January 14 2014
by Joann Weiner
The Obama administration proclaimed that the United States has made significant gains in the war on poverty in the 50 years that have passed since President Lyndon B. Johnson declared an “unconditional war on poverty.” Using a new measure of the poverty rate, a report last week from the president’s Council of Economic Advisors showed that about one in six Americans lived in poverty in 2012, compared with one in four Americans in 1967. That’s progress.
Yet, 50 years after the war began, more than 46 million Americans live below the poverty line, including 25 million women and girls.
Making matters worse, this war has been costly. As the Heritage Foundation noted, the U.S. government has spent more than $20 trillion fighting poverty without much to show for it.
Moreover, while the figures in the White House report showed that the poverty rate has fallen by one third, figures based on the official poverty rate show that today’s 15 percent poverty rate is about where it was when LBJ was president.
Sen. Marco Rubio (R-Fla) last week declared that the country has lost the war on poverty.
Why has it been so difficult to reduce poverty in America?
It turns out that one reason it’s hard to reduce poverty has nothing to do with poverty itself. Instead, it’s because it’s pretty hard to even figure out how bad the problem is. Without knowing the size of the battle, it’s hard to know whether the U.S. is winning the war.
One reason it is difficult is because there’s a big difference between the official measure of poverty — the one that shows no progress in reducing poverty — and the supplemental measure of poverty — the one that shows significant progress.
For example, according to official statistics, a family of four is considered to live in poverty if its annual cash income is less than about $23,000. A single mom with three kids working full time would have to earn more than $12 an hour after taxes to rise out of poverty without any government assistance.
The official poverty measure is based on the idea that a family needs a certain amount of money to eat a decent meal. In the early 1960s, Mollie Orshansky, an economist at the Social Security Administration, calculated this figure as essentially the cost of a nutritionally adequate diet multiplied by three (she used three because, at the time, families spent about one third of their income on food). This measure has been used as the official poverty yardstick for determining whether someone is deemed eligible for certain “means tested” government benefits.
When figuring out whether a family is in poverty, the official measure includes what’s known as money income before taxes, meaning that it includes not just earnings but also any government benefits paid in cash, such as Social Security, workers compensation benefits and unemployment insurance benefits. However, the figure doesn’t include non-cash benefits, nor does it include taxes, refundable credits or medical or child care expenses. In short, the official measure doesn’t take into account the arsenal of “weapons” the government deploys to help fight the war on poverty.
To remedy these shortcomings, the Census Bureau developed a ”supplemental poverty measure” that would better reflect a person’s economic well-being than the traditional measure. For example, a single mother with three kids might be eligible to receive almost $6,000 from the earned income tax credit. She also might be eligible for housing and heating subsidies, while her kids could receive school lunches. Ignoring these benefits understates her family’s economic well-being. Likewise, if this single mom took a job, she might have to pay for child care, bus fare and appropriate work clothing. Whether she’s working or not, she might also have lots of unreimbursed medical expenses. Ignoring these expenses overstates her economic well-being.
The alternative poverty measure shows the impact of specific government programs on the poverty rate. For example, the elderly poverty rate would be more than three times higher than it is without Social Security. The National Women’s Law Centerreported that the EITC lifted 1.5 million women and 2.9 million kids out of poverty in 2012. Conversely, ignoring unreimbursed medical expenses understates the poverty rate by about 25 percent. In this respect, government tax and transfer programs have significantly reduced the rate of poverty in America since the mid-1960s.
These data also show why Maria Shriver, whose organization just released “The Shriver Report” detailing how “A Woman’s Nation Pushes Back from the Brink,” emphatically argued that the war on poverty hasn’t been a failure. Speaking on NBC’s “Meet the Press,” she said that it was her father, Sargent Shriver, who ran LBJ’s programs, and that many of those programs continue to help people get out of poverty today.
Some women’s groups strongly disagree with The Shriver Report’s recommendations on how to improve women’s economic welfare. The Independent Women’s Forum is one of those groups. In a press statement released today, Sabrina Schaeffer, the executive director of the IWF, argues that the report is “intended to perpetuate the myth that America is inherently unfair to women and girls today, to encourage even greater dependence on the state, and to give government even more control over our lives.”
Whereas Shriver says that government policies fail due to a lack of funding, Schaeffer counters that the real failure lies with the government intervention itself, asserting that this intervention leads to fewer jobs and a less dynamic economy. To Schaeffer, “[o]ur over-bearing government too often is women’s worst enemy.”
Both Rubio and Shriver are right (and wrong) to a great extent about where the country stands in the war on poverty. The number of people living in poverty remains stubbornly high despite the billions of federal dollars spent each year to alleviate poverty. Yet it’s equally true that without these government programs, poverty would likely be much worse than it is today.