Poverty Measurement

The official measure used today to provide information on how many  people are “in poverty” in the United States was developed in the 1960s,  based on the cost of food at that time. HHS uses the official poverty thresholds to update  the “federal poverty guidelines” each year, which are the basis for  determining financial eligibility or funding distribution for certain low- income programs. About 80 Programs Provide an Array of Supports for Low- Income Individuals and Households

		Over $700 Billion in Federal Obligations in Fiscal Year 2013 Was Concentrated in Large Programs Aimed at Meeting Basic Needs

We identified 82 federal programs, including several tax expenditures,  that target low-income individuals, families, and communities to help them  meet basic needs or provide other assistance. In addition to the $742 billion in obligations reported in our survey, in  fiscal year 2013, the federal government incurred $14 billion in reduced  tax revenues for the nonrefundable portion of the EITC and four other tax  expenditures, according to estimates from the Department of the  Treasury (Treasury) (see table 3). Some of these recommendations have been addressed. Based on the SPM, About One-Sixth of the U.S. Population Lived in Poverty in 2013, When Considering Certain Government Benefits and Living Expenses

		SPM Provides Information on the Economic Well- Being of the U.S. Population by Taking into Account Certain Government Assistance and Living Expenses and Other Factors

In 2013, 48.7 million people in the United States (15.5 percent of the  population) lived in poverty according to the SPM, based on our analysis  of Census data (see fig. The SPM  threshold in 2013 for two adults and two children ranged from $21,397 to  $25,639, depending on their housing situation, according to Census. We found that the highest rates of poverty (SPM) were  among single parent households (30 percent) and households headed by   However, the largest numbers of  a person with a disability (29 percent).people below the SPM poverty line were in other types of households. Because program definitions and eligibility requirements vary, these  categories may not be used to determine eligibility for programs. Poverty rates were much higher for those who did not work or worked  less during the year. Program Recipients’ Income Levels and Household Characteristics Reflected Differences in Program Purpose and Design

		An Estimated One-Third of the U.S. Population Received a Low-Income Benefit at Some Time in 2012

An estimated 106 million people, or about one-third of the U.S.  population, received benefits from at least one of eight selected federal  low-income programs at some point during 2012 (see fig. Program Recipients Were Often in Households with Children and Households with Earnings

Almost two-thirds of the recipients of the eight programs combined were  in households with children, including married, cohabiting, and single  parent households (see table 6). SNAP and EITC Moved the Most People above Poverty; However, All Selected Programs Had a Majority of Recipients with Incomes above the SPM Threshold after Accounting for Benefits

Each of the eight programs lifted a number of recipients above the SPM  threshold, ranging from 340,000 (LIHEAP) to nearly 8.7 million (SNAP)  (see fig. Research Suggests Selected Programs Have Generally Encouraged Labor Force Participation and Had Mixed Effects on Hours Worked

The receipt of benefits from means-tested low-income programs (i.e.,  those with financial eligibility tests for individuals or families) may affect  an individual’s willingness to seek and accept employment in two key  ways. The EITC, in particular, has  increased incentives for people with children to join the labor force, based  on our review of studies. Additionally, a worker is not necessarily able to control the  number of hours he or she works in response to different marginal tax  rates, given constraints in work schedules or other factors such as child  care. For example, not all labor supply behavior can be  found in data. Research also shows that inherent policy trade-offs exist for means- tested benefit programs attempting to meet multiple objectives. Appendix I: Objectives, Scope, and Methodology

The objectives of this report were to examine: (1) what federal programs  (including tax expenditures) are targeted to low-income individuals; (2)  what are the number and selected household characteristics of people in  poverty based on the Supplemental Poverty Measure (SPM); (3) what are  the incomes (as a percent of the SPM) and household characteristics of  people receiving benefits from selected programs; and (4) what is known  about how selected low-income programs affect work incentives? Specifically, we:  reviewed relevant federal laws, regulations, and agency guidance;  and interviewed agency officials;  collected information on 82 federal low-income programs by surveying  13 federal agencies that administer these programs; analyzed 2013 data from Census Bureau’s (Census) Current  Population Survey (CPS) to describe low-income households; analyzed 2012 data, the most recent available, from the Transfer  Income Model, version 3 (TRIM3) microsimulation model maintained  by the Urban Institute to describe recipients of eight large federal low- income programs; and  conducted an economic literature review on work incentives and  disincentives related to assistance from selected federal low-income  programs. These criteria  were developed by the Congressional Research Service (CRS), which  has maintained a list of low-income programs for many years. States may supplement the federal  benefit. Nutrition assistance benefits. The Additional Child Tax Credit is the refundable portion of the Child Tax Credit.
Why GAO Did This Study

The federal government provides assistance aimed at helping people with low-incomes who may earn too little to meet their basic needs, cannot support themselves through work, or who are disadvantaged in other ways. With fiscal pressures facing the federal government and the demands placed on aid programs, GAO was asked to examine federal low-income programs.
This report (1) describes federal programs (including tax expenditures) targeted to people with low incomes, (2) identifies the number and selected household characteristics of people in poverty, (3) identifies the number, poverty status, and household characteristics of selected programs' recipients, and (4) examines research on how selected programs may affect incentives to work. For a list of low-income programs that were $100 million in obligations or more in fiscal year 2013, GAO consulted with the Congressional Research Service; surveyed and interviewed officials at relevant federal agencies; and reviewed relevant federal laws, regulations, and agency guidance. GAO also conducted analyses on low-income individuals using Census data on the SPM and official poverty measure and microsimulation data from the Urban Institute that adjusts for under-reporting of benefit receipt in Census survey data. To examine labor force effects, GAO reviewed economic literature. Selected low-income programs were large in dollars and helped meet a range of basic needs.
GAO is not making new recommendations in this report. GAO clarified portions in response to comments from one agency.

What GAO Found

More than 80 federal programs (including 6 tax expenditures) provide aid to people with low incomes, based on GAO's survey of relevant federal agencies. Medicaid (the largest by far), the Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), and the refundable portion of the Earned Income Tax Credit (EITC) comprised almost two-thirds of fiscal year 2013 federal obligations of $742 billion for these programs. Aid is most often targeted to groups of the low-income population, such as people with disabilities and workers with children. Survey responses showed that criteria used to determine eligibility vary greatly; most common were variants of the federal poverty guidelines, based on the Census Bureau's official poverty measure.
In 2013, 48.7 million people (15.5 percent), including many households with children, lived in poverty in the United States, based on Census's Supplemental Poverty Measure (SPM). This measure takes into account certain expenses and federal and state government benefits not included in the official poverty measure. The SPM is not used to determine program eligibility; however, it does provide more information than the official measure on household resources available to meet living expenses. In 2013, the SPM poverty threshold ranged from $21,397 to $25,639 for a family of four, depending on housing situations. Based on six mutually exclusive household types GAO developed, individuals in a household headed by a person with a disability or a single parent had the highest rates of poverty using the SPM, while childless or married parent households had larger numbers of people in poverty using the SPM.
In 2012, the most recent year of data available, GAO estimated that 106 million people, or one-third of the U.S. population, received benefits from at least one or more of eight selected federal low-income programs: Additional Child Tax Credit, EITC, SNAP, SSI, and four others. Almost two-thirds of the eight programs' recipients were in households with children, including many married families. More than 80 percent of recipients also lived in households with some earned income during the year. Without these programs' benefits, GAO estimated that 25 million of these recipients would have been below the SPM poverty threshold. Of the eight programs, EITC and SNAP moved the most people out of poverty, however, the majority of recipients of each of the programs were estimated to have incomes above the SPM threshold, after accounting for receipt of benefits.
Research suggests that assistance from selected means-tested low-income programs can encourage people's participation in the labor force, but have mixed effects on the number of hours they work. Changes in certain low-income programs through the years, including the EITC, have enhanced incentives for people to join the labor force, according to studies. While workers who receive means-tested benefits face benefit reductions as their earnings rise, research shows that various factors limit how much people change their work behavior in response. For example, people may not be aware of such changing interactions in a complex tax and benefit system or be able to control the number of hours they work, according to studies. Research also shows that enhancing work incentives can create difficult policy trade-offs, including raising program costs or failing to provide adequate assistance to those in need.