Poverty rate is dubious

By Robert Rector

The Heritage Foundation

According to the Census Bureau’s new annual poverty report, 46.7 million Americans lived in poverty in 2014. This finding is surprising since government spent more than $1 trillion in 2014 on cash, food, housing, medical care and targeted social services for poor and low-income Americans. (That figure does not include Social Security or Medicare.)

More than 100 million people, or one-third of the total population, received benefits from at least one anti-poverty program, at an average cost of $9,000 per recipient. If converted into cash, this spending is five times the amount needed to lift everyone’s income above poverty.

How can government spend that much money and still have more than 45 million people mired in poverty? The answer is: It can’t. The problem lies in the way the government measures poverty. The Census Bureau defines a household as poor if its “income” falls below specific thresholds. (In 2014 the poverty income threshold for a family of four was $24,008.)

But in counting “income,” Census excludes nearly all welfare benefits. According to Census, food stamps, housing vouchers and refundable tax-credit programs (which provide up to $7,500 per year in cash grants to poor families) are not “income.” Of the $1 trillion government spends on anti-poverty programs, Census counts only about 7 percent as “income” for the purposes of measuring poverty.

Wide-screen plasma TV

It should, thus, be no great surprise that government’s own data show the poor actually spend $2.30 for every $1 of income Census claims they have. In addition, the living standards of the poor (as defined by Census) differ greatly from conventional images. According to the government’s own reports, the typical American defined as poor by the Census Bureau has a car, air conditioning and cable or satellite TV. Half of the poor have computers, 43 percent have Internet, and 40 percent have a wide-screen plasma or LCD TV.

Far from being overcrowded, poor Americans have more living space in their home than the average non-poor person in Western Europe. Some 42 percent of all poor households actually own their own homes; on average, this is a well-maintained, three-bedroom house with 11/2 baths, a garage, and a porch or patio.

According to the U.S. Department of Agriculture, only 4 percent of poor children were hungry for even a single day in the prior year because the family could not afford food.

Of course, poor Americans do not live in the lap of luxury. Many of the poor struggle to make ends meet. But they are generally struggling to pay for cable TV, air conditioning and a car, while putting food on the table.

Fortunately, claims of widespread deprivation in the U.S. are inaccurate. But we should not judge the enormous welfare state merely by the volume of free benefits it distributes.

When President Lyndon Johnson launched the War on Poverty in 1964, he sought to decrease welfare dependence and to increase self-sufficiency: the ability of a family to support itself above poverty without the need of government handouts. By that measure, the War on Poverty has been a dismal failure. While self-sufficiency increased dramatically in the decades before the War on Poverty began, it has been at a standstill for the last 45 years, despite $24 trillion in anti-poverty spending.

Robert Rector is a senior research fellow of domestic policy studies in the DeVos Center for Religion and Civil Society at The Heritage Foundation.