We’re doing better than we think. The official poverty rate fails to consider the effects of some of our most significant antipoverty programs. The official rate is calculated by comparing pretax cash income to a standard of basic need that was defined in the 1960s and simply adjusted for inflation ever since. Because it only considers pretax cash income, the official measure does not count the value of the earned income tax credit (EITC), child tax credit (CTC), or Supplemental Nutrition Assistance Program (SNAP) benefits. In 2014, the federal government paid over $50 billion in refundable EITC benefits and $70 billion in SNAP benefits to low-income families.
The failure to account for these programs and other shortcomings in the official poverty measure led to the development of the Supplemental Poverty Measure, used for research purposes, that better captures both the resources available to families and the needs of those families. Using the measure, the Census Bureau calculates that the EITC and CTC reduced the poverty rate by 3.1 percentage points in 2014. Similarly, SNAP benefits reduced the poverty rate by 1.5 percentage points. The major public programs we use to fight poverty do, in fact, reduce poverty, if we bother to count them.
We could be doing even better. One of the best antidotes to poverty is work, but a job alone is not enough. When the economy expanded during the 1990s and the unemployment rate fell below 4 percent, the poverty rate declined from 15.1 percent in 1993 to 11.3 percent in 2000. A thriving economy makes our battle against poverty much, much easier.
But while sound public policy can help the economy grow, it can’t guarantee growth in the face of larger macroeconomic and demographic forces. And even as the economy grows, an increasing number of jobs pay low wages, offer few benefits, and have irregular hours. Entry-level jobs in the service sector or gig economy may not lift workers and their families out of poverty, and the unstable employment they offer may exacerbate the consequences of poverty for both adults and children.
We need to do a better job of making work work for low-income families. That means judiciously increasing the minimum wage and ensuring that workers have access to health insurance and that they have some minimum amount of paid time off to take care of their own or their family members’ health needs. Workers should also have some say in or advance notice of scheduling so they can arrange for child care and balance their time at second jobs or at educational and training activities.
Confronting poverty is daunting. But we can make real progress if we choose to.