How much does the social safety net help?

By
  • Megan Juelfs-Swanson, PhD student
in StatChat

When it comes to the social safety net, myths and half-truths, rather than reality, often shape our conception of who depends on the net and the value of these programs. It is easy to lose sight of what these programs do for families, especially if one lives in a household that has never qualified for a program. Mitt Romney, a smart and well-informed person, infamously stated that 47 percent of Americans “believe the government has the responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it.” But the reality isn’t so simple. Advocates of the social safety net countered Romney’s argument by highlighting that many of those people were seniors who had paid into the system, or individuals who are currently working, but needed help to make ends meet.

When our understanding of the social safety net relies on myths and incomplete truths, it distorts our public conversation about the place of these programs in our society, and our obligation—or lack of obligation—to those households using the programs.

In an attempt to provide a better picture of the social safety net I graphed median annual benefits for 12 social safety programs against a household’s resources or wages.

Watching the chart shift from household resources (see below for description) to household wages gives some sense of the combined contributions from the social safety net. This shift is not an indication of what each individual program provides in a household, but rather the combined benefits. For a household receiving Social Security (large orange dot), their household resources would include the benefit from the retirement program plus their benefit from Medicare and any other programs they would receive.

By Household Resources

When we talk about household resources, it includes the cash and in-kind benefits from the social safety net while subtracting any tax liabilities and other expenses necessary to work (such as childcare). Thus, households receiving social security (large orange dot) have nearly $20,000/year in resources because they receive that program. Likewise, families that claim the Earned Income Tax Credit (brown dot, near left side) have a household income of around $28,000/year after they have been credited with that tax return, which is typically around $2,000.

There are three interesting items to note on this chart:

  • Supplemental Nutrition Assistance Program (SNAP, formerly food stamps – pink dot) – SNAP is a “guaranteed” program, meaning that if a household applies for the benefit and meets the eligibility requirements, they will receive benefits. This means that the program expands and contracts as economic conditions change. While SNAP participation has grown since 2007, it is still smaller than many of the safety net programs (circle size is based on the number of households receiving the program).
  • Unemployment Insurance (UI—yellow dot) – As a benefit designed to bridge jobs, easing the financial strain on workers after a layoff as they look for further employment, the household resources associated with this benefit are the second highest on the chart. This reflects the wages of these households before and/or after their time of unemployment. The roughly $4,400 provided to these families allows then to pay rent or a mortgage and for other basic necessities so their spell of unemployment is not compounded by eviction or lack of electricity.
  • Temporary Assistance to Needy Families (TANF, formerly welfare – small dark green dot)—Despite complaints about “welfare queens,” TANF is the safety net program that assists the smallest number of households. This is, in part, because TANF is a “budgeted” program, meaning that people can only receive benefits as long as there is money left in the budget. The program does not expand its roster if there are more people in the population struggling with poverty.

By Household Wages

Looking at program assistance by wages removes the value of the assistance provided by the social safety net programs. This is clear when looking at households receiving Social Security (orange dot), which shows no income from wages. Since this is a retirement benefit, the lack of wages in these households is no surprise. The same is also true for households receiving Medicare (light blue dot) and Supplemental Security Insurance (light purple dot).

  • Many people using the safety net are working. Social Security, Medicare, and Supplemental Security Insurance (disability insurance) aside, 89 percent of households receiving safety net benefits do have some form of earned income in the previous year.
  • Energy and Housing Programs (Energy: small, dark blue dot; Housing: small, maroon dot)—Both the energy and housing programs are given primarily to households that have no earned income. This is partially explained by the overlap of safety net benefits. Almost half of either program—42 percent for energy and 46 percent for housing—also benefit from Social Security, Medicare, or Supplemental Security Insurance. As such, we would not expect individuals in these households to be working, given their age and abilities.

Over the next few weeks, I am going to look more closely at the social safety net and the resources that we, as a country, commit to it. I hope it will inform public debate, and help dispel some myths and half truths.

 

Data: 2013 Current Population Survey, using variables created by the U.S. Census Bureau to for their Supplemental Poverty Measure.