The New York Times reported on September 13, 2011 that "Another 2.6 million people slipped into poverty in the United States last year, the Census Bureau reported Tuesday, and the number of Americans living below the official poverty line, 46.2 million people, was the highest number in the 52 years the bureau has been publishing figures on it."
The article continued, "The census report said that the percentage of Americans living below the poverty line last year, 15.1 percent, was the highest level since 1993 (the poverty line in 2010 for a family of four was $22,314)."
"Minorities were hit hardest. Blacks experienced the highest poverty rate, at 27 percent, up from 25 percent in 2009, and Hispanics rose to 26 percent from 25 percent. For whites, 9.9 percent lived in poverty, up from 9.4 percent in 2009. Asians were unchanged at 12.1 percent."
Certainly, climbing unemployment caused many people to fall below the poverty line in 2010 and during previous years of the recession. As shocking as a 15.1 percent poverty rate may seem, it's not significantly higher than when President Johnson's administration implemented the War on Poverty forty-six years ago. The poverty rate at the beginning of the War on Poverty was roughly 13 percent.
After forty-six years and trillions of dollars poured into entitlement programs, how has the poverty rate hovered near 13 percent?
First, America has relative poverty. America does not have the kind of abject poverty found in third world countries so it measures poverty on an income threshold. People or families live in poverty if their income falls below the poverty threshold. Although the vast majority of families below the poverty line have air conditioning, a vehicle, cable or satellite television, and/or a video game system as Mike Brownfield of the Heritage Foundation illustrated, they are considered poor relative to other income brackets. American poverty is vastly different than the stereotypical notion of what poverty looks like.
Basing poverty on a relative measurement perpetuates poverty. Even as the poor acquire possessions that improve their quality of life and provide basic needs, there will always be poverty because the poor don't have the possessions of wealthier families.
Second, incentives create more of the incentivized behavior. The War on Poverty began during a time of tremendous, and many economists thought perpetual, economic expansion. It was the first time in American history when political elite saw a greater role for government in private lives along with good economic conditions. Keynesian theorists at the time thought they could control the economy to perpetuate growth. Many political elites wondered how a country as wealthy as America could have poverty so they moved to eliminate it.
Soon after the implementation of the War on Poverty, Keynesians realized they could not control the economy and War on Poverty designers recognized that their programs didn't have the impact they predicted.
The federal government poured money into communities for training programs and jobs. After federal funds ran out, however, the training programs shut down and the new jobs were eliminated. Communities went back to square one. Although the federal programs didn't work, entitlement spending accelerated. By the mid1970s, many programs such as welfare and food stamps were ingrained in the federal budget increasing annually. Millions of people were receiving handouts while working minimally or not at all. Handouts essentially became incentives not to work or work minimally. Many recipients simply didn't see the advantage of working harder to rise above the poverty threshold. This is how welfare can trap its recipients.
Finally, the poor engage in self destructive behavior at higher rates than those above the poverty line. Robert Rector of the Heritage Foundation reported that, "Among all families, nearly one in five is headed by unmarried women, compared to one in two among poor families. One in three families headed by unmarried women is poor, compared to one in 10 of all families. One in four children lives in single-mother families, but one in two children living in such families is poor." The breakdown of the family among the poor community has had a profoundly negative impact multigenerational poverty. Also, crime rates, incarceration rates and high school dropout rates are higher among the poor than other income brackets, which make it increasingly difficult to rise above the poverty line.
The unintended consequence of entitlement handouts is that they create incentives for people to remain poor. This isn't to say that all poor people intentionally remain below the poverty line; the overwhelming majority of the poor would rather not live in poverty. But, many entitlement recipients fear taking the leap to self sustaining employment because they would lose government handouts. The correlation between poverty and broken families, crime, incarceration, and high school drop outs rates does further damage to the poor. The entitlement system needs drastic reforms and the poor need to address issues within their communities before poverty rates can significantly decrease in America. The welfare reforms in 1996 were a good starting point to fix the entitlement system, but there is still a long way to go.
