Need-Tested Benefits: Impact of Assistance on Poverty Experienced by Low-Income Families and Individuals
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Contents
- Introduction
- Need-Tested Programs
- How Do Need-Tested Programs Reduce Poverty?
- How Do Need-Tested Programs Reduce Overall Poverty?
- How Do Need-Tested Benefits Reduce Poverty Among Families of Differing Characteristics?
- How Do Need-Tested Programs Reduce Poverty Among Varying Racial and Ethnic Groups?
Figures
- Figure 1. Poverty Rate, With and Without Benefits
- Figure 2. Poverty Gap for the Typical Family Living in Poverty, With and Without Benefits
- Figure 3. Poverty Gap, With and Without Benefits
- Figure 4. Poverty Rates, With and Without Benefits: Individuals by Family Category
- Figure 5. Poverty Gap for the Typical Family Living in Poverty, With and Without Benefits, by Family Category
- Figure 6. Poverty Gap, With and Without Benefits, by Family Category
- Figure 7. Poverty Rates, With and Without Benefits, by Racial and Ethnic Identity
- Figure 8. Poverty Gap for the Typical Family Living in Poverty, With and Without Benefits, by Racial and Ethnic Composition of Family
- Figure 9. Poverty Gap, With and Without Benefits, by Racial and Ethnic Composition of Family
Tables
- Table 1. Need-Tested Benefit Income Examined in this Report
- Table 1. Percentage of Families With Children Living in Poverty, With and Without Benefits, by Racial and Ethnic Composition of Family and Overall
- Table 2. Percentage of Families with Children and Workers Living in Poverty, With and Without Benefits, by Racial and Ethnic Composition of Family and Overall
- Table 3. Person-Level Poverty Metrics, With and Without Benefits, by Family Category and Overall
- Table 4. Person-Level Poverty Metrics, With and Without Benefits, by Racial and Ethnic Identify and Overall
- Table 5. Family-Level Poverty Gaps, With and Without Benefits, by Family Category and Overall
- Table 6. Family-Level Poverty Gaps, With and Without Benefits, by Racial and Ethnic Composition of Family and Overall
Appendixes
Summary
Need-tested programs have received increased attention from policymakers in the past year, as the COVID-19 pandemic pushed workers from jobs for extended periods and depressed employment income among many lower-income households. In response, Congress enacted a series of changes to these and other benefit programs to provide additional income support. Most of these changes are temporary. This report provides an overview of how need-tested benefits affected poverty before the pandemic, to provide an approximate picture of how these programs would operate should the economy recover as forecasted by CBO and the temporary measures in current law expire.
Need-tested programs provide low-income families with benefits in the form of, for instance, cash, food, housing, and child care subsidies that affect their poverty status. While all need-tested programs target families with low income, many also restrict benefits to persons of a certain age, persons with disabilities, or persons in families with children. This report analyzes the impact of these programs on both the prevalence of poverty (poverty rate) and the degree of poverty (poverty gap). At the individual family level, the poverty gap is the difference (if any) between the poverty threshold applicable to the family and its family income. At the aggregate level, the poverty gap is the sum of all individual families' gaps, and therefore represents the total funds needed for all families to exit poverty.
Need-tested benefits produced comparatively large reductions in the prevalence and degree of poverty among families with children relative to other family types. Before consideration of need-tested benefits, 25.6% of all children would have lived in poverty in 2017. Need-tested benefits reduced that poverty rate by half (see Figure S1). Need-tested benefits also reduced the pre-benefit aggregate poverty gap among families with children by two-thirds.
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Figure S1. Poverty Rates Before and After Need-Tested Benefits in 2017, by Family Type |
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Source: CRS estimates. |
In addition to families with children, need-tested benefits produced comparatively large reductions in poverty among childless families who had an individual with disabilities. People in families with an individual with disabilities and in families with children also had the greatest need, as measured by the pre-benefit poverty rate and per-family median poverty gap.
Need-tested programs produced relatively small reductions in the prevalence and degree of poverty among working-age people ages 18 to 64 living in families with no children or adults aged 65 or older. While such people experienced relatively low pre-benefit poverty rates and low benefit receipt, those who were living in poverty experienced relatively high degrees of poverty—after benefits are counted, their families would typically require the most additional funds to exit poverty. They also account for roughly $55 billion of the remaining $144 billion aggregate poverty gap after need-tested benefits are received, the largest share of any family category.
Need-tested programs reduced both the prevalence and degree of poverty across all racial/ethnic groups. Before counting need-tested benefits, 12.9% of non-Hispanic White persons would have lived in poverty, compared with 30.8% of Hispanic persons, 31.6% of non-Hispanic Black persons, and 18.2% of Asian persons in 2017. Need-tested benefits reduced these estimated poverty rates to 9.0% for non-Hispanic White persons, 19.3% for Hispanic persons, 18.9% for non-Hispanic Black persons, and 13.7% for Asian persons.
Aggregate poverty gaps among the racial/ethnic groups are affected by both the typical gap for a family in poverty within that group and the group's size (see Figure S2). Families comprised entirely of non-Hispanic White persons represent the largest group—and also had the largest aggregate pre-benefit poverty gap. Need-tested benefits reduced the poverty gap among non-Hispanic White families by $41 billion (a reduction of 38%), the largest of any group. However, need-tested benefits reduced aggregate poverty gaps for families of multiple races by 58%, non-Hispanic Black families by 57%, and Hispanic families by 51%. Asian families, the smallest of the racial/ethnic groups examined in this report, experienced a reduction of the pre-benefit poverty gap of 31%. Still, the largest aggregate poverty gap that remained was for non-Hispanic White families ($67 billion).
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Figure S2. Aggregate Poverty Gap in 2017, by Racial/Ethnic Composition of Family |
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Source: CRS estimates. |
Introduction
Need-tested programs have received increased attention from policymakers in the past year, as the Coronavirus Disease 2019 (COVID-19) pandemic pushed workers from jobs for extended periods1 and depressed employment income among lower-income households.2 These deteriorating labor market conditions3 coincided with an increase in the number of families relying on need-tested programs to meet their basic needs.4 In response, Congress provided three rounds of direct payment one-time "stimulus checks" to families,5 expanded Unemployment Insurance (UI) program benefits and length of coverage,6 expanded nutrition assistance programs,7 and enacted large increases in refundable tax credits.8 All of these policy responses are temporary and will expire in varying timespans without further congressional action.
This report examines the impact of need-tested benefits on the prevalence and degree of poverty in 2017,9 a year of economic expansion before the pandemic. It does so by using estimates of the impact of these programs as they existed at that time, under policies that the programs, without additional legislative action, generally will revert to once the temporary measures enacted in response to the pandemic expire.
The need-tested programs examined in this report provide cash or in-kind benefits directly to families, increasing those families' disposable income. This increase can either prevent families from living in poverty altogether or alleviate the severity of deprivation for those who live in poverty.10 Therefore, the Congressional Research Service (CRS) estimates in this report show how need-tested benefits reduce poverty by examining families' disposable income before and after receiving benefits and then evaluating two concepts:
- poverty rates and the number of people in poverty, which measure the prevalence of poverty; and
- poverty gaps, which measure the degree of poverty among those who live in poverty.
Using this method, CRS found that need-tested benefits improve family economic wellbeing by reducing both the prevalence and degree of poverty, particularly for families with children. This analysis expands on prior CRS research establishing that these programs combine into a system of need-tested benefits that are largely received by families with children.11
Need-tested programs by definition are targeted to households, families, or individuals with low incomes. They require financial resources (income and assets) to fall below a specified threshold in order to qualify for benefits.
Need-tested benefits provide benefits in either cash or noncash forms (e.g., food, housing, medical benefits). They sometimes subsidize the purchase of certain goods or services, and those subsidies are considered a form of income. The refundable tax credits provide lump-sum benefits once a year as part of federal income tax refunds. In measuring poverty status, the value of these credits is measured as income in the year they are accrued, rather than the year they are paid. This report evaluates the cumulative impact that the income from 10 major need-tested benefits programs (see Table 1) have on the rate and degree of poverty.
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Cash Assistance: Supplemental Security Income (SSI) funds received once a month by individuals and couples who are aged 65 and older, or with disabilities (including blindness). Temporary Assistance for Needy Families (TANF) funds received once a month by families with children. Refundable Tax Credits: Earned Income Tax Credit (EITC) funds received once a year by low and middle-income working taxpayers. Additional Child Tax Credit (ACTC) funds received once a year by low and middle-income working taxpayers with dependent children. Food Assistance: Supplemental Nutrition Assistance Program (SNAP) noncash benefits received monthly by low-income households through a card (similar to a debit card) that can be used to purchase food. Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) noncash benefits received monthly for low-income children under 5 or by pregnant/postpartum women, through a card that can be used to purchase food. Free and Reduced-Price School Lunch (FRPL) subsidies for lunches purchased daily by low-income children in school, provided through the National School Lunch Program. Housing Subsidies: Housing assistance provided to low-income households, through rent-reducing vouchers or reduced monthly rents via the Section 8 Housing Choice Voucher program, the project-based Section 8 rental assistance program, or the public housing program. Low Income Home Energy Assistance (LIHEAP) subsidies received by low-income households to reduce heating and cooling costs. Child Care: Child Care and Development Fund (CCDF) subsidies received by working parents, usually in the form of voucher-like subsidies for recipients or contracts with providers, to reduce the cost of child care. |
Source: CRS. For more information, see CRS Report R44327, Need-Tested Benefits: Estimated Eligibility and Benefit Receipt by Families and Individuals.
This report uses the concepts of the research Supplemental Poverty Measure (SPM) to measure the impact of the income from these programs on poverty. The underlying population and income data come from a U.S. Census Bureau household survey of the population, the Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS) for calendar year 2017. However, the poverty rates in this report differ from those published by the U.S. Census Bureau because, when possible, reported program income is adjusted for under-reporting of need-tested benefits by survey respondents. These adjustments use data from the Transfer Income Model 3 (TRIM3) microsimulation model funded primarily by the U.S. Department of Health and Human Services (HHS) and maintained at the Urban Institute. This report uses income or subsidy estimates from TRIM3 for SSI, TANF, housing assistance, the EITC, the ACTC, SNAP, and CCDF subsidies.12
Medicaid and State Children's Health Insurance Program (CHIP) health coverage is not counted as income for the purposes of this report, as the SPM does not explicitly consider the value of health insurance. Additionally, this report does not isolate the effects of social insurance, although UI expansions have significantly alleviated poverty during the pandemic.13
In examining changes in poverty rates and poverty gaps between when need-tested benefits are excluded versus counted, this report's analysis does not consider behavioral changes (e.g., labor force participation or family formation decisions) that need-tested benefits might prompt.14
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Terms Used in This Report Poverty: a state of economic need experienced by families with disposable income that is less than the poverty threshold. Such families are occasionally described in this report as living in poverty. Disposable Income: what the Census Bureau terms resources available to families under the research Supplemental Poverty Measure (SPM). These resources are calculated as the sum of labor income after taxes, interest and dividends, cash social insurance benefits (e.g., Social Security, unemployment insurance), and cash and noncash need-tested benefits minus work expenditures and medical expenditures. Poverty Threshold: the level of disposable income that determines whether a family is considered to be living in poverty. If a family's disposable income is below this threshold, that family is living in poverty. Families have varying thresholds that depend on the cost of basic needs such as food and clothing, geographically adjusted housing costs, family composition, housing tenure, and other adjustments as determined by the SPM. For example, before the geographic adjustment is applied, the 2017 threshold for a two-parent family with two children is $27,085 if they own their home with a mortgage, $23,261 if own their home outright, and $27,005 if they are renters. Poverty Rate: the proportion of all individuals living in poverty. CRS estimated the impact of need-tested programs on the prevalence of poverty by calculating the poverty rate before and after need-tested benefits are received by families. The higher the poverty rate, the higher the prevalence of poverty. Prevalence of Need/Poverty: the poverty rate calculated either before (prevalence of need) or after (prevalence of poverty) the application of need-tested benefits to family disposable income. Poverty Gap: the difference between disposable income and the poverty threshold for families living in poverty (i.e., how much extra disposable income it would take for all families living in poverty to exit poverty). CRS evaluates the impact of need-tested benefit programs on the degree of poverty by calculating the poverty gap before and after need-tested benefits are received. When the poverty gap is reduced, families become richer. The greater these reductions, the greater the extent to which need-tested benefits alleviate the degree of poverty. Degree of Need/Poverty: the poverty gap calculated either before (degree of need) or after (degree of poverty) the application of need-tested benefits to family disposable income. |
How Do Need-Tested Programs Reduce Poverty?
The need-tested programs examined in this report provide cash and in-kind benefits directly to families, increasing those families' disposable income. This increase can either prevent families from living in poverty altogether or alleviate the severity of deprivation for those who live in poverty. CRS therefore evaluated two concepts, the poverty rate and poverty gap, to capture the varying ways in which poverty is alleviated by need-tested benefits.
CRS used the poverty rate, calculated as the percentage of people living in poverty according to the SPM, to measure the impact need-tested benefits programs have on the prevalence of poverty. By estimating how the poverty rate changed in response to the application of need-tested benefits to families' disposable income, CRS was able to measure their impact on the prevalence of poverty.
CRS used another measure—the poverty gap—to further understand and examine the impact of programs on the degree of poverty. The poverty gap is the difference between the poverty threshold (a family is counted as living in poverty if its disposable income is below this threshold) and a family's disposable income. This is a measure of how much extra disposable income a given family would require to exit poverty, meaning that the poverty gap for a family living above the poverty threshold is $0. The greater the distance between disposable income and the poverty threshold for families living in poverty, the further they are from exiting poverty, and, therefore, the greater the degree of their poverty. By examining the typical degree of poverty, as measured by the median poverty gap,15 CRS estimated how much extra income families experiencing poverty usually require (before and after receipt of need-tested benefits) to exit poverty.
CRS then summed the individual poverty gaps of all families living in poverty to determine the aggregate poverty gap. In this analysis too, poverty is measured both before and after need-tested benefits are considered. This method emphasizes how need-tested benefits as a group reduce the degree of poverty in the United States, and how much poverty remains in dollar terms.
The following sections display the extent to which need-tested benefits reduced the prevalence and degree of poverty before the pandemic, using the aforementioned concepts and methods. These sections examine the overall population, and then break out findings by family category and racial and ethnic identity.
How Do Need-Tested Programs Reduce Overall Poverty?
The following section shows that overall, need-tested benefits reduced the prevalence of poverty, the aggregate degree of poverty of all families living in poverty, and the typical degree of poverty among families living in poverty. Need-tested benefits reduced the degree of poverty by $123 billion in 2017, and in doing so lifted 21.6 million people above the poverty threshold. These benefits also reduced the typical degree of deprivation for families in poverty. If need-tested benefits were not counted, the median family living in poverty would require roughly $9,200 in additional income to exit poverty. When need-tested benefits are counted, the median family remaining in poverty would require a smaller amount of $5,600 to exit poverty.
Need-tested benefits prevented 21.6 million people from living in poverty
CRS estimated that in 2017, prior to the pandemic and based on the policies that existed then, almost one in five people (19.2%) would have been living in poverty if not for need-tested benefits. Figure 1 displays that these benefits lifted 21.6 million people above the poverty line, decreasing the poverty rate to 12.5%.
Later sections of this report show that the impacts presented in Figure 1 primarily represent reductions in poverty rates among children, adults in families with children, and adults with work-impairing disabilities. The sections also show that need-tested benefits disproportionately reduce poverty rates among people identifying as Hispanic, Black, or two or more races.
Need-tested benefits reduced the typical degree of poverty experienced by families from roughly $9,200 to $5,600
Reductions in the prevalence and degree of aggregate poverty, however, do not reflect how a typical family living in poverty may be impacted by need-tested benefits. Additionally, aggregate poverty gaps are a function of both the size of the population and the typical amount that the income of a family living in poverty falls short of the poverty threshold. CRS therefore estimated the median poverty gap before and after benefit receipt. Figure 2 shows that need-tested benefits reduced the typical degree of poverty experienced by families by roughly $3,600 in 2017. The families that were living in poverty before receipt of need-tested benefits would have typically required $9,241 ($770 per month) to close their family poverty gap, and exit poverty. Roughly 6.8 million families did exit poverty after benefit receipt, but 20.2 million did not. Families that continued to live in poverty after counting income from need-tested benefits would have typically required an extra $5,644 (or roughly $470 per month) to close their family poverty gap, and exit poverty.
Later sections of this report show that the impacts of need-tested benefits on the measure shown in Figure 2 vary by family composition and the race of the head of the family. Need-tested benefits reduce the median poverty gap most significantly for families with children and families without children where an adult with disabilities is present. Additionally, need-tested benefits reduce the median poverty gap most significantly for Black and Hispanic families.
Need-tested benefits reduced the degree of poverty by $123 billion
CRS estimated that, in addition to reducing the prevalence of poverty, need-tested benefits alleviated the degree of poverty by almost half in 2017. Figure 3 displays these estimates of the poverty gap before and after need-tested benefits. After applying need-tested benefits to family resources, the aggregate poverty gap declined from $267 billion to $144 billion, a reduction of $123 billion. That is, for all families to exit poverty they would require an additional $144 billion of disposable income in aggregate, and without benefits they would have needed $267 billion.
Later sections of this report show that the impacts shown in Figure 3 primarily represent families with children and families without children where an adult with disabilities was present. The sections also show that these impacts disproportionately affect families comprised entirely of persons who identify as Hispanic, Black, or two or more races. Although need-tested benefits reduced the depth of poverty by a relatively low percentage (compared to the pre-benefit gap) among families comprised of White individuals, these families experienced the largest total reductions from need-tested benefits.
How Do Need-Tested Benefits Reduce Poverty Among Families of Differing Characteristics?
Each of the programs examined in this report, by definition, limit eligibility to families or individuals with low incomes. However, many need-tested programs are also limited to families with children, or adults of a certain age or with a disability. Of the programs examined in this report, five provide benefits only to families with children: the ACTC (the refundable portion of the child tax credit), TANF cash assistance, CCDF child care subsidies, WIC, and FRPL. SSI provides monthly cash benefits to needy individuals or couples who are aged 65 and older, or with disabilities (including blindness). Additionally, most EITC dollars go to families with children,16 and families with children also comprise a large share of SNAP households.17
These eligibility requirements culminate in a need-tested benefits system that largely alleviates the prevalence and degree of poverty among children, adults with severe work disabilities, and their respective family members.18 These are also the population groups with the greatest prevalence of need—as measured by pre-benefit poverty rates. This elevated prevalence of need means that despite the impact of need-tested benefits on these groups, poverty is still more prevalent among children (12.6%) and adults living with disabilities (29.9%) than among adults of working age19 in families without children (11.0%), who receive relatively fewer benefits.20
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Overlap in Family and Individual Groupings For the purposes of the estimates in this report, these categories are treated as mutually exclusive, with individuals assigned to a single category based on "adults in families with children" having first order of precedence. This is generally because many of need-tested benefits discussed in this report are either targeted toward families with children or require that a family have a child to qualify (CHIP, ACTC, TANF, CCDF, School Meals). Families with a parent with disabilities or with an adult aged 65 or older may themselves qualify or have a spouse that qualifies for these benefits based on the presence of a child, rather than disability status or age. Note that assigning individuals to mutually exclusive groups creates overlap between populations—specifically, there are people classified as "adults in families with children" who either have a severe work-limiting disability or are aged 65 and older. In 2017, 8.7% of adults in families with children overlapped with other categories: 4.9% of these adults were aged 18 to 64 and had a severe work disability and 3.8% were aged 65 and older. Despite this overlap, each adult was assigned to only one group based on the rank order listed above (e.g., adults who are aged 65 and in a family with children were classified as "adults in families with children").
Source: CRS, based on data from the U.S. Census Bureau's ASEC to the CPS and the TRIM3 microsimulation model, primarily funded by HHS and maintained at the Urban Institute. |
Need-tested benefits most substantially reduced the prevalence of poverty among children and adults with disabilities
Estimates presented in Figure 4 show that in 2017, need-tested benefits reduced the prevalence of poverty among children and adults with disabilities by the largest amounts. Except for adults with disabilities, persons living in families without children are relatively unlikely to be lifted from poverty by need-tested benefits.21 However, adults without disabilities living in families without children also exhibit the comparatively lowest prevalence of pre-benefit need. While need-tested benefits provide fairly modest support for adults aged 65 or older in families without children, a separate CRS analysis found that Social Security (which is a form of social insurance) reduced the prevalence of poverty among the population aged 65 and older. Without Social Security, poverty would increase in this population by 32 percentage points.22
After counting need-tested benefits, families comprised of working-age adults ages 18 to 64 without disabilities and with no children typically experienced the greatest degree of poverty
Need-tested benefits significantly reduce the typical amount of funds that families would require to exit poverty. Figure 5 shows that without need-tested benefits, the median family with children would have required roughly $12,000 to exit poverty in 2017, and with benefits counted they would have required $6,500. Families with an adult with disabilities and with no children would have typically required roughly $9,700 to exit poverty without benefits, compared to roughly $3,900 with benefits. Other family groups experienced comparatively small differences between the typical degree of poverty with benefits and typical degree of poverty without benefits. Families comprised of working-age adults ages 18 to 64 without disabilities and with no children therefore required the most funds to exit poverty despite exhibiting a relatively low prevalence and degree of need.
After receiving need-tested benefits, families without children, an adult with disabilities, or an adult aged 65 or older would have typically required an extra $7,606 (or roughly $634 per month) to close their family poverty gap and exit poverty. These families generally tend to receive fewer benefits.23 Families without children and with an adult aged 65 or older, who is likely to benefit from Social Security, and families with adults with disabilities or with children, who are specifically targeted by benefits programs, typically experience a lesser degree of poverty.
Families with children typically experience a lower degree of poverty than families without children, adults with disabilities, or adults aged 65 or older. However, the typical degree of poverty experienced by families with children remains relatively high ($6,522, or roughly $544 a month) considering the large aggregate amount of benefits they receive.
Need-tested benefits reduced the degree of poverty most substantially among families with children
Aggregate poverty gaps depend on both the size of the population and the typical gap experienced by families in a population grouping. The varying eligibility requirements of need-tested programs produce a system in which families with pre-benefit incomes below the poverty line who have children or include individuals with disabilities experience the greatest reduction in the degree of poverty when they receive need-tested benefits.24
Figure 6 shows this result by displaying both the pre- and post-need-tested benefits poverty gap by family type in 2017. Need-tested benefits most significantly reduce the aggregate degree of poverty for families with children. These families also exhibited the greatest degree of need—as measured by the pre-benefit poverty gap—an amount that was almost twice as large as the family category with the second-greatest degree of need (families comprised of working-age adults without disabilities and with no children). However, need-tested benefits decreased the degree of poverty among families with children by such a large amount (from $116 billion to $39 billion) that, after benefit receipt, families comprised of working-age adults without disabilities and with no children (who, again, receive fewer benefits) accounted for the largest remaining poverty gap. The small benefits these families received mean that they represented 38% of the remaining poverty gap ($55 billion of the $144 billion total), the highest share of any family category. This section further shows that families without children and with an adult with disabilities experienced the second largest reduction in the degree of poverty both as a share of need and in total dollars.
How Do Need-Tested Programs Reduce Poverty Among Varying Racial and Ethnic Groups?
The impact of need-tested benefits on poverty also differs by racial identity.25 Varying eligibility requirements associated with need-tested benefits programs intersect with differing racial and ethnic groups in several ways. As previously discussed, 5 of the 10 need-tested benefits examined in this report are targeted to families with children and several also require earnings to qualify for benefits. In terms of racial/ethnic groups, a relatively large share of Hispanic families and families of multiple races living in poverty (pre-benefit) have children,26 which might qualify them for benefits. Racial groups in which families living in poverty are less likely to have a child, such as White families, are also less likely to exit poverty due to need-tested benefits, as they are less likely to qualify.
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Race and Ethnicity CRS uses responses recorded on the ASEC survey to define racial and ethnic groups. The ASEC asks respondents to self-identify as American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, or White.27 Additionally, respondents may identify as more than one race or as some other race. Hispanic ethnicity is addressed separately in another question. Therefore, persons of any racial identity can also identify as being Hispanic.28 CRS combines these two survey questions to categorize individuals according to both their race and Hispanic ethnicity. CRS categorizes Hispanic individuals as being Hispanic, regardless of their racial identity. All non-Hispanic individuals are then categorized according to their respective racial identities. Using this definition, CRS further defines the race or ethnicity of a family by the racial or ethnic composition of the family members. If one member reports a racial or ethnic identity that differs from their other family members, the family is categorized as having two or more races. If all members of the family share the same racial or ethnic identity, they are categorized as that identity. By using compositional measures to define families' racial and ethnic group, CRS can evaluate families of multiple racial and ethnic identities. For example, a family comprised entirely of Black individuals, none of whom identify as Hispanic, would be considered Black. A family comprised of both non-Hispanic Black individuals and Hispanic Black individuals would be considered two or more races. A family comprised entirely of Hispanic Black individuals would be considered Hispanic. It should be noted that this method of defining an individual's racial and ethnic group preferences Hispanic ethnicity over racial identity, which may not reflect how a respondent views their own racial and ethnic identity. |
Need-tested benefits most significantly reduced the prevalence of poverty among persons identifying as Hispanic, Black, or two or more races
Figure 7 shows that need-tested benefits reduced poverty rates for persons identifying as Hispanic, Black, or two or more races by a larger amount than for other racial identities in 2017. Varying family composition and work status, state-by-state variation in benefit administration, and take-up rates all contribute to this finding, although examination of the exact nature of these differences is beyond the scope of this report. These population groups are also those with the greatest prevalence of need—as measured by pre-benefit poverty rates. Before need-tested benefits are counted, the poverty rates would have been 30.8% for Hispanic persons, 31.6% for non-Hispanic Black persons, and 23.5% for non-Hispanics persons of two or more races. This elevated prevalence of need means that despite the varying impact of need-tested benefits on these groups, poverty is still more prevalent among persons identifying as Hispanic (19.3%), Black (18.9%), or two or more races (12.3%) than among persons identifying as White (9.0%), who receive relatively fewer benefits.29
Families comprised entirely of Asian individuals typically required the most funds to exit poverty
Need-tested benefits significantly reduce the typical amount of funds that families would require to exit poverty.
Figure 8 shows that without need-tested benefits, Hispanic families living in poverty would have typically required roughly $10,200 to exit poverty in 2017, and with benefits they would have required approximately $6,200. Black families living in poverty experienced a similar reduction. White families living in poverty would have typically required roughly $7,900 to exit poverty without benefits, and $5,300 with benefits. Asian families would have required the most funds to exit poverty, despite their relatively low prevalence and aggregate degree of poverty. Persons identifying as Asian benefit the least from the programs examined in this report, as measured by commensurate reductions in both the prevalence and degree of poverty. This may be related to the relatively low percentage of Asian families living in poverty who have both a child and a worker or an adult with disabilities, among other factors.
After receiving need-tested benefits, the typical family in most racial/ethnic groups would have required an amount closer to $5,000 to exit poverty. The exceptions were Hispanic families, with a median poverty gap of $6,169 (roughly $517 per month), and Asian families, with a median poverty gap of $9,911 (roughly $820 per month).
Need-tested benefits reduced the degree of poverty in families across racial and ethnic identities
Benefits cut the degree of poverty among Hispanic, Black, and multiple race families in half in 2017, while Asian families received relatively lower aggregate benefits in terms of dollars. Figure 9 displays these estimates. After need-tested benefits are applied, and despite large dollar reductions in the aggregate poverty gap, non-Hispanic White families represented almost half of the remaining poverty gap ($67 billion of $144 billion). This is partially a result of non-Hispanic White families being the largest racial/ethnic group.
Table 1. Percentage of Families With Children Living in Poverty, With and Without Benefits, by Racial and Ethnic Composition of Family and Overall
Based on 2017 Income and Population Data
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Race or Ethnicity |
With Need-Tested Benefits |
Without Need-Tested Benefits |
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Hispanic |
39% of Hispanic families living in poverty (after benefit receipt) had at least one child. |
49% of Hispanic families living in poverty (before benefit receipt) had at least one child. |
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Non-Hispanic Black |
24% |
35% |
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Non-Hispanic Asian |
22% |
29% |
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Non-Hispanic Two or more Races |
46% |
60% |
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Non-Hispanic White |
14% |
21% |
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Total Population |
23% |
33% |
Source: CRS analysis of the SPM using the TRIM3-adjusted 2018 ASEC to the CPS.
Notes: Families are defined as the SPM resource unit. Child is defined as any person under 18. CRS could not provide estimates for American Indian or Alaska Native (AIAN) or Hawaiian or Pacific Islander populations due to small sample sizes. This table therefore does not add up to the total population, in which AIAN and Hawaiian or Pacific Islander populations are included. Need-tested benefits data are not available for every program targeting low-income families. CRS used SSI, SNAP, refundable tax credits, housing assistance, child care subsidies, TANF, WIC, LIHEAP, and FRPL to calculate the impact of need-tested benefits.
Table 2. Percentage of Families with Children and Workers Living in Poverty, With and Without Benefits, by Racial and Ethnic Composition of Family and Overall
Based on 2017 Income and Population Data
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Race or Ethnicity |
With Need-Tested Benefits |
Without Need-Tested Benefits |
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Hispanic |
31% of Hispanic families living in poverty (after benefit receipt) have at least one child and at least one worker. |
42% of Hispanic families living in poverty (before benefit receipt) have at least one child and at least one worker. |
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Non-Hispanic Black |
14% |
25% |
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Non-Hispanic Asian |
16% |
23% |
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Non-Hispanic Two or more Races |
33% |
49% |
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Non-Hispanic White |
8% |
16% |
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Total Population |
16% |
26% |
Source: CRS analysis of the SPM using the TRIM3-adjusted 2018 ASEC to the CPS.
Notes: Families are defined as the SPM resource unit. Child is defined as any person under 18. Workers are defined as anyone age 15 or older working full or part-time for any length of time during the year. CRS could not provide estimates for American Indian or Alaska Native (AIAN) or Hawaiian or Pacific Islander populations due to small sample sizes. This table therefore does not add up to the total population, in which AIAN and Hawaiian or Pacific Islander populations are included. Need-tested benefits data are not available for every program targeting low-income families. CRS used SSI, SNAP, refundable tax credits, housing assistance, child care subsidies, TANF, WIC, LIHEAP, and FRPL to calculate the impact of need-tested benefits.
Table 3. Person-Level Poverty Metrics, With and Without Benefits, by Family Category and Overall
Based on 2017 Income and Population Data
|
Family Category |
With Need-Tested Benefits |
Without Need-Tested Benefits |
|
Adults aged 18 to 64 with disabilities and without children |
29.9% of adults aged 18 to 64 with disabilities lived in poverty, which amounts to 4.0 million people. |
43.1% of adults with disabilities aged 18 to 64 would have lived in poverty without benefits, which amounts to 5.8 million people. |
|
Children |
12.6% 9.3 million people |
25.6% 19.0 million people |
|
Adults (all ages) in families with children |
10.4% 8.7 million people |
19.8% 16.6 million people |
|
Adults aged 65 or older |
14.2% 6.8 million people |
16.7% 8.0 million people |
|
Adults aged 18 to 64 without disabilities and without children |
11.0% 11.5 million people |
12.1% 12.5 million people |
|
Total Population |
12.5% 40.3 million people |
19.2% 61.9 million people |
Source: CRS analysis of the SPM using the TRIM3-adjusted 2018 ASEC to the CPS.
Notes: Need-tested benefits data are not available for every program targeting low-income families. CRS used SSI, SNAP, refundable tax credits, housing assistance, child care subsidies, TANF, WIC, LIHEAP, and FRPL to calculate the impact of need-tested benefits.
Table 4. Person-Level Poverty Metrics, With and Without Benefits, by Racial and Ethnic Identify and Overall
Based on 2017 Income and Population Data
|
Race or Ethnicity |
With Need-Tested Benefits |
Without Need-Tested Benefits |
|
Hispanic |
19.3% of Hispanic individuals lived in poverty, which amounts to 11.4 million people. |
30.8% of Hispanic individuals would have lived in poverty without benefits, which amounts to 18.2 million people. |
|
Non-Hispanic Black |
18.9% 7.5 million people |
31.6% 12.5 million people |
|
Non-Hispanic Asian |
13.7% 2.6 million people |
18.2% 3.4 million people |
|
Non-Hispanic Two or more Races |
12.3% 780 thousand people |
23.5% 1.5 million people |
|
Non-Hispanic White |
9.0% 17.5 million people |
12.0% 25.2 million people |
|
Total Population |
12.5% 40.3 million people |
19.2% 61.9 million people |
Source: CRS analysis of the SPM using the TRIM3-adjusted 2018 ASEC to the CPS.
Notes: CRS could not provide estimates for American Indian or Alaska Native (AIAN) or Hawaiian or Pacific Islander populations due to small sample sizes. This table therefore does not add up to the total population, in which AIAN and Hawaiian or Pacific Islander populations are included. Need-tested benefits data are not available for every program targeting low-income families. CRS used SSI, SNAP, refundable tax credits, housing assistance, child care subsidies, TANF, WIC, LIHEAP, and FRPL to calculate the impact of need-tested benefits.
Table 5. Family-Level Poverty Gaps, With and Without Benefits, by Family Category and Overall
Based on 2017 Income and Population Data
|
Family Category |
With Need-Tested Benefits |
Without Need-Tested Benefits |
|
Families with children |
Families with children experienced a poverty gap of $39 billion, and the median poverty gap among these families was $6,522 |
Families with children would have experienced a $116 billion poverty gap without benefits, and the median poverty gap among these families would have been $11,958 |
|
Families without children with an adult aged 18 to 64 with disabilities |
$25 billion poverty gap $3,917 median |
$55 billion poverty gap $9,692 median |
|
Families without children with an adult aged 65 or older |
$24 billion poverty gap $3,941 median |
$33 billion poverty gap $5,319 median |
|
Families without children, an adult aged 18 to 64 with disabilities, or an adult aged 65 or older |
$55 billion poverty gap $7,606 median |
$62 billion poverty gap $8,526 median |
|
Total |
$144 billion poverty gap $5,644 median |
$267 billion poverty gap $9,241 median |
Source: CRS analysis of the SPM using the TRIM3-adjusted 2018 ASEC to the CPS.
Notes: Need-tested benefits data are not available for every program targeting low-income families. CRS used SSI, SNAP, refundable tax credits, housing assistance, child care subsidies, TANF, WIC, LIHEAP, and FRPL to calculate the impact of need-tested benefits. The aggregate poverty gap may not sum to total due to rounding.
Table 6. Family-Level Poverty Gaps, With and Without Benefits, by Racial and Ethnic Composition of Family and Overall
Based on 2017 Income and Population Data
|
Family Category |
With Need-Tested Benefits |
Without Need-Tested Benefits |
|
Non-Hispanic White |
Families comprised entirely of White individuals experienced a poverty gap of $67 billion, and the median poverty gap among these families was $5,305 |
These families would have experienced a $108 billion poverty gap without benefits, and the median poverty gap among these families would have been $7,897 |
|
Non-Hispanic Black |
$24 billion poverty gap $5,116 median |
$56 billion poverty gap $10,039 median |
|
Hispanic |
$30 billion poverty gap $6,169 median |
$62 billion poverty gap $10,182 median |
|
Non-Hispanic Asian |
$12 billion poverty gap $9,911 median |
$18 billion poverty gap $11,978 median |
|
Non-Hispanic Two or more Races |
$8 billion poverty gap $5,533 median |
$20 billion poverty gap $9,387 median |
|
Total |
$144 billion poverty gap $5,644 median |
$267 billion poverty gap $9,241 median |
Source: CRS analysis of the SPM using the TRIM3-adjusted 2018 ASEC to the CPS.
Note: CRS could not provide estimates for American Indian or Alaska Native (AIAN) or Hawaiian or Pacific Islander populations due to small sample sizes. This table therefore does not add up to the total poverty gap, in which AIAN and Hawaiian or Pacific Islander populations are included. Need-tested benefits data are not available for every program targeting low-income families. CRS used SSI, SNAP, refundable tax credits, housing assistance, child care subsidies, TANF, WIC, LIHEAP, and FRPL to calculate the impact of need-tested benefits.
Footnotes
| 1. |
Gabriel Chodrow-Reich and John Coglianese, Projecting Unemployment Durations: A Factor-Flows Simulation Approach With Application to the COVID-19 Recession, National Bureau of Economic Research, Working Paper no. 27566, July 2020. |
| 2. |
For more information, see CRS Insight IN11457, COVID-19 Pandemic's Impact on Household Employment and Income. |
| 3. |
As of the cover date of this report, unemployment rates remain elevated above pre-pandemic levels (3.6% in December 2019 compared to 5.8% in May 2021) and labor force participation remains depressed (63.0% in December 2019 compared to 61.6% in May 2021); Bureau of Labor Statistics, Employment Situation News Release, June 4, 2021, https://www.bls.gov/news.release/empsit.nr0.htm. |
| 4. |
For example, from the start of the declared national health emergency in January 2020 to January 2021 (the most recent month of data for which the programs mentioned in this footnote have available data), Supplemental Nutrition Assistance Program (SNAP) enrollment increased by roughly 5 million and Medicaid enrollment increased by roughly 10 million. SNAP: U.S. Department of Agriculture, Food and Nutrition Services, "SNAP Data Tables," June 11, 2021, https://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-snap; and Medicaid: Center for Medicaid & CHIP Services, Medicaid and CHIP Coverage Learning Collaborative, "December 2020 and January 2021 Medicaid and CHIP Enrollment Trends Snapshot," April 20, 2021, https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/downloads/december-2020-january-2021-medicaid-chip-enrollment-trend-snapshot.pdf. |
| 5. |
For more information, see CRS Insight IN11605, COVID-19 and Direct Payments: Comparison of First and Second Round of "Stimulus Checks" to the Third Round in the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2). |
| 6. |
For more information, see CRS Report R46687, Current Status of Unemployment Insurance (UI) Benefits: Permanent-Law Programs and COVID-19 Pandemic Response. |
| 7. |
For more information, see CRS Report R46681, USDA Nutrition Assistance Programs: Response to the COVID-19 Pandemic. |
| 8. |
For more information, see CRS Report R46680, The American Rescue Plan Act of 2021 (ARPA; P.L. 117-2): Title IX, Subtitle G—Tax Provisions Related to Promoting Economic Security. |
| 9. |
This report uses the year 2017 because as of June 2021 it was the latest year for which data were available to the Congressional Research Service (CRS) that corrected for the under-reporting of benefit receipt in selected need-tested benefit programs using the TRIM3 microsimulation model. |
| 10. |
Additionally, benefits can support families who live above the poverty line. These programs' eligibility rules do not align with the Supplemental Poverty Measure (SPM), which is the poverty measure used in this report. Rather, many programs determine eligibility based on the U.S. Department of Health and Human Services (HHS) Poverty Guidelines. Refundable tax credits uniquely support families who are higher up the income distribution, while the rest of the benefits are primarily disbursed to low-income families. |
| 11. |
For more information, see CRS Report R44327, Need-Tested Benefits: Estimated Eligibility and Benefit Receipt by Families and Individuals. |
| 12. |
For more on the analytical methods used for this report, see CRS Report R46824, Need-Tested Benefits: Technical Companion to Selected CRS Reports on Need-Tested Benefits Receipt by Families and Individuals. |
| 13. |
See Zachary Parolin, Megan A. Curran, and Christopher Wimer, The CARES Act and Poverty in the COVID-19 Crisis, Center on Poverty and Social Policy, June 2020, p.10, at https://www.povertycenter.columbia.edu/news-internal/coronavirus-cares-act-forecasting-poverty-estimates. |
| 14. |
Additionally, the SPM poverty thresholds are based on an analysis of consumption expenditures—expenditures and a standard of living that are partially based on income received by need-tested benefits. Here too, that standard of living is held constant. |
| 15. |
The median is the amount that divides the poverty population into two groups: one with poverty gaps less than the median, and one with poverty gaps more than the median. These groups are of equal size, meaning that half of families living in poverty have a poverty gap more than or equal to the median, and the other half have a poverty gap less than or equal to the median. The median is used because it is less affected by extreme values than is the mean (commonly called the average). |
| 16. |
In 2018, 97% of all EITC dollars went to families with children; see CRS Report R43805, The Earned Income Tax Credit (EITC): How It Works and Who Receives It. |
| 17. |
In FY2017, 68% of all SNAP participants lived in households with children. See Kathryn Cronquist and Sarah Lauffer, Characteristics of Supplemental Nutrition Assistance Program Households: Fiscal Year 2017, U.S. Department of Agriculture, Alexandria, VA, 2019, p. 37, https://www.fns.usda.gov/snap/characteristics-supplemental-nutrition-assistance-program-households-fiscal-year-2017. |
| 18. |
This report uses a definition of an individual with a work-limiting disability that is based on a method developed by the U.S. Census Bureau. An individual is considered to have a work-limiting disability if any of the following is true: (1) responded "Yes" to an ASEC question asking whether the individual has a health problem or disability that prevents working; (2) responded "Yes" to an ASEC question asking whether the individual retired or left a job for a health reason; (3) responded that the individual did not work in the month of the survey because of a disability; (4) responded to an ASEC question that the individual did not work in the prior year because of a disability; (5) was a recipient of Medicare and under age 65; or (6) was a recipient of SSI and under age 65. This corresponds to the definition of severely work disabled in the document found at https://www2.census.gov/programs-surveys/demo/guidance/disability/cpstableexplanation.pdf. Additionally, this report only considers adults who are at least 18 and under 65 as having a work-limiting disability. Adults 65 and older and children with disabilities are not categorized alongside working-age adults with disabilities. |
| 19. |
Defined in this report as anyone who is at least 18 and under 65. |
| 20. |
For more information, see CRS Report R44327, Need-Tested Benefits: Estimated Eligibility and Benefit Receipt by Families and Individuals. |
| 21. |
One factor contributing to this finding is that families without children are less likely to receive benefits. For more on this, see CRS Report R46823, Need-Tested Benefits: Who Receives Assistance? |
| 22. |
For more information, see CRS Report R45791, Poverty Among the Population Aged 65 and Older. |
| 23. |
See CRS Report R46823, Need-Tested Benefits: Who Receives Assistance? |
| 24. |
Additionally, prior CRS analysis finds that children, adults living with children, and adults with disabilities are relatively likely to receive at least one benefit. For more on this, see CRS Report R46823, Need-Tested Benefits: Who Receives Assistance? |
| 25. |
The racial identities listed in this report are taken directly from the CPS. CRS could not report results for American Indian and Alaska Native (AIAN) and Native Hawaiian and Other Pacific Islander populations because of small sample sizes in the 2018 ASEC. For these populations, estimates "based on a single-year sample would be unreliable due to the small size of the sample that can be drawn from either population." See U.S. Census Bureau, Current Population Survey, 2018 ASEC Technical Documentation, 2019, Appendix G, "Source and Accuracy Statement," https://www2.census.gov/programs-surveys/cps/techdocs/cpsmar18.pdf |
| 26. |
Forty-nine percent of Hispanic families living in poverty (before benefit receipt) had at least one child. Whether these families qualify for certain benefits also depends on their work status; 42% of Hispanic families living in poverty (before benefit receipt) had both a child and a worker. Families comprised of members of multiple races exhibited similar demographic patterns. CRS analysis of the CPS and TRIM3; see Table 1 and Table 2 in Appendix for these results. |
| 27. |
The Census Bureau is required to categorize race in this way to comply with guidance from 1997 issued by OMB. These definitions "reflect a social definition of race recognized in this country and [are] not an attempt to define race biologically, anthropologically, or genetically." For more information, see https://www.census.gov/topics/population/race/about.html. |
| 28. |
The Census Bureau is required to categorize ethnicity in this way to comply with guidance from 1997 issued by OMB. For more information, see https://www.census.gov/topics/population/hispanic-origin/about.html. |
| 29. |
For more information, see CRS Report R44327, Need-Tested Benefits: Estimated Eligibility and Benefit Receipt by Families and Individuals. |
Document ID: R46825