Rising Extreme Poverty in the United States and the Response of Federal Means-Tested Transfer Programs

May 2013

H. Luke Shaefer, University of Michigan and Kathryn Edin, Harvard University

Download '2013-06-npc-working-paper.pdf'.

Abstract

This study documents an increase in the prevalence of extreme poverty among U.S. households with children between 1996 and 2011, and assesses the response of major federal means-tested transfer programs. “Extreme poverty” is defined using a World Bank metric of global poverty: $2 or less, per person, per day. Using the 1996-2008 panels of the Survey of Income and Program Participation (SIPP), we estimate that in mid-2011, 1.65 million households with 3.55 million children were living in extreme poverty in a given month, based on cash income. This constituted 4.3 percent of all non-elderly households with children. The prevalence of extreme poverty has risen sharply since 1996, particularly among those most impacted by the 1996 welfare reform. Adding SNAP benefits to household income reduces the number of extremely poor households with children by 48.0 percent in mid-2011. Adding SNAP, refundable tax credits, and housing subsidies reduces the number 62.8 percent.

Keywords:
Food Assistance Programs and Food Security, Poverty Trends and Measurement, Social Welfare Programs and Policies