Study: U.S. poverty rate decreased over past half-century thanks to safety-net programs

Government programs such as food stamps and unemployment insurance have made significant progress in easing the plight of the poor in the half-century since the launch of the war on poverty, according to a major new study.

But the nation’s economy has made far less progress lifting people out of poverty without the need for government services.

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The findings by a group of academic researchers at Columbia University paint a mixed picture of the United States nearly 50 years after Lyndon B. Johnson announced in his January 1964 State of the Union address that he would wage a war on poverty. They also contradict the official poverty rate, which suggests there has been no decline in the percentage of Americans experiencing poverty since then.

According to the new research, the safety net helped reduce the percentage of Americans in poverty from 26 percent in 1967 to 16 percent in 2012. The results were especially striking during the most recent economic downturn, when the poverty rate barely budged despite a massive increase in unemployment.

While the government has helped keep poverty at bay, the economy by itself has failed to improve the lives of the very poor over the past 50 years. Without taking into account the role of government policy, more Americans — 29 percent — would be in poverty today, compared with 27 percent in 1967.

The research has already resonated in Washington, where there are sharp debates in Congress about whether to trim the safety net.

For the White House, where President Obama and top advisers have been briefed on the study, the research suggests that Congress must preserve the safety net as a critical tool to help the poor — at the same time that additional steps are taken to make sure that lower-income Americans earn high-enough wages to escape poverty.

“It gives you a deep appreciation for what public programs do today and how much more they do today than in the past,” said Jason Furman, chairman of Obama’s Council of Economic Advisers. “But it also gives you a sense of how little progress we’ve made on incomes and raising incomes in the past several decades and the importance of doing that going forward in order to continue to make progress on poverty.”

Other analysts note that the dramatic expansion of the safety net comes with unintended consequences, including increased dependency for the poor.

Scott Winship, a fellow at the conservative Manhattan Institute, said the safety net plays an important and helpful role “during downturns, but then when the economy turns around, the expanded safety net has acted as a poverty trap, in essence lulling people and preventing them from pursuing work.”

The study was led by Christopher Wimer and Liana Fox, researchers at the Columbia Population Research Center, and joined by professors Irwin Garfinkel, Neeraj Kaushal and Jane Waldfogel. They made use of a change in how the U.S. government began measuring poverty in 2010.

Until then, the U.S. Census evaluated poverty based only on a limited measure of the income and expenses of Americans. From 1967 through 2012, the official measure showed poverty increasing from 14 percent of the population to 15 percent, often falling during periods of economic strength and rising during weakness.

But starting three years ago, the government began publishing an alternative measure that took into account the full range of expenses the poor face and the government benefits they receive. The Columbia researchers went further, using that standard and tracing it back in time to evaluate the evolution of poverty since the Johnson era.

Among the researchers’ discoveries was that deep poverty — incomes below 50 percent of the poverty line — has been stable at 5 percent of the population for about 40 years and that the safety net has grown especially powerful in protecting children from poverty.

“That means the safety net is working effectively for the most vulnerable families and kids,” Waldfogel said.

One of the most striking findings for the researchers was how poverty stayed stable during the financial crisis and Great Recession thanks to a dramatic expansion of the safety net, including enhanced unemployment benefits, more-generous food stamps and tax credits for the poor.

In previous and shallower recessions, poverty increased more than it did during the 2007-to-2009 downturn. For example, as the economy slowed and fell into recession in 1990, the poverty rate, including the impact of the safety net, rose 1.5 percentage points to 20.7 percent.

By contrast, in the far worse recent recession, with a much higher level of unemployment, the poverty rate rose only 0.8 percentage points.

“It’s sort of remarkable,” Wimer said. Without the safety net, “poverty would have risen by five or six percentage points from 2007 through 2012.”

More recently, in the slow-going economic recovery, this alternative poverty rate has climbed a bit more, to 16 percent — a reflection, researchers say, of the fact that Americans are losing benefits as they return to work, a positive outcome that still involves costs such as transportation.

Armed with this type of evidence, White House officials say they will work aggressively to try to protect existing safety-net programs at the same time they seek to lift the wages of people in need, for example by fighting for an increase in the minimum wage.

“We have to defend nutritional assistance and unemployment insurance that made that progress on reducing poverty possible, but we also have to address the reasons that poverty hasn’t improved in market incomes,” Furman said. “When you cut the wages for low-income people, adjusted for inflation, you’re not going to make as much progress on reducing poverty for low-income Americans.”

 
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