India’s path to prosperity: Book talk with Raghuram Rajan on ‘Breaking the Mold’


India’s path to prosperity: Book talk with Raghuram Rajan on ‘Breaking the Mold’


Behind the numbers: Millions seeking a path out of poverty

homeless person laying on bench
Editor's note:

This op-ed originally appeared in Spotlight on Poverty.

Today, the U.S. Census Bureau reported that 39.7 million Americans experienced poverty last year – statistically the same as last year. In order to effectively craft policies to combat poverty, we need to know exactly who is poor – not just whether their pre-tax income falls below a given number.  Millions of Americans – including children and their parents, senior citizens, people with disabilities, and workers – make up the national number of people living in poverty.

Each year, the U.S. Census Bureau calculates how many people overall in the United States were living in poverty in a given year by both the official and supplemental poverty measure. Specifically, the official poverty measure utilizes a formula (pre-tax income must be less than the current value of three times a minimum food diet in 1963 adjusted by family composition), that determines whether family is below the poverty threshold.

At 12.3 percent, the official rate of poverty in the U.S. was statistically significantly lower in 2017, down .4 percentage points from 2016. 7 million fewer people were living in poverty in 2017 than at the Great Recession-era peak of 46.7 million in 2014.

Although the official poverty measure may be imperfect, this designation of who is officially poor in the U.S. remains consequential. The official poverty measure matters because where a household falls relative to official poverty guidelines determines eligibility for dozens of federal programs.

For the past several years, I have worked with my colleagues at The Hamilton Project to produce an annual update characterizing those who are living below the official poverty line—with a particular focus on working-age adults. Today, we learn in broad strokes who lived below the poverty line in 2017.

12.8 million children lived in poverty.

3.5 million fewer children lived in poverty than at the depths of the Great Recession in 2010. The share of children in poverty continues to decline; children made up a smaller share (32.2 percent) of those in poverty than at any point in the past 30 years. This is a welcome development, but children still represent an unacceptably large share of those in poverty given that we know that childhood is a time for indispensable and cost-effect investments.

4.7 million senior citizens lived in poverty.

Senior citizens are decreasingly likely to live in poverty, but because the U.S. population is aging, the number of senior citizens living in poverty will likely continue to increase. Senior women are twice as likely to experience poverty as men; a recent Hamilton Project at Brookings proposal recommends that Social Security beneficiaries be permitted to voluntarily forgo some benefits to in exchange for an enhanced benefit in the event of one’s own disability or the death of a spouse.

3.8 million working-age adults with a disability lived in poverty.

The share of working-age adults in poverty – who reported not working due to disability – has doubled in the past 30 years, rising from a 10.9 percent share of the working-age poor in 1986 to a 20.5 percent share in 2016. A quarter of working-age adults with a disability lived in poverty in 2017. Different policy solutions are required for those who are not capable of achieving economic self-sufficiency through work than for those who are, including reforming and modernizing disability insurance programs.

2.4 million worked full-time all year and lived in poverty.

In 2016, there were more than two million Americans who worked full-time all year, but did not earn enough to work their way out of poverty. In 2017, that number was statistically the same.

One culprit? Stagnant wages. There has been little growth in the real median hourly wages of American workers in the past forty years, with increases at the top masking alarming wage stagnation at the bottom. From 1979 to 2016, real wages shrunk by 1 percent for the bottom quintile but grew by 27 percent for the top.

5.7 million worked less than full-time and lived in poverty.

Even as the economy regains and (for now) maintains its strength, those struggling to find sufficient work cannot work their way out of poverty. Involuntary part-time work – including being unable to find a full-time job, slack work, seasonal work, or having a job that started or ended during the week – spiked during the Great Recession to two million workers, but dropped to 980,000 in 2017. While the number of people living in poverty working less then full-time is statistically significantly lower than in 2016, in 2017, one-in-three of those working less than full-time, was working part-time involuntarily.

For those who consider work as the surest path from poverty – and there is broad agreement that no one who works full-time should be poor – social and safety net policy should provide incentives to work. This could include tax policies that reward earned income and increasing federal and state minimum wages. It should not include work requirements for receiving SNAP or Medicaid. The poorly designed work requirements and administratively burdensome verification systems currently being considered in the Farm Bill for SNAP and by states for Medicaid are likely to penalize workers while drawing few new workers into the labor force.

Instead, the evidence has shown us that a job market which delivers more full-time positions and increases the wage returns to work would reduce poverty, in part by providing opportunity for those living in poverty who are unemployed or are working part-time, but would rather be working full-time. Nevertheless, it is imperative that safety net programs continue to function effectively in order to bridge the gaps when jobs are scarce, including during economic downturns or when a worker experiences volatility that is symptomatic of the low-wage labor market.

Poverty is a complex problem. Even as we debate the different ways to measure and reduce poverty, we know that far too many Americans are living in poverty in the United States. 39.7 million, officially.