Social Security Reduces Elderly Poor By 11.4 Million, Study Finds
WASHINGTON - One in two elderly Americans would live below the poverty line were it not for Social Security, according to a new study by the Center on Budget and Policy Priorities, a liberal Washington think-tank.
The study, which includes the first state-by-state comparison of Census Bureau Social Security figures, found that the retirement benefit program reduced the number of elderly living in poverty in the United States from 15.3 million to 3.8 million.
The state-by-state figures indicate that Social Security benefits lift more than 250,000 elderly out of poverty in 14 states and over 100,000 in 33 states.
"When you look at the data from the individual states, it is surprising how important Social Security is around the nation. It's not just the South or the Midwest, but these benefits are reducing the numbers of elderly living in poverty by substantial percentages in every state," said Wendell Primus, Director of Income Security Studies for the Center and head researcher for the study.
Combining Census data from 1993 to 1997 for forty-three states, the study found that without Social Security benefits, 47.6 percent of the 32 million elderly people in the United States would be living in poverty.
The study adopted the federal government income thresholds of $7,698 in annual earnings for an individual and $9,712 for a couple as its definition of poverty.
In California, the largest state by population, Social Security lowered the number of elderly people living in poverty from 1.45 million to 421,000. The one million people lifted from poverty represents 31 percent of all people age 65 years and up in the state.
In Florida, Social Security reduced the number of elderly poor people by nearly 900,000, from nearly 1.2 million to slightly less than 300,000, and lowered the poverty rate from 48.7 percent to 11.7 percent. About three of every four elderly women in Florida would live in poverty without Social Security.
In another example, Social Security reduced the proportion of elderly New Yorkers living in poverty from 50 percent to 15.1 percent, lifting more than 800,000 elderly people from poverty.
The study compared data for forty-three states, leaving out the District of Columbia and seven states with elderly populations too small to provide a reliable sample: Alaska, Delaware, Montana, North Dakota, South Dakota, Vermont and Wyoming.
As a corollary to the main report, the Center also compiled a state-by-state fact sheet. Both the main report text and links to each of the state fact sheets can be found on the Internet at http://www.cbpp.org/4-8-99socsec.htm.
The study, "Social Security and Poverty Among the Elderly," found Social Security's effects in shrinking poverty to be the most striking among elderly women. Seven million of the 11.4 million elderly people whom Social Security lifted out of poverty in 1997 were women.
"Social Security represents a solid foundation on which many workers build their retirement funds. For most elderly women, it is not just the foundation, it is the whole house," said Evelyn Morton of the American Association of Retired Persons.
Without Social Security benefits, 52.6 percent of all elderly women were earning wages below the poverty line in 1997, compared to 40.8 percent of elderly men, the study said.
"These features of Social Security are of particular importance because elderly women receive substantially less income than elderly men do from other sources, such as earnings, pensions, and investments. Elderly women have fewer financial assets than elderly men," said Kathryn Porter, the study's principal author.
Social Security provides special protections for widows, spouses whose average earnings during their working years were low because they were paid low wages or missed years of work during childcare, and divorced spouses who were married at least 10 years and have not remarried, Porter said.
The study reported that while women receive 53 percent of Social Security retirement and survivor benefits, they pay only 38 percent of Social Security payroll taxes. Benefits cut the gap between poverty rates for elderly women and elderly men by one-half, the study found.
The study also found that poverty among elderly people in minority racial and ethnic groups was higher than that among white elderly. In 1997, 46.3 percent of white elderly were poor before receipt of Social Security, while 59.9 percent of black elderly and 54.9 percent of Hispanic elderly were poor before receipt of benefits.
"This is an unsurprising finding. Many of those who are old today worked for years before the passage of civil rights laws, when wage differentials between races were even higher than today. It also reflects the fact that many Hispanic elderly emigrated to the United States too late in life to amass a sufficient number of years of employment to qualify for substantial benefits," said Robert Greenstein, executive director of the Center on Budget and Policy Priorities.
While acknowledging the fact that the Center hopes the study will give them a larger voice in the debate over ensuring Social Security solvency, Greenstein stressed that the numbers are taken directly from Census Bureau data.
"While we do think these figures have a place in the debate, there are no manipulations, no assumptions, and no regressive analyses. What we're trying to show is the importance of Social Security to the elderly in our nation," Greenstein said.
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