More Safety Net Programs Could Aid Escape from Deep Poverty

Ann Stevens
Ann Huff Stevens

With assistance such as food stamps, tax credits and utility and housing discounts, more than two-thirds of those in “deep poverty” escape within a year, but nearly a quarter return to poverty at some point, half of those in five years. The findings point to the effectiveness and further need for safety net programs that provide a boost out of poverty.

Those are the findings in a new policy brief released by the Center for Poverty Research at the UC Davis College of Letters and Science, “Safety Net Enables Faster, More Permanent Exit from Deep Poverty.”

“We often think of the safety net as helping individuals avoid poverty, but it may be even more powerful in helping move individuals out of poverty more quickly,” said the brief’s author, Ann Huff Stevens, professor of economics and deputy director of the center.  “This is especially true for some families living well below the official poverty line.”

“Deep poverty” is defined as having an income less than half of the official poverty threshold, or, for a family of three in 2017, living with annual income of less than $9,758, Stevens said. That accounts for 5.7 percent of the population, or 18.5 million individuals, according to the U.S. Census Bureau. To look at the persistence of deep poverty, Stevens used data from the Panel Study of Income Dynamics, focusing on the survey years between 1985 and 2015.

The usual definition of poverty in the U.S. does not include in-kind benefits (such as food stamps or housing assistance) or after-tax benefits (such as the earned income tax credit). Particularly at the low levels of income that define deep poverty, ignoring such benefits, along with known problems of underreporting of income in survey data, can give a misleading picture of deep poverty.  In this new research, Stevens modifies the usual poverty definition to include in-kind and after-tax benefits.

“The existing safety net provides important benefits to the poorest families in the U.S. While some worry that the safety net might encourage long-term dependency, this research shows, to the contrary, that available safety net programs help shorten the time U.S. families spend in deep poverty,” Stevens said.

Furthermore, poverty affects members of ethnic groups and single women more than white men. “While deep poverty is a relatively rare occurrence, it is far more likely among children, single-parent families and racial minorities,” Stevens said. Blacks, she said, have an overall lower rate of exit from deep poverty than other groups. Households headed by single white women, additionally, maintain a state of deep poverty of about 3.5 years, similar to households headed by black men.

Households headed by single black women that find themselves in deep poverty will spend more time, or nearly half the next decade, in deep poverty after falling into that state, according to Stevens.

Poverty, or deep-poverty, is often a concern, but long-term deep poverty brings particular risks to affected families and children.  This research shows that there is a substantial minority of the deep poverty population who will remain there for many years, but existing safety-net programs significantly reduce the number exposed to long-term deep poverty.

Karen Nikos-Rose, news and media relations specialist. Originally posted on the UC Davis Egghead blog