(WITHDRAWN) Poverty and the Safety Net Among Rural Families: Decomposing Changes over Time

Background

Since 2000 an increasing number of rural children in American have grown up in poverty (Council of Economic Advisors, 2015). Explanations for the increase tend to center on income inequality, changes to family composition (Hertz & Farrigan, 2016) and changes to the economy and labor markets. For example, rates of working poor were 17% higher in rural America compared to metro and this gap has widened (Thiede et al., 2016). Beyond overall trends (Nolan, Waldfogel, & Wimer, 2017), relatively little work has examined how the social safety net affects rural child poverty and how this relationship has changed over time. The social safety net includes major social welfare transfers such as Social Security, tax credits such as the Earned Income Tax Credit (EITC), the Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), and Temporary Aid for Needy Families (TANF). Our study is motivated to understand trends in pre- and post-transfer income and poverty rates among households with children. We compare nonmetro (rural) families to metro families.  

Method

We pooled the Annual Social and Economic Supplement to the Current Population Survey across years 1990 to 2016 (Ruggles, Genadek, Goeken, Grover, & Sobek, 2015) merged with Archived Supplemental Poverty Measure database (Wimer et al., 2017). Poverty was measured with the Supplemental Poverty Measure (SPM) produced by the US Census and retroactively applied in the Archived SPM database (Wimer et al., 2017). Major safety net programs included the EITC, SNAP, TANF, housing subsidies, school lunch subsidies, and other credits. Market income poverty rates were compared with SPM poverty rates to estimate the magnitude of the poverty reduction (static pre-post comparison). Changes in poverty rates over time were decomposed into their respective components, i.e., earnings, private transfers, public transfers, and taxes (Azevedo, Sanfelice, & Nguyen, 2012).

Results

Rural families relied more on the social safety net than non-rural families (approximately 10% of non-metro incomes from safety net compared with about 5% in metro families). Poverty reduction (i.e., difference between pre-transfer and post-transfer) was about 40% larger for nonmetro families compared to metro. Decomposition analysis showed that reduced earnings over time has put upward pressure on the poverty rate (up to 3 percentage points). While a combination of private and public transfers reduced poverty, they were not able to offset the impact of labor market changes. In the full paper, we extend analyses across the deep poor (below 50% of official threshold), near poor (those below 125% of the official threshold), and to a five-part work family typology developed by Waldfogel (2009).

Implications

In the context of an eroding American social safety net, this study documents the extent to which market forces put upward pressure on the rural child poverty rate. As economic growth is unequally concentrated in metro and suburban areas, we expect these patterns to continue in the future. Further, we show that the safety net’s ability to offset these changes weakens over time. In the full paper, we discuss labor-market focused policy options for rural America.