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Social Security, the Nation's Most
Effective Safety Net Program, Keeps More than 800,000 Elderly New
Yorkers Out of Poverty
As the nation debates
the future of Social Security, the phenomenal impact of Social
Security on the economic well-being of the elderly should be at the
forefront of all discussions. A new analysis of Census Bureau data
by the Washington, D.C.-based Center on Budget and Policy Priorities
measures the impact of Social Security on the elderly population.
Pooling the five most recent years of data from the Census Bureau's
Current Population Survey, the Center has estimated poverty rates
with and without Social Security benefits for the elderly in 43
states, including New York.
Without Social Security, over one
million elderly New Yorkers would have incomes below the official
poverty line. With Social Security benefits added to income, the
number of elderly poor is reduced by 812,000 to just over 350,000.
When other governmental programs (e.g., Supplemental Security
Income, food stamps, and housing subsidies) are taken into account,
the number of poor elderly New Yorkers falls even further to
223,000.
New York's Elderly Poverty
Rate is Cut Significantly by Social Security
One half of New York's elderly
population would be poor if it were not for Social Security and
other government programs. When Social Security benefits are taken
into consideration, New York's elderly poverty rate (for the
1993-1997 period) falls to 15.1%. When other government programs are
considered, the elderly poverty rate is reduced further to 9.6%. For
the United States as a whole, the comparable figures are 12.6% and
9.4%.
The official elderly poverty rate
for the United States as a whole, as published by the U.S. Census
Bureau, has averaged 11.1% over this same period. This official
poverty rate falls between the two poverty rates used in this report
because the income measure used by the Census Bureau includes all
governmental cash transfers (Social Security plus other income
transfer programs) but does not include noncash benefits such as
food stamps and housing subsidies. See Methodological
Notes.
While Social Security benefits are
not sufficient to bring the income of all elderly persons above the
poverty line, Social Security is still important for the elderly
whose incomes remain below that level. If it were not for Social
Security, the poorest of the elderly would fall even further below
the poverty line. In fact, Social Security makes up a very
substantial proportion of the incomes of the elderly. Nationwide,
Social Security constitutes 80% of the income of the elderly in both
the lowest and the next lowest quintiles.
Social Security is the Most
Important Safety Net Program for Elderly New
Yorkers
A combination of federal, state and
local programs supplements the incomes of New York's elderly
population. Although the other government programs are significant,
Social Security is clearly the most important anti-poverty program
for the elderly. More than 80% of the elderly lifted from poverty by
government programs in New York, are kept from poverty by Social
Security benefits, reducing the elderly poverty rate from 50% to
15.1%. All other programs combined account for another 17% of the
elderly removed from poverty by government programs, reducing New
York's elderly poverty rate to 9.6%.
Importance for Elderly
Women
The majority of elderly people
lifted from poverty by Social Security are women. More than half a
million elderly New York women are pulled out of poverty by Social
Security benefits. The poverty rate of elderly women in New York
falls from 55.4% to 18.9% when Social Security benefits are counted.
About two-thirds of elderly women who otherwise would be poor -- 66%
-- are removed from poverty by Social Security. Another 117,000
elderly women's incomes are increased above the poverty level by
other government programs, reducing the poverty rate for elderly
women in New York to 12.1%.
Elderly Poverty Rates Have
Fallen While Child Poverty Rates Have Risen
The power of Social Security in
lifting the elderly out of poverty is underscored by comparing the
long term trends in the elderly and child poverty rates. Prior to
the enactment of Social Security, poverty was widespread among the
nation's elderly. Even 30 years ago, the elderly were more likely to
live in poverty than the population as a whole. In 1966, 28.5% of
the elderly in the United States had incomes below the poverty line,
compared with 14.7% of the general population and 17.6% of children.
By 1997 the national poverty rate for the elderly had fallen to
10.5% while the child poverty rate was 19.9% and the overall poverty
rate was 14.7%.
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Methodological Notes
For the purposes of this report, estimates of the
impact of Social Security on elderly poverty were calculated
for New York using U.S. Census Bureau data from the Current
Population Surveys for 1993, 1994, 1995, 1996, and 1997. Five
years of data were used to increase sample sizes and therefore
the accuracy of the estimates.
To determine whether an individual or family is
poor, that person's or family's income is compared to the
official poverty line for a household of that type and size as
published annually by the Census Bureau. In 1998 the official
poverty line for an elderly individual was $8,480 per year
while the poverty line for a two-person family with an elderly
householder was $9,873. The poverty lines for elderly
individuals and two-person families with elderly householders
are slightly lower than the poverty lines for non-elderly
individuals and two-person families with non-elderly
householders.
The official poverty rates for households of
different types and sizes, as determined and published by the
Census Bureau, are based on a definition of income that
includes all cash payments received by an individual or
family, whether from earnings, government benefits, or any
other source. The analysis presented in this report compares
three measures of income (all of which differ from the
definition of income used by the Census Bureau to calculate
the official poverty statistics) to calculate the following
three poverty measures:
- "Poverty Before Social Security" is estimated by
comparing the official poverty thresholds to a measure of
income which excludes all government benefits except those
from social insurance programs other than Social Security --
primarily, unemployment insurance, worker's compensation,
federal pensions, some types of veterans payments, and a few
other small programs.
- "Poverty After Social Security" is calculated by
adding Social Security benefits to the income measure used
in the Poverty without Social Security calculation and
comparing this measure of income to the official thresholds.
- "Poverty After All Government Programs" is
estimated by comparing the poverty thresholds to a measure
of income that includes not only Social Security and other
social insurance programs but nearly all government benefits
(other than health insurance) as well, including cash
assistance and benefits provided in forms other than cash,
such as food stamps and housing subsidies. This measure
encompasses cash assistance provided by state and local
governments, including general assistance to individuals
without children, special state-funded cash aid for
immigrants, and state supplements to the federal
Supplemental Security Income program. Medical insurance
programs such as Medicare and Medicaid are not included as
income in this measure because these programs provide
insurance protection rather than benefits that can be used
for basic living expenses like food or rent. When the
poverty line was set, it did not take into account the costs
of medical care. If medical insurance programs were counted
as income, the poverty line would have to be adjusted to
compensate. The definition of income used in this measure,
which counts major non-cash benefits other than health
insurance as income, is similar to that recommended for
measuring poverty by an expert panel of the National Academy
of Sciences in 1995.
As mentioned above, in calculating the official
poverty rate, the Census Bureau uses a definition of income
which includes cash income from all sources. Therefore, the
official poverty rate will be lower than "Poverty After Social
Security" as estimated in this report but greater than
"Poverty After All Government Programs." In 1997, for the U.S.
as a whole, the official elderly poverty rate was 10.5% which
is less than the "Poverty After Social Security" rate of 11.9%
but greater than the "Poverty After All Government Programs"
rate of 9.0%. |
For
additional information or for additional copies of this report,
contact the
Fiscal
Policy Institute
One Lear Jet Lane
Latham, NY 12110
(518)
786-3156. |
