Not all safety nets are created equal.
Vermont’s $26,100 safety net, the nation’s largest, is more than double the size of each of the 20 smallest state safety nets. Georgia’s is just $10,045, according to a new analysis by Jacob Berman, an economist at the Federal Reserve Bank of Chicago.
What he found in his analysis is that the most generous states are in the Northeast, while the least are in the South and West. Six of the 10 largest safety nets belong to Massachusetts, Rhode Island, New York, Connecticut, Pennsylvania and, of course, Vermont. (If you include Washington, D.C., it’s home to the second-largest safety net.) The smallest can be found in Alabama, South Carolina, Florida, Nevada and Georgia. Much of Vermont’s generosity can be explained by Medicaid, which accounts for about half of all the programs, he found. Georgia’s small safety net is largely accounted for by its restrictions on Medicaid and welfare.
Such analyses are complicated, Berman notes. What people are eligible to receive and what they actually get aren’t always the same. And not only do states implement dozens of their own programs to curb the plight of their poorest residents, they even administer the federally maintained safety net differently.
Take Obamacare. About half the states are going forward with the federal health-care law’s expansion of low-income assistance through Medicaid. Some are exploring alternatives and some are just choosing not to expand. Unemployment insurance is another example. Though it’s a federal program, that weekly benefit ranges from $235 in Mississippi to $674 in Massachusetts.
Because eligibility and benefits distributed don’t always match up, Berman’s analysis focused on real benefits—the actual assistance delivered to low-income residents. To do that, he kept things relatively simple: he took the total amount of money spent on benefits aimed at low-income households and divided it by the number of people living in such households. He ignored programs that states don’t have a say over and focused on those they did, including programs such as Social Security, Medicaid, unemployment benefits, welfare and food stamps. He also focused on non-elderly adults and kids and adjusted for price differences across states.
Not only did the analysis show how widely state safety nets vary, but it found something else: they grow as the number of low-income households shrink. In other words, states with more poor residents provide less assistance to those residents. States with less poor residents tend to have more generous safety nets.
As with all such studies, there are some limitations, Berman notes. There are other policies that affect the well-being of states’ poorest residents, such as tax policies and government spending on education or transportation. Even zoning laws can have an influence.
CORRECTION: An earlier version of this post incorrectly described the pattern shown in the graph above. States with fewer poor residents tend to provide them with more-generous safety nets.