7.5 The Social Safety Net

LO 7.5: Discuss how government programs help people across the income and wealth hierarchy.

A social safety net comprises policies and programs provided by governments and private institutions, such as churches, to support individuals and families facing financial hardship or other difficulties. Social safety net programs include unemployment insurance, food assistance programs, and housing aid, and they can help reduce inequality.

Photo 7.15

A Social Safety Net Can Include Food Assistance Programs

Most government aid consists of non-cash benefits such as tax credits, vouchers to help pay for food or housing, and various legal ways to shelter income from taxes. Moreover, households across the income spectrum qualify for a range of non-cash benefits. For example, low-income individuals may be eligible for the Earned Income Tax Credit, Housing Choice Vouchers (Section 8), SNAP, and other programs. Higher-income households earning at least $100,000 can shelter some of their income from taxation if it takes the form of capital income, such as income gained from stocks, real estate, and contributions to 529 accounts. Households across the income spectrum have access to non-cash benefits taking different forms.

The United States stands out as an exceptionally wealthy country with strong economic growth. However, it spends only 22.7% of its gross domestic product (GDP) on social spending (see Figure 7.16) (Ortiz-Ospina et al., 2025). In contrast, France spends 31.6% of its GDP on social programs, and many other countries surpass the United States on this measure as well.