The US Census Bureau released its annual poverty report last week. The report marks the 50th anniversary of President Lyndon Johnson’s War on Poverty. Since the beginning of those government programs, US taxpayers have spent over $22 trillion, in constant 2012 dollars, on anti-poverty programs. Adjusted for inflation, this spending, which does not include Social Security or Medicare, is three times the cost of all military wars in US history since the Revolution. Note this amount is also greater than the total national debt.
The official poverty rate was reported for 2013 as 14.5% of the population. It is interesting to note that this rate was virtually the same in 1966, two years after Johnson launched his programs. Since the mid 1960s, poverty has ranged from a low of around 12% to a high of 15%. It seems to rise by a few percentage points when the economy slows and drop by a few when the economy increases.
Robert Rector and Rachel Sheffield of the Heritage Foundation, point out in a recent report that the static nature of poverty is perplexing because the poverty rate fell dramatically before the War on Poverty began. In 1950, the poverty rate was 32.2%. By 1965, the first year the programs started, the rate had already fallen to 17.3%. The puzzling fact is that the rate has not changed while means tested welfare spending has soared. In 2013 the federal government ran over 80 different welfare programs that provided cash, food, housing, and medical care among other services to low income Americans. Over 100 million people, nearly one in three Americans, received benefits from at least one of the programs. Poverty spending totaled $943 billion in 2013 at an average cost of $9,000 per recipient.
Today, adjusting for inflation, 16 times more money is spent on poverty programs than when the War on Poverty started. As the spending has soared progress in reducing the poverty rate has stopped. Part of this is because of how the Census Bureau counts poverty. A family is poor if income is below a certain threshold. But the Census Bureau leaves out nearly all government means-tested spending on the poor as income. This trick makes it so welfare programs could grow infinitely while poverty remains unchanged.
But this also understates the living condition of people in poverty in the US. According to the Federal Government, 80% of poor households have air conditioning; before 1963 only 12% of the entire US population had AC. Almost 75% of the poor have a vehicle and 31% have two or more. 66% have at least one DVD player. Over 50% of poor families with children have a video game system. The average living space of a poor person in the US, exceeds the average space for the average income person in Sweden, France, Germany, and the United Kingdom.
According to figures from the USDA, America’s poor and middle class children consume virtually the same amount of protein, vitamins, and minerals. Most poor teenagers today are one inch taller and 10 pounds heavier than the average GI who stormed the beaches of Normandy in WWII.
I don’t think the results from Johnson’s War are what he anticipated. He stated, “We want to give the forgotten fifth of our people opportunity, not doles.” He said the war would make “important reductions” in future welfare spending. The goal was to make “taxpayers out of taxeaters”. Basically, the percentage of Americans that are not self-sufficient has not changed over the past 50 years in spite of large amounts of government spending that was designed to eliminate poverty.
So what happened for us to spend all this money and yet not be able to move the needle toward more self-sufficiency? Education has played a role. High school graduation rates have largely plateaued after 1970. This is during a time when most careers require more education and training. For example, a person could make a decent living ratcheting lug nuts on tires as the cars traveled down a Detroit assembly line in 1970. Today, that job has been replaced by robots. There is a growing divergence between the rich and poor in the world economy today. Those with the skills and education in demand will succeed.
During this time, there has also been a slowdown of wage growth among low-skilled male workers but there has also been an increase in wages among women. Another factor that has seemed to contribute to increased poverty has been a decline of the American family unit. In 1965, only 7% of children were born outside of marriage, today that number is over 40%. As the welfare state has expanded, marriage has stagnated and single parenthood has soared.
Now, I realize that any single parent run household has their own path of how they came to the place where they are at today. Single parents have one of the toughest jobs there is. (I realize how tough it is to manage kids with two parents!) These comments are not designed to criticize any person’s position in life. This is just to make some general overview comments. According to the Census Bureau, single parent families are twice as likely to be in poverty as families with married couples. One may conclude that the growth of single parent households has contributed to the stagnation of improvements we have hoped to see in the poverty rate. Also, as means-tested welfare benefits were expanded, in some communities, welfare became a substitute for having a husband at home, according to the Heritage Foundation.
The church we go to have a lot of programs to help people in our community that are struggling. These deal from helping them break addictions, to fixing cars of single parent and poor families, to working with those incarcerated. One thing that is mentioned is to avoid giving “toxic charity”. Constantly giving someone a handout where they are dependent upon you is toxic. Teaching that person a skill so they can eventually become self-sufficient, as President Johnson envisioned, is truly helping.
At the 50th anniversary of the War on Poverty, it appears a lot of the money we have spent as a country could be categorized as toxic charity. The benefits have moved from becoming a safety net to a hammock for some people. Many of the programs have discouraged work. They have also taken away the core desire in each of us to work, create, and achieve great things.
There is no denying that we need to have ways to help those in our country who are in need. There is also no denying that things are tough in our economy as the median family income is lower today than it was before the recession. The questions are how should we change these government programs so they are more effective. Finding ways to unshackle businesses from the burdensome government taxes and regulation so more productivity will occur and people will get jobs is a start. Welfare programs for able-bodied recipients should require education to move them off the program and also require work. Anti-marriage penalties should be removed from welfare. We also need more non-profits, churches, and communities to step-up as assistance at the local levels is more efficient than Washington mandates. The success of the program should be defined by how many people move off the welfare system to self-sufficiency, as Ronald Reagan once said.