A Crazy Welfare Statistic

If we took the entire 2009 total government transfer payments paid to persons and distributed it amongst the households below the poverty line, how much would each household receive?

Answer: $238,490

How much, if we divided all the government transfer payments from 2009 to all U.S. households?

Answer: $17,475

There’s a lot to say about this number. But this is a blog. Here’s what bothers me. Income inequality is alway an issue. It drives the call for more welfare programs. Here we are paying out $17,475 per U.S. household ($35,000, if we just gave it to the 50 percent of households with the lowest incomes). What is going on here!

Perhaps it’s true: the rent is too damn high!

I’m very welcome to comments on this matter. Methodology is discussed below.


Total government outlays (federal,state, and local) is separable into three major categories: (1) government purchases (where the government buys and uses final goods and services, e.g. defense spending, toilet paper for Social Security Administrative offices), (2) Transfer payments (e.g., I take money from you and give it to your grandparents, who spend it), and (3) Interest payments on debt (e.g., paying the interest on government debt). This transfer payment (“government social benefits: to persons”) data is from the Bureau of Economic Analysis (BEA, Table 3.12). I focused on the transfer payments to person (approximately $2.1 trillion dollars in 2009). The largest components of this are Social Security, Medicare, Medicaid, and unemployment payments. The data on households come from the U.S. Census Bureau (U.S. households, households in poverty).

I have generated annual data going back to 1959. I’ve converted it to real, 2009 dollars. Please e-mail me at [email protected] if you’d like to see the data.