The War on Poverty: What Went Wrong?

Next year will be the 50th anniversary of the War on Poverty. President Lyndon Johnson deserves great credit for declaring the war and for skillfully pushing legislation through Congress that established a major set of programs designed to serve the poor. Two cheers for President Johnson.

But not three. Johnson’s soaring rhetoric (“For the first time in our history, it is possible to conquer poverty”) is still inspiring, but his prediction that the nation could “conquer poverty” turned out to be false. It is true that poverty declined by 30 percent within five years of Johnson’s declaration of war in 1964, but there has been little progress since the 1960s. For the last two decades, poverty has averaged well above the 12.1 percent achieved when Johnson left office in 1969. For the last three years, the poverty rate has been at or above 15 percent.

What factors explain the difficulty we have faced in reducing the poverty rate? Some analysts think we could reduce poverty by spending more money on the poor. Of course, we could simply give money to the poor until they reach the poverty line, a strategy Johnson employed with the elderly. By increasing Social Security benefits, Johnson reduced elderly poverty to 25 percent in 1968 from 35.2 percent in 1959, a reduction of nearly 30 percent. Poverty among the elderly has continued to fall. In 2012, a year in which the overall poverty rate was 15 percent and the child poverty rate was nearly 22 percent, the poverty rate among the elderly was 9.1 percent. So giving money to the poor can reduce poverty rates.

We already spend more than enough money on means-tested programs for poor and low-income people to bring them all out of poverty. There were about 46.5 million people in poverty in 2012, a year in which spending on means-tested programs was around $1 trillion. If that money were divided up among the poor, we could spend about $22,000 per person. For a single mother and two children, that would be over $65,000. The poverty level in 2013 for a mother and two children is less than $20,000. So this strategy would work, but giving so much money to young, able-bodied adults would not be tolerated by the public. Besides, if government gave this much cash to non-workers, many low-wage workers would quit work so they too could collect welfare.

Rather than look to government for the complete solution to poverty, we should also focus attention on three factors that are directly linked to poverty and are under the control of individual Americans – education, family composition, and work. In an advanced economy that features technological sophistication and faces international competition, it is difficult to escape poverty without a good education or a marketable skill. Yet a recent survey of adult skills in 24 nations by the OECD showed the U.S. far behind several other nations in the literacy and numeracy skills of workers. Similarly, international tests of school-age children in nations with modern economies consistently show the U.S. near the middle of the pack. Achievement testing in the U.S. shows that the gap between children from poor and wealthier families has been growing for decades. Thus, poor parents pass their disadvantages to their children and the children, on average, remain near the bottom of the income distribution as adults because they are near the bottom of the education distribution.

Changes in family composition are also deeply implicated in the stubbornness of poverty. Kids in single-parent families are about five times as likely to be poor as children in married-couple families. Yet the share of children in single-parent families has been rising for decades. Worse, poor and poorly educated adults are much more likely to have nonmarital births than wealthier and better educated adults, creating another pathway for the intergenerational transmission of poverty. Equally important, children reared in single-parent families are more likely to have education and behavioral problems than children from married-couple families, further increasing the likelihood that the children will be poor as adults.

Finally, nonwork is the surest route to poverty. The poverty rate among full time workers is 2.9 percent as compared with a poverty rate of 16.6 percent among those working less than full time and about 24 percent for those who don’t work. Unfortunately, the percentage of adult males working has been declining for decades. The work rate among young black males is below 50 percent. By contrast, when single mothers substantially increased their work rates in the mid-1990s, the poverty rate among mother-headed families reached its lowest level ever.

The nation should face up to two facts: poverty rates are too high, especially among children, and spending money on government means-tested programs is at best a partial solution. To mount an effective war against poverty, we need changes in the personal decisions of more young Americans. Unless young people get more education, work more, and stop having babies outside marriage, government spending will be minimally effective in fighting poverty. On the other hand, providing government support to increase the incentives and payoff for low-income jobs and redesigning the nation’s welfare programs to encourage marriage hold great promise for at last achieving the poverty reduction envisioned by President Johnson.