Annual $2-a-Day Poverty among Children in Single Mother Households Grew more than 660% between 1995 and 2012 after Reducing Survey Bias

Back in the field in 2010 to study the deeply poor, Kathryn Edin began to encounter something markedly different from anything she had seen in 20 years of canvassing poor communities: families with no visible means of cash income from any source. As Edin and I write in $2 a Day: “[W]hat was so strikingly different from a decade and a half earlier was that there was virtually no cash coming into these homes.”

Has there been a spike in the number of children going for periods with virtually no cash in the U.S.? We began to test this with the Survey of Income and Program Participation (the SIPP). We then substantiated our core findings in two other major household surveys beyond the SIPP, and in administrative records. Recently we’ve released analyses using survey data that have been adjusted using a micro-simulation model called TRIM, which corrects for “underreporting” of public benefits—when people forget or choose not to say they receive benefits from a program like TANF. Specifically we used TRIM to correct for underreporting in TANF and SSI income. Even with these corrections, survey data remain imperfect, as discuss in our previous post. But TRIM is a significant improvement over unadjusted CPS data.

In our first blog post on TRIM, we examined the increase in annual $2-a-day poverty for all children using TRIM adjusted data. While the overall levels of extreme poverty are somewhat lower after adjusting for underreporting, the magnitude of the change since 1995 was much bigger. Rather than doubling, extreme poverty using TRIM roughly tripled between 1995 and 2012.

Here we examine TRIM results for children in single mother households. If our hypothesis is correct—and the rise in extreme poverty is driven largely by the declining reach of welfare through Temporary Assistance for Needy Families (TANF)—then the change in extreme poverty should be driven by single mother households, those most affected by welfare reform.

Below we chart the number of children under 18 in single mother households reporting annual cash incomes under the $2-a-day threshold, correcting for underreporting in TANF and SSI. (These estimates were generously provided by TRIM expert Danilo Trisi at the Center on Budget and Policy Priorities. Note that Trisi’s estimates include income from related family members and un-married partners, close, although not identical, to the original household we used in SIPP.)

According to TRIM, only 83,000 children in single mother households were in annual extreme poverty in 1995. That’s 0.46% of all such children that year. That means in 1995 there were fewer than 100,000 children in single mother families below the $2-a-day threshold in the entire United States, out of about 18 million such children. According to TRIM, all the children in extreme poverty in 1995 across the U.S. could have fit into one football stadium.

Following 1995, the number of children in such families experiencing extreme poverty skyrocketed, hitting 441,000 in 1997 and up over 500,000 in the mid-2000s. The count of extreme poverty among children in single mother families peaked in 2011 at nearly 895,000, and at the last year in our series stood at 704,000 (3.5%) in 2012.

These figures reflect a 660% increase in the percentage of children in single mother families experiencing extreme poverty between 1995 and 2012. They reflect a 748% increase in the number of such children in extreme poverty.

How do these adjusted estimates compare to estimates of annual extreme poverty using unadjusted annual-recall survey data? Table 1 presents the adjusted and unadjusted counts for 1995 and 2012 using Trisi’s procedures (which are close but not identical to our own). As we would expect for reasons described in $2.00 a Day and our academic papers, the TRIM adjusted estimates of annual extreme poverty in any given year are lower than the unadjusted counts. We also find that the TRIM counts of annual extreme poverty are very much in line with our previous SIPP estimates of annual extreme poverty reported elsewhere. Note that in those papers (and also in the SNAP administrative data), we include spells lasting less than a year.

However, while the overall levels of extreme poverty are lower in any given year in the adjusted data, the magnitude of the change between 1995 and 2012 is much, much greater in TRIM. If we were examining only the unadjusted data, we would conclude that annual extreme poverty among single mother households doubled between 1995 and 2012. But using the adjusted data, it appears that extreme poverty grew 747% over this period. In short, correcting for underreporting doesn’t explain away the rise in $2-a-day cash poverty since 1996 that motivated $2.00 a Day. In fact, it makes the change over time look even more stark. Honing in on single mother households paints the starkest picture of all.

What can explain this? As shown in table 1, the answer appears to relate to the fact that the unadjusted CPS data overstated extreme poverty to a much greater degree in 1995 (781% of the adjusted data) than it did in 2012 (186% of the adjusted data). But if problems with underreporting with our survey data are getting worse over time, how can that be true?

We argue that the answer to this puzzle is directly related to the decline of cash assistance, and phenomenon first identified by Arloc Sherman and Trisi at the Center. In essence, in any given year, some families responding to surveys fail to report that they got TANF, and this problem seems to be getting worse over time. But while the rate of underreporting is getting somewhat worse over time, the number of cash assistance dollars to underreport has also gotten a lot smaller. To read more about this important phenomenon, check out our previous TRIM blog post.

When looking at extreme poverty in data adjusted for survey problems, the magnitude of the rise in extreme poverty appears even larger than previously reported. The explanation, we believe, is directly related to the decline of TANF. Between 1995 and 2012—according to the best data we have—there was a 660% increase in the percentage of children in single mother families experiencing annual extreme poverty. The rise of $2-a-day poverty is by far greatest among children in single mother households, and data that does not correct for underreporting vastly underestimated the extent of the change faced by the poorest single mothers.

 

 - H. Luke Shaefer and Kathryn Edin