Center for American Progress

Reimagining Our Social Contract: The Safety Net Is Social Insurance for All Americans

Reimagining Our Social Contract: The Safety Net Is Social Insurance for All Americans

When four in five Americans will experience at least one year of poverty, near poverty, unemployment, or the safety net during their working years, it’s time to rethink how we conceptualize poverty and update our nation’s social contract accordingly.

Steve Bosshard hands over a specially prepared box of food to Gordon Hanson at a food bank distribution in Petaluma, California, in January. (AP/Eric Risberg)
Steve Bosshard hands over a specially prepared box of food to Gordon Hanson at a food bank distribution in Petaluma, California, in January. (AP/Eric Risberg)

Every year, the Bureau of the Census releases its estimate of how many Americans lived below the federal poverty line at a specific point in time during the previous year. For the past several years, the official poverty rate has remained steady at about 15 percent.

Hearing this statistic, one might conclude that the same 15 percent of Americans remain stuck at the bottom, year in and year out, constituting the nation’s poor. But look beyond the point-in-time data, and you will find an important but rarely discussed fact: It is not the same 15 percent year after year.

Other Census data show nearly one in three Americans—31.6 percent of us—experienced a spell of poverty of at least two months between 2009 and 2011, but only 3.5 percent of the population was in poverty for all three of those years. To be sure, factors such as race, gender, disability, education level, family structure, or being born into a poor family can increase the odds that one will face such hardship. But the odds do not look too great for any of us: Research by Mark Rank and others has indicated that more than half of all Americans will experience at least one year of poverty or near poverty at some point during their working years. When including those who experience a year or more of unemployment or turn to the safety net, that figure rises to nearly four out of five Americans.

In other words, the poor are us. That’s a fact that should resonate loudly and clearly with both lawmakers and voters.

Poverty is not a character flaw, nor is it a fixed set of characteristics that describes some malady suffered by others. Just take a look at some of the leading causes of economic hardship and how our safety net provides insufficient insurance against these shocks:

  • Losing a job. More than two-thirds of Americans—66.8 percent—will experience a year of unemployment at some point during their working years. Yet there is no state where more than half of unemployed workers have access to unemployment insurance when they need it. Since Congress failed to renew the Emergency Unemployment Compensation program, the share of unemployed workers receiving jobless benefits has now reached a near all-time low of 31.7 percent.
  • Having a child. The birth of a child is one of the leading causes of poverty spells. Parents lose income to recover from childbirth and to care for a new baby just when expenses are mounting. Yet the United States is the only developed nation in the world with no federally mandated paid family leave.
  • Disability and ill health. Disability serves as both a cause and a consequence of poverty. Disability can lead to loss of income from work, and low-income people are more likely to experience disability and poor health due to lack of access to health care and preventive services, physically demanding jobs, and the greater likelihood of living and working in an environment that may have an adverse effect on health. One in five Americans live with a disability, and many more experience poor health. For individuals whose disability or poor health prevents them from supporting themselves through work, Social Security’s disability programs provide vital but all too meager income support, leaving many in poverty despite receiving benefits. And for the one in six workers who care for an elderly or disabled family member, relative, or friend, a lack of paid sick days and paid leave can make it difficult if not impossible to maintain steady employment.
  • Being born into poverty. Half of U.S. children will live in a poor or low-income household at some point before their 18th birthday. Given what we know about the long-term education, health, and employment outcomes associated with child poverty, this is a risk to all Americans and to our national competitiveness. Yet only one in four poor families with children receive Temporary Assistance for Needy Families, and in no state does this temporary help lift a family above even half of the federal poverty line.

The United States does have in place some critical social protections to respond to these widespread risks. For example, the Supplemental Nutrition Assistance Program, or SNAP—formerly known as food stamps—helped 46 million people purchase food and stave off hunger in 2012. The Earned Income Tax Credit, or EITC—which supplements the wages of low-income working families—kept 6.5 million people out of poverty in 2012 alone. Furthermore, the Affordable Care Act is already offering health coverage to millions more Americans.

But recently, the nation has moved in the wrong direction by, for example, cutting the amount of nutrition assistance people receive so that the average individual benefit is now just $1.40 per person, per meal. The House of Representatives recently put forth a tax reform package that would allow critical improvements to the EITC to expire in 2017. It seems as though conservatives are proposing cuts to key work and income supports at nearly every turn, with little political consequence.

It’s not that the public does not back these programs. In fact, large majorities in public opinion research say they support SNAP, the EITC, and other elements of the safety net. Yet members of Congress rarely fear losing their seats over a vote to cut help for those struggling the most.

The counterexample is Social Security, which lifted 22 million people out of poverty in 2012. Social Security is our nation’s bedrock social insurance program. It protects American workers and their families against the risks of poverty as a result of old age, the death of a spouse or parent, or a life-changing disability.

In contrast to other parts of the safety net, talking about cutting Social Security is fraught with political risk, with large majorities of Americans of all political stripes, age groups, and income levels supporting Social Security and opposing benefit cuts. Social Security should inform us not only in terms of how effective anti-poverty policies can be but also in terms of how powerful and effective advocacy for the safety net as a whole would be if it were properly understood as social insurance.

Consider this: About 79 percent of today’s 20-year-olds can expect to receive Social Security retirement benefits at age 67.[1] That’s nearly identical to the four out of five Americans who will experience economic hardship during their working lives.

So why the disconnect? Approximately 80 percent of Americans will receive Social Security retirement benefits, and 80 percent will experience a poverty-related event during their working years. Americans pay a payroll tax for Social Security, as well as taxes for the safety net. And low-income households pay a share of taxes approximately equivalent to their share of national income.

One reason that there is insufficient political force behind protecting and strengthening the safety net is because it is misperceived and therefore marginalized as an issue by politicians, just as the poor are misperceived and marginalized as only ever encompassing the same 15 percent of Americans. The truth is that without the safety net that we have in place today, the poverty rate would be nearly twice as high it is now. Can you imagine an America where at any given time nearly 30 percent of the nation lived in poverty and on less than approximately $18,000 annually for a family of three?

The safety net is not a replacement for an economy that works for all; it must be understood and fought for in tandem with efforts to create jobs, boost wages, and provide greater access to employment. Such efforts would reduce the need for families to turn to the safety net during their working years in the first place. But in good economic times and in bad, the safety net is social insurance for all Americans who experience the risks of job loss, cut hours, divorce, disability, and a whole host of other common experiences that come with the messy ups and downs of life. As such, our social contract needs to be strengthened and updated to meet the challenges that families and individuals now confront in our economy.

In the months to come, the Center for American Progress will release key recommendations to strengthen our nation’s social contract. We must take these steps not for the sake of a fictional, monolithic poor, but for all of us who need and seek a very basic economic security that is currently lacking in our nation. When four in five Americans are at risk of economic hardship, and that shared fragility is widely understood and mobilized into a political force demanding greater economic security, we can expect lawmakers to sit up, take notice, and finally begin to make the reforms and investments necessary to tackle America’s poverty crisis.

Melissa Boteach is the Vice President of Half in Ten and the Poverty to Prosperity Program at the Center for American Progress.


[1] The methodology for calculating the 79 percent is that according to the Social Security Administration, about one-eighth of today’s 20-year olds will die before they reach age 67, which is when they would qualify for retirement benefits. This means that approximately 87.5 percent of them will reach age 67. It is estimated that about 90 percent of workers are covered by Social Security, which would translate to about 79 percent of today’s 20-year-olds qualifying for retirement benefits. See Social Security Administration, “Social Security Basic Facts,” April 2, 2014, available at

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Melissa Boteach

Senior Vice President, Poverty to Prosperity Program