Spotlight Exclusives

Holes in the Safety Net: The Rise of $2 a Day Poverty in the U.S.

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Is it possible to live on $2 a day in the United States? This is a question you might ask about an impoverished nation, or another erabut not 21st century America. Yet, incredible as it might seem, over 1 million American children survive on $2 a day every month, even after taking federal benefits into account. 

In this election year, there has been considerable discussion about government benefits and proposed cuts to the social safety net. There seems to be a huge gap, however, between common perceptions about welfare and the grim realities that the poor face in America today. Our recent research on $2 a day poverty in the United States raises questions about what we are willing to accept as a society.


Contrary to public perception, the past 15 years have been a period of declining access to welfare benefits among extremely poor families. Some in-kind benefits and tax subsidies have increased, but many of these expanded benefits are conditional on a recipient۪s employment status. The biggest beneficiaries have been families right at the poverty line or slightly above it, not the deeply poor. In contrast, the number of people receiving cash assistance – what is typically meant by welfare – has plummeted from about 12.3 million recipients per month in 1996 to 4.4 million in June 2011.


With current high unemployment rates and limited access to cash assistance, we wanted to investigate changes in the number of Americans living in $2 a day poverty. This is a benchmark similar to what۪s used by the World Bank to measure global poverty in developing countries. It is also less than the cost of a gallon of gasoline, and roughly equivalent to a half-gallon of milk.


Our study documents a rapid increase in $2 a day poverty over the past 15 years. Looking only at cash income, the number of households with children living in $2 a day poverty in a given month has increased 130 percent from 1996 to 2011 and now accounts for 1.46 million American households. We estimate that these households include 2.8 million children. In addition, we find that about 800,000 households with children are in $2 a day poverty for an entire calendar quarter.


Despite the challenges facing many poor families, when we take into consideration some of our major in-kind programs, it۪s clear these programs are having a crucial impact. Adding in Supplemental Nutrition Assistance Program (SNAP) benefits as dollars reduces the number of $2 a day households with children by about 46 percent. Our most recent estimates suggest that accounting for refundable tax credits and housing subsidies, in addition to SNAP, reduces the incidence by about 58 percent. Many households in $2 a day poverty are also covered by public health insurance. Thus, the safety net is playing a vital role in blunting some of the hardships that $2 a day families would otherwise face.


Policymakers demanding reductions in the safety net should not assume all poor Americans receive generous benefits. In fact, many do not receive the benefits they need to get by. While unemployment and poverty remain high, we find it troubling that there is more talk about cutting the safety net than helping the poorest of the poor. There is also more talk of drug-testing those accessing benefits than there is about making sure that those who otherwise fall through the cracks can meet their basic needs.


Is our society content to have more than 1 million children subsisting on pocket change, even after accounting for means-tested public programs?


To stem the tide of rising $2 a day poverty, the first step must be to protect our in-kind programs that act as important buffers for these families.


But policymakers should go further. We propose relaxing restrictions like work requirements for cash assistance when the unemployment rate is above eight percent, ideally through an automatic trigger rather than waiting for legislative action.


If there is resistance to offering struggling parents cash assistance, we recommend making available more resources to help them get back to work. While the 2009 economic stimulus bill included modest funds for states to subsidize firms that hired the poor, Congress let the program expire at the end of 2010. Yet even this program did not specifically target the poorest of the poor.


We now have a safety net that provides neither cash assistance nor work opportunities for the neediest Americans. Our safety net is full of holes, and those living on $2 a day are falling through them.

To print a PDF version of this document, click here.

H. Luke Shaefer is an assistant professor of social work at the University of Michigan.


Kathryn Edin is a professor of public policy and management at the Harvard Kennedy School.



The views expressed in this commentary are those of the author or authors alone, and not those of Spotlight. Spotlight is a non-partisan initiative, and Spotlight۪s commentary section includes diverse perspectives on poverty.  If you have a question about a commentary, please don۪t hesitate to contact us at

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