Joi, 15 Septembrie 2022 07:45

US Government Assistance Lifts 45.4m People Out of Poverty in 2021

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The U.S. official poverty rate was 11.6% in 2021, while the Supplemental Poverty Measure (SPM) dipped to 7.8%, its lowest point on record, according to U.S. Census Bureau data released on September 13, 2022.

Each year, the Census Bureau releases two poverty estimates to provide a snapshot of economic well-being in the United States: the official poverty measure and the SPM. In 2021, the official poverty rate was not statistically different from 2020. The 2021 SPM rate, however, was 1.4 percentage points lower.

The difference in estimates shows how taxes and noncash government programs can help lift more people out of poverty.

The official poverty measure defines resources as pretax money income, which includes income sources such as earnings and social insurance programs like Social Security, Supplemental Security Income (SSI), and unemployment benefits.

The SPM expands this definition by including income and payroll taxes, tax credits, stimulus payments, other noncash government benefits like the Supplemental Nutritional Assistance Program (SNAP), and housing subsidies. Necessary expenses such as child support paid, work, child care, and medical expenses are deducted. As a result, it is possible to estimate the effect of government programs on each of the measures and compare how different benefits affect poverty rates.

The impact of these programs on the number of people in poverty in 2021 varies. Both measures are shown with consistent universes that include unrelated individuals under age 15.

When focusing solely on pretax and transfer income prior to social insurance programs like Social Security, 63.7m people were in poverty using the official poverty measure. But based on the SPM, 64.5m people were in poverty.

This comparison shows the effect of the SPM’s broader family definition and poverty thresholds that vary geographically. This infographic provides full details on the differences between the measures.

When Social Security, SSI, and other social insurance programs are added to a family’s resources, the number of people lifted out of poverty using the SPM and official poverty measures is not statistically different: Approximately 25.6 million fewer people were in poverty using the SPM and 25.7m fewer were in poverty using the official poverty measure. This would bring the number in poverty down to 38.9 million and 38.0 million for SPM and official poverty, respectively.

However, when the value of noncash benefits, taxes, and tax credits were added to resources measured by SPM, the number in poverty dropped by half to 19.1m.

The total impact of government assistance using the SPM: is 45.4m fewer people in poverty in 2021.

Changes Over Time

In 2019, government assistance helped lift 23.4 million people out of official poverty and 31.5m people out of SPM poverty.

In 2020, the first year of the COVID-19 pandemic, government assistance removed 29.6 million people from official poverty, 6.2m more people than in 2019. This reflects expanded unemployment benefits in response to the recession in 2020. The number of people kept out of official poverty by government assistance fell to 25.7m in 2021.

The SPM captured the additional effect of stimulus payments, refundable tax credits, and expanded school lunch and Pandemic Electronic Benefit Transfer (P-EBT) programs.

Using the SPM, 46.0 million people were lifted out of poverty in 2020, a year-over-year increase of 14.5m people. The number of people kept out of poverty by government assistance as measured by the SPM (45.4m) in 2021 was not statistically different from 2020.

 

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