In 2014, Vulnerable Populations Made Up 80% of the Poor

The Census released the microdata for the Supplemental Poverty Measure (SPM). Here's what is shows.

Market Poverty

At the market distribution of income (defined as total SPM income minus transfers plus taxes), 85.9 million Americans were below the supplemental poverty line. This is a poverty rate of 27.2%.

Here is how those 85.9 million people breakdown among eight life status categories (where categories overlap, people are placed in the first category they qualify for starting from the top):

Children and eldery make up slightly more than half of the market poor. Add in the disabled (temporary and permanent) and it goes to two-thirds. Together, identifiable vulnerable populations (those who are not Fully Employed or Other) make up around 83% of the market poor. Although I didn't do further analysis here, at least some (and probably many) of the Fully Employed and Other find themselves in poverty only because they are living with and supporting a vulnerable dependent.

The market poverty rate for each of these populations is as follows:

As you can see, every category except able-bodied, fully employed adults has quite high poverty rates at the market distribution. Non-elderly disabled people fare the worse with a market poverty rate of nearly 54%.

Disposable Poverty

When we bring in the tax-and-transfer system, and get to disposable income, the poverty level falls to 48.3 million, or 15.3%. Thus, under this specification, taxes and transfers are cutting poverty by 37.6 million, or 44%.

Here is how these 48.3 million break down using the same life status categories as above:

Even at the disposable income distribution, it is vulnerable populations (those not Fully Employed or Other) who make up around 80% of the poor.

Here are the actual poverty rates (light blue) put up against the market poverty rates from above (blue) for each life status:

The elderly and disabled get the biggest help, thanks to Social Security. Children around the poverty line also get a decent boost, mainly from nutrition programs (food stamps, WIC, school lunch), the Earned Income Tax Credit, and to a lesser degree the Child Tax Credit.

There are a number of policy changes that could bring these light blue bars down even further. A tighter labor market could increase employment, reduce the length of the spells of unemployment, and increase wages. That would pluck off some people from the Fully Employed and Unemployed pile, as well as some of their vulnerable dependents. That's certainly worth doing, but it's effect would be relatively modest up againt the overall poverty problem.

The other thing to do is increase welfare benefits to vulnerable populations, i.e. children, elderly, disabled, students, carers and the unemployed. Some of these benefits would work by directly increasing the disposable income of vulnerable people or their families. Others, like paid leave and child care, would also work by increasing the employment rate, in addition to increasing disposable incomes (under SPM, child care benefits would count as a disposable income increase).

In short, then, the main way forward is full employment and generous welfare.

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