Elderly Poverty and Supplemental Security Income

Article excerpt

In the United States, poverty is generally assessed on the basis of income, as reported in the Current Population Survey's (CPS's) Annual Social and Economic Supplement (ASEC), using an official poverty standard established in the 1960s. The prevalence of receipt of means-tested transfers is underreported in the CPS, with uncertain consequences for the measurement of poverty rates by both the official standard and by using alternative "relative" measures linked to the contemporaneous income distribution. The article reports results estimating the prevalence of poverty in 2002. We complete this effort by using a version of the 2003 CPS/ASEC for which a substantial majority (76 percent) of respondents have individual records matching administrative data from the Social Security Administration on earnings and receipt of income from the Old-Age, Survivors, and Disability Insurance and Supplemental Security Income (SSI) programs. Adjustment of the CPS income data with administrative data substantially improves coverage of SSI receipt. The consequence for general poverty is sensitive to the merge procedures employed, but under both sets of merge procedures considered, the estimated poverty rate among all elderly persons and among elderly SSI recipients is substantially less than rates estimated using the unadjusted CPS. The effect of the administrative adjustment is less significant for perception of relative poverty than for absolute poverty. We emphasize the effect of these adjustments on perception of poverty among the elderly in general and elderly SSI recipients in particular.

Selected Abbreviations

ASEC Annual Social and Economic Supplement

CPS Current Population Survey

DER Detailed Earnings Record

DI Disability Insurance

FBR federal benefit rate

FICA Federal Insurance Contributions Act

MEF Master Earnings File

NRC National Research Council

OASDI Old-Age, Survivors, and Disability Insurance

PHUS Payment History Update System

SECA Self-Employment Contributions Act

SER Summary Earnings Record

SGA substantial gainful activity

SIPP Survey of Income and Program Participation

SSA Social Security Administration

SSI Supplemental Security Income

SSN Social Security number

SSR Supplemental Security Record

Introduction

The decline in the elderly poverty rate is often cited as a major accomplishment of national poverty policy. From 1966 through 2006, the official poverty rate for persons 65 or older declined from 28.5 percent to 9.4? percent. In 1966, elderly poverty exceeded that of adults aged? 18-65 by 18? percentage points. By 1993, parity with the poverty rate of other adults was achieved, and since that year, the elderly poverty rate has generally been over a percentage-point lower than that registered for adults of "working age" (DeNevas-Walt, Proctor, and Smith 2007, 50).

Supplemental Security Income (SSI)-the nation's safety net for the aged, blind, and disabled- presumably played some role in this decline and serves to ameliorate the consequences of poverty for those who remain poor. However, assessing the contribution of SSI payments to the reduction of elderly poverty raises three issues. First, receipt of SSI is significantly underreported, so any evaluation using standard sources-notably the Current Population Survey's (CPS's) Annual Social and Economic Supplement (ASEC)-is likely unreliable (Roemer 2000; Weinberg 2006). Second, the federal SSI payment is not alone sufficient to move recipients out of poverty, so the SSI effect, if present, must occur in combination with other family resources. Third, as is widely appreciated, the poverty standard itself is controversial, and its modest empirical basis is outdated (Citro and Michael 1995; Weinberg 2006; Blank 2008).

This article addresses these measurement, context, and standards issues. On the measurement side, we investigate the consequences for perception of poverty among the elderly of using administrative information from the Social Security Administration (SSA) on earnings and income from the Old-Age, Survivors, and Disability Insurance (OASDI) and SSI programs to adjust CPS/ASEC data for underreporting. …