Anti-Poverty Effect of the Supplemental Nutrition Assistance Program Presented by Laura Wheaton and Elaine Waxman The Urban Institute January 22, 2018

Introduction SNAP helps low-income families with the purchase of food Provides a nutritional and health benefit Enables more resources to be spent on other necessities SNAP anti-poverty effect: Not captured in the official poverty measure Included in Census Bureau’s Supplemental Poverty Measure (SPM) SNAP effect is understated due to underreporting of SNAP in survey data Our estimates adjust for the underreporting of SNAP and other benefits in the survey data

Outline of Talk Supplemental Poverty Measure (SPM) SNAP anti-poverty effects Census Bureau SPM estimates Underreporting of SNAP in survey data Our estimates – correcting for underreporting of SNAP Overall and subgroup effects Effect of Full Participation Context and Discussion

Supplemental Poverty Measure

Supplemental Poverty Measure (SPM) Produced annually by the Census Bureau as a supplement to the official poverty measure Designed to overcome shortcomings of the official poverty measure: Includes value of non-cash benefits (e.g., SNAP) Subtracts non-discretionary expenses (e.g., taxes, child care, and other work expenses) Reflects geographic variation in housing costs Uses poverty thresholds based on recent consumption data

SPM Threshold Family is “poor” if resources are below the SPM threshold 2015 SPM threshold (2 adults and 2 children) $25,930 (own with mortgage) $21,806 (own without mortgage) $25,583 (rent) Adjusted for geographic differences in housing costs and for number of adults and children in the family

Estimating the Anti-Poverty Effect of SNAP Are family resources below the SPM threshold? Yes, family is poor No, family is not poor Subtract SNAP from resources. Is family poor now? If Yes, family is counted as removed from poverty by SNAP

Estimating the Anti-Poverty Effect of SNAP Poverty rate “with SNAP” = the share of the population that is poor under the standard SPM poverty definition (SNAP is included in resources) Poverty rate “without SNAP” = the share of the population that would be poor in the absence of SNAP (SNAP is excluded from resources)

SNAP anti-poverty effects

2015 SPM Poverty Rates with and without SNAP (Census Bureau) Source: Liana Fox. "The Supplemental Poverty Measure: 2016, Current Population Reports." US Census Bureau.

Underreporting of SNAP Census Bureau estimates use data from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC). Source of the official poverty estimates SNAP and other means-tested benefits are substantially underreported in the CPS ASEC. Therefore, the anti-poverty effects of SNAP are also understated in the Census Bureau estimates.

Underreporting of SNAP in CPS ASEC (2015) Source: FNS National Data Bank and authors’ tabulations of the 2016 CPS ASEC. Note: Excludes disaster assistance and benefits in the US Territories. Data are for calendar year 2015.

The TRIM3 Model A microsimulation model of government programs Simulates over a dozen benefit, tax, and health programs Real-world rules or hypothetical rules Primary funding from HHS/ASPE; ASPE holds the copyright Maintained/developed at Urban Institute Primary data source: CPS ASEC; an ACS version has been developed under foundation funding

SNAP After Correction for Underreporting (2015) Source: FNS National Data Bank and TRIM3 Note: Excludes disaster assistance and benefits in the US Territories. Data are for calendar year 2015.

SNAP Anti-Poverty Effect, Before and After Correction for Underreporting Source: Liana Fox. "The Supplemental Poverty Measure: 2016, Current Population Reports." US Census Bureau. Authors’ calculations based on the 2016 Current Population Survey, Annual Social and Economic Supplement and the Transfer Income Model, Version 3.

Poverty Rate with and without SNAP, by Age Source: Transfer Income Model, Version 3.

Poverty Rate with and without SNAP by Race/Ethnicity Source: Transfer Income Model, Version 3

Poverty Rate with and without SNAP by Work/Disability Status of Adults in the Family Source: Transfer Income Model, Version 3.

Poverty Rate with and without SNAP by Region Source: Transfer Income Model, Version 3.

Poverty Rate with and without SNAP by Metro Status Source: Transfer Income Model, Version 3. Note: The results by metropolitan area status exclude about 2.8 million people whose metropolitan status is not identified in the public use CPS ASEC.

Deep Poverty “Deep Poverty” is defined as having SPM resources below 50 percent of the SPM poverty threshold. Example: $12,792 for 2 adult 2 child family that rents their home additional adjustment for geographic variation in housing costs.

Deep Poverty Rate with and without SNAP by Age Group Source: Transfer Income Model, Version 3.

Poverty Gap The “poverty gap” is the total amount of resources that would be necessary to move all poor families up to the SPM poverty threshold. Reduction in poverty gap due to SNAP: Poverty gap (in absence of SNAP) minus Poverty gap (with SNAP)

Reduction in Poverty Gap from SNAP, 2015

Effect of Full Participation

Effect of Full Participation To simulate full participation in SNAP, we: Assign SNAP to all persons found eligible for SNAP by TRIM3, regardless of whether they are participating in the “baseline” simulation Recalculate SPM poverty, including the additional SNAP benefits

Poverty Rate in Absence of SNAP, with Baseline SNAP, and with Full Participation in SNAP, By Age, 2015 Source: Transfer Income Model, Version 3.

Deep Poverty Rate in Absence of SNAP, with Baseline SNAP, and with Full Participation, By Age, 2015 Source: Transfer Income Model, Version 3.

Share of pre-SNAP Poverty Gap Filled, Baseline SNAP and Full Participation Source: Transfer Income Model, Version 3.

Context and Discussion

Findings This study finds that: Other research has found that: SNAP has a substantial anti-poverty effect Much of SNAP’s anti-poverty potential (under current rules) has been achieved, although some additional potential remains (especially for the elderly) Other research has found that: SNAP participation may reduce childhood food insecurity as much as 12.8 percent Food insecurity can interfere with childhood development and increases the likelihood of poor health outcomes in children and adults

Policy Context The President’s FY 2018 budget calls for reduced SNAP spending: Reducing waivers of time limits for able bodied adults without dependents who do not meet work requirements Eliminating broad based categorical eligibility Capping the benefit at the six-person amount Eliminating the minimum benefit Changing the standard utility allowance Requiring states to pay 25 percent of SNAP benefits The 2018 Farm Bill (which funds SNAP) will likely also include changes to scale back SNAP

Urban Analysis of Administration’s FY18 Budget

Annual Resource Loss from Major Safety Net Programs

Annual Family Resource Loss by Program

Policy Context Others call for preserving and expanding upon the current program. For example, H.R. 1276, the Closing the Meal Gap Act of 2017 would: Base the SNAP benefit on the Low-Cost Food Plan (rather than the Thrifty Food Plan) Eliminate the cap on the excess shelter expense deduction Authorize a standard medical expense deduction for households with an elderly or disabled member Raise the minimum benefit to $25 per month Exempt able-bodied adults without dependents from time limits unless they are offered a position in a SNAP Employment and Training Program

Contact Elaine Waxman: EWaxman@urban.org Laura Wheaton: LWheaton@urban.org Poverty estimates from this presentation will be included in a forthcoming brief by Laura Wheaton and Victoria Tran. Trump FY18 analysis of safety net changes can be found at https://www.urban.org/sites/default/files/publication/94831/the-impact-of-proposed-2018-changes-to-key-safety-net-programs-on-family-resources.pdf Forthcoming brief on SNAP and retail meal costs coming February 2018.