pensions, veterans benefits  and other social insurance cash transfers.  It does not include means-tested cash transfers; (2) “Plus means-tested cash transfers” is the official Census Bureau income definition, which includes means-tested cash transfers, primarily AFDC/TANF and SSI; (3) “Plus food and housing benefits” counts the cash value of means-tested food and housing benefits as income; and (4) “Plus EITC and federal taxes” is the most comprehensive income measure used.  It adds the refundable Earned Income Tax Credit (EITC) to income, while subtracting federal payroll and income taxes.  The fungible value of Medicare and Medicaid is not included in any of the income measures

Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 1980-2012, analyzed by the Congressional Budget Office. 


  • Figure ECON 4 shows the percentage of the population below the official poverty line with various means-tested transfers counted as income for the years 1979 to 2012.  The official poverty rate – using the official income definition, which includes means-tested cash transfers (primarily TANF and SSI) in addition to pre-transfer cash income and social insurance cash transfers – was 15.0 percent in 2012.  Without cash welfare (TANF and SSI), the 2012 poverty rate would be 15.7 percent
  • Adding non-cash, means-tested transfers (food and housing benefits including SNAP) to the official income definition has the effect of lowering the percentage of people with incomes below the official poverty line.  Including the value of food and housing benefits in total income would reduce the poverty rate to 12.9 percent in 2012.
  • When income is defined to include all of the previously mentioned benefits plus the Earned Income Tax Credit (EITC) and the effect of federal taxes, the percentage of people below the official poverty line would decrease to 11.4 percent in 2012.  Federal taxes and the EITC have had the net effect of reducing poverty rates following the EITC expansions in 1993 and 1995.
  • Table ECON 4 shows the percentage of the population below the official poverty line with various means-tested transfers counted as income for selected years.  The combined effect of means-tested cash transfers, food and housing benefits, the EITC, and federal taxes was to reduce the poverty rate in 2012 by 4.3 percentage points.  Net reductions in poverty rates were smaller during the 1981 - 1982 recession, and higher in the mid-1990s, largely due to expansions in the EITC.

Table ECON 4. Percentage of Total Population Below the Official Poverty Line with Various Means-Tested Transfers Counted as Income: Selected Years

 

Cash income plus all social insurance

Plus means-tested cash transfers
(official poverty measure)

Plus food and housing benefits

Plus EITC and federal taxes

Reduction in poverty rate

1979

12.8

11.6

9.7

10.0

2.8

1981

14.9

13.9

12.2

13.2

1.7

1983

16.0

15.2

13.7

14.7

1.3

1986

14.5

13.6

12.2

13.1

1.4

1989

13.8

12.8

11.2

11.8

2.0

1992

15.6

14.5

12.9

13.0

2.6

1995

14.9

13.8

12.0

11.5

3.4

1998

13.5

12.7

11.3

10.4

3.1

2000

12.0

11.3

10.1

9.5

2.5

2001

12.5

11.7

10.5

9.8

2.7

2002

12.8

12.1

10.9

10.0

2.8

2003

13.2

12.5

11.2

10.4

2.8

2004

13.5

12.7

11.5

10.5

3.0

2005

13.3

12.6

11.2

10.3

3.0

2006

13.0

12.3

11.0

10.0

3.0

2007

13.2

12.5

11.1

10.1

3.1

2008

13.9

13.2

11.7

10.1

3.8

2009

15.1

14.3

12.4

10.5

4.6

2010

15.8

15.1

13.0

11.3

5.0

2011

15.8

15.0

12.9

11.2

4.6

2012

15.7

15.0

12.9

11.4

4.3

Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 1980-2012, analyzed by the Congressional Budget Office. 


The four measures of income are as follows:

(1) “Cash income plus all social insurance” is earnings and cash income, plus social security, workers compensation, disability, unemployment, public and private pensions, veterans benefits  and other social insurance cash transfers.  It does not include means-tested cash transfers;

(2) “Plus means-tested cash transfers” is the official Census Bureau income definition, which includes means-tested cash transfers, primarily AFDC/TANF and SSI;

(3) “Plus food and housing benefits” counts the cash value of means-tested food and housing benefits as income; and

(4) “Plus EITC and federal taxes” is the most comprehensive income measure used.  It adds the refundable Earned Income Tax Credit (EITC) to income, while subtracting federal payroll and income taxes.  The fungible value of Medicare and Medicaid is not included in any of the income measures.

View full report

Preview
Download

"FINAL Fourteenth Report - FINAL 9 22 15.pdf" (pdf, 3.14Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®