US social welfare programs reduced poverty by about two-thirds overall in 2018, according to an analysis of Census data by Matt Bruenig of the left-leaning People’s Policy Project.
Bruenig offers a unusual analysis of the effectiveness of anti-poverty programs, in which he takes into account how far below the poverty line impoverished households are as a whole – which he calls the poverty gap – and measures how much of that gap is eliminated by the programs. This provides a more complete look at poverty reduction efforts, Bruenig says, by including the many households that see poverty reduced thanks to various government programs, even if their poverty is not entirely alleviated.
Using that method, Breunig calculated that poor families in the U.S. were $512 billion below the poverty line as a group in 2018, when measured in terms of market income. Once social welfare programs such as Social Security, the Earned Income Tax Credit and housing subsidies are taken into effect, the poverty gap dropped to $173 billion – a reduction of 66%.
Using the same approach, Bruenig also looked at how effective specific social programs were in reducing the poverty gap. For example, as you can see in the table below, Social Security’s retirement benefits shrank the poverty gap by 40%, while food stamps (Temporary Assistance for Needy Families, or TANF) shrank the gap by 1%.
Why it matters: Bruenig says the data shows that the most effective anti-poverty programs are simple, and revolve around the distribution of cash benefits, while more complicated schemes involving tax credits are less effective. If the U.S. wants to reduce child poverty – and children are the most impoverished group in the country in Bruenig’s analysis – the most effective way would be to create a Social Security-like program that provides cash to households with children.
“Instead of these weak tax credits, we should follow the Social Security model,” Bruenig writes. “Just as Social Security already provides monthly checks to elderly people and disabled people, it should also provide checks to (the parents of) children. Social Security for kids would dramatically cut poverty and is the best path forward for welfare state expansion given our current welfare situation.”