Abstract
In his January 1964 State of the
Union address, President Lyndon Johnson proclaimed, “This administration today,
here and now, declares unconditional war on poverty in America.” In the 50
years since that time, U.S. taxpayers have spent over $22 trillion on
anti-poverty programs. Adjusted for inflation, this spending (which does not
include Social Security or Medicare) is three times the cost of all U.S.
military wars since the American Revolution. Yet progress against poverty, as
measured by the U.S. Census Bureau, has been minimal, and in terms of President
Johnson’s main goal of reducing the “causes” rather than the mere
“consequences” of poverty, the War on Poverty has failed completely. In fact, a
significant portion of the population is now less capable of self-sufficiency
than it was when the War on Poverty began.
This week, the U.S. Census Bureau is
scheduled to release its annual poverty report. The report will be notable
because this year marks the 50th anniversary of the launch of President Lyndon
Johnson’s War on Poverty. In his January 1964 State of the Union address,
Johnson proclaimed, “This administration today, here and now, declares
unconditional war on poverty in America.”[1]
Since that time, U.S. taxpayers have
spent over $22 trillion on anti-poverty programs (in constant 2012 dollars).
Adjusted for inflation, this spending (which does not include Social Security
or Medicare) is three times the cost of all military wars in U.S. history since
the American Revolution. Despite this mountain of spending, progress against
poverty, at least as measured by the government, has been minimal.
The Welfare–Poverty Paradox
This week, the Census Bureau will
most likely report that the poverty rate last year was about 14 percent,
essentially the same rate as in 1967, three years after the War on Poverty was
announced. As Chart 1 shows, according to the Census, there has been no net progress
in reducing poverty since the mid to late 1960s. Since that time, the poverty
rate has undulated slowly, falling by two to three percentage points during
good economic times and rising by a similar amount when the economy slows.
Overall, the trajectory of official poverty for the past 45 years has been flat
or slightly upward.
The static nature of poverty is
especially surprising because (as Chart 1 also shows) poverty fell dramatically
during the period before the War on Poverty began. In 1950, the poverty rate
was 32.2 percent. By 1965 (the first year during which any War on Poverty
programs began to operate), the rate had been cut nearly in half to 17.3
percent.[2]
The unchanging poverty rate for the
past 45 years is perplexing because anti-poverty or welfare spending during
that period has simply exploded. As Chart 2 shows, means-tested welfare
spending has soared since the start of the War on Poverty. In fiscal year 2013,
the federal government ran over 80 means-tested welfare programs that provided
cash, food, housing, medical care, and targeted social services to poor and
low-income Americans.
Overall, 100 million
individuals—nearly one in three Americans—received benefits from at least one
of these programs. Federal and state governments spent $943 billion in 2013 on
these programs at an average cost of $9,000 per recipient. (Again, Social
Security and Medicare are not included in the totals.)
Today, government spends 16 times
more, adjusting for inflation, on means-tested welfare or anti-poverty programs
than it did when the War on Poverty started. But as welfare spending soared,
the decline in poverty came to a grinding halt. As Chart 2 shows, the more the
government spent, the less progress against poverty was made.
How can this paradox be explained?
How can government spend $9,000 per recipient and have no apparent impact on
poverty? The answer is that it can’t.
The conundrum of massive
anti-poverty spending and unchanging poverty rates has a simple explanation.
The Census Bureau counts a family as “poor” if its income falls below specific
thresholds,[3] but in counting “income,” the Census
omits nearly all of government means-tested spending on the poor.[4] In effect, it ignores almost the entire
welfare state when it calculates poverty. This neat bureaucratic ploy ensured
that welfare programs could grow infinitely while “poverty” remained unchanged.
Living Conditions of the Poor in America[5]
Consumption
by Poor Families. Since the Census Bureau
dramatically undercounts the actual incomes of the poor, it should be no
surprise to find that the U.S. Department of Labor routinely reports that poor
families spend $2.40 for every $1.00 of their reported income.[6] If public housing benefits are added to
the tally, the ratio of consumption to income rises to $2.60 for every $1.00.
In other words, the “income” figures that the Census Bureau uses to calculate
poverty dramatically undercount the economic resources available to
lower-income households.
Amenities. Because the official Census poverty report undercounts
welfare income, it fails to provide meaningful information about the actual
living conditions of less affluent Americans. The government’s own data show
that the actual living conditions of the more than 45 million people deemed
“poor” by the Census Bureau differ greatly from popular conceptions of poverty.[7] Consider these facts taken from various
government reports:[8]
- Eighty percent of poor households have air conditioning. By contrast, at the beginning of the War on Poverty, only about 12 percent of the entire U.S. population enjoyed air conditioning.
- Nearly three-quarters have a car or truck; 31 percent have two or more cars or trucks.[9]
- Nearly two-thirds have cable or satellite television.
- Two-thirds have at least one DVD player, and a quarter have two or more.
- Half have a personal computer; one in seven has two or more computers.
- More than half of poor families with children have a video game system such as an Xbox or PlayStation.
- Forty-three percent have Internet access.
- Forty percent have a wide-screen plasma or LCD TV.
- A quarter have a digital video recorder system such as a TIVO.
- Ninety-two percent of poor households have a microwave.
For decades, the living conditions
of the poor have steadily improved. Consumer items that were luxuries or
significant purchases for the middle class a few decades ago have become
commonplace in poor households. In part, this is caused by a normal downward
price trend following the introduction of a new product. Initially, new
products tend to be expensive and available only to the affluent. Over time,
prices fall sharply, and the product becomes widely prevalent throughout the
population, including poor households. This is a general sign of desirable
economic progress.
Liberals use the declining relative
prices of many amenities to argue that even though poor households have air
conditioning, computers, cable TV, and wide-screen TVs, they still suffer from
substantial material deprivation in basic needs such as food and housing. Here
again, the data tell a different story.
Poverty,
Nutrition, and Hunger. Despite impressions to the
contrary, most of the poor do not experience undernutrition, hunger, or food
shortages.[10] Information on these topics is collected
by the household food security survey of the U.S. Department of Agriculture. The
USDA survey shows that in 2009:
- Ninety-six percent of poor parents stated that their children were never hungry at any time during the year because they could not afford food.
- Some 83 percent of poor families reported that they had enough food to eat.
- Some 82 percent of poor adults reported that they were never hungry at any time in the prior year due to lack of money to buy food.
- As a group, America’s poor are far from being chronically undernourished. The average consumption of protein, vitamins, and minerals is virtually the same for poor and middle-class children and in most cases is well above recommended norms. Poor children actually consume more meat than do higher-income children and have average protein intakes 100 percent above recommended levels.[11]
- Most poor children today are, in fact, supernourished and grow up to be, on average, one inch taller and 10 pounds heavier than the GIs who stormed the beaches of Normandy in World War II.[12]
Housing
and Poverty. TV newscasts about poverty in
America generally depict the poor as homeless or as residing in dilapidated
living conditions. While some families do experience such severe conditions,
they are far from typical of the population defined as poor by the Census
Bureau. The actual housing conditions of poor families are very different.[13]
- Over the course of a year, only 4 percent of poor persons become temporarily homeless. At a single point in time, one in 70 poor persons is homeless.[14]
- Only 9.5 percent of the poor live in mobile homes or trailers; 49.5 percent live in separate single-family houses or townhouses, and 40 percent live in apartments.
- Forty-two percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
- Only 7 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
- The average poor American has more living space than the average individual living in Sweden, France, Germany, or the United Kingdom. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)[15]
- The vast majority of the homes or apartments of the poor are in good repair and without significant defects.
By his own report, the average poor
person had sufficient funds to meet all essential needs and was able to obtain
medical care for his family throughout the year whenever needed.
Of course, poor Americans do not
live in the lap of luxury. The poor clearly struggle to make ends meet, but
they are generally struggling to pay for cable TV, air conditioning, and a car,
as well as food for the table. The average poor person is far from affluent,
but his lifestyle is equally far from the images of stark deprivation purveyed
by advocacy groups and the mainstream media. The challenges go much deeper than
a lack of material resources.
Was the War on Poverty a Success?
Do the higher living standards of
the poor mean that the War on Poverty has been successful? The answer is no,
for two reasons. First, the incomes and living standards of less affluent
Americans were rising rapidly well before the War on Poverty began. (See Charts
1 and 2.)
Second, and more important, to
assess the War on Poverty, we must understand President Johnson’s actual goal
when he launched it. The original goal of the War on Poverty was not to prop up
living standards artificially through an ever-expanding welfare state. Instead,
Johnson declared that his war would strike “at the causes, not just the
consequences of poverty.”[16] He added, “Our aim is not only to
relieve the symptom of poverty, but to cure it and, above all, to prevent it.”[17]
In other words, President Johnson
was not proposing a massive system of ever-increasing welfare benefits, doled
out to an ever-enlarging population of beneficiaries. His proclaimed goal was
not a massive new system of government handouts but an increase in
self-sufficiency: a new generation capable of supporting themselves out of
poverty without government handouts.
LBJ actually planned to reduce, not
increase, welfare dependence. He declared, “We want to give the forgotten fifth
of our people opportunity not doles.”[18] He claimed that his war would enable the
nation to make “important reductions” in future welfare spending: The goal of
the War on Poverty, he stated, would be “making taxpayers out of taxeaters.”[19] Because he viewed the War on Poverty as
a means to increase self-support, Johnson proclaimed that it would be an
“investment” that would “return its cost manifold to the entire economy.”
Measuring Self-Sufficiency
How has the War on Poverty fared
with respect to President Johnson’s paramount goal of promoting
self-sufficiency? What return have the taxpayers reaped from their $22 trillion
“investment”? Paradoxically, the answers to these questions are best provided
by the Census Bureau’s official poverty statistics.
As noted, Census poverty figures are
misleading as a measure of actual living conditions because they exclude nearly
all welfare assistance. They do, however, provide a fairly accurate measure of
a family’s wages and earnings. This means that the official Census “poverty”
figures are, in fact, a good measure of President Johnson’s original goal of
promoting “self-sufficiency”: the ability of a family to sustain itself above
the poverty level through its own work and investment without reliance on
welfare aid.
Chart 3 repeats the official Census
“poverty” figures from Chart 1 but relabels them more accurately as a
“self-sufficiency” index. The story told by the chart is striking.
In the decade and a half before the
start of the War on Poverty, low-income Americans experienced dramatic
improvements in self-sufficiency. The share of Americans who lacked
self-sufficiency was cut nearly in half, falling from 32.2 percent in 1950 to 17.3
percent in 1965.
During the first six years after
Johnson announced the War on Poverty (1965 to 1970), self-sufficiency continued
to improve steadily. New government programs were initiated. Means-tested
welfare spending increased sharply from $57 billion in 1964 to $141 billion
(measured in constant 2012 dollars).
Some authors suggest that the
continuing decline in official poverty from 1965 to 1970 demonstrates the
initial success of the War on Poverty, but over 90 percent of the increased
spending during this period was in the form of non-cash benefits that the
Census does not count for purposes of measuring poverty.[20] It is therefore impossible for the
expansion of means-tested welfare to have directly produced the large decline
in official poverty that occurred during this period.
Programs that in theory could have
reduced poverty indirectly by raising wages and employment were regarded as
largely ineffective and were limited in scope. For example, in the late 1960s,
only 300,000 participants per year were enrolled in Job Corps and related
training programs.[21]
Thus, it is implausible to suggest
that the decline in official poverty between 1965 and 1970 was due
substantially to the direct or indirect effects of War on Poverty programs.
Rather, official poverty declined and self-sufficiency improved for the same
general reason that these improvements occurred before 1965: a steady rise of
wages and education levels.
Unfortunately, the situation changed
in the early 1970s. The steady improvement in self-sufficiency slowed and then came
to a halt. For the next four decades, self-sufficiency has remained stagnant or
has slightly worsened.
The big picture is clear: For 20
years, from 1950 to 1970, self-sufficiency (and official poverty) improved
dramatically. In the next four decades, there was no progress at all; the
self-sufficiency rate remained essentially static. In terms of President
Johnson’s main goal of reducing the “causes” rather than the mere
“consequences” of poverty, the War on Poverty has failed completely, despite
$22 trillion in spending. In fact, a significant portion of the population is
now less capable of self-sufficiency than it was when the War on Poverty began.
What Went
Wrong?
The lack of progress in
self-sufficiency for the past four decades is stunning. Many factors have
contributed to this problem. For example, high school graduation rates, after
increasing rapidly throughout the 20th century, largely plateaued after 1970.[22] Broad economic factors also played a
role, especially the slowdown in wage growth among low-skilled male workers
since 1973. On the other hand, employment and wages among women increased, and
this should have led to increased self-sufficiency.[23]
Although President Johnson intended
the War on Poverty to increase Americans’ capacity for self-support, exactly
the opposite has occurred. The vast expansion of the welfare state has
dramatically weakened the capacity for self-sufficiency among many Americans by
eroding the work ethic and undermining family structure.
When Johnson launched the War on
Poverty, 7 percent of American children were born outside of marriage. Today,
the number is over 40 percent. (See Chart 4.) As the welfare state expanded,
marriage stagnated and single parenthood soared.
As Chart 5 shows, there has been no
significant increase in the number of married-couple families with children
(both poor and non-poor) in the U.S. since 1965. By contrast, the number of
single-parent families with children has skyrocketed by nearly 10 million,
rising from 3.3 million such families in 1965 to 13.2 million in 2012. Since
single-parent families are roughly four times more likely than married-couple
families to lack self-sufficiency (and to be officially poor), this unravelling
of family structure has exerted a powerful downward pull against
self-sufficiency and substantially boosted the official child poverty rate.
Since the beginning of the War on
Poverty, the absolute number of married-couple families with children in
official poverty has declined, but as Chart 6 shows, the number of
single-parent families in official poverty (or lacking self-sufficiency) has
more than tripled, increasing from 1.6 million in 1965 to 4.8 million today.
When the War on Poverty began, 36 percent of poor families with children were
headed by single parents; today, the figure is 68 percent. [24]
The War on Poverty crippled marriage
in low-income communities. As means-tested benefits were expanded, welfare
began to serve as a substitute for a husband in the home, eroding marriage
among lower-income Americans. In addition, the welfare system actively
penalized low-income couples who did marry by eliminating or substantially
reducing benefits. As husbands left the home, the need for more welfare to
support single mothers increased. The War on Poverty created a destructive
feedback loop: Welfare promoted the decline of marriage, which generated the
need for more welfare.
Today, unwed childbearing and the
resulting growth of single-parent homes is the most important cause of official
child poverty.[25] If poor women who give birth outside of
marriage were married to the fathers of their children, two-thirds would
immediately be lifted out of official poverty and into self-sufficiency.[26]
The welfare state has also reduced
self-sufficiency by providing economic rewards to able-bodied adults who do not
work or who work comparatively little. The low level of parental work is a
major cause of official child poverty and the lack of self-sufficiency. Even in
good economic times, the median poor family with children has only 1000 hours
of parental work per year. This is the equivalent of one adult working 20 hours
per week. If the amount of work performed in poor families with children was
increased to the equivalent of one adult working full-time through the year,
the poverty rate among these families would drop by two-thirds.[27]
Conclusion
This lack of progress in building
self-sufficiency is due in major part to the welfare system itself. Welfare
wages war on social capital, breaking down the habits and norms that lead to
self-reliance, especially those of marriage and work. It thereby generates a
pattern of increasing intergenerational dependence. The welfare state is
self-perpetuating: By undermining productive social norms, welfare creates a
need for even greater assistance in the future.
As the War on Poverty passes the
half-century mark, it is time to rein in the endless growth in welfare spending
and return to LBJ’s original goals. As the economy improves, total means-tested
spending should be moved gradually toward pre-recession levels. Able-bodied,
non-elderly adult recipients in all federal welfare programs should be required
to work, prepare for work, or at least look for a job as a condition of
receiving benefits.
Finally—and most important—the
anti-marriage penalties should be removed from welfare programs, and long-term
steps should be taken to rebuild the family in lower-income communities.
—Robert
Rector is a Senior Research Fellow and Rachel Sheffield is a Policy Analyst
in the Institute for Family, Community, and Opportunity at The Heritage
Foundation.
See entire report for references and
charts
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