White House Points to Poverty Reduction

TANF, WIC and SSI–federal programs that provide income and nutrition to low-income families – are more effective at reducing poverty in rural areas. But for the poorest families in rural America, Social Security is the most effective at reducing child poverty.

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The federal program most associated with supporting senior citizens is the one that does an outsized job of reducing poverty among rural children, according to a report from the White House.

“Social Security plays a particularly large role in alleviating deep child poverty in rural areas, reducing deep poverty by nearly one-half (nearly double its effect in urban areas),” according to the report, released today by the White House Office of Economic Advisers.

The study says Social Security payments reduce the overall rural child poverty rate by 18.1 percent. In contrast, in urban areas, Social Security reduces the child poverty rate by 10.2 percent.

Previous studies by the Daily Yonder have shown that rural areas receive a larger share of their income from Social Security payments than urban areas do. But Social Security’s impact on children may not be obvious, given that most of us associate Social Security with retirement benefits.

Child-poverty reduction comes mostly through two parts of Social Security that are not related to retirement benefits, the report said. These are the survivor benefit, which goes to children of a deceased parent, and the disability program, which provides payments to the severely disabled. Rural children are more likely to benefit from each of these programs than urban ones.

On the other hand, rural children are less likely than urban ones to live with an older adult who is receiving Social Security retirement benefits, the study said.

The information was included in the White House report focusing on rural children’s poverty.

“Rural and tribal communities face distinct challenges, including limited access to critical services, fewer job prospects, and in some places, relative lack of institutional capacity,” the report says.

This spring the White House launched “Rural Impact,” which the report describes as “an effort to address the challenge of rural child poverty by bringing together federal agencies and public and private resources.”

The report lists the Obama administration’s efforts to support a variety of anti-poverty efforts in education, healthcare, and economic development. Proposals include providing universal pre-K education, expanding access to child care, and improving medical services.

The report also promotes a particular focus of the Obama administration – raising the minimum wage.

“By raising the minimum wage to $10.10 per hour, as some states have done, full-time workers earning exactly the minimum wage would see their earnings increase by $5,700—enough to move a family of four above the poverty line once tax credit assistance is included,” according to the report. The Council of Economic Advisers says such an increase in the minimum wage would raise 1.6 workers and their families out of poverty.

The report also lists another of the president’s national initiatives, the effort to provide free community college to qualified students. The report notes that rural students are more likely to attend a community colleges and that a lower percentage of rural adults have a college degree.

The Economic Advisers estimated the poverty-reducing power of various federal income-assistance programs by measuring what poverty levels would be if the programs did not exist. The difference between the current poverty rate and the theoretical poverty rate without the safety-net program is a measurement of the programs’ impact on reducing poverty.

The study uses the “supplemental poverty measure,” rather than the standard federal poverty measure. The supplemental measure takes into account variables like cost of living, which tends to be lower in rural areas.

Rural child poverty is greater than urban child poverty when measured with the regular federal poverty definition. But rural child poverty is lower than the urban figure using the supplemental poverty measurement.

The poverty reduction rates for children in “deep poverty” are shown in the graph at the top of this article. The raw numbers for all people living in poverty are in Table 2 below. Note that in the table, in every case the raw poverty numbers are lower for rural populations, but the rate of reduction can be greater or lower for rural children, depending on the program.

The biggest child-poverty reductions in the study come from tax credits like the Earned Income Tax Credit and the Child Care Tax Credit. In this category of poverty-reduction programs, urban areas benefit slightly more than rural ones.

SNAP rounds out the top three income-support program in change in poverty reduction it provides.

The top row shows the curren supplemental poverty measurement rate. The other lines show what that poverty rate would be if the programs did not exist, according to the study. (Click chart to enlarge)

 

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