A new policy brief finds the number of American households living on $2 or less per person, per day, a metric typically meant to measure poverty in developing nations, reached 1.46 million households in 2011. The brief is part of a series issued by the National Poverty Center (NPC) at the University of Michigan in conjunction with Harvard University’s Kennedy School of Government.
The authors analyzed data from the Census Bureau’s Survey of Income and Program Participation (SIPP) on households with children whose household income was at or below the SIPP’s household-specific monthly poverty thresholds. Authors use the term “extremely poor” and adapted one of the World Bank’s measures of global poverty to define it: $2 or less, per person, per day in total household income in a given month. The time period covered in this analysis is 1996 (the year welfare reform was enacted in the US) to 2011.
The authors find a sharp increase in the prevalence of extreme poverty between 1996 and 2011. This increase appears to be concentrated among those groups most affected by the cuts to cash assistance as a result of welfare reform. The authors found that the number of households living on $2 or less per person, per day in a given month grew from about 636,000 in 1996 to approximately 1.46 million households in early 2011, an increase of 130%.
Although cash assistance has dropped off, certain in-kind benefits have become more widely available, namely the Supplemental Nutrition Assistance Program (SNAP), formerly the Food Stamp program. More flexible eligibility requirements for SNAP and a surge in need due to tough economic times have meant SNAP participation has grown from a monthly average of 25.5 million recipients in 1996 to 45.2 million in June 2011. When SNAP benefits are counted as income for poor households, the apparent rise in extreme poverty is much less dramatic. When SNAP benefits are considered equivalent to income, the number of households living on less than $2 per person per day was roughly 800,000 (compared to 1.46 million excluding SNAP) in 2011, an increase of 67% (compared to an increase of 130% excluding SNAP) from 1996.
The report finds particularly strong evidence of SNAP’s positive impact when the program was expanded as a part of the American Recovery and Reinvestment Act (ARRA). The number of households in extreme poverty appears to have spiked between 2008 and 2011 when only cash income is considered, but remains virtually unchanged if SNAP benefits are considered equivalent to cash.
An estimated 2.8 million children lived in extreme poverty at the beginning of 2011, which is 16% of all children in poverty. When SNAP is factored in, the number is 1.4 million children. The report concludes that the in-kind safety net, which includes housing assistance, is valuable to households with children, but still leaves far too many behind. The authors found that, “At the beginning of 2011, roughly one-in-five households in extreme poverty utilized a housing subsidy such as section 8 vouchers or public housing units (comparable to the proportion of all households in poverty).”
To read the full report, Extreme Poverty in the United States, 1996 to 2011, National Poverty Center Policy Brief #28, February 2012, online here.