While the Census Bureau reports that in 2016 some 12.7% of Americans lived in poverty, it is impossible to reconcile this poverty rate, which has remained virtually unchanged over the last 50 years, with the fact that total inflation-adjusted government-transfer payments to low-income families have risen steadily. Transfers targeted to low-income families increased in real dollars from an average of $3,070 per person in 1965 to $34,093 in 2016.
.. Compared with what they pay in Social Security taxes, the lowest quintile of earners can receive as much as 10 times the lifetime benefits received by the highest quintile of earners and three times as much as the middle quintile... The measured poverty rate has remained virtually unchanged only because the Census Bureau doesn’t count most of the transfer payments created since the declaration of the War on Poverty. The bureau measures poverty using what it calls “money income,” which includes earned income and some transfer payments such as Social Security and unemployment insurance.
But it excludes food stamps, Medicaid, the portion of Medicare going to low-income families, Children’s Health Insurance, the refundable portion of the earned-income tax credit, at least 87 other means-tested federal payments to individuals, and most means-tested state payments. If government counted these missing $1.5 trillion in annual transfer payments, the poverty rate would be less than 3%.