Advertisement

The Poverty Rate Doesn’t Include Much Anti-Poverty Spending

When contemplating the rising poverty rate in the face of the economic downturn, it’s important to keep in mind that one crucial quirk of the way the Census Bureau calculates the poverty rate is that the value of things like food stamps and Medicaid isn’t counted in considering whether a family is above or below the line. If the government enacted a pure cash transfer, like higher EITC benefits, that would show up as lifting some families out of poverty. But if the government increases spending on non-cash anti-poverty programs, then whatever benefits those programs have doesn’t count unless they indirectly serve to boost the recipients’ market wages. This is defensible in many cases, but hardly in all of them. SNAP (“food stamps”) in particular is extremely cash-like. It’s not as good as a pure cash transfer, but it’s difficult to make the case that a family receiving an extra $50 in SNAP value isn’t clearly better off than it was before the increase in SNAP benefits.

This is important because an increase in SNAP benefit levels is something the 111th Congress enacted and President Obama signed into law back in 2009. In other words, the real evolution of living standards at the low end in the United States isn’t as bad as a cursory look at the press release would have you believe and the incremental improvement is entirely thanks to a progressive public policy intervention.

Advertisement