For anyone who thinks that poverty among seniors is a thing of the past, the data released this morning by the U.S. Census Bureau should serve as a wake-up call. Under the Census Bureau’s more comprehensive Supplemental Poverty Measure (SPM), the rate of poverty among Americans 65 and older is 54 percent higher than under the official poverty measure (14.6 percent v. 9.5 percent). Over 6.5 million seniors—more than one in seven—cannot afford to meet their basic needs.
The increase in the percentage of seniors in deep poverty—living below half of the poverty line—is even more dramatic. Under the SPM, the deep poverty rate for seniors is 78 percent higher than under the official measure (4.8 percent v. 2.7 percent).
In contrast, poverty rates for children are lower under the SPM than under the official poverty measure. Their poverty rate is 19 percent lower under the SPM than under the official poverty measure (16.4 percent v. 20.4 percent)—and their deep poverty rate is 53 percent lower (4.4 percent v. 9.3 percent).
Why are the poverty rates for seniors and children so different under the SPM than under the official poverty measure?
The SPM is a more comprehensive measure of economic security than the official poverty measure. On the income side, the SPM takes into account non-cash benefits such as the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) and after-tax income such as the Earned Income Tax Credit. On the expense side, it takes into account such items as out-of-pocket medical expenses, work expenses, and tax payments, which affect the income an individual or family has available to meet basic needs. The SPM also updates the poverty thresholds and takes account of geographic differences.
For seniors, the main reason that poverty rates are higher rate under the SPM is that the SPM takes account of out-of-pocket medical costs, which consume a much greater share of seniors’ budgets. (The addition of non-cash benefits and tax credits as income has only a small effect in reducing poverty among seniors; income from Social Security and Supplemental Security Income benefits are already counted in the official poverty measure.)
For children, the main reason that the poverty rates are lower under the SPM is that the SPM counts income from refundable tax credits; the second most important factor is counting SNAP benefits as income. The drop in poverty—and especially deep poverty—among children highlights the importance of safety net programs in reducing poverty. But the SPM also shows that even so, children are the age group at the highest risk of poverty.
Lawmakers, take note: Social Security and safety net programs that can lift vulnerable Americans out of poverty need to be strengthened—not cut.