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Social Security Keeps 21 Million Americans Out of Poverty: A State-By-State Analysis

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Jamie Sanderson

Social Security provides essential benefits that reduce poverty in the United States. It keeps over 21 million Americans out of poverty, including 1.1 million children and 14.5 million elderly people. Without Social Security, the elderly poverty rate would exceed 40% in most states, but it has been reduced to under 10% in many states due to Social Security benefits. Social Security is particularly important for reducing poverty among vulnerable groups like children, the elderly, and women over age 65.

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Social Security Keeps 21 Million Americans Out of Poverty: A State-By-State Analysis

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Jamie Sanderson
205 views5 pages
Social Security provides essential benefits that reduce poverty in the United States. It keeps over 21 million Americans out of poverty, including 1.1 million children and 14.5 million elderly people. Without Social Security, the elderly poverty rate would exceed 40% in most states, but it has been reduced to under 10% in many states due to Social Security benefits. Social Security is particularly important for reducing poverty among vulnerable groups like children, the elderly, and women over age 65.

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Social Security provides essential benefits that reduce poverty in the United States. It keeps over 21 million Americans out of poverty, including 1.1 million children and 14.5 million elderly people. Without Social Security, the elderly poverty rate would exceed 40% in most states, but it has been reduced to under 10% in many states due to Social Security benefits. Social Security is particularly important for reducing poverty among vulnerable groups like children, the elderly, and women over age 65.

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205 views5 pages

Social Security Keeps 21 Million Americans Out of Poverty: A State-By-State Analysis

Uploaded by

Jamie Sanderson
Social Security provides essential benefits that reduce poverty in the United States. It keeps over 21 million Americans out of poverty, including 1.1 million children and 14.5 million elderly people. Without Social Security, the elderly poverty rate would exceed 40% in most states, but it has been reduced to under 10% in many states due to Social Security benefits. Social Security is particularly important for reducing poverty among vulnerable groups like children, the elderly, and women over age 65.

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820 First Street NE, Suite 510 Washington, DC 20002 Tel: 202-408-1080 Fax: 202-408-1056 [email protected] www.cbpp.

org

October 16, 2012

SOCIAL SECURITY KEEPS 21 MILLION AMERICANS OUT OF POVERTY: A STATE-BY-STATE ANALYSIS


by Paul N. Van de Water and Arloc Sherman1 Social Security benefits play a vital role in reducing poverty. Without Social Security, 21.4 million more Americans would be poor, according to the latest available Census data (for 2011). Although most of those whom Social Security keeps out of poverty are elderly, nearly a third are under age 65, including 1.1 million children. (See Table 1.) Depending on their design, reductions in Social Security benefits could significantly increase poverty, particularly among the elderly.
Table 1

Effect of Social Security on Poverty, 2011


Age Group Percent in Poverty Excluding Including Social Security Social Security 23.4 21.9 16.7 13.7 43.6 8.7 21.9 15.0 48.3 10.7 Number Lifted Out of Poverty by Social Security

Children Under 18 Adults Ages 18-64 Elderly Age 65 and Over Total, All Ages Addendum: Women Age 65 and Over

1,107,000 5,829,000 14,480,000 21,415,000 8,696,000

Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2012.

Social Security Lifts 14 Million Elderly Americans Out of Poverty


Almost 90 percent of people aged 65 and older receive some of their family income from Social Security.2 Without Social Security benefits, 43.6 percent of elderly Americans would have incomes below the official poverty line, all else being equal; with Social Security benefits, only 8.7 percent do. These benefits lift some 14.5 million elderly Americans including 8.7 million women above the poverty line.

1 2

The authors wish to thank William Chen for his assistance in preparing this paper.

Kathy A. Ruffing and Paul N. Van de Water, Top Ten Facts About Social Security, Center on Budget and Policy Priorities, August 2010 (update forthcoming).

Social Security reduces elderly poverty dramatically in every state in the nation, as Figure 1 and Table 2 show. Without Social Security, the poverty rate for those aged 65 and over would meet or exceed 40 percent in 41 states; with Social Security, it is less than 10 percent in the large majority of states. Social Security lifts 1.2 million elderly people out of poverty in California and Florida, about 800,000 in New York, Texas, and Pennsylvania, and over half a million in Ohio, Illinois, and Michigan.

Social Security Lifts More Than 1 Million Children Out of Poverty


Social Security is important for children and their families as well as for the elderly. About 6 million children under age 18 (8 percent of all U.S. children) lived in families that received income from Social Security in 2011, according to Census data. This figure includes children who received their own benefits as dependents of retired, disabled, or deceased workers, as well as those who lived with parents or relatives who received Social Security benefits. In all, Social Security lifts 1.1 million children out of poverty. Social Security records show that 3.2 million children under age 18 qualified for Social Security payments themselves in December 2011. (See Table 3.) Of these, 1.2 million were the survivor of a deceased worker. Another 1.7 million received payments because their parent had a severe disability. And 315,000 children under 18 received payments because their parent or guardian was retired.3

Technical Note
This analysis uses the Census Bureaus official definition of poverty. In determining poverty status, the Census Bureau compares a familys cash income before taxes with poverty thresholds that vary by the size and age of the family. The poverty thresholds in 2011 were $10,788 for an elderly individual, $13,596 for an elderly couple, and $23,021 for an average family of four.4 To calculate the anti-poverty effects of Social Security, we determined each familys poverty status twice first excluding and then including the familys Social Security benefits. Our analysis considers the non-institutionalized population using data from the Census Bureaus Current Population Survey (CPS), the survey that is used to produce official poverty estimates.5 Each March the CPS collects information on personal income, health coverage, and other social and economic characteristics for the previous year. The national estimates reported here are for 2011. The state-by-state estimates are based on a three-year average (for 2009, 2010, and 2011) to improve the reliability of the results. One critic of estimates such as these argues that they do nothing to answer the question of what would have happened if Social Security had not existed.6 Indeed, this analysis does not take into account other changes that would occur in the absence of Social Security. If Social Security did not exist, many elderly individuals likely would have saved somewhat more and worked somewhat longer, and many might live with their adult children rather than in their own households. Other studies confirm, however, that Social Security has made a very large contribution to reducing poverty and that cutting Social Security benefits could substantially increase poverty among the elderly.7
3 4

Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2012, Table 5.J10.

Poverty thresholds depend on the size of the family and the ages of its members; this figure is a weighted average for families of four. For more information, see http://www.census.gov/hhes/www/poverty/data/threshld/index.html. 5 U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2011, Series P60-243, September 2012.
6 7

Charles P. Blahous III, Reforming Social Security for Ourselves and Our Posterity, Westport, CT: Praeger, 2000, p. 13.

Eugene Smolensky, Sheldon Danziger, and Peter Gottschalk, The Declining Significance of Age in the United States: Trends in the Well-Being of Children and the Elderly Since 1939, in John L. Palmer, Timothy Smeeding, and Barbara Boyle Torrey, eds., The Vulnerable, Washington: Urban Institute, 1988; Gary V. Engelhardt and Jonathan Gruber, Social Security and the Evolution of Elderly Poverty, National Bureau of Economic Research Working Paper 10466, May 2004.

Figure 1

Social Security Reduced Number of Elderly Poor in Every State

Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2010-2012. Estimates are an average for 2009-2011.

Table 2

Effect of Social Security on Poverty Among the Elderly by State, 2009-2011


Percent in Poverty Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Excluding Social Security 49.4 36.8 41.7 55.0 37.8 36.9 37.6 38.8 34.9 45.8 52.8 33.6 46.8 44.2 48.8 47.3 46.9 51.4 50.3 47.4 35.6 40.7 47.6 45.2 54.8 47.3 50.1 42.1 42.1 45.1 39.4 42.1 42.8 50.9 42.1 48.3 46.1 40.8 47.4 47.9 51.9 42.8 54.8 41.4 42.1 49.1 37.8 40.0 51.8 42.6 41.2 Including Social Security 9.1 10.4 9.1 11.9 8.5 7.2 6.2 7.7 15.6 8.9 11.9 8.2 8.5 7.5 8.0 5.6 6.7 9.2 15.0 8.0 8.2 7.4 7.4 6.9 12.5 6.9 7.8 6.6 9.4 6.5 7.8 10.4 10.9 10.0 8.7 8.1 7.2 7.0 9.1 8.3 11.4 7.3 11.5 10.7 7.3 8.5 9.5 6.7 9.0 5.1 6.6

Number Lifted Out of Poverty by Social Security 262,000 15,000 263,000 187,000 1,246,000 168,000 149,000 41,000 14,000 1,196,000 379,000 49,000 74,000 579,000 354,000 157,000 148,000 235,000 198,000 81,000 191,000 322,000 529,000 267,000 163,000 325,000 67,000 82,000 106,000 68,000 357,000 91,000 820,000 498,000 28,000 622,000 199,000 183,000 753,000 60,000 261,000 40,000 361,000 789,000 94,000 34,000 270,000 279,000 113,000 307,000 22,000

Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2010-2012.

Social Security Beneficiaries by State and Age, December 2011


Total Age 65 and Older
627,589 52,635 783,759 399,589 3,692,234 514,038 472,762 123,940 52,578 2,835,182 982,617 177,767 192,561 1,475,030 820,232 435,929 353,505 547,184 509,036 204,129 627,752 819,775 1,331,766 656,491 363,797 791,322 139,855 230,834 300,676 178,509 1,104,066 248,606 2,347,514 1,193,445 91,509 1,499,952 478,397 522,183 1,850,453 144,356 620,923 116,417 827,555 2,406,196 235,011 90,916 913,142 796,472 277,734 766,501 66,999 38,292,328

Table 3

Age 18-64

Children Under Age 18


80,195 7,742 61,325 50,444 276,338 38,440 30,146 9,449 4,559 191,759 107,420 11,639 16,112 112,926 74,786 25,866 28,468 68,399 65,845 17,507 49,939 66,263 121,791 42,206 52,738 73,584 10,262 15,365 23,725 16,622 77,859 24,720 184,277 107,869 5,151 116,331 47,786 32,230 135,461 11,241 60,135 7,079 85,362 249,463 24,399 7,203 76,074 54,510 29,063 53,454 4,967 3,245,306

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Totala.

1,037,438 82,109 1,104,545 647,077 5,129,529 721,274 630,447 176,885 75,755 3,894,179 1,524,263 234,314 278,563 2,065,432 1,219,879 592,000 498,707 913,548 809,450 306,600 872,919 1,161,122 2,016,684 904,803 609,651 1,188,437 198,230 313,087 424,836 262,952 1,500,403 370,911 3,337,276 1,808,331 121,335 2,166,271 717,398 734,841 2,617,879 207,122 956,097 156,102 1,287,683 3,551,961 335,444 132,268 1,318,580 1,127,126 451,039 1,085,632 93,748 55,404,480

329,654 21,732 259,461 197,044 1,160,957 168,796 127,539 43,496 18,618 867,238 434,226 44,908 69,890 477,476 324,861 130,205 116,734 297,965 234,569 84,964 195,228 275,084 563,127 206,106 193,116 323,531 48,113 66,888 100,435 67,821 318,478 97,585 805,485 507,017 24,675 549,988 191,215 180,428 631,965 51,525 275,039 32,606 374,766 896,302 76,034 34,149 329,364 276,144 144,242 265,677 21,782 13,866,846

Source: Social Security Administration, Annual Statistical Supplement, 2012, Table 5.J5.a. Includes outlying areas and foreign countries (not shown).

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