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October 25, 2013

Social Security Keeps 22 Million AmericansOut Of Poverty: A State-By-State Analysis

By Paul N. Van de Water, Arloc Sherman, and Kathy A. Ruffing1

Social Security benefits play a vital role in reducing poverty. Without Social Security, 22.2 millionmore Americans would be poor, according to the latest available Census data (for 2012). Although

most of those whom Social Security keeps out of poverty are elderly, nearly a third are under age 65,including 1 million children. (See Table 1.) Depending on their design, reductions in Social Securitybenefits could significantly increase poverty, particularly among the elderly.

Social Security Lifts 15

Million Elderly Americans

Out of Poverty

Almost 90 percent of people aged65 and older receive some of theirfamily income from Social Security.2Without Social Security benefits,44.4 percent of elderly Americanswould have incomes below theofficial poverty line, all else beingequal; with Social Security benefits,only 9.1 percent do. These benefitslift 15.3 million elderly Americansincluding 9.0 million womenabove the poverty line.

Social Security reduces elderlypoverty dramatically in every state in

the nation, as Figure 1 and Table 2show. Without Social Security, the poverty rate for those aged 65 and over would meet or exceed 40percent in 39 states; with Social Security, it is less than 10 percent in the large majority of states.Social Security lifts more than 1.2 million elderly people out of poverty in California and Florida,

1 The authors wish to thank William Chen for his assistance in preparing this paper.

2Policy Basics: Top Ten Facts About Social Security, Center on Budget and Policy Priorities, November 6, 2012,http://www.cbpp.org/cms/index.cfm?fa=view&id=3261.

Table 1

Effect of Social Security on Poverty, 2012

Age Group Percent in Poverty

Number Lifted Out

Of Poverty

By Social Security

Excluding

Social

Security

Including

Social

Security

Children

Under 1823.2 21.8 1,021,000

Adults Ages

18-6416.7 13.7 5,886,000

Elderly Age 65

And Over44.4 9.1 15,281,000

Total, All Ages 22.1 15.0 22,188,000

Addendum:

Women Age 65

And Over48.6 11.0 9,005,000

Source: Center on Budget and Policy Priorities based on data from the U.S.

Census Bureau, Current Population Survey, March 2013.

820 First Street NE, Suite 510Washington, DC 20002

Tel: 202-408-1080Fax: 202-408-1056

center@cbpp.orgwww.cbpp.org

http://www.cbpp.org/cms/index.cfm?fa=view&id=3261http://www.cbpp.org/cms/index.cfm?fa=view&id=3261http://www.cbpp.org/cms/index.cfm?fa=view&id=3261

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nearly 900,000 in New York andTexas, almost 800,000 inPennsylvania, and over half amillion in Ohio, Illinois, Michigan,and North Carolina.

Social Security Lifts1 Million Children

Out of Poverty

Social Security is important forchildren and their families as well asfor the elderly. About 6 millionchildren under age 18 (8 percent ofall U.S. children) lived in familiesthat received income from SocialSecurity in 2012, according to

Census data. This figure includeschildren who received their ownbenefits as dependents of retired,disabled, or deceased workers, aswell as those who lived with parentsor relatives who received SocialSecurity. In all, Social Security lifts1 million children out of poverty.

Social Security records show that3.3 million children under age 18qualified for Social Securitypayments themselves in December2012. (See Table 3.) Of these, 1.2million were the survivor of adeceased worker. Another 1.7million received payments becausetheir parent had a severe disability.And 322,000 children under 18received payments because theirparent or guardian was retired.3

Technical Note

This analysis uses the CensusBureaus official definition ofpoverty. In determining poverty status, the Census Bureau compares a familys cash income beforetaxes with poverty thresholds that vary by the size and age of the family. The poverty thresholds in2012 were $11,011 for an elderly individual, $13,878 for an elderly couple, and $23,492 for an

3 Social Security Administration,Annual Statistical Supplement to the Social Security Bulletin, 2013, Table 5.J10.

Figure 1

Social Security Reduces Number

Of Elderly Poor in Every State

Source: Center on Budget and Policy Priorities based on data from theU.S. Census Bureau, Current Population Survey, March 2011-2013.

Estimates are an average for 2010-2012.

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average family of four.4 To calculate the anti-poverty effects of Social Security, we determined eachfamilys poverty status twice first excluding and then including the familys Social Securitybenefits.

Our analysis considers the non-institutionalized population using data from the Census BureausCurrent Population Survey (CPS), the survey that is used to produce official poverty estimates.5

Each March the CPS collects information on personal income, health coverage, and other social andeconomic characteristics for the previous year. The national estimates reported here are for 2012.The state-by-state estimates are based on a three-year average (for 2010, 2011, and 2012) to improvetheir reliability.

One critic of estimates such as these argues that they do nothing to answer the question of whatwould have happened if Social Security had not existed.6 Indeed, this analysis does not take intoaccount other changes that would occur in the absence of Social Security. If Social Security did notexist, many elderly individuals likely would have saved somewhat more and worked somewhatlonger, and many might live with their adult children rather than in their own households. Otherstudies confirm, however, that Social Security has made a very large contribution to reducing

poverty and that cutting Social Security benefits could substantially increase poverty among theelderly.7

4 Poverty thresholds depend on the size of the family and the ages of its members; this figure is a weighted average for

families of four. For more information, seehttp://www.census.gov/hhes/www/poverty/data/threshld/index.html.5 U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2012, Series P60-245, September2013.

6 Charles P. Blahous III, Reforming Social Security for Ourselves and Our Posterity, Westport, CT: Praeger, 2000, p. 13.

7 Eugene Smolensky, Sheldon Danziger, and Peter Gottschalk, The Declining Significance of Age in the United States: Trends inthe Well-Being of Children and the Elderly Since 1939, in John L. Palmer, Timothy Smeeding, and Barbara Boyle Torrey, eds.,The Vulnerable, Washington: Urban Institute, 1988; Gary V. Engelhardt and Jonathan Gruber, Social Security and the

Evolution of Elderly Poverty, National Bureau of Economic Research Working Paper 10466, May 2004.

http://www.census.gov/hhes/www/poverty/data/threshld/index.htmlhttp://www.census.gov/hhes/www/poverty/data/threshld/index.htmlhttp://www.census.gov/hhes/www/poverty/data/threshld/index.htmlhttp://www.census.gov/hhes/www/poverty/data/threshld/index.html

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Table 2

Effect of Social Security on Poverty Among the Elderly by State, 2010-2012Percent in Poverty Number Lifted Out of

Poverty by Social Security

Excluding Social Security Including Social Security

Alabama 47.7 7.8 255,000

Alaska 35.1 9.2 16,000

Arizona 42.4 8.5 295,000

Arkansas 55.1 11.9 194,000

California 38.1 8.8 1,284,000

Colorado 39.6 7.6 191,000

Connecticut 35.9 6.3 145,000

Delaware 41.6 7.5 47,000

District of Columbia 34.7 16.2 14,000

Florida 46.4 9.7 1,223,000

Georgia 46.9 9.4 383,000

Hawaii 33.8 8.5 51,000

Idaho 44.2 7.4 80,000

Illinois 43.1 8.3 585,000

Indiana 46.5 8.0 347,000

Iowa 48.5 5.9 168,000Kansas 40.0 6.0 135,000

Kentucky 53.2 9.0 250,000

Louisiana 49.9 14.3 208,000

Maine 44.4 8.1 76,000

Maryland 35.5 7.8 203,000

Massachusetts 42.0 7.8 328,000

Michigan 46.3 7.6 550,000

Minnesota 44.7 7.4 264,000

Mississippi 53.5 11.8 165,000

Missouri 46.6 6.5 340,000

Montana 44.8 8.2 62,000

Nebraska 38.9 7.0 76,000

Nevada 42.2 9.1 114,000

New Hampshire 44.2 6.4 68,000

New Jersey 37.9 7.4 365,000

New Mexico 42.0 9.7 96,000

New York 44.5 11.3 886,000

North Carolina 52.6 10.4 559,000

North Dakota 42.0 8.6 28,000

Ohio 46.5 7.8 638,000

Oklahoma 42.0 8.3 174,000

Oregon 41.6 5.7 194,000

Pennsylvania 48.4 8.9 773,000

Rhode Island 46.1 8.3 60,000

South Carolina 51.5 12.5 254,000

South Dakota 44.5 8.0 41,000

Tennessee 54.8 12.1 372,000Texas 43.1 10.7 871,000

Utah 42.6 7.1 100,000

Vermont 46.3 7.7 36,000

Virginia 36.6 10.4 262,000

Washington 38.2 6.2 281,000

West Virginia 51.9 9.9 110,000

Wisconsin 41.8 5.2 296,000

Wyoming 38.6 6.0 22,000

Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2011-2013.

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Table 3

Social Security Beneficiaries by State and Age, December 2012Total Age 65 and Older Age 18-64 Children Under Age 18

Alabama 1,060,625 647,359 332,545 80,721

Alaska 84,875 55,585 21,595 7,695

Arizona 1,141,080 820,651 258,497 61,932

Arkansas 657,754 410,353 196,912 50,489

California 5,280,104 3,839,895 1,165,435 274,774

Colorado 748,595 540,025 169,479 39,091

Connecticut 640,252 484,396 125,810 30,046

Delaware 182,065 129,769 43,021 9,275

District of Columbia 77,277 53,597 19,198 4,482

Florida 4,004,631 2,939,422 871,059 194,150

Georgia 1,582,070 1,031,445 440,813 109,812

Hawaii 240,456 184,086 44,688 11,682

Idaho 288,285 201,302 70,527 16,456

Illinois 2,102,955 1,513,697 477,449 111,809

Indiana 1,244,610 844,162 325,071 75,377

Iowa 600,699 445,043 129,908 25,748

Kansas 507,529 362,172 116,721 28,636

Kentucky 930,153 564,601 297,145 68,407

Louisiana 826,385 524,420 236,222 65,743

Maine 314,392 211,908 84,857 17,627

Maryland 895,225 649,913 195,624 49,688

Massachusetts 1,185,319 841,846 277,068 66,405

Michigan 2,061,941 1,373,208 566,014 122,719

Minnesota 927,488 678,095 206,853 42,540

Mississippi 621,969 375,448 193,952 52,569

Missouri 1,212,560 812,991 325,490 74,079

Montana 203,292 145,328 47,718 10,246

Nebraska 317,489 235,858 66,337 15,294

Nevada 442,298 316,633 101,439 24,226

New Hampshire 271,189 186,216 67,947 17,026

New Jersey 1,525,539 1,132,456 315,809 77,274

New Mexico 382,365 258,328 98,692 25,345

New York 3,394,475 2,411,519 800,013 182,943

North Carolina 1,859,584 1,245,926 505,134 108,524

North Dakota 122,104 92,648 24,265 5,191

Ohio 2,204,313 1,537,362 549,935 117,016

Oklahoma 730,060 491,540 190,131 48,389

Oregon 757,029 544,547 180,178 32,304

Pennsylvania 2,660,380 1,894,316 630,363 135,701

Rhode Island 210,975 147,745 51,847 11,383

South Carolina 986,228 650,230 275,287 60,711

South Dakota 159,453 119,385 32,829 7,239

Tennessee 1,322,096 859,269 376,536 86,291

Texas 3,657,907 2,505,687 900,555 251,665

Utah 346,961 244,907 77,007 25,047

Vermont 135,597 94,295 34,067 7,235

Virginia 1,353,738 949,743 327,999 75,996

Washington 1,164,430 832,234 276,720 55,476

West Virginia 455,850 285,570 141,441 28,839

Wisconsin 1,110,160 789,938 266,819 53,403

Wyoming 96,294 69,518 21,658 5,118

Totala. 56,758,185 39,613,754 13,885,983 3,258,448

Source: Social Security Administration,Annual Statistical Supplement, 2013, Table 5.J5. a.Includes outlying areas and foreigncountries (not shown).