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Percent
30
Figure 6-5
Trends in Market and Post-Tax, Post-Transfer
Poverty, 1967–2012
25
20
Market SPM
(Pre-Tax and Pre-Transfer)
15
10
5
Supplemental Poverty Measure
(Post-Tax and Post-Transfer)
0
1967 1977 1987 1997 2007
Source: Wimer et al (2013).
expansion of the safety net spurred by the War on Poverty, and hovered
around that level until the Great Recession when it increased to 12.7 percentage
points in 2012.
Despite an increase in “market poverty” of 4.5 percentage points
between 2007 and 2010, the actual SPM poverty rate rose only 0.5 percentage
points due to the safety net. In fact, the 2009 Recovery Act reduced poverty
by 1.7 percentage points in 2010 through its extensions to the safety net as
discussed below. Overall, for the entire 45-year period, the poverty decline
of 9.8 percentage points is almost entirely accounted for by the increased
effectiveness of the safety net. 22
Figure 6-6 shows a similar analysis of the effect of the safety net on
trends in deep poverty and highlights two important features of the safety
net often overlooked. First, the safety net improves the well-being of many
more individuals than is reflected in the standard accounting of how many
individuals are lifted from poverty: in 2012, about one in twenty (5.3 percent)
Americans lived in deep poverty, yet without government transfers the
number would be closer to one in five (18.8 percent).
Second, the safety net almost entirely eliminates cyclical swings in the
prevalence of deep poverty. Figure 6-6 shows that despite large increases in
22 As described earlier, the underreporting of government income and benefits means that this
is likely to be a conservative lower-bound estimate of the effect of the safety net.
244 | Chapter 6