More Than Half of U.S. Senior
Citizens Would be in Poverty Without Social Security
U.S. Census report uses a new way to
look at poverty; finds rate unchanged between 2011 and 2012 for nation
7, 2013 - Senior citizens are doing poorly, according to the latest
poverty report from the U.S. Census Bureau. The nation's poverty rate
for all ages was 16.0 percent in 2012, unchanged from 2011, according to
the supplemental poverty measure released yesterday. But more than half
of Americas 65 and older (54.7 percent) would be living in poverty if
Social Security income was not included in the supplemental poverty
Senior citizens had a supplemental
poverty rate of 14.8 percent, equating to 6.4 million. Excluding Social
Security, 23.7 million would be in poverty.
In an earlier report, the bureau
reported no age group experienced a statistically significant change in
the number or rates of people in poverty between 2011 and 2012, with one
exception: the number of people 65 and older in poverty rose between
2011 and 2012.
The 2012 rate for all ages was
higher than the official measure of 15.0 percent. The official poverty
rate in 2012 was also not significantly different from the corresponding
rate in 2011.
Without adding Social Security
benefits to income, the supplemental poverty rate overall would have
been 8.6 percentage points higher (or 24.5 percent rather than 16.0
These findings are contained in the
Census Bureau's annual report, The Research
Supplemental Poverty Measure, released
with support from the Bureau of Labor Statistics and describing research
showing different ways of measuring poverty in the United States.
"The important contribution that
the supplemental poverty measure provides is allowing us to gauge the
effectiveness of tax credits and transfers in alleviating poverty," said
Kathleen Short, a Census Bureau economist and the report's author. "We
can also examine the effect of necessary expenses that families face,
such as paying taxes or work-related and medical-out-of-pocket
Unlike the official poverty rate,
the supplemental poverty measure takes into account the impact of
different benefits and necessary expenses on the resources available to
families, as well as geographic differences in housing costs. For
example, the measure adds refundable tax credits (the Earned Income Tax
Credit and the refundable portion of the child tax credit) to cash
income, which reduces the supplemental poverty rate for all people by
three percentage points (19.0 percent to 16.0 percent). For children,
the supplemental poverty rate of 18.0 percent would rise to 24.7 percent
if refundable tax credits were excluded.
supplemental poverty measure deducts various necessary expenses from
income; these include medical out-of-pocket expenses, income and payroll
taxes, child care expenses and work-related expenses. These expenses
reduce income available for necessary basic goods purchases including
food, clothing, shelter and utilities (FCSU) and a small additional
amount to allow for other needs. Deducting medical out-of-pocket
expenses increases the supplemental poverty rate by 3.4 percentage
Without accounting for medical
out-of-pocket expenses, the number of people living below the poverty
line would have been 39.2 million rather than the 49.7 million people
classified as poor with the supplemental poverty measure.
The supplemental poverty measure's
poverty thresholds vary by geography, family size and whether a family
pays a mortgage, rents or owns their home free and clear. For example,
the 2012 thresholds for families with two adults and two children were
around $18,000 for homeowners without a mortgage living outside
metropolitan areas in North Dakota, Kentucky, West Virginia, Alabama,
Arkansas, South Dakota, Tennessee and Missouri, but around $35,500 for
homeowners with a mortgage in the San Jose-Sunnyvale-Santa Clara,
Calif., and San Francisco-Oakland-Fremont, Calif., metro areas. The
$23,283 official poverty threshold for a family of four was the same no
matter where a family lives.
The differences between the
official and supplemental poverty measures varied considerably by state.
The supplemental rates were higher than the official statewide poverty
rates in 13 states and the District of Columbia. The states were
California, Colorado, Connecticut, Florida, Hawaii, Illinois, Maryland,
Massachusetts, Nevada, New Hampshire, New Jersey, New York and Virginia.
For another 28 states, supplemental
rates were lower than the official statewide poverty rates. The states
were Alabama, Arkansas, Idaho, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana,
Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma,
South Carolina, South Dakota, Tennessee, Texas, Vermont, West Virginia,
Wisconsin and Wyoming. Rates in the remaining nine states were not
statistically different using the two measures.
Poverty Rates for Different Demographic Groups
The supplemental poverty measure
can show the effects of tax and transfer policies on various subgroups,
unlike the current official poverty measure. According to the report:
Including tax credits and noncash
benefits results in lower poverty rates for some groups. For instance,
the supplemental poverty rate was lower for children than the official
rate: 18.0 percent compared with 22.3 percent.
Subtracting necessary expenses from
income results in higher poverty rates for other groups. The
supplemental poverty rate for those 65 and older was 14.8 percent
compared with only 9.1 percent using the official measure. Medical
out-of-pocket expenses were a significant element for this group.
Even though supplemental poverty
rates were lower than the official rates for children and higher for
those 65 and older, the rates for children were still higher than the
rates for both 18- to 64-year-olds and people 65 and older.
Supplemental poverty rates were
higher than the official measure for all race groups and for Hispanics,
with one exception: blacks, whose 25.8 percent supplemental poverty rate
was lower than the official rate of 27.3 percent.
Supplemental poverty rates differed
by region primarily because the supplemental poverty rate has thresholds
that vary geographically. The rates were higher than official rates for
the Northeast and West, lower in the Midwest and not statistically
different from the official measure in the South. These results reflect
differences in housing costs, which are not captured by the official
The supplemental poverty measure is
an effort to take into account many of the government programs designed
to assist low-income families and individuals that were not included in
the current official poverty measure, released Sept. 17.
While the official poverty measure
includes only pretax money income, the supplemental measure adds the
value of in-kind benefits, such as the Supplemental Nutrition Assistance
Program, school lunches, housing assistance and refundable tax credits.
Additionally, the supplemental poverty measure deducts necessary
expenses for critical goods and services from income. Expenses that are
deducted include taxes, child care and commuting expenses, out-of-pocket
medical expenses and child support paid to another household.
Today's report compares 2012
supplemental poverty estimates to 2012 official poverty estimates for
numerous demographic groups at the national level. In addition, the
report presents supplemental poverty estimates for states using
three-year averages. At the national level, the report also compares
2011 supplemental poverty estimates with 2012 estimates.
There has been a continuing debate
about the best approach to measure income and poverty in the United
States since the publication of the first official U.S. poverty
estimates in 1964. In 2009, an interagency group asked the Census
Bureau, in cooperation with the Bureau of Labor Statistics, to develop a
new, supplemental measure to allow for an improved understanding of the
economic well-being of American families and the way that federal
policies affect those living in poverty.
The measures presented in this
report used the 2013 Current Population Survey Annual Social and
Economic Supplement with income information that referred to calendar
year 2012 to estimate supplemental poverty measure resources, including
the value of various in-kind benefits beyond cash income. (The official
poverty measure is based solely on cash income.)
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