NRPLUS MEMBER ARTICLE D oom and gloom about the U.S. economy is very popular right now. One form of it from the left, epitomized by Poverty, by America, a new book from Princeton sociologist Matthew Desmond, says that the U.S. has made no progress against poverty in the past 50 years.
Writing for the New York Times, Desmond wrote of the need to end America’s “addiction to poverty.” He wrote, “Poverty persists in America because many of us benefit from it.” And the trillions spent by government on antipoverty measures over the past 50 years hasn’t been enough. “This rich country has the means to abolish poverty. Now we must find the will to do so,” he wrote.
Today at the American Enterprise Institute, poverty scholars spoke against Desmond’s argument and the negative narrative about American antipoverty programs in general. Kevin Corinth, an AEI senior fellow who previously served at the Joint Economic Committee in Congress and the Council of Economic Advisers at the White House, said of Desmond’s book, “I have read every word, and it’s not good.”
Desmond’s argument, that the last 50 years have seen no progress in America against poverty, is based on the official government measure of poverty. It is true that the official poverty rate has fluctuated between 10 and 15 percent for the past 50 years.
But there’s a problem with that interpretation of the data. “It’s for a very simple reason that serious researchers have known for a very long time: The official poverty measure does not include much of the government assistance,” Corinth said. “If you were to include all the benefits we provide, you get a much different picture of poverty.”
Corinth and other researchers have calculated the “full-income poverty rate,” which includes all the government assistance poor people receive. Where the official poverty rate was 10.5 percent in 2019, the full-income poverty rate was 1.6 percent. The full-income poverty rate was around 19 percent in 1963, around 7 percent 20 years later, and gradually declining to 1.6 percent since then — a long-running decline, contrary to Desmond’s portrayal.
Scott Winship, director of AEI’s Center of Opportunity and Social Mobility, illustrated the absurdity of Desmond’s use of the official poverty number by running it in reverse. He said, “If you use today’s official poverty line, the poverty rate in 1963 would have been 70 percent.”
Winship said that where you choose to set the poverty line is arbitrary. To see a trend over time, though, it must be held at a constant standard of living. He said that no matter where you set the boundary, if you hold the standard of living constant over time, you will see a decline.
This isn’t an unusual, conservative view of the data. Corinth said, “People across the spectrum know this. Desmond should have known it and doesn’t acknowledge it.” Winship said similar things, pointing to research he has done comparing different measures of poverty. “These are things people knew in 2012 and 2014. It is not a new discovery that poverty is declining,” he said.
AEI president Robert Doar, who ran antipoverty programs under New York governor George Pataki and mayor Michael Bloomberg, noted that these programs aren’t merely theoretical benefits for the poor. “The takeup of these programs is very high, especially for households with children,” Doar said.
Doar emphasized the importance of combining subsidies with employment, and said that both of those ingredients are necessary to successfully reduce poverty. “Government can do some things that work,” Corinth said, and pointed to the successes of welfare reform in the 1990s at removing some disincentives to work.
Desmond suggested raising the minimum wage to help people out of poverty, but Corinth argued that wouldn’t do much. “Less than 10 percent of poor, working-age adults work full-time year-round,” Corinth said. That’s not a reflection of laziness, he said, but merely a statistical reality. Working full-time year-round, even at a low rate of pay, would get you most of the way to the official poverty line anyway, and with government assistance, you’d be over it.
Federal spending on means-tested benefit programs has soared since 1963. In 2019, they combined for around $700 billion in spending. But the decline in poverty is not just because of transfer programs, Winship said. “Welfare reform reduced pre-tax-and-benefit poverty rates, and that’s a huge policy success,” he said. He pointed to a 2021 study that found over half of the reduction in poverty in single-parent households since 1968 was due to higher private income, with the remainder being from government assistance.
“The only long-term driver of debt in the safety net is Medicaid,” Doar said. By “safety net,” he did not include Social Security and Medicare, which are entitlements, not antipoverty programs. Data show that spending on the earned-income tax credit, food assistance, housing assistance, and child tax credits are not long-term debt problems; only Medicaid spending is spiraling out of control.
One negative aspect of the status quo is its effect on upward mobility. “In some ways our safety net has reduced poverty while limiting upward mobility,” Winship said. He pointed to data that show about half of people who are born into the lowest quartile of income will remain there as adults, and that number has hardly budged over time. “The things that really have gotten worse are indicators of social poverty,” Winship also said, such as measures of social capital and participation in civil society.
But that’s no reason to trash the entire system. There are individual horror stories, but “the vast majority of poor Americans are not using hard drugs or working two full-time jobs,” Corinth said.
The economist Julian Simon once wrote, “False bad news is a very real social pollution, and a dangerous one.” The idea that poverty hasn’t moved in 50 years is false bad news, and it could inform poor public-policy decisions that make things worse if it isn’t countered effectively.