September 15, 2014 | Backgrounder on Poverty and Inequality
In his January 1964 State of the Union address, President Lyndon Johnson proclaimed, “This administration today, here and now, declares unconditional war on poverty in America.” In the 50 years since that time, U.S. taxpayers have spent over $22 trillion on anti-poverty programs. Adjusted for inflation, this spending (which does not include Social Security or Medicare) is three times the cost of all U.S. military wars since the American Revolution. Yet progress against poverty, as measured by the U.S. Census Bureau, has been minimal, and in terms of President Johnson’s main goal of reducing the “causes” rather than the mere “consequences” of poverty, the War on Poverty has failed completely. In fact, a significant portion of the population is now less capable of self-sufficiency than it was when the War on Poverty began.
This week, the U.S. Census Bureau is scheduled to release its annual poverty report. The report will be notable because this year marks the 50th anniversary of the launch of President Lyndon Johnson’s War on Poverty. In his January 1964 State of the Union address, Johnson proclaimed, “This administration today, here and now, declares unconditional war on poverty in America.”
Since that time, U.S. taxpayers have spent over $22 trillion on anti-poverty programs (in constant 2012 dollars). Adjusted for inflation, this spending (which does not include Social Security or Medicare) is three times the cost of all military wars in U.S. history since the American Revolution. Despite this mountain of spending, progress against poverty, at least as measured by the government, has been minimal.
This week, the Census Bureau will most likely report that the poverty rate last year was about 14 percent, essentially the same rate as in 1967, three years after the War on Poverty was announced. As Chart 1 shows, according to the Census, there has been no net progress in reducing poverty since the mid to late 1960s. Since that time, the poverty rate has undulated slowly, falling by two to three percentage points during good economic times and rising by a similar amount when the economy slows. Overall, the trajectory of official poverty for the past 45 years has been flat or slightly upward.
The static nature of poverty is especially surprising because (as Chart 1 also shows) poverty fell dramatically during the period before the War on Poverty began. In 1950, the poverty rate was 32.2 percent. By 1965 (the first year during which any War on Poverty programs began to operate), the rate had been cut nearly in half to 17.3 percent.
The unchanging poverty rate for the past 45 years is perplexing because anti-poverty or welfare spending during that period has simply exploded. As Chart 2 shows, means-tested welfare spending has soared since the start of the War on Poverty. In fiscal year 2013, the federal government ran over 80 means-tested welfare programs that provided cash, food, housing, medical care, and targeted social services to poor and low-income Americans.
Overall, 100 million individuals—nearly one in three Americans—received benefits from at least one of these programs. Federal and state governments spent $943 billion in 2013 on these programs at an average cost of $9,000 per recipient. (Again, Social Security and Medicare are not included in the totals.)
Today, government spends 16 times more, adjusting for inflation, on means-tested welfare or anti-poverty programs than it did when the War on Poverty started. But as welfare spending soared, the decline in poverty came to a grinding halt. As Chart 2 shows, the more the government spent, the less progress against poverty was made.
How can this paradox be explained? How can government spend $9,000 per recipient and have no apparent impact on poverty? The answer is that it can’t.
The conundrum of massive anti-poverty spending and unchanging poverty rates has a simple explanation. The Census Bureau counts a family as “poor” if its income falls below specific thresholds, but in counting “income,” the Census omits nearly all of government means-tested spending on the poor. In effect, it ignores almost the entire welfare state when it calculates poverty. This neat bureaucratic ploy ensured that welfare programs could grow infinitely while “poverty” remained unchanged.
Consumption by Poor Families. Since the Census Bureau dramatically undercounts the actual incomes of the poor, it should be no surprise to find that the U.S. Department of Labor routinely reports that poor families spend $2.40 for every $1.00 of their reported income. If public housing benefits are added to the tally, the ratio of consumption to income rises to $2.60 for every $1.00. In other words, the “income” figures that the Census Bureau uses to calculate poverty dramatically undercount the economic resources available to lower-income households.
Amenities. Because the official Census poverty report undercounts welfare income, it fails to provide meaningful information about the actual living conditions of less affluent Americans. The government’s own data show that the actual living conditions of the more than 45 million people deemed “poor” by the Census Bureau differ greatly from popular conceptions of poverty. Consider these facts taken from various government reports:
For decades, the living conditions of the poor have steadily improved. Consumer items that were luxuries or significant purchases for the middle class a few decades ago have become commonplace in poor households. In part, this is caused by a normal downward price trend following the introduction of a new product. Initially, new products tend to be expensive and available only to the affluent. Over time, prices fall sharply, and the product becomes widely prevalent throughout the population, including poor households. This is a general sign of desirable economic progress.
Liberals use the declining relative prices of many amenities to argue that even though poor households have air conditioning, computers, cable TV, and wide-screen TVs, they still suffer from substantial material deprivation in basic needs such as food and housing. Here again, the data tell a different story.
Poverty, Nutrition, and Hunger. Despite impressions to the contrary, most of the poor do not experience undernutrition, hunger, or food shortages. Information on these topics is collected by the household food security survey of the U.S. Department of Agriculture. The USDA survey shows that in 2009:
Housing and Poverty. TV newscasts about poverty in America generally depict the poor as homeless or as residing in dilapidated living conditions. While some families do experience such severe conditions, they are far from typical of the population defined as poor by the Census Bureau. The actual housing conditions of poor families are very different.
By his own report, the average poor person had sufficient funds to meet all essential needs and was able to obtain medical care for his family throughout the year whenever needed.
Of course, poor Americans do not live in the lap of luxury. The poor clearly struggle to make ends meet, but they are generally struggling to pay for cable TV, air conditioning, and a car, as well as food for the table. The average poor person is far from affluent, but his lifestyle is equally far from the images of stark deprivation purveyed by advocacy groups and the mainstream media. The challenges go much deeper than a lack of material resources.
Do the higher living standards of the poor mean that the War on Poverty has been successful? The answer is no, for two reasons. First, the incomes and living standards of less affluent Americans were rising rapidly well before the War on Poverty began. (See Charts 1 and 2.)
Second, and more important, to assess the War on Poverty, we must understand President Johnson’s actual goal when he launched it. The original goal of the War on Poverty was not to prop up living standards artificially through an ever-expanding welfare state. Instead, Johnson declared that his war would strike “at the causes, not just the consequences of poverty.” He added, “Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.”
In other words, President Johnson was not proposing a massive system of ever-increasing welfare benefits, doled out to an ever-enlarging population of beneficiaries. His proclaimed goal was not a massive new system of government handouts but an increase in self-sufficiency: a new generation capable of supporting themselves out of poverty without government handouts.
LBJ actually planned to reduce, not increase, welfare dependence. He declared, “We want to give the forgotten fifth of our people opportunity not doles.” He claimed that his war would enable the nation to make “important reductions” in future welfare spending: The goal of the War on Poverty, he stated, would be “making taxpayers out of taxeaters.” Because he viewed the War on Poverty as a means to increase self-support, Johnson proclaimed that it would be an “investment” that would “return its cost manifold to the entire economy.”
How has the War on Poverty fared with respect to President Johnson’s paramount goal of promoting self-sufficiency? What return have the taxpayers reaped from their $22 trillion “investment”? Paradoxically, the answers to these questions are best provided by the Census Bureau’s official poverty statistics.
As noted, Census poverty figures are misleading as a measure of actual living conditions because they exclude nearly all welfare assistance. They do, however, provide a fairly accurate measure of a family’s wages and earnings. This means that the official Census “poverty” figures are, in fact, a good measure of President Johnson’s original goal of promoting “self-sufficiency”: the ability of a family to sustain itself above the poverty level through its own work and investment without reliance on welfare aid.
Chart 3 repeats the official Census “poverty” figures from Chart 1 but relabels them more accurately as a “self-sufficiency” index. The story told by the chart is striking.
In the decade and a half before the start of the War on Poverty, low-income Americans experienced dramatic improvements in self-sufficiency. The share of Americans who lacked self-sufficiency was cut nearly in half, falling from 32.2 percent in 1950 to 17.3 percent in 1965.
During the first six years after Johnson announced the War on Poverty (1965 to 1970), self-sufficiency continued to improve steadily. New government programs were initiated. Means-tested welfare spending increased sharply from $57 billion in 1964 to $141 billion (measured in constant 2012 dollars).
Some authors suggest that the continuing decline in official poverty from 1965 to 1970 demonstrates the initial success of the War on Poverty, but over 90 percent of the increased spending during this period was in the form of non-cash benefits that the Census does not count for purposes of measuring poverty. It is therefore impossible for the expansion of means-tested welfare to have directly produced the large decline in official poverty that occurred during this period.
Programs that in theory could have reduced poverty indirectly by raising wages and employment were regarded as largely ineffective and were limited in scope. For example, in the late 1960s, only 300,000 participants per year were enrolled in Job Corps and related training programs.
Thus, it is implausible to suggest that the decline in official poverty between 1965 and 1970 was due substantially to the direct or indirect effects of War on Poverty programs. Rather, official poverty declined and self-sufficiency improved for the same general reason that these improvements occurred before 1965: a steady rise of wages and education levels.
Unfortunately, the situation changed in the early 1970s. The steady improvement in self-sufficiency slowed and then came to a halt. For the next four decades, self-sufficiency has remained stagnant or has slightly worsened.
The big picture is clear: For 20 years, from 1950 to 1970, self-sufficiency (and official poverty) improved dramatically. In the next four decades, there was no progress at all; the self-sufficiency rate remained essentially static. In terms of President Johnson’s main goal of reducing the “causes” rather than the mere “consequences” of poverty, the War on Poverty has failed completely, despite $22 trillion in spending. In fact, a significant portion of the population is now less capable of self-sufficiency than it was when the War on Poverty began.
The lack of progress in self-sufficiency for the past four decades is stunning. Many factors have contributed to this problem. For example, high school graduation rates, after increasing rapidly throughout the 20th century, largely plateaued after 1970. Broad economic factors also played a role, especially the slowdown in wage growth among low-skilled male workers since 1973. On the other hand, employment and wages among women increased, and this should have led to increased self-sufficiency.
Although President Johnson intended the War on Poverty to increase Americans’ capacity for self-support, exactly the opposite has occurred. The vast expansion of the welfare state has dramatically weakened the capacity for self-sufficiency among many Americans by eroding the work ethic and undermining family structure.
When Johnson launched the War on Poverty, 7 percent of American children were born outside of marriage. Today, the number is over 40 percent. (See Chart 4.) As the welfare state expanded, marriage stagnated and single parenthood soared.
As Chart 5 shows, there has been no significant increase in the number of married-couple families with children (both poor and non-poor) in the U.S. since 1965. By contrast, the number of single-parent families with children has skyrocketed by nearly 10 million, rising from 3.3 million such families in 1965 to 13.2 million in 2012. Since single-parent families are roughly four times more likely than married-couple families to lack self-sufficiency (and to be officially poor), this unravelling of family structure has exerted a powerful downward pull against self-sufficiency and substantially boosted the official child poverty rate.
Since the beginning of the War on Poverty, the absolute number of married-couple families with children in official poverty has declined, but as Chart 6 shows, the number of single-parent families in official poverty (or lacking self-sufficiency) has more than tripled, increasing from 1.6 million in 1965 to 4.8 million today. When the War on Poverty began, 36 percent of poor families with children were headed by single parents; today, the figure is 68 percent. 
The War on Poverty crippled marriage in low-income communities. As means-tested benefits were expanded, welfare began to serve as a substitute for a husband in the home, eroding marriage among lower-income Americans. In addition, the welfare system actively penalized low-income couples who did marry by eliminating or substantially reducing benefits. As husbands left the home, the need for more welfare to support single mothers increased. The War on Poverty created a destructive feedback loop: Welfare promoted the decline of marriage, which generated the need for more welfare.
Today, unwed childbearing and the resulting growth of single-parent homes is the most important cause of official child poverty. If poor women who give birth outside of marriage were married to the fathers of their children, two-thirds would immediately be lifted out of official poverty and into self-sufficiency.
The welfare state has also reduced self-sufficiency by providing economic rewards to able-bodied adults who do not work or who work comparatively little. The low level of parental work is a major cause of official child poverty and the lack of self-sufficiency. Even in good economic times, the median poor family with children has only 1000 hours of parental work per year. This is the equivalent of one adult working 20 hours per week. If the amount of work performed in poor families with children was increased to the equivalent of one adult working full-time through the year, the poverty rate among these families would drop by two-thirds.
This lack of progress in building self-sufficiency is due in major part to the welfare system itself. Welfare wages war on social capital, breaking down the habits and norms that lead to self-reliance, especially those of marriage and work. It thereby generates a pattern of increasing intergenerational dependence. The welfare state is self-perpetuating: By undermining productive social norms, welfare creates a need for even greater assistance in the future.
As the War on Poverty passes the half-century mark, it is time to rein in the endless growth in welfare spending and return to LBJ’s original goals. As the economy improves, total means-tested spending should be moved gradually toward pre-recession levels. Able-bodied, non-elderly adult recipients in all federal welfare programs should be required to work, prepare for work, or at least look for a job as a condition of receiving benefits.
Finally—and most important—the anti-marriage penalties should be removed from welfare programs, and long-term steps should be taken to rebuild the family in lower-income communities.—Robert Rector is a Senior Research Fellow and Rachel Sheffield is a Policy Analyst in the Institute for Family, Community, and Opportunity at The Heritage Foundation.
 Lyndon B. Johnson, “Annual Message to the Congress on the State of the Union,” January 8, 1964, http://www.presidency.ucsb.edu/ws/index.php?pid=26787 (accessed September 8, 2014).
 The poverty figures for 1947 through 1958 are taken from Gordon Fisher, “Estimates of the Poverty Population Under the Current Official Definition for Years Before 1959,” U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, 1986. The figures for 1953 and 1954 were interpolated. Copies of this document will be made available on request from the authors. These estimates are not official government figures.
 For example, the poverty income threshold for a family of four including two children in 2013 was $23,624 per year. U.S. Census Bureau, “Preliminary Estimates of Weighted Average Poverty Thresholds for 2013,” http://www.census.gov/hhes/www/poverty/data/threshld/index.html (accessed September 8, 2014).
 Typically, only 3 percent of total means-tested spending is counted by the Census as “income” for purposes of deriving the official poverty measure.
 See Robert Rector and Rachel Sheffield, “Understanding Poverty in the United States: Surprising Facts About America’s Poor,” Heritage Foundation Backgrounder No. 2607, September 13, 2011, http://www.heritage.org/research/reports/2011/09/understanding-poverty-in-the-united-states-surprising-facts-about-americas-poor, and Robert Rector and Rachel Sheffield, “Air Conditioning, Cable TV, and an Xbox: What Is Poverty in the United States Today?” Heritage Foundation Backgrounder No. 2575, July 18, 2011, http://www.heritage.org/research/reports/2011/07/what-is-poverty?ac=1.
 The government surveys that provide data on the actual living conditions of poor Americans include the Residential Energy Consumption Survey, What We Eat in America, Food Security, the National Health and Nutrition Examination Survey, the American Housing Survey, and the Survey of Income and Program Participation. See U.S. Department of Energy, Energy Information Administration, Residential Energy Consumption Survey, http://www.eia.doe.gov/emeu/recs/ (accessed June 22, 2011); U.S. Department of Agriculture, What We Eat in America, NHANES 2007–2008, Table 4, http://www.ars.usda.gov/SP2UserFiles/Place/12355000/pdf/0708/Table_4_NIN_POV_07.pdf (accessed June 22, 2011); Mark Nord, “Food Insecurity in Households with Children: Prevalence, Severity, and Household Characteristics,” U.S. Department of Agriculture, September 2009, http://www.ers.usda.gov/Publications/EIB56/EIB56.pdf (accessed September 7, 2011); U.S. Department of Health and Human Services, “About the National Health and Nutrition Examination Survey,” http://www.cdc.gov/nchs/nhanes/about_nhanes.htm (accessed September 7, 2011); U.S. Census Bureau, Current Housing Reports, Series H150/11, American Housing Survey for the United States: 2011 (Washington: U.S. Government Printing Office, 2013), http://www.census.gov/programs-surveys/ahs/data/2011/h150-11.html (accessed September 8, 2014); and U.S. Census Bureau, Survey of Income and Program Participation, 2001 Panel, Wave 8 Topical Module, 2003, http://www.bls.census.gov/sipp_ftp.html#sipp01 (accessed June 27, 2011).
 Unless otherwise noted, data on the physical amenities in poor households are calculated from the 2009 Residential Energy Consumption Survey (RECS) conducted by the U.S. Department of Energy, http://www.eia.gov/consumption/residential/data/2009/index.cfm?view=microdata (accessed September 8, 2014).
 U.S. Census Bureau, American Housing Survey for the United States: 2011.
 The figures on food consumption and hunger were calculated from U.S. Census Bureau, Current Population Survey, December 2009 Food Security Supplement. The December supplement data provide the basis for the household food security reports of the U.S. Department of Agriculture.
 Katherine S. Tippett et al., Food and Nutrient Intakes by Individuals in the United States, 1 Day, 1989–91, U.S. Department of Agriculture, Agricultural Research Service, September 1995, http://www.ars.usda.gov/SP2UserFiles/Place/12355000/pdf/csfii8991_rep_91-2.pdf (accessed September 7, 2011). More recent data are available from the authors upon request.
 Bernard D. Karpinos, “Current Height and Weight of Youths of Military Age,” Human Biology, Vol. 33 (1961), pp. 336–364. 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.
 Unless otherwise noted, figures on the housing of poor households are taken from U.S. Census Bureau, American Housing Survey for the United States: 2011.
 U.S. Department of Housing and Urban Development, Office of Community Planning and Development, The 2009 Annual Homeless Assessment Report to Congress, June 2010, p. 8, http://www.hudhre.info/documents/5thHomelessAssessmentReport.pdf (accessed June 22, 2011).
 Kees Dol and Marietta Haffner, Housing Statistics of the European Union 2010, Netherlands Ministry of the Interior and Kingdom Relations, September 2010, p. 51, Table 2.1, http://abonneren.rijksoverheid.nl/media/dirs/436/data/housing_statistics_in_the_european_union_2010.pdf (accessed September 7, 2011), and U.S. Department of Energy, 2005 Residential Energy Consumption Survey, Consumption & Expenditures Tables, Summary Statistics, Table US1, Part 2, http://www.eia.gov/emeu/recs/recs2005/hc2005_tables/c&e/pdf/tableus1part2.pdf (accessed September 7, 2011).
 Lyndon B. Johnson, “Proposal for a Nationwide War on the Sources of Poverty,” March 16, 1964, http://www.fordham.edu/halsall/mod/1964johnson-warpoverty.html (accessed August 27, 2009).
 Johnson, “Annual Message to the Congress on the State of the Union,” January 8, 1964.
 President Lyndon Johnson, quoted in David Zaretsky, President Johnson’s War on Poverty: Rhetoric and History (Tuscaloosa: University of Alabama Press, 1986), p. 49.
 Data available from the authors upon request.
 James T. Patterson, America’s Struggle Against Poverty 1900–1994 (Cambridge, MA: Harvard University Press, 1995), p. 128.
 U.S. Department of Education, National Center for Education Statistics, Digest of Educational Statistics, Table 122, “High school graduates, by sex and control of school: Selected years, 1869–70 through 2021–22,” http://nces.ed.gov/programs/digest/d12/tables/dt12_122.asp (accessed September 8, 2014).
 The welfare reform legislation enacted in 1996 had a significant positive effect in decreasing welfare dependence, increasing self-sufficiency, and reducing official poverty among single mothers. After remaining largely static for 35 years, the percentage of single-mother families that lacked self-sufficiency dropped sharply from 42 percent in 1996 to 33 percent in 2000. However, most of these gains have been offset by the erosions of the reform’s work requirements after 2001 and by the weakness of the U.S. economy after 2007. Finally, and most important, the reforms have been overwhelmed by the growth of additional poverty-prone single-parent families since 1996.
 U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements, “Historical Poverty Tables—Families,” Table 4, http://www.census.gov/hhes/www/poverty/data/historical/families.html (accessed September 11, 2014) The poverty rate of single-parent male-headed families between 1959 and 1973 is assumed to equal the 1974 rate of 15 percent. This assumption has no significant effect on the results.
 Out-of-wedlock childbearing is not the same thing as teen pregnancy; the overwhelming majority of non-marital births occur to young adult women in their early twenties, not to teenagers in high school.
 Robert E. Rector, Kirk A. Johnson, Patrick F. Fagan, and Lauren R. Noyes, “Increasing Marriage Would Dramatically Reduce Child Poverty,” Heritage Foundation Center for Data Analysis Report No. CDA03-06, May 20, 2003, http://www.heritage.org/Research/Family/cda0306.cfm.
 Robert E. Rector and Rea S. Hederman, Jr., “The Role of Parental Work in Child Poverty,” Heritage Foundation Center for Data Analysis Report No. CDA03-01, January 29, 2003, http://www.heritage.org/Research/Family/cda-03-01.cfm.