820 First Street NE, Suite 510 Washington, DC 20002 Tel: 202-408-1080 Fax: 202-408-1056 center@cbpp.org www.cbpp.

org

October 25, 2013

Social Security Keeps 22 Million Americans Out Of Poverty: A State-By-State Analysis

By Paul N. Van de Water, Arloc Sherman, and Kathy A. Ruffing1 Social Security benefits play a vital role in reducing poverty. Without Social Security, 22.2 million more Americans would be poor, according to the latest available Census data (for 2012). Although most of those whom Social Security keeps out of poverty are elderly, nearly a third are under age 65, including 1 million children. (See Table 1.) Depending on their design, reductions in Social Security benefits could significantly increase poverty, particularly among the elderly.

Social Security Lifts 15 Million Elderly Americans Out of Poverty

Almost 90 percent of people aged 65 and older receive some of their family income from Social Security.2 Without Social Security benefits, 44.4 percent of elderly Americans would have incomes below the official poverty line, all else being equal; with Social Security benefits, only 9.1 percent do. These benefits lift 15.3 million elderly Americans including 9.0 million women above the poverty line.

Table 1

Effect of Social Security on Poverty, 2012

Age Group Percent in Poverty Excluding Including Social Social Security Security 23.2 16.7 44.4 22.1 48.6 21.8 13.7 9.1 15.0 11.0 Number Lifted Out Of Poverty By Social Security

Children Under 18 Adults Ages 18-64 Elderly Age 65 And Over Total, All Ages Addendum: Women Age 65 And Over

1,021,000 5,886,000 15,281,000 22,188,000 9,005,000

Source: Center on Budget and Policy Priorities based on data from the U.S. Social Security reduces elderly Census Bureau, Current Population Survey, March 2013. poverty dramatically in every state in the nation, as Figure 1 and Table 2 show. Without Social Security, the poverty rate for those aged 65 and over would meet or exceed 40 percent in 39 states; with Social Security, it is less than 10 percent in the large majority of states. Social Security lifts more than 1.2 million elderly people out of poverty in California and Florida,

1 2

The authors wish to thank William Chen for his assistance in preparing this paper.

Policy Basics: Top Ten Facts About Social Security , Center on Budget and Policy Priorities, November 6, 2012, http://www.cbpp.org/cms/index.cfm?fa=view&id=3261.

nearly 900,000 in New York and Texas, almost 800,000 in Pennsylvania, and over half a million in Ohio, Illinois, Michigan, and North Carolina.

Figure 1

Social Security Reduces Number Of Elderly Poor in Every State

Social Security Lifts 1 Million Children Out of Poverty

Social Security is important for children and their families as well as for the elderly. About 6 million children under age 18 (8 percent of all U.S. children) lived in families that received income from Social Security in 2012, according to Census data. This figure includes children who received their own benefits as dependents of retired, disabled, or deceased workers, as well as those who lived with parents or relatives who received Social Security. In all, Social Security lifts 1 million children out of poverty. Social Security records show that 3.3 million children under age 18 qualified for Social Security payments themselves in December 2012. (See Table 3.) Of these, 1.2 million were the survivor of a deceased worker. Another 1.7 million received payments because their parent had a severe disability. And 322,000 children under 18 received payments because their parent or guardian was retired.3

Technical Note

U.S. Census Bureau, Current Population Survey, March 2011-2013. This analysis uses the Census Estimates are an average for 2010-2012. Bureaus official definition of poverty. In determining poverty status, the Census Bureau compares a familys cash income before taxes with poverty thresholds that vary by the size and age of the family. The poverty thresholds in 2012 were $11,011 for an elderly individual, $13,878 for an elderly couple, and $23,492 for an

Source: Center on Budget and Policy Priorities based on data from the

Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2013, Table 5.J10.

average family of four.4 To calculate the anti-poverty effects of Social Security, we determined each familys poverty status twice first excluding and then including the familys Social Security benefits. Our analysis considers the non-institutionalized population using data from the Census Bureaus Current Population Survey (CPS), the survey that is used to produce official poverty estimates.5 Each March the CPS collects information on personal income, health coverage, and other social and economic characteristics for the previous year. The national estimates reported here are for 2012. The state-by-state estimates are based on a three-year average (for 2010, 2011, and 2012) to improve their reliability. One critic of estimates such as these argues that they do nothing to answer the question of what would have happened if Social Security had not existed.6 Indeed, this analysis does not take into account other changes that would occur in the absence of Social Security. If Social Security did not exist, many elderly individuals likely would have saved somewhat more and worked somewhat longer, and many might live with their adult children rather than in their own households. Other studies confirm, however, that Social Security has made a very large contribution to reducing poverty and that cutting Social Security benefits could substantially increase poverty among the elderly.7

Poverty thresholds depend on the size of the family and the ages of its members; this figure is a weighted average for families of four. For more information, see http://www.census.gov/hhes/www/poverty/data/threshld/index.html.
4

U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2012 , Series P60-245, September 2013.
5 6 7

Charles P. Blahous III, Reforming Social Security for Ourselves and Our Posterity , Westport, CT: Praeger, 2000, p. 13.

Eugene Smolensky, Sheldon Danziger, and Peter Gottschalk, The Declining Significance of Age in the United States: Trends in the Well-Being of Children and the Elderly Since 1939, in John L. Palmer, Timothy Smeeding, and Barbara Boyle Torrey, eds., The Vulnerable, Washington: Urban Institute, 1988; Gary V. Engelhardt and Jonathan Gruber, Social Security and the Evolution of Elderly Poverty, National Bureau of Economic Research Working Paper 10466, May 2004.

Table 2

Effect of Social Security on Poverty Among the Elderly by State, 2010-2012

Percent in Poverty Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Excluding Social Security 47.7 35.1 42.4 55.1 38.1 39.6 35.9 41.6 34.7 46.4 46.9 33.8 44.2 43.1 46.5 48.5 40.0 53.2 49.9 44.4 35.5 42.0 46.3 44.7 53.5 46.6 44.8 38.9 42.2 44.2 37.9 42.0 44.5 52.6 42.0 46.5 42.0 41.6 48.4 46.1 51.5 44.5 54.8 43.1 42.6 46.3 36.6 38.2 51.9 41.8 38.6 Including Social Security 7.8 9.2 8.5 11.9 8.8 7.6 6.3 7.5 16.2 9.7 9.4 8.5 7.4 8.3 8.0 5.9 6.0 9.0 14.3 8.1 7.8 7.8 7.6 7.4 11.8 6.5 8.2 7.0 9.1 6.4 7.4 9.7 11.3 10.4 8.6 7.8 8.3 5.7 8.9 8.3 12.5 8.0 12.1 10.7 7.1 7.7 10.4 6.2 9.9 5.2 6.0 Number Lifted Out of Poverty by Social Security 255,000 16,000 295,000 194,000 1,284,000 191,000 145,000 47,000 14,000 1,223,000 383,000 51,000 80,000 585,000 347,000 168,000 135,000 250,000 208,000 76,000 203,000 328,000 550,000 264,000 165,000 340,000 62,000 76,000 114,000 68,000 365,000 96,000 886,000 559,000 28,000 638,000 174,000 194,000 773,000 60,000 254,000 41,000 372,000 871,000 100,000 36,000 262,000 281,000 110,000 296,000 22,000

Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2011-2013.

Table 3

Social Security Beneficiaries by State and Age, December 2012

Total Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Totala. 1,060,625 84,875 1,141,080 657,754 5,280,104 748,595 640,252 182,065 77,277 4,004,631 1,582,070 240,456 288,285 2,102,955 1,244,610 600,699 507,529 930,153 826,385 314,392 895,225 1,185,319 2,061,941 927,488 621,969 1,212,560 203,292 317,489 442,298 271,189 1,525,539 382,365 3,394,475 1,859,584 122,104 2,204,313 730,060 757,029 2,660,380 210,975 986,228 159,453 1,322,096 3,657,907 346,961 135,597 1,353,738 1,164,430 455,850 1,110,160 96,294 56,758,185 Age 65 and Older 647,359 55,585 820,651 410,353 3,839,895 540,025 484,396 129,769 53,597 2,939,422 1,031,445 184,086 201,302 1,513,697 844,162 445,043 362,172 564,601 524,420 211,908 649,913 841,846 1,373,208 678,095 375,448 812,991 145,328 235,858 316,633 186,216 1,132,456 258,328 2,411,519 1,245,926 92,648 1,537,362 491,540 544,547 1,894,316 147,745 650,230 119,385 859,269 2,505,687 244,907 94,295 949,743 832,234 285,570 789,938 69,518 39,613,754 Age 18-64 332,545 21,595 258,497 196,912 1,165,435 169,479 125,810 43,021 19,198 871,059 440,813 44,688 70,527 477,449 325,071 129,908 116,721 297,145 236,222 84,857 195,624 277,068 566,014 206,853 193,952 325,490 47,718 66,337 101,439 67,947 315,809 98,692 800,013 505,134 24,265 549,935 190,131 180,178 630,363 51,847 275,287 32,829 376,536 900,555 77,007 34,067 327,999 276,720 141,441 266,819 21,658 13,885,983 Children Under Age 18 80,721 7,695 61,932 50,489 274,774 39,091 30,046 9,275 4,482 194,150 109,812 11,682 16,456 111,809 75,377 25,748 28,636 68,407 65,743 17,627 49,688 66,405 122,719 42,540 52,569 74,079 10,246 15,294 24,226 17,026 77,274 25,345 182,943 108,524 5,191 117,016 48,389 32,304 135,701 11,383 60,711 7,239 86,291 251,665 25,047 7,235 75,996 55,476 28,839 53,403 5,118 3,258,448

Source: Social Security Administration, Annual Statistical Supplement, 2013, Table 5.J5. a. Includes outlying areas and foreign countries (not shown).