Politics & Policy

How Poor Is ‘Poor’?

What does it mean to say that 46.2 million Americans live in “poverty”?

Yesterday morning, the U.S. Bureau of the Census released its annual report on income and poverty, saying that some 46.2 million Americans — 15 percent of the population — were poor in 2011. The poverty rate did not fall from the prior year but remained at a near record high, the agency said.

The rise in poverty from 36.4 million in 2006 to 46.2 million in 2011 was due initially to the recession and now to the failure of the Obama administration to restore jobs in the economy.

According to the Census Bureau, some 11 million more adults are without work today than before the recession began. This number has been getting worse year by year. Similarly, roughly 8 million fewer Americans work fulltime through the year. The collapse of jobs sharply increases the total poverty number.

#ad#But what does it mean to say that 46.2 million Americans are “poor”? For most people, the word “poverty” suggests near destitution: an inability to provide nutritious food, clothing, and reasonable shelter for one’s family. However, only a small number of the 46.2 million persons classified as “poor” by the Census Bureau fit that description.

Nearly all “poor” persons live in houses or apartments that are in good repair and not overcrowded; in fact, the dwelling of the average poor American is larger than the house or apartment of the average non-poor person in countries such as France and the United Kingdom. By their own reports, most poor persons in America had sufficient funds to meet all essential needs and to obtain medical care for family members throughout the year whenever needed.

Some 80 percent of poor adults and 96 percent of poor children were never hungry at any time during the year because they could not afford food. The average consumption of protein, vitamins, and minerals is virtually the same for poor and middle-class children and is well above recommended norms in most cases. Some 80 percent of poor households have air conditioning; nearly two-thirds have cable or satellite TV; half have a personal computer; 43 percent have Internet access; and one-third have a wide-screen plasma or LCD TV.

Clearly, there is a wide gap between what the average American thinks when he hears the word “poverty” and the actual living conditions of most persons the Census Bureau defines as poor. In part, this is because the bureau ignores nearly the entire welfare state when it measures poverty.

The Census Bureau determines that a family is poor if its annual “income” falls below specified thresholds. For 2011, the threshold for a family of four was around $23,000. But the bureau doesn’t count welfare benefits such as food stamps, public housing, the earned-income tax credit, and many other programs as “income” for purposes of determining whether a family is poor.

The federal government runs nearly 80 means-tested welfare programs that provide cash, food, housing, medical care, and targeted social services to poor and low-income persons. In FY 2011, government spent $927 billion on these programs, not counting Social Security and Medicare. Roughly one-third of the U.S. population received aid from at least one of these programs, at an average cost of $9,000 per recipient.

But the Census Bureau counts only about 3 percent of this $927 billion as “income” for purposes of measuring poverty. This missing means-tested welfare spending — taxpayer funds spent on the poor but not counted by the Census Bureau for purposes of measuring poverty — exceeds the GDPs of most nations on earth.

If the Census Bureau’s official poverty numbers don’t convey accurate information about poverty, do they tell us anything useful at all? The answer is yes. While the bureau does a lousy job of counting welfare aid, it does a fairly good job of measuring wages and salaries. This means that it provides a fairly accurate picture of “self-sufficiency” — the ability of a family to sustain an income above the poverty level without government welfare assistance.

#page#If the government’s “poverty” figures are reinterpreted as “self-sufficiency” numbers, they’re actually quite informative. The fact that the Census Bureau ignores most welfare assistance is irrelevant, because welfare is specifically excluded from the concept of self-sufficiency.

Although it is misleading to say that 46.2 million Americans were “poor” in 2011, it is accurate to say that 46.2 million lacked self-sufficiency. They were unable to maintain an income above poverty without means-tested welfare aid.

Paradoxically, promoting “self-sufficiency” was the original goal of President Lyndon Johnson’s War on Poverty. Johnson declared that his aim was to eliminate “the causes, not just the consequences of poverty.” He sought to increase the incomes of the poor by increasing families’ capacity for self-support, not by increasing dependence on welfare. LBJ actually promised to reduce, not increase, welfare dependence. The goal of the War on Poverty, he stated, would be “making taxpayers out of tax-eaters.”

#ad#Clearly, things haven’t worked out as LBJ planned. The U.S. has spent over $19 trillion on means-tested welfare since he launched the War on Poverty. But Americans are no more capable today of supporting themselves through work than they were in the mid-1960s.

The short-term rise in families lacking self-sufficiency is owing to the failure of the Obama administration to restore jobs in the economy. But self-sufficiency had not substantially improved even before the recession. The long-term failure to boost self-sufficiency (and decrease official “poverty”) has been caused largely by the welfare state itself, which has eroded the work ethic and severely undermined marriage in low-income communities.

When the War on Poverty began, 7 percent of American children were born outside marriage; today the number is 42 percent. Single-parent families are four times more likely to be “poor” or non-self-sufficient than are families headed by a married couple with the same level of education.

What can be done to increase self-sufficiency and reduce official “poverty”? In the short term, the number of jobs should be increased by easing the threat of excessive taxes and greater regulation on employers and investors who create jobs. In the long term, welfare must be transformed from a system that discourages work and marriage into a system that promotes both. All able-bodied adult recipients of means-tested welfare aid should be required to work or prepare for work as a condition of receiving aid. And marriage must be incrementally rebuilt in communities where it has all but vanished.

These steps are best for the welfare recipients, for taxpayers, and for society as a whole. They are necessary if we are ever to move toward Johnson’s original goal of self-sufficiency for all Americans.

— Robert Rector is senior research fellow in domestic policy studies at the Heritage Foundation and author of the new paper “Marriage: America’s Greatest Weapon Against Child Poverty.”

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