The voices of Urban Institute's researchers and staff
February 11, 2015

It takes a package of policies to substantially reduce poverty

The Children's Defense Fund’s recent policy recommendations could reduce the number of children living in poverty by 60 percent—down from 10.9 million to 4.3 million, according to our analysis. Our study also shows something that we’ve seen in other analyses of anti-poverty policies: that it takes a package of policies, not just a single policy, to substantially reduce poverty.

The Children’s Defense Fund (CDF) contracted with the Urban Institute to assess the costs and impacts of nine different anti-poverty policies. We found that each individual policy would reduce child poverty by anywhere from 1 percent to 21 percent; but none of the individual effects are nearly as large as the 60 percent reduction in child poverty when the policies are all combined. Here’s the full list of CDF proposals, with our estimate of how much child poverty would be reduced from smallest to largest impacts:

  • Child support “pass through” (child support for children receiving TANF is paid to the family instead of retained by the government, and a portion is disregarded in computing SNAP benefits): 1 percent reduction in the number of children in poverty
  • Expanded child and dependent care tax credit: 1 percent reduction
  • Expanded child care subsidies: 3 percent reduction
  • Minimum wage increased to $10.10: 4 percent reduction
  • Expanded EITC: 9 percent reduction
  • Guaranteed transitional jobs for unemployed or under-employed parents: 11 percent reduction
  • Child tax credit made fully refundable: 12 percent reduction
  • SNAP benefit increase of about 30 percent: 16 percent reduction
  • Guaranteed housing vouchers for low-income families with children facing high rent relative to their income: 21 percent reduction

(These poverty figures use the Supplemental Poverty Measure because it captures the impact of changes in tax credits and non-cash benefits, not just changes in cash income.)

There are two reasons that the full package of policies has such a big impact relative to the individual policies. First, some poor families are helped by some policies but not others.  For example, an EITC expansion only helps families with working parents, not families with parents who can’t find jobs. Conversely, a transitional jobs program only helps families with unemployed or under-employed parents, not families with parents who are already working full-time but have low earnings.

Second, it may take a combination of two or more policies to raise a family’s resources past the level that defines poverty (the “poverty threshold”).  For instance, a family may be helped by both an expanded EITC and the SNAP increase, but it may take both of those combined to lift that family above the poverty threshold.

In prior analyses, we’ve seen the same thing—for example, in a 2012 analysis of Wisconsin poverty for the Community Advocates Public Policy Institute. Individual policies can have a big impact, but the largest impact comes from the combination of policies, with different pieces directed at different reasons why families are poor. To get the most people out of poverty, it takes a package. Photo: Elaine Thompson/AP

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