About $168 billion. That’s how much money it would take to get every household in the United States above the federal poverty line.
We’ve written in the past about the equity-efficiency tradeoff, and the problem of poverty is the poster child of this phenomenon. We could end poverty in this country overnight. The government could appropriate $168 billion and give it to every household whose income falls below the federal poverty line. This may not be efficient, but it’s important to recognize that poverty is not an inherent property of the economy. It doesn’t necessarily need to exist.
In order to arrive at the $168 billion number, I looked at data from the American Community Survey. I took the total reported income of each household and saw how far below the federal poverty line each family was. Below is a table showing how much money each state would need in order to end poverty.
| State | Amount Needed to End Poverty | Per Capita | Households in Poverty |
|---|---|---|---|
| California | $17,214,506,268 | $438.67 | 1,522,399 |
| Texas | $16,001,075,509 | $539.84 | 1,392,305 |
| New York | $11,322,505,843 | $569.76 | 1,032,499 |
| Florida | $11,132,233,232 | $507.65 | 1,044,689 |
| Ohio | $6,567,602,300 | $557.52 | 623,894 |
| Illinois | $6,494,454,210 | $511.67 | 585,786 |
| Pennsylvania | $6,450,478,080 | $496.71 | 604,820 |
| Georgia | $5,926,791,086 | $547.63 | 517,794 |
| North Carolina | $5,742,585,246 | $542.55 | 537,488 |
| Michigan | $5,488,476,066 | $546.03 | 509,788 |
| Tennessee | $3,942,381,489 | $564.32 | 372,500 |
| Arizona | $3,813,769,244 | $524.72 | 325,868 |
| New Jersey | $3,669,825,896 | $396.01 | 343,018 |
| Virginia | $3,654,968,769 | $422.17 | 331,499 |
| Louisiana | $3,483,011,621 | $753.73 | 329,464 |
| Indiana | $3,465,090,635 | $508.69 | 317,271 |
| Alabama | $3,298,573,345 | $652.63 | 312,509 |
| South Carolina | $3,171,156,723 | $608.34 | 289,916 |
| Missouri | $3,112,352,627 | $504.58 | 307,748 |
| Kentucky | $3,074,362,542 | $681.57 | 289,694 |
| Massachusetts | $3,022,624,611 | $432.27 | 298,893 |
| Washington | $2,961,360,328 | $382.56 | 275,446 |
| Oklahoma | $2,482,808,368 | $621.44 | 227,110 |
| Maryland | $2,479,179,167 | $401.76 | 220,848 |
| Wisconsin | $2,477,475,585 | $420.48 | 246,377 |
| Colorado | $2,348,106,492 | $404.10 | 210,248 |
| Mississippi | $2,341,319,924 | $793.28 | 218,010 |
| Minnesota | $2,042,361,857 | $357.45 | 205,570 |
| Oregon | $1,979,543,462 | $467.02 | 190,419 |
| Arkansas | $1,963,917,073 | $647.59 | 189,809 |
| Nevada | $1,664,073,405 | $529.79 | 142,946 |
| Connecticut | $1,554,699,690 | $432.06 | 144,867 |
| New Mexico | $1,472,476,815 | $696.28 | 138,332 |
| Iowa | $1,444,320,891 | $451.92 | 140,178 |
| Kansas | $1,394,899,517 | $474.85 | 131,739 |
| West Virginia | $1,242,770,474 | $696.44 | 121,901 |
| Utah | $1,071,849,227 | $321.76 | 94,327 |
| Nebraska | $806,337,527 | $410.16 | 81,348 |
| Idaho | $732,766,597 | $387.03 | 69,183 |
| Hawaii | $627,510,580 | $434.07 | 48,899 |
| Maine | $568,495,447 | $412.73 | 63,269 |
| Montana | $506,699,776 | $458.52 | 50,764 |
| District of Columbia | $503,804,437 | $749.62 | 40,961 |
| Rhode Island | $499,944,707 | $456.42 | 49,682 |
| Delaware | $437,231,264 | $434.68 | 38,714 |
| South Dakota | $408,104,275 | $453.86 | 37,611 |
| New Hampshire | $388,590,676 | $280.00 | 41,093 |
| North Dakota | $359,985,008 | $461.90 | 35,831 |
| Alaska | $337,041,950 | $459.20 | 24,983 |
| Vermont | $280,263,620 | $434.35 | 28,707 |
| Wyoming | $262,716,316 | $453.15 | 26,480 |
Unsurprisingly, the states that would need the most money to end poverty are the states with the largest populations. There is a huge dropoff between Florida and Ohio both in terms of the amount of money needed to end poverty and their population.
Among the states that would need between $1 billion and $10 billion, Louisiana and Mississippi stand out as the only states whose per capita amount needed to end poverty is over $700. Washington D.C. is the only other place with a per capita amount this high, but naturally the population there is significantly smaller.
If we actually wanted to go down this path as a country, we’d be looking at a price tag of $1.7 trillion over the next 10 years. While this is a ton of money, it’s not impossible for the federal government to raise this type of revenue. If you wanted to do it without raising the deficit, there are programs we could cut in favor of this massive cash transfer.
Every year, the Congressional Budget Office releases a handful of options that could lower the deficit. There are certainly things that could be cut if lawmakers decided this was more important.
One option would be to eliminate state and local tax deductions. This would save about $1.6 trillion over the next 10 years. Another option that would get you there would be to impose a new payroll tax between 1% and 2%. This is not to suggest that these particular tradeoffs would be good or bad, it’s just to highlight that eliminating poverty over the next 10 years is not just some pipe dream, it’s a real tangible policy option.
I must note at this point that there are some important limitations to this analysis. First off, while the American Community Survey does an amazing job trying to account for sampling errors, it is still just a survey. One particular group that I imagine is being under reported is people experiencing homelessness (the American Community Survey does survey some homeless people who are currently sheltered, but this is certainly a gap).
Another issue is that the variable I was using to approximate household size does not always equal the household size that would be used to determine a household’s poverty threshold. From the variable description, the variable I used “reports the number of person records that are included in the sampled unit. These person records all have the same serial number as the household record. The information contained in the household record usually applies to all these persons.”
Despite these limitations, it is interesting to see just how far away we are from living in a world with zero poverty. I should also note that the federal poverty line is not the only measure of social wellbeing we should care about. Lifting everyone out of poverty would not solve every single issue in our country. However, it would solve the problem of people living in poverty, and that is worth something.