GAO Reports on Federal Low-Income Assistance Programs

How Much, Who Gets It, and Does it Help?

Homeless person’s sign asking for donations
More than 80 Federal Programs Assist Low-Income Persons. Spencer Platt/Getty Images News

The U.S. federal government currently spends about $742 billion a year on more than 80 programs intended to provide aid to people with low incomes, according to a survey conducted the Government Accountability Office (GAO).

Since the War on Poverty of the 1960s, the government has created a series of social assistance programs intended to help people who work, but earn too little to meet basic living needs, who are physically unable to work, or who are disadvantaged in other ways.

Starting in the 1970s, several new so-called “welfare to work” low-income assistance programs have offered monetary incentives intended to encourage beneficiaries to get jobs and remain in the labor force.

The success of these social welfare programs at reducing poverty and building the labor force has varied, often leaving lawmakers with difficult decisions in how to best spend the taxpayers’ money.

Where the Money Comes From and Who Gets It

Make no mistake, the money comes from taxpayers, but it is distributed to eligible low-income beneficiaries by the relevant federal agencies in amounts determined by Congress through the annual federal budget process.

Funds for over 60% of the yearly $742 billion in low-income assistance come from four federal benefit and assistance programs: Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), and the refundable portion of the Earned Income Tax Credit (EITC).

Programs like Social Security Old-Age and Survivors Insurance, and Medicare, were not included in the GAO’s review because they are not targeted solely toward persons with low-incomes.

Most of the assistance goes to individuals and families in traditionally low-income groups, such as disabled persons and workers with dependent children.

The GAO’s survey showed that while the criteria used to determine financial eligibility for receiving low-income assistance varied widely from program-to-program, federal poverty guidelines, based on the Census Bureau's official poverty measurements were most commonly used.

In 2015, the federal poverty level for a family of four was a total income of $24,250 or lower per year. Poverty levels used to determine eligibility for federal low-income assistance vary from state-to-state, based on the cost of living.

The SPM: A More Accurate Measure of Poverty

The Census Bureau also calculates a national Supplemental Poverty Measure (SPM), which factors in federal and state government benefits, and family expenses not considered in the official poverty measure. While not used to determine eligibility for assistance, the SPM provides Congress with a more detailed and perhaps accurate overview of poverty based on family resources and living expenses.

According to the SPM for 2013, about 48.7 million people – 15.5% of the total population – including families with children live in poverty throughout the United States. The GAO found that households headed by disabled persons or single parents had highest rates of poverty based on the SPM.

How Many People Get Low-Income Assistance

In 2012, an estimated 106 million people, or 33% of the total U.S. population, received benefits from one or more of the ten federal low-income assistance programs studied by the GAO. The average benefit represented about $15,230 per person.

Nearly two-thirds of the 106 million low-income program benefit recipients lived in households with children, including many married families. Over 80% also lived in households that reported at least some income from sources other than federal assistance.

The GAO estimates that without federal low-income benefits, at least 25 million of the recipients would have ended up living below the SPM poverty level in 2013, the last year for which data was available.

Do Low-Income Programs Reduce Welfare Roles?

Supporters of federal low-income social assistance programs argue that they help get people off of welfare and back to work, thus helping the economy and justifying spending nearly $800 billion a year on them.

According to the GAO, “means-tested” low-income programs – that is, programs that exclude persons with too much income – do “encourage” recipients to seek work and remain in the work force. Some of these programs, like Earned Income Tax Credit (EITC), offer monetary incentives for people to work.

However, the GAO also noted that the number of hours worked by employees getting benefits from means-tested low-income assistance programs tends to vary. “While workers who receive means-tested benefits face benefit reductions as their earnings rise, research shows that various factors limit how much people change their work behavior in response,” stated the GAO. “For example, people may not be aware of such changing interactions in a complex tax and benefit system or be able to control the number of hours they work, according to studies.”

In addition, the GAO found that offering such government-provided incentives to work can present lawmakers with “difficult policy trade-offs,” like increasing the programs’ costs to taxpayers.

Of the eight low-income assistance programs studied, the GAO reported that the EITC and SNAP (food stamp) programs succeeded in lifting the most people out of poverty. However, as the GAO noted, “the majority of recipients of each of the programs were estimated to have incomes above the SPM threshold, after accounting for receipt of benefits.”