Economic Security Programs Reduce Poverty and Inequality

A report from the Center on Budget and Policy Priorities, “Economic Security Programs Reduce Overall Poverty, Racial and Ethnic Inequities,” shows that economic security programs significantly reduce poverty and poverty disparities across racial and ethnic lines, lifting a higher percentage of Black and Latino individuals out of poverty than whites. Despite this finding, Black and Latino individuals still experience poverty at much higher rates than white individuals. To address these disparities, CBPP calls for strengthened economic security programs, including expanding housing assistance, TANF, tax credit programs, and SNAP.

Using the Supplemental Poverty Measure, which accounts for additional forms of individual income and expenses compared to the Official Poverty Measure, the researchers examine how government assistance and taxes influenced poverty rates and disparities in poverty across racial and ethnic lines in 1970 to 2017.

The researchers found that economic security programs have become more effective at both reducing poverty and narrowing racial and ethnic disparities. In 1970, government programs reduced the white poverty rate by 2 percentage points and the Black poverty rate by 4 percentage points. Meanwhile, these programs and taxes increased the poverty rate among Latinos by 3 percentage points because tax payments outweighed government benefits. In 2017, government assistance programs lowered both the white and Latino poverty rate by 12 percentage points and the Black poverty rate by 16 percentage points. Despite these improvements, significant racial and ethnic disparities persist. After accounting for government assistance programs, Black and Latino individuals still experience poverty at double the rate of white individuals. Ten percent of white individuals experienced poverty in 2017, compared to 21% of Black individuals and 20% of Latino individuals.

Economic security programs have also greatly reduced poverty rates among children. In 1970, assistance programs and taxes slightly increased poverty among white and Latino children, and reduced poverty among Black children by 3.7 percentage points. In 2017, government assistance and taxes reduced poverty among all children by 11.8 percentage points, with greater reductions among Black and Latino children. The programs reduced poverty among Black and Hispanic children by 20.4 and 16.1 percentage points, respectively, compared to 7.4 percentage points among white children.

Despite these improvements, further actions are needed to reduce poverty rates and racial and ethnic disparities. CBPP estimates that two packages of policy proposals from the National Academies of Sciences would cut child poverty rates and racial and ethnic disparities among children in half. The proposals include expanding housing vouchers and food assistance, strengthening the earned income tax credit and childcare assistance programs, providing a universal childcare allowance, and increasing the minimum wage. CBPP notes that along with strengthening these programs, the government must commit to addressing discrimination and its impacts to directly target systemic disparities. These policy solutions are even more pressing today, given the economic impact of COVID-19, which has disproportionately affected Black and Latino households.

The report can be found at: