All affluent countries offer safety nets of sorts, a set of government transfer programs that assist families laid low by financial circumstances. America is atypical in that individual states control the scale and scope of some key safety net programs available to their residents, leading to significant variations in benefits determined by where recipients live.

Here we investigate the degree to which a state’s political leanings are associated with the generosity of state-directed benefit programs, the interaction of state programs with federal safety net support and the implications for the size and incentives of the safety net package as a whole. You might be surprised by our conclusions.

Adding It All Up

Nobody has a lock on defining what constitutes a safety net program and what doesn’t. We focus on a handful of large programs that most people would agree fit the definition – government cash and “near-cash” support for low-income, single-parent families with children.

• Supplemental Nutrition Assistance Program (federally directed). Formerly the Food Stamp Program, SNAP subsidizes grocery purchases. It is available to households living below 130 percent of the government’s official poverty line and is the largest of the programs we consider, with over $100 billion in expenditures annually.
• Federal Child Tax Credit, refundable portion (federally directed). The Child Tax Credit provides up to $2,000 per child as a tax credit for families. Of that, $1,700 is refundable, meaning families can receive that amount as cash even if they have no federal income tax liability to offset. However, families must have at least $2,500 in earnings to claim the first dollar of the credit, and the credit phases in with income. As a result, the refundable portion offers support to the working low-and moderate-income families – but not the poorest families.

• Federal Earned Income Tax Credit (federally directed). The EITC is a fully refundable tax credit that primarily subsidizes employed workers with children. Like the CTC, it excludes families without earnings. Thus the primary beneficiaries are the poor and near-poor who hold down jobs.

• State Earned Income Tax Credit (state-directed). EITCs are now provided by 31 states, the District of Columbia, Guam and Puerto Rico, most of them refundable. In 2019, the year on which this analysis focuses, 29 states had their own EITCs. They typically are structured as a percentage of the federal EITC, and therefore similarly benefit the working poor and near-poor.

• Temporary Assistance for Needy Families (state-directed). Formerly Aid to Families with Dependent Children – what most people meant by “welfare” – this program supports families with cash assistance on a temporary, month-to-month basis. Since the welfare reform sponsored by the Clinton administration in 1996, the program has shrunk dramatically from a caseload of about 5 million families to around 1 million today. While TANF is funded partially with federal block grants to states and partially with state funds, individual states have a great deal of discretion over who gets the benefits and how much they get.

Again, to be clear, the term “safety net” is commonly used to refer to a wider range of programs, including unemployment insurance, Medicaid, Social Security and a variety of other state and local supports that are not covered here. Our analysis focuses on the main cash and near-cash programs serving single-parent families listed above.

We aimed at assessing the generosity of each state with regard to this set of benefits in 2019, before the pandemic led to radical increases in support that have since expired or been repealed. To adjust for differences in economic conditions across states, we consider a fixed, nationally representative group of single-parent families using their observed earnings and family structure. (For simplicity, we exclude families with adults over 65, immigrants and members with reported disabilities from the analysis.)

We calculate benefits available to each family in the sample under the rules of each state. The average imputed benefit amount across single-parent families is our measure of state generosity.

Due to the way we constructed it, the measure holds constant differences in demographic factors and earnings across states to isolate what we are really after: variations in benefit rules. Notably, our calculations reflect the fact that the federal SNAP benefit formula counts state TANF benefits as income, so state TANF decisions indirectly affect federal generosity. When calculating state group averages to identify trends, we weight benefits by 2019 state population size and exclude the outliers Alaska and Hawaii because they have different official poverty thresholds and federal SNAP rules. Our benefit values are all adjusted to 2022 prices.

As a result of varying rules, families in different states experience a wide range of eligibility and benefit levels. For example, an average single-parent family was eligible to receive $8,055 in combined cash and food assistance in 2019 in Minnesota if they fully accessed all programs, while they would have received just $5,122 if they lived in neighboring Wisconsin. Importantly, because the generosity measure is constructed using a consistent set of families, differences shown in Figure 1 are solely due to state differences in eligibility and benefits along with the indirect effects of those on federal benefits.

One reason states might choose different benefit formulas is that support goes further in more affordable locations. We therefore recalculate the benefits with cost-of-living adjustments (COLAs) that correct for differences in state-specific living expenses to make an arguably more accurate evaluation of the programs’ impacts on beneficiaries. Figure 2 shows total state generosity in 2019 with and without COLA.

Note that COLAs moderate, but do not eliminate, differences in generosity across states. In Oklahoma, for example, the nonadjusted value of combined federal and state benefits was on average $5,669 per family. However, due to the lower-than-average cost of living in the state, the adjusted value was $6,329. In California, the COLA calculation has the opposite effect: the non-COLA value of benefits was $7,328, while the COLA-corrected value was $6,603. It should not be surprising, then, that low-benefit states typically had the lower costs of living (Figure 2).

Blue State Generosity

Where does ideology come into the picture? We assay the political preferences of individual states using the popular vote margin between Joe Biden and Donald Trump in the 2020 presidential election. This is calculated by finding the difference between the number of votes for Biden and the number of votes for Trump, then dividing by the sum of both. We define “red” states as those that voted for Donald Trump over Joe Biden by a five-percentage- point margin or more, “blue” states as those that voted for Biden over Trump by at least the same margin, and “purple” states as those that had less than a five-percentage- point vote margin between the two candidates.

The two state-directed safety net programs, TANF and state EITC, provide cash benefits. States determine who qualifies for TANF and how much they can receive. Thus adding together the generosity indexes for state EITC and TANF yields a measure of state-directed generosity. Since states have discretion over state-directed generosity, the index is likely to reflect the policy priorities of each state.

Figure 3A shows the state-directed generosity for each state plotted against its presidential vote margin. States on the right side of zero voted for Biden, while those on the left side voted for Trump.

The graph reveals a clear positive relationship between the two variables: bluer states offer more generous state-benefit packages. In Figure 3B, we can see that this relationship holds even after adjusting for differences in the state-by-state cost of living, which tends to be higher in blue states.

population-weighted average of 55 percent less in state-directed benefits than the same families would have received from blue states – an annual difference of $1,365 (population- weighted benefits were $1,130 in red states and $2,495 in blue states). This calculation uses dollars that are not adjusted for the cost of living, though. Using the COLA, the gap between the state groups is smaller: families in red states receive 48 percent lower state-directed benefits on average than families in blue states, or $1,122 less.

Federal safety net programs – that is, SNAP along with the refundable portion of the federal CTC and the federal EITC – narrow the red-blue gap. Given our approach of imputing benefits for a fixed sample, state differences in the index of federal generosity stem only from the way that federal programs interact with state programs. In particular, the fact that TANF income is considered in determining SNAP eligibility means that families in states with more generous TANF programs are eligible for smaller SNAP benefits.

Here’s where the numbers get really interesting: federal benefits have an inverse relationship with the Biden vote share. Blue states, which are more ideologically in tune with generous safety net benefits, generally receive less in federal safety net support, while red states receive more. This pattern is even more pronounced after accounting for differences in the cost of living (Figures 4A and 4B).

Using non-adjusted and population-weighted numbers, the federal government provides 8 percent more in benefits to red states than to blue states. But taking COLA into consideration, this gap widens significantly: red states receive 23 percent more from the federal government than blue states. Thus, on average, typical single-parent families in blue states receive $924 less in COLA-adjusted federally directed benefits than they would if they lived in the average red state ($4,985 versus $4,061).

SNAP benefits tend to be higher in states with smaller TANF programs because cash welfare assistance income is considered when determining eligibility. As a result, populations in red states receive an average of 31 percent of their benefits in food support, compared with 21 percent in blue states. Purple states follow the pattern of red states with 32 percent in food support.

Generosity to Non-Earners

One of the most debated aspects in fashioning safety nets is the degree to which programs should benefit families without earnings – often those most in need – or should prioritize incentivizing work. By supporting families with little or no earnings, the conservative argument goes, TANF may disincentivize work and inhibit self-sufficiency.

Now, TANF does have work requirements built-in (and not included in our calculations of generosity), making it more work-oriented than its traditional cash welfare predecessor. But benefits are not fully conditional on earnings the way they are with EITC and CTC programs. To the extent that right-leaning states aim to incentivize work, they may choose to build out a state EITC/CTC program and reduce TANF spending, thereby increasing the implicit work incentives in the safety net structure as a whole.

To assess the work incentives in the set of programs we consider, we first look at what each family would receive if they earned zero dollars compared to benefits if they earned $15,000 annually.

Comparing averages for each state group – blue, purple and red – allows for comparison in policy structure. We find that blue states offer higher benefits at all income levels, notably providing much higher support for families with zero income than most red and purple states do. Benefits for families making $15,000 in blue states are 15 percent lower than those for families with no earned income in blue states (a decrease of about $2,000), which is a significantly wider difference than in purple and red states (4 percent for both groups). The gap in benefits between families with $0 and $15,000 in income is smaller in red and purple states, so there is more incentive to work but also less support for the lowest-income families.

For families making $30,000 annually (not shown in the figures), the amount of benefits an average family receives is relatively consistent across states. The gap in average benefits between no income and $30,000 is $5,993 for blue states, $5,539 for purple states and $5,706 for red states. In other words, states have similar levels of support for families with moderate earnings, and differences in the incentive to work across states stem mainly from state generosity for non-earners.

Getting to Here from There

Compare each state’s average benefits in 2001 to their benefits in 2019. Breaking the states down into three groups again based on the 2020 vote margin, we find that there were increases across the board, at least before COLA. The average increase between 2001 and 2019 was $806 for blue states (14 percent), $555 for purple states (11 percent) and $811 for red states (16 percent). Expansions in the federal SNAP program and refundable tax credits were largely responsible for these changes.

Takeaways

The conclusions of our analysis that leap off the page are worth repeating. Blue states generally provide more state-directed benefits than red states do, especially to families without earnings. Federally directed benefits help to offset the differences, especially by expanding food support in states with low TANF generosity.

But note that expansions in the federal safety net have resulted in increasing generosity over time in both red and blue states. This should be somewhat reassuring to those who believe that in a national economy in which there are few formal barriers to the state-to-state movement of people and capital, the safety net should reflect national rather than regional values.

The levelling role of federal payments also leads to a paradox: all else equal, states with less political support for safety net spending receive more federal benefit transfers, and cuts to programs like SNAP will disproportionately affect the poorest families in these states.