September 18, 1998 | Backgrounder on Welfare and Welfare Spending
In the last week of September, the U.S. Census Bureau will issue its annual report on the number of Americans who are "living in poverty."
Census Bureau poverty reports vary little from year to year. For the past decade, the Census Bureau has declared that between 31.5 million and 39 million persons were living in poverty each year. Last year, for example, the Census Bureau declared there were 36.5 million poor Americans--nearly 14 percent of the U.S. population. But a close look at the actual material living standards of persons defined as "poor" by the Census Bureau demonstrates that the Bureau's official poverty report is misleading. For most Americans, the word "poverty" means destitution, an inability to provide a Family with nutritious food, adequate clothing, and reasonable shelter. But only a small number of the 36.5 million persons classified as "poor" by the Census Bureau fit such a description.
In fact, numerous government reports indicate that most "poor" Americans today are better housed, better fed, and own more personal property than average Americans throughout most of this century. Today, inflation-adjusted expenditures per person among the lowest-income one-fifth (or quintile) of households equal those of the average American household in the early 1970s.1
In 1995, 41 percent of all "poor" households 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.
The average "poor" American has one-third more living space than the average Japanese does and four times as much living space as the average Russian.2
Seventy percent of "poor" households own a car; 27 percent own two or more cars.
Ninety-seven percent have a color television. Nearly half own two or more televisions.
Nearly three-quarters have a VCR; more than one in five has two VCRs.
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.
Sixty-four percent of the "poor" own microwave ovens, half have a stereo system, and over a quarter have an automatic dishwasher.
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.
Poor children actually consume more meat than do higher-income children and have average protein intakes that are 100 percent above recommended levels.
Most poor children today are in fact super-nourished, growing up to be, on average, one inch taller and ten pounds heavier that the GIs who stormed the beaches of Normandy in World War II.
The Census Bureau counts as poor any household with cash income that is less than the official poverty threshold--which, in 1997, was $16,404 for a Family of four. But the Census Bureau dramatically undercounts the incomes of these less affluent Americans. Other government surveys consistently show that spending by low-income households greatly exceeds the income the Census Bureau claims they have.
Why does this happen? Careful examination reveals that the annual Census poverty report dramatically exaggerates poverty and misrepresents the living conditions of lower-income Americans. The inaccuracy of the report is the result of three errors:
The Census Bureau deems that a Family is "poor" if its annual cash income falls below certain specified "income thresholds." These thresholds were set in the early 1960s and have been raised upward in each subsequent year to adjust for inflation. For example, the poverty threshold for a Family of four was roughly $3,100 in 1963 and reached $16,404 in 1997. This official poverty measurement served initially as a public relations instrument in President Lyndon Johnson's larger "War on Poverty." Therefore, the initial income thresholds were set artificially high in order to enlarge the apparent numbers of the poor and build public support for Johnson's Welfare policies. 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.
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.
The most critical error by far is that the Census 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 (GNP). In 1996, NIPA figures show that aggregate "personal income" of Americans was $6.8 trillion.3 By contrast, aggregate personal income according to the Census Bureau's official definition of income was only $4.8 trillion.4 In other words, the Census missed $2 trillion in annual income, or roughly $20,000 for each U.S. household.5 The missing $2 trillion of personal income exceeds the entire economies of most 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 CONDITION OF HOUSEHOLDS CLASSIFIED AS POOR
Spending and Income
As Chart 1 shows, in 1995, the Census Bureau claimed that the lowest income fifth (or quintile) of U.S. households had an average income of $8,350.6 In the same year, however, the Consumer Expenditure Survey of the U.S. Department of Labor showed that the average household, in the same lowest income quintile, spent $14,607.7
The Labor Department and Census Bureau data directly contradict each other. The Labor Department survey shows $1.75 in spending for every $1.00 of income that the Census Bureau claims these same households possess. This is no fluke; a similarly wide gap between spending and alleged "income" occurred throughout the 1980s and 1990s.
But the picture is still incomplete. When counting household expenditures, the Labor Department's Consumer Expenditure Survey excludes public housing subsidies and health care subsidies provided through Medicaid, Medicare, and other government medical programs. If Housing and medical subsidies are included, the total expenditures of the average household in the bottom income quintile rise to $20,335.8 This means that less affluent households spend $2.43 for every $1.00 of "income" reported by the Census Bureau.
Ownership of Property and AmenitiesTable 1 shows property and consumer durable ownership in the mid-1990s among all U.S. households and among poor households. Some 41 percent of poor households actually own their own homes. The median value of homes owned by these households is $65,000, or 70 percent of the median value of all homes owned in America. Some 900,000 households, classified as poor, own homes worth over $150,000. The typical home owned by the "poor" is a three-bedroom house with one-and-a-half baths. It is in good repair, has a garage or carport, and was constructed in 1962. It has a porch or patio, and is located on a half-acre lot.9
Roughly 70 percent of poor households own a car or truck. Remarkably, over one-fourth of poor households own two or more cars or trucks. Modern conveniences are very common and, in some cases, almost ubiquitous among poor households. Two-thirds of the poor have air conditioning; a similar number have microwaves, while almost 30 percent have automatic dishwashers.
It is not surprising that nearly all poor households have color television sets; but nearly half actually own two or more color television sets. Nearly three-fourths of the poor now have VCRs, and more than one in five own two VCRs. While these numbers do not suggest lives of luxury, they also seem quite distant from conventional images of poverty.
In the United States, both the overall population and the poor live, in general, in spacious housing. Nearly 70 percent of all U.S. households have two or more rooms per occupant. Among the poor overall, this figure is 60 percent. Among the urban poor, it is 55 percent. Crowding is quite rare; only 0.5 percent of all households and 1.9 percent of poor households are severely crowded, with 1.5 or more persons per room. Moderate crowding (1.01 to 1.50 persons per room) is slightly more common, characterizing 2.1 percent of all households and 5.6 percent of poor households.
Housing space also can be measured in square footage per person. At present, Americans have an average of 718 square feet of living space per person. Poor Americans have 440 square feet.10 By contrast, social reformer Jacob Riis--writing of tenement living conditions in New York City around 1890--described families living with four or five persons per room and some 20 square feet of living space per person.11
International comparisons of living space can be instructive. The Housing Indicator Program conducted by the United Nations Centre for Human Settlements surveyed Housing conditions in major cities in 54 different countries. The survey showed the United States to have, by far, the most spacious Housing units, with 50 percent to 100 percent more square footage per capita than in other industrialized nations.12
Although poor Americans do have less Housing space than average Americans do, they compare quite favorably to the average population in most other nations. Chart 2 compares Housing space available to poor Americans with data for urban populations in representative nations covered in the U.N. survey. (Note that this chart presents the living conditions of the average citizen in other countries, not the "poor" of those countries.) Housing space for poor Americans appears to be comparable to that of an average person living in Toronto, and greater than that of the average person living in Paris, London, or Vienna. Poor Americans have roughly twice the living space per person of the average citizen in middle-income countries, such as Greece or Poland. And poor American households have roughly four times more Housing space per person than do the general populations of cities in the developing world, such as Cairo or Beijing. (For data on Housing in other nations, see the Appendix.)
Of course, it is possible that the Housing of poor American households could be spacious and still dilapidated or unsafe. However, data from the American Housing Survey indicate that this is not the case. For example, the survey provides a tally of households with "severe physical problems." Only a tiny portion of poor households and an even smaller portion of total households fall into that category.13
The most common "severe problem," according to the American Housing Survey, is a shared bathroom--when occupants lack a complete bathroom and must share bathroom facilities with individuals in a neighboring unit. This condition affects about one-half of 1 percent of all United States households and 2 percent of poor households. About 1 percent of all households and 2 percent of poor households have other "severe physical problems," of which the most common are repeated heating breakdowns and upkeep problems.
The American Housing Survey also provides a count of households affected by "moderate physical problems." A wider range of households fall into this category: nearly 9 percent of the poor and 5 percent of total households. However, the problems affecting these units are clearly modest. Although living in such units might be disagreeable by modern middle-class standards, they are a far cry from Dickens-like squalor. The most common problems are deficiencies in upkeep, the lack of a full kitchen, and the use of unvented oil, kerosene, or gas heaters as the household's primary heat source (the last condition occurs almost exclusively in the South).
There are frequent charges of widespread hunger and malnutrition in the United States. Reliable survey data show that while hunger definitely exists in the United States, it is relatively restricted in scope and frequency. For example, the Third National Health and Nutrition Examination Survey conducted by the U.S. Department of Health and Human Services in 1988-1989 found that 96 percent of U.S. households reported they had "enough food to eat." Some 3 percent reported that they "sometimes" did not have enough food, and around a half percent said they "often" did not have enough food. Among the poor, 84 percent reported having enough food, while 13.2 percent reported shortages "sometimes," and 2.7 percent "often."14
It is widely believed that lack of financial resources forces poor people to eat low-quality diets that are deficient in nutriments and high in fat. However, survey data show that nutriment density (amount of vitamins, minerals, and protein per 1,000 calories of food) does not vary by income class.15 Nor do the poor consume higher-fat diets than the middle class. Table 3 shows the percentage of calories derived from fat for low-income and high-income adult men and women; there is little variation by income level. The percentage with high fat intake (as a share of total calories) is virtually the same for low-income and upper-middle-income persons.16
The U.S. Department of Agriculture periodically surveys the food and nutriment consumption of American households.17 These surveys provide little evidence of widespread under-nutrition among the poor; in fact, they show that the average nutriment consumption among the poor closely resembles that of the upper middle class. Example: Children in families with incomes below the poverty level actually consume more meat than do children in families with incomes at 350 percent of poverty or higher (roughly $57,000 for a Family of four in today's dollars).
Table 4 shows the average intake of protein, vitamins, and minerals as a percentage of the recommended daily allowance (RDA) among poor and middle-class children at various age levels.18 The intake of nutriments is very similar for poor and middle-class children, and is generally well above the recommended daily level. For example, the consumption of protein (a relatively expensive nutriment) among poor children is, on average, between 150 and 267 percent of the RDA.
When shortfalls of specific vitamins and minerals appear (for example, among teenage girls), they tend to be very similar for the poor and the middle class. For example, while poor teenage girls, on average, tend to under-consume Vitamin E, Vitamin B-6, calcium, phosphorus, magnesium, iron, and zinc, a virtually identical under-consumption of these same nutriments appears among upper-middle-class teenage girls.
Overall, examination of the average nutriment consumption of Americans reveals that age and gender play a far greater role in determining nutritional patterns than does income. The average nutriment intakes of adult women in the upper middle class (above 350 percent of poverty) more closely resemble the intakes of poor women than they do those of upper-middle-class men, children, or teens. The nutriment consumption of upper-middle-income preschoolers, as a group, is virtually identical to that of poor preschoolers, but not to the consumption of adults or older children in the upper middle class.19 This same pattern holds for adult males, teens, and most other age and gender groups.
It is important to note that the nutriment intake figures in Table 4 represent only the average nutriment intakes for poor children in various age categories. Thus, the figures do not necessarily rule out the possibility that there could be pockets of under-nutrition within each age group of poor children even while the average consumption of the group remains high. The data do, however, refute any claim of widespread under-nutrition and hunger among poor children in general.
During this century, improvements in nutrition and health have led to increases in the rate of growth and ultimate height and weight of American children. Poor children have been affected by this trend. Poor boys today at ages 18 and 19 are actually taller and heavier than similar aged boys in the general U.S. population in the late 1950s. Poor boys living today are one inch taller and some ten pounds heavier than GIs of similar age during World War II, and nearly two inches taller and 20 pounds heavier than American doughboys back in World War I.20
This does not mean, of course, that all poor children have now reached optimal levels of health and nutrition. In particular, poor children remain more likely to be born at low birth weight than are children of higher income groups.21 Low birth weight, in turn, contributes to a slightly disproportionate number of poor children being short for their age, particularly in the preschool years.22 However, the general trend among poor children has been one of marked improvements in health and nutrition, leading to rapid growth and large stature.
Poverty and Obesity
The principal nutrition-related health problem among the poor, as with the general U.S. population, stems from over-consumption, not the under-consumption, of food. While overweight and obesity are prevalent problems throughout the United States, they are found most frequently among poor adults. As Chart 4 shows, nearly half of poor adult women are overweight, compared with a third of women who are not poor.
Recently, health experts have expressed concern over the growing problem of obesity among children.23 Poor children have not been immune to this problem, and some studies actually have found obesity to be more prevalent among poor children than among middle-class children. For example, a recent pediatric study examined height and weight of school children aged 5 to 12 in inner-city Harlem.24 The children in the study were black or Hispanic, and nearly all were from low-income households. As a whole, these economically disadvantaged inner-city children were found to be above average in height and weight, compared with government norms. A large sub-group was markedly obese: The study noted that "more than a quarter of central Harlem children could be considered obese; of whom nearly 14% would be super obese."25 The authors noted the contrast between these inner-city children and the image of the lean black child that emerged from studies in the late 1960s.
Dr. Sue Kimm of the University of Pittsburgh used data from the Growth and Health Study (NGHS) of the National Heart, Lung, and Blood Institute to examine the relationship between obesity and socioeconomic status, based on a sample of nine- and ten-year-old girls drawn from Ohio, California, and the District of Columbia in 1987.26 The study found 19 percent of white girls and 31 percent of black girls were overweight. White girls from low-income families (below $10,000) were two to three times more likely to be overweight than were middle- and upper-income girls. The prevalence of obesity among blacks did not vary according to Family income.
If poverty is defined as generally lacking adequate nutritious food for one's Family, suitable clothing, and a reasonably warm, dry apartment in which to live, 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 in America, but it is limited in both extent and severity. The bulk of the "poor" live in material conditions that would have been judged comfortable or well-off just a few generations ago.
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 American society can no longer clearly remember what it meant to be poor or even middle class in earlier generations.27
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. Using the Census Bureau's own standards, a child born to a never-married mother is 700 percent more likely to live in poverty than is a child born to a husband and wife whose marriage remains intact.28
The Census poverty report has been tightly linked to the War on poverty since its inception. The implicit message of the poverty report is that government should throw more and more Welfare benefits at low-income communities in an effort to artificially raise Family incomes above the official poverty thresholds. Such Welfare policies have been disastrous.
Despite spending $7 trillion, the War on Poverty--by eroding the work ethic and marriage--has failed. By undermining families' capacity for self-support, the War on poverty expanded the clientele of needy persons. Government became caught in a trap: The more aid that it gave, the more persons in apparent need of its aid emerged. With the Welfare Reform Act of 1996, the federal government finally began to break away from this failed entitlement mentality. But the Census Bureau report continues to embody the old, failed philosophy of unending free handouts.
The Census poverty report also has had a distorting effect on the national dialogue by focusing attention exclusively on income and material living standards while ignoring values and behavior. The report is rooted in the belief that "poverty" causes social problems such as crime, drug use, school failure, illegitimacy, and dependence. This belief, although common, is false. Clearly, there were far more truly poor persons in earlier generations than there are today. (In fact, nearly all adults alive today had parents or grandparents who grew up "poor" in the sense of having incomes below the current Census thresholds, adjusted for inflation.) If it were true that "poverty" causes social and behavioral problems, then earlier generations should have been awash in drugs, crime, and promiscuity. But this was not the case. Most social problems have expanded as incomes have increased.
In reality, it is the norms and values within a Family, rather than its income, that are critical to a child's well-being and prospects for success in future life. Ironically, conventional Welfare, with its misplaced emphasis on artificially boosting income, has a strongly damaging effect on the very values that are critical to a child's success. By ignoring values and undermining the norms of work, self-control, and marital stability, the War on poverty has harmed those whom it intended to help.29
Overall, the Census poverty report is deeply flawed as a measurement tool and misleading as a policy indicator. The report not only exaggerates poverty, but, even more tragically, encourages policymakers to focus on the symptom of income shortage while ignoring behavioral problems, which are the root causes of the lack of income. As such, the report serves both society and the poor badly.
Robert E. Rector is Senior Policy Analyst in Welfare and Family Issues at The Heritage Foundation.
INTERNATIONAL HOUSING OPTIONS
3. U.S. Department of Commerce, Bureau of Economic Analysis, "BEA Current and Historical Data," Survey of Current Business, November 1997, p. D-6. The figure includes personal or employee contributions to Social Security.
4. U.S. Bureau of the Census, Current Population Reports, P60-197, Money Income in the United States: 1996 (With Separate Data on Valuation of Non-Cash Benefits) (Washington, D.C.: U.S. Government Printing Office, 1997), p. 48.
5. The Census Bureau also makes estimates of income using "alternative definitions of income," which include some non-cash benefits; see ibid. These estimates are more accurate than the official figures but are not widely known. However, even when these non-cash resources are included, the Census Bureau's income count still falls $1.4 trillion short of NIPA figures.
7. U.S. Department of Labor, Bureau of Labor Statistics, Report 911, Consumer Expenditures in 1995, June 1997. Data for subsequent years are not yet available. It should be noted that in questionnaire surveys, the omission of information is far more likely than the inclusion of information that is untrue. Thus, it is far more likely that low-income households will fail to mention or conceal sources of income than that they will make up thousands of dollars of expenditures that never actually occurred.
8. This estimate, based on various government surveys, assumes that the lowest income quintile of households receive 74 percent of public housing benefits, 47 percent of Medicaid assistance (excluding nursing home care), and 29 percent of Medicare.
14. Source: Interagency Board for Nutrition Monitoring and Related Research, Third Report on Nutrition Monitoring in the United States: Vol. 2 (Washington, D.C.: U.S. Government Printing Office, December 1995), p. VA 95. In addition, the Food Security Measurement Project conducted by the United States Department of Agriculture in 1995 provides similar but more detailed data. The project's report makes a clear distinction between actual malnutrition and the less severe problem of hunger. It provides a series of detailed questions to determine the scope of hunger, which it defines as "The uneasy or painful sensation caused by a lack of food. The recurrent and involuntary lack of access to food." U.S. Department of Agriculture, Household Food Security in the United States in 1995: Summary Report of the Food Security Measurement Project (Washington, D.C.: U.S. Government Printing Office, September 1997).
15. Carol T. Windham et al., "Nutrient Density of Diets in the USDA Nationwide Food Consumption Survey, 1977-1978: Impact of Socioeconomic Status on Dietary Density," Journal of the American Dietetic Association, January 1983, p. 33.
17. U.S. Department of Agriculture, Agriculture Research Service, Food and Nutrient Intakes by Individuals in the United States, 1 Day, 1989-91, Nationwide Food Surveys, NFS Report N. 91-2 (Washington, D.C.: U.S. Government Printing Office, September 1995).
18. Table 4 also provides the "mean adequacy ratio" for various groups. The mean adequacy ratio represents average intake of all the nutriments listed as a percent of RDA. However, in computing mean adequacy, intake values exceeding 100 percent of RDA are counted at 100, since the body cannot use an excess consumption of one nutriment to fill a shortfall of another nutriment.
19. In general, the intake of protein, vitamins, and minerals increases only slightly as incomes increase; the average nutriment consumption of persons with incomes of 350 percent of poverty is only 7 percent greater than the intake of poor persons. Thus, if concern exists about the consumption of particular vitamins or minerals among the poor, simply raising income would be a very inefficient means of addressing that concern. A more effective approach might be to provide specific vitamin and mineral supplementation directly as part of the food stamp or other nutrition programs.
20. Based on a comparison of males aged 18 and 19. Bernard D. Karpinos, Height and Weight of Military Youths, Medical Statistics Division, Office of Surgeon General, Department of the Army, 1960, pp. 336-354. Recent data on young males in poverty provided by the National Center for Health Statistics of the U.S. Department of Health and Human Services based on the second National Health and Nutrition Examination Survey.
21. Centers for Disease Control and Prevention, National Center for Health Statistics, "Health Aspects of Pregnancy and Childbirth: United States, 1982-88," Vital and Health Statistics, Series 23, No. 18 (August 1995), Table 24.
23. Centers for Disease Control, "Update: Prevalence of Overweight Among Children, Adolescents, and Adults--United States, 1988-1994," Morbidity and Mortality Weekly Report, March 7, 1997, pp. 199-200.