Are Our 37 Million Poor Really Poor?

Bill Steigerwald
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Posted: Sep 11, 2007 12:01 AM
Are Our 37 Million Poor Really Poor?

Robert Rector of The Heritage Foundation is a national authority on poverty and the U.S. welfare system. Specializing in welfare reform and family breakdown, Rector has done extensive research on the economic and social costs of welfare.

With presidential candidates of a certain hue decrying the suffering of the 37 million Americans who have been officially classified as poor by the U.S. Census Bureau, we thought we'd ask Rector if these poor people are really as poverty-stricken as we have been led to believe. I talked to the author of “America's Failed $5.4 Trillion War on Poverty” Thursday, Sept. 6, by telephone from his office in Washington:

Q: John Edwards and others lament that 37 million Americans struggle with incredible poverty every day. You say it is not so simple or accurate to think of them as truly poor. What do you mean?

A: Well, when John Edwards says that one in eight Americans do not have enough money for food, shelter or clothing, that’s generally what the average citizen is thinking about when they hear the word “poverty.” But if that’s what we mean by poverty, then virtually none of these 37 million people that are ostensibly poor are actually poor. In reality, the government runs multiple surveys that allow us to examine the physical living conditions of these individuals in great detail.

When you look at the people who John Edwards insists are poor, what you find is that the overwhelming majority of them have cable television, have air conditioning, have microwaves, have two color TVs; 45 percent of them own their own homes, which are typically three-bedroom homes with 1{1/2} baths in very good recondition. On average, poor people who live in either apartments or in houses are not crowded and actually have more living space than the average person living in European countries, such as France, Italy or England.

Also, a lot of people believe that poor people are malnourished. But in fact when you look at the average nutriment intake of poor children, it is virtually indistinguishable from upper-middle-class children. In fact, poor kids by the time they reach age 18 or 19 are taller and heavier than the average middle-class teenagers in the 1950s at the time of Elvis. And the boys, when they reach 18, are a full one inch taller and 10 pounds heavier than the GIs storming the beaches of Normandy. It’s pretty hard to accomplish that if you are facing chronic food shortages throughout your life.

Q: How many Americans would you define as “truly poor”?

A: If you are looking at people who do not have adequate warm, dry apartments that are in good repair, and don’t have enough food to feed their kids, you’re probably looking at one family in 100, not one family in eight.

Q: Who are these “truly poor” and where do they live?

A: Generally, they will be families that have a whole lot of behavioral issues in addition to mere economic issues -- possibly drug problems, mental problems, certainly very low work effort, probably unmarried mothers and so forth. They would be spread around the country. Very few of them are elderly. Even though the elderly appear to have low incomes, they are not likely to lack food or to have a hole in their roof or things like that.

Q: Is there any single reason why the “official poor” are poor?

A: If you look at the official poor, particularly at children who are officially in poverty, there are two main reasons for that. One is that their parents don’t work much. Typically in a year, poor families with children will have about 16 hours of adult work per week in the household. If you raised that so that you had just one adult working full time, 75 percent of those kids would immediately be raised out of poverty.

The second major reason that children are poor is a single parenthood in the absence of marriage. Close to two-thirds of all poor children live in single-parent families. What we find is that if a never-married mother married the father of her children, again, about 70 percent of them would immediately be raised out of poverty. Most of these men who are fathers without being married in fact have jobs and have a fairly good capacity to support a family.

Q: How many of those 37 million are children -- and why do they count them as poor people?

A: They are counted as part of the household -- what they judge is the whole household’s income. Part of the reason the Census Bureau is telling us that we have 37 million poor people is that it judges families to be poor if they have incomes roughly less than $20,000 a year. But it doesn’t count virtually any welfare income as income. So food stamps, public housing, Medicaid -- all of the $600 billion that we spend assisting poor people (per year) is not counted as income when they go to determine whether a family is poor.

Q: Are these 37 million officially poor people the same people year after year, decade after decade?

A: Not exactly. Some of them are just down there temporarily. Others tend to be in poor or near-poor status for a long time. That would tend to be true of single mothers, for example. ... But vis-a-vis the single mothers, it’s important to understand that 38 percent of all children are born to a mother who is not married and in half of the cases she is actually living with the father and the couple will express an interest in marriage but it never actually happens. One of the simplest and most important things we could do to reduce child poverty would be to go and communicate to those couples -- all of whom are low-income -- the importance of marriage for their own well-being and for the child’s well-being.

Q: You don't make these numbers up -- you rely on information provided by the Census Bureau. So how does this myth of the poor never seem to be debunked or straightened out in the media?

A: All of the data I provide come directly from government surveys. Those government surveys are not heavily publicized by the media, because since the beginning of the War on Poverty the politically correct thing to do is to just exaggerate the amount of poverty that exists in the United States as a way of encouraging more welfare spending.

Q: You said we're spending $600 billion a year?

A: That’s what we are spending on cash, food, housing and medical care. The biggest program in there is Medicaid, followed by something called the “earned income tax credit.” The federal government, with state governments, runs 70 different means-tested welfare programs. These are programs that provide assistance exclusively to poor and low-income Americans.

Q: How much of this money actually gets to the poor people who need it and how much is overhead?

A: Most of the money goes directly to poor people either as services or as something like a food stamp or medical care. The problem with these programs is that they reward individuals for not working and not being married.

Essentially, they set up a very negative set of incentives that tends to push people deeper into poverty rather than helping them climb out of it.

The problem with the welfare state is not that it has huge overhead costs. In fact, the overhead costs are only about 15 percent of total costs. The problem is that aid is given in such a way that it encourages dependence rather than helping people to become self-sufficient.

Q: I’ve read that the national poverty rate declined steadily until it hit about 13 percent in about 1965. It’s been stuck there since, despite trillions of dollars in welfare spending. Is this true -- and why?

A: Yes. Poverty was declining rapidly before the War on Poverty was created in the mid-1960s, and since that time the poverty rate has basically stagnated.

There are two reasons for that. One is that none of the poverty spending is counted as income, so that it can’t have an anti-poverty effect. But the second, more important reason is that all of these programs discourage work and marriage, so that they in fact are pushing people deeper into poverty at the same time that they are giving them aid.

Q: So it is true that the official poverty rate is stuck at about 12 or 13 percent?

A: It hasn’t varied terribly much since the beginning of the War on Poverty.

Q: Despite how many trillions being spent?

A: Since the beginning of the War on Poverty we have now spent over 11 trillion dollars.

Q: Where did that money go -- and who got it?

A: Basically, we have spent a lot of money but we spent money in such a way that we displaced the work effort of the poor, so that we did not get very much net increase in income. Rather than bringing people’s incomes up, what we’ve done is supplanted work with welfare. What you need to do in order to truly get improvements is to create a welfare system that requires work and encourages marriage so that the recipient is moving toward self-sufficiency while receiving aid, rather than receiving aid in lieu of his own work efforts.

Q: We’ve known for a long time about these problems with the welfare system. Is there any progress being made to fix them?

A: In 1996, we reformed one small welfare program -- Aid to Families with Dependent Children -- by requiring the recipients or part of the recipients to perform work in exchange for the benefits.

As a result of that, we got a huge decline in welfare rolls, a huge surge in employment and record drops in black child poverty. Unfortunately, the rest of the welfare system -- the remaining 69 programs -- remained unreformed. Until we reform those programs in a similar way, we will make no further progress against poverty.