Thoughts on the War on Poverty

July 15th, 2013 at 11:45 am

My CBPP colleague Arloc Sherman has a piece out this AM on a theme I’ve often stressed here: the conservative meme that “we waged a war on poverty and lost” is wrong.  I’d like to add two points here.

First, the problem here is in part one of measurement.  As officially measured, the poverty rate excludes many of our most effective anti-poverty programs:

Those who claim that we don’t have much to show from anti-poverty programs often cite the fact that the poverty rate under the government’s official measure of poverty is similar now to what it was in the mid-1960s. Such a comparison, however, is grossly misleading. The official poverty measure counts only families’ cash income before taxes. It fails to count food stamps, the EITC, rental subsidies, and the like. As a result, it counts the forms of assistance that have shrunk dramatically since the 1960s such as cash welfare payments to poor families with children, while leaving out the key forms of assistance that were created or expanded during this period and have powerful anti-poverty effects.

For example, Sherman points out that in 2011, the earned income tax credit and SNAP reduced the number of poor by three and 2.6 million persons, respectively.  Using a much more encompassing poverty measure, he compares market-based poverty rates in 2011 of 29% with an “all-in” measure of 16.1%.  So, our soldiers in the war on poverty almost cut the enemy in half.  That’s not losing.

But is it winning?

Here I think there’s a huge analytic gap in the “war on poverty” debate.  There’s far too little attention paid to one of the most potent enemies: an economy that has made it harder for low-wage households to be upwardly mobile.

Too often, the “war on poverty” is discussed as a war between programs to help lift the poor out of poverty and the behavior of the poor themselves.  In this frame-up, the programs may provide some anti-poverty benefits, but they also create poverty-inducing incentives, like to work less or form families outside of wedlock.

However, those incentives have been found to be small if not unmeasurable in practice, while economic factors including rising inequality, globalization, de-unionization, the decline in the real minimum wage, and the absence of full employment have been solidly associated with sharply declining earnings and job opportunities for less-advantaged persons.

In this regard, to evaluate the effectiveness of our anti-poverty regime, it’s not enough to consider the poverty-reducing impact of the safety net.  You have to evaluate the impact of market developments on the primary—pre-tax and pre-transfer—distribution of income.  In other words, a full-throated anti-poverty analysis should start out by assessing the scope of the problem: how much market poverty is there—and how is it trending—against which the anti-poverty measures must push back.

In turn, this will lead anti-poverty policy makers not simply to more redistribution—a better EITC, UI, etc.—but to more measures targeted at the primary distribution itself, like full employment.  In the long run, the best strategy against poverty is not only a more robust safety net, though that’s increasingly important.  It’s to implement policies that require the safety net to do less to offset market poverty.

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One comment in reply to "Thoughts on the War on Poverty"

  1. Tom in MN says:

    If we took all the money spent on the wars on terror and drugs, both of which, basically by definition are not winnable, we would have won the war on poverty. The lack of effort on fighting poverty is a sad commentary on the supposed greatness of this country. We’ve lost less than 5000 people in this century to terrorism, yet in that time how many more have died due to poverty and all the ugliness (drugs, violence, etc) it entails?