NYPN Members: 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.

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%.

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%.

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%.

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%.