Association for Public Policy Analysis & Management

A large body of research has not only documented inequality, but has also suggested—and begun to provide causal links to—adverse outcomes associated with greater inequality. Such estimates of inequality typically rely on pre-tax, cash income. As SPM-style poverty measures have gained currency in the policy world to provide a more comprehensive accounting of the role of the social safety net in ameliorating economic need, measures of inequality have lagged behind. For example, typical measures of income inequality include cash welfare but exclude food assistance (and other near-cash) programs. This paper uses California Poverty Measure (CPM) data for 2011-2013 to briefly review the relative mitigation of inequality seen once taxes and means-tested programs are incorporated into family resources (based on Bohn, Danielson, Levin, Mattingly, and Wimer, 2013; Wimer, Mattingly, Kimberlin, Fisher, Danielson, and Bohn, 2015). We then provide an in-depth comparison of family after-tax work and retirement income (WRI) with their after-tax comprehensive income (CI). WRI counts taxes paid, earnings from work, and retirement income (including Social Security) while CI includes in addition tax credits received, cash welfare, and in-kind programs. Using the WRI distribution to classify families, we associate family characteristics—including educational attainment, work status, presence and ages of children, marital/cohabiting status—with the likelihood of being moved out of the bottom quintile of the WRI distribution by the social safety net. Preliminary estimates indicate that single parents are dramatically more likely to be moved out of the bottom quintile than are single adults without dependents. Those who are not employed full-time are also relatively less assisted by the social safety net than those who are employed full-time. These estimates help to quantify not just the role of means-tested programs in raising absolute economic well-being (as the SPM family of measures has done), but also their role in restricting the spread of incomes—in other words, relative well-being.