September 18, 1998

September 18, 1998 | Executive Summary on Welfare and Welfare Spending , Poverty and Inequality

The Myth of Widespread American Poverty

Each year, the U.S. Census Bureau issues an annual report on the number of Americans who are "living in poverty." But a close look at the actual material living standards of persons defined as "poor" demonstrates that the Census Bureau's official poverty report is misleading.

If poverty is defined generally as lacking adequate nutritious food for the family, clothing, and a reasonably warm and dry apartment to live in, or lacking a car to get to work when one is needed, then there are few poor persons remaining in the United States. Real material hardship does occur, but it is limited in extent and severity. The bulk of the "poor" today live in material conditions that would have been judged comfortable or well-off just a few generations ago.

The following facts about persons defined as "poor" by the Census Bureau are taken from various government reports:

  • In 1995, 41 percent of "poor" households actually owned their own homes. The average home owned by a person classified as "poor" has three bedrooms, one-and-a-half baths, a garage, and a porch or patio.

  • Over three-quarters of a million "poor" persons own homes worth over $150,000; and nearly 200,000 "poor" persons own homes worth over $300,000.

  • Only 7.5 percent of "poor" households are overcrowded. Nearly 60 percent have two or more rooms per person.

  • Seventy percent of "poor" households own a car; 27 percent own two or more cars.

  • Ninety-seven percent of the "poor" have a color television. Nearly half own two or more color televisions. Nearly three-quarters have a videocassette recorder, and more than one in five has two VCRs. Sixty-four percent own microwave ovens, half have a stereo system, and over a quarter have an automatic dishwasher.

  • Two-thirds of "poor" households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.

  • As a group, the "poor" are far from being chronically hungry and malnourished. In fact, poor persons are more likely to be overweight than are middle-class persons. Nearly half of poor adult women are overweight.

  • Despite frequent charges of widespread hunger in the United States, 84 percent of the poor report their families have "enough" food to eat; 13 percent state they "sometimes" do not have enough to eat, and 3 percent say they "often" do not have enough to eat.

  • The average consumption of protein, vitamins, and minerals is virtually the same for poor and middle-class children, and in most cases is well above recommended norms.

  • Most poor children today are in fact super-nourished, growing up to be, on average, one inch taller and ten pounds heavier that GIs who stormed the beaches of Normandy in World War II.

Thus, the annual Census poverty report misrepresents the living conditions of lower-income Americans and greatly exaggerates the extent of poverty in the United States. There are three sources of error in the Census Bureau's report.

First, the Census Bureau deems a family to be poor if its cash income falls below certain thresholds. (The poverty threshold for a family of four was $16,404 in 1997.) But these thresholds have been set artificially high. Although families with incomes below the thresholds will face many financial difficulties, they are not necessarily poor in the sense of lacking adequate food, shelter, and clothing.

Second, in determining whether a family is poor, the Census Bureau considers only current income and ignores all assets accumulated in prior years. Thus, a businessman who suffers temporary business losses resulting in a negative net income for the year will be labeled as "poor" even if he has a million dollars sitting in the bank.

Third (and most critically), the Census Bureau radically undercounts the true economic resources or annual income received by the American public. This may be seen by comparing Census income figures with the U.S. Department of Commerce's National Income and Product Accounts (NIPA), which provide the figures measuring the gross national product. In 1996, NIPA figures showed that aggregate "personal income" of Americans was $6.8 trillion. By contrast, aggregate personal income according to the Census Bureau's official definition of income was only $4.8 trillion. Thus, the Census Bureau missed $2 trillion in annual income, or roughly $20,000 for each U.S. household. The missing $2 trillion of personal income exceeds the entire economies of all but a few of the world's nations. Much of the missing income belongs to the middle class and the rich, but low-income families receive a large slice as well.

The old maxim that "the rich get richer and the poor get poorer" is simply untrue. Material conditions of lower-income Americans have improved dramatically over time. In fact, living conditions in the nation as a whole have improved so much that our society can no longer clearly remember what it meant to be poor or even middle class in earlier generations.

But higher material living standards should not be regarded as a victory for the War on Poverty. Living conditions were improving dramatically and poverty was dropping sharply long before the War on Poverty began. The principal effect of the War on Poverty has been not to raise incomes, but to displace self-sufficiency with dependence. A second consequence of welfare has been the destruction of families. When the War on Poverty began, 7.7 percent of children were born out of wedlock; today, the figure is 32 percent.

The collapse of the work ethic and family structure has profound effects on low-income Americans and society in general, far outweighing any changes in income or material living conditions.

Robert E. Rector is Senior Policy Analyst in Welfare and Family Issues at The Heritage Foundation.

About the Author

Robert Rector
DeVos Center for Religion and Civil Society