Testimony before Joint
United States Senate
Delivered on September 25, 2008
My name is Robert Rector. I am a Senior Research Fellow at The
Heritage Foundation. I am honored to have the opportunity to
discuss poverty and poverty reduction at this hearing. The views I
express in this testimony are my own, and should not be construed
as representing any official position of The Heritage
Point #1 The welfare state is
In FY2008, federal, state and local governments will spend $679
billion on means-tested welfare programs. Means-tested welfare
programs provide: cash, food, housing, free or subsidized medical
care, and targeted social services to poor and low income
Americans. This high level of spending is not the result of a
temporary, short-term surge in expenditures, but, rather, is the
product of a steady incremental growth in spending over the last
- In 2008, means-tested welfare spending will exceed total
defense outlays including the cost of the war in Iraq.
- Total welfare spending amounts to around $6,000 for each person
in the lowest income third of the population.
- Since the beginning of the War on Poverty under Lyndon Johnson,
the U.S has spent $14.3 trillion on welfare (in constant 2007
Point #2 Most "poor" Americans are not
"poor" in any normally understood sense of the word.
For most Americans, the word "poverty" suggests destitution: an
inability to provide a family with nutritious food, clothing, and
reasonable shelter. But only a small number of the 37 million
persons classified as "poor" by the Census Bureau fit that
description. While real material hardship certainly does occur, it
is limited in scope and severity. Most of America's "poor" live in
material conditions that would be judged as comfortable or well-off
just a few generations ago. Today, the expenditures per person of
the lowest-income one-fifth (or quintile) of households equal those
of the median American household in the early 1970s, after
adjusting for inflation.
For example, according to the government's own data, nearly two
thirds of households defined by Census as "poor" have cable or
satellite television. Eighty five percent have air
Overall, the typical American defined as poor by the government
has a car, air conditioning, a refrigerator, a stove, a clothes
washer and dryer, and a microwave. He has two color televisions,
and cable or satellite TV reception. He has a VCR, a DVD player,
and a stereo. He is able to obtain medical care. His home is in
good repair and is not overcrowded. By his own report, his family
is not hungry and he had sufficient funds in the past year to meet
his family's essential needs. While this individual's life is not
opulent, it is equally far from the popular images of dire poverty
conveyed by the press, liberal activists, and politicians.
Point #3 The United States does not
have higher poverty rates than European nations
Studies which claim that the U.S. has a higher poverty rate than
European nations use a distorted technique that creates higher
income standard for assessing poverty in the United States than in
other nations. Because of these biased methods, many Americans are
deemed "poor" when, in fact, they have higher real incomes than
persons identified as "non-poor" in Europe. By contrast, if a fair,
uniform standard of comparison is used, the lowest income tenth of
the U.S. population is found to have a real income that is roughly
equal to, or higher than, most European nations. The median income
in the U.S. is also higher than nearly all European nations.
Point #4 Poverty levels in the U.S.
remain high because the U.S. is aggressively importing poverty from
In recent decades the U.S. has imported over ten million high
school dropouts from abroad through both legal and illegal
immigrant channels. Currently a third of all immigrant adults in
the U.S. lack a high school degree. Overall, immigrants in the U.S.
have substantially higher poverty rates than non-immigrants.
- One in eight poor children in the U.S. (as measured by the
Census Bureau) is the child of an illegal immigrant.
- One quarter of all poor Americans are in immigrant
- High school drop out immigrants and their children cost U.S.
taxpayers $92 billion per year as measured by total benefits and
services received minus total taxes paid.
Point #5 The major cause of child
poverty in the U.S. is the high level of out-of-wedlock
Last year, 38 percent of American children were born
out-of-wedlock, mainly to poorly educated young adult women.
Children born and raised outside marriage are about seven times
more likely to live in poverty than are children born to and raised
by a married couple.
Point #6 A second major cause of child
poverty in the U.S. is the low level of parental work.
The second major cause is of child poverty is consistent low
levels of parental work. In a typical year, only about one fourth
of all poor households with children have the equivalent of a
full-time/full year worker.
Point #7 Reducing poverty will require
addressing the root causes, not the mere symptoms, of poverty.
To reduce poverty, the U.S. must:
- Substantially reduce the number of illegal immigrants in the
U.S. by enforcing, for the first time, the twenty year old law
against hiring illegals.
- Reform the legal immigration system to increase the future
number of high skill immigrants entering the U.S. and reduce the
future inflow of low skill immigrants who are likely to be poor and
- Increase work among welfare recipients by establishing work
requirements for able-bodied, non-elderly adults receiving Food
Stamp or public housing benefits.
- Decrease out-of-wedlock childbearing by reducing the
anti-marriage penalties in means-tested welfare programs and by
offering voluntary life skills planning to young adult women at
risk of non-marital pregnancy.
How Poor Are America's Poor?
For most Americans, the word "poverty" suggests destitution: an
inability to provide a family with nutritious food, clothing, and
reasonable shelter. For example, the "Poverty Pulse" poll taken by
the Catholic Campaign for Human Development in 2002 asked the
general public the question: "How would you describe being poor in
the U.S.?" The overwhelming majority of responses focused on
homelessness, hunger or not being able to eat properly, and not
being able to meet basic needs.
But if poverty means lacking nutritious food, adequate warm
housing, and clothing for a family, relatively few of the 37
million people identified as being "in poverty" by the Census
Bureau could be characterized as poor. While material hardship does
exist in the United States, it is quite restricted in scope and
severity. The average "poor" person, as defined by the government,
has a living standard far higher that the public imagines.
The following are facts about persons defined as "poor" by the
Census Bureau, taken from various government reports:
- Forty-three percent of all poor households actually own their
own homes. The average home owned by persons classified as poor by
the Census Bureau is a three-bedroom house with one-and-a-half
baths, a garage, and a porch or patio.
- Eighty five percent of poor households have air conditioning.
By contrast, 35 years ago, only 36 percent of the entire U.S.
population enjoyed air conditioning.
- Only 6 percent of poor households are overcrowded. More than
two-thirds have more than two rooms per person.
- The average poor American has more living space than the
average individual living in Paris, London, Vienna, Athens, and
other cities throughout Europe. (These comparisons are to the
average citizens in foreign countries, not to those
classified as poor.)
- Nearly three-quarters of poor households own a car; 30 percent
own two or more cars.
- Ninety-eight percent of poor households have a color
television; two thirds own two or more color televisions
- Sixty four percent have cable or satellite TV reception.
- Nearly all have a VCR and a DVD player;
- Forty seven percent have a personal computer,
- Eighty two percent own microwave ovens,
- Sixty percent have a stereo,
- and a quarter have an automatic dishwasher.
As a group, America's poor are far from being chronically
undernourished. 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 100 percent above recommended levels. Most
poor children today are, in fact, super-nourished and grow up to
be, on average, one inch taller and 10 pounds heavier that the GIs
who stormed the beaches of Normandy in World War II.
While the poor are generally well-nourished, some poor families
do experience hunger, meaning a temporary discomfort due to food
shortages. According to the U.S. Department of Agriculture (USDA),
13 percent of poor families and 2.6 percent of poor children
experience hunger at some point during the year. In most cases,
their hunger is short-term. Ninety-two percent of the poor report
their families always had "enough" food to eat over the last four
months, while only 1.5 percent say they "often" did not have enough
to eat during that period.
It is widely believed that a 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
kilocalorie of food) does not vary by income class. Nor do the poor
consume higher-fat diets than do the middle class; the percentage
of persons with high fat intake (as a share of total calories) is
virtually the same for low-income and upper-middle-income
persons. Over-consumption of calories in general,
however, is a major problem among the poor, as it is within the
general U.S. population.
On the other hand, the living conditions of the average poor
American should not be taken as representing all the poor. There is
actually a wide range in living conditions among the poor. For
example, around sixty percent of poor households have cell phones
and a third have telephone answering machines, but, at the other
extreme, approximately one-tenth have no phone at all. While the
majority of poor households do not experience significant material
problems, roughly a third do experience at least one problem during
the year such as overcrowding, temporary food shortages, or
difficulty getting medical care.
Cross National Comparisons of Persons
with Low Income
Many studies show that the U.S. has a higher poverty rate than
European nations. These studies are flawed because they employ the
concept of "relative poverty". Typically, a family is judged to be
in "relative poverty" if its income is less than half the median
family income in the nation where it lives. Since median family
incomes differ widely between nations, the "relative poverty"
concept sets the "poverty bar" at different heights for different
nations. Because the U.S. has a substantially higher median family
income than most European nations, the poverty bar is set higher
for the U.S. than elsewhere. This means the real income needed to
be judged "non-poor" in the U.S. is substantially higher than in
Studies of "relative poverty" are therefore misleading. For
example, using a relative poverty measure, Poland is found to have
less poverty than the U.S. In fact, the real incomes of individuals
at the bottom of the income distribution in Poland are only third
of the incomes of similar Americans. Median family income in Poland
is only about a quarter of the U.S. median. How can Poland
realistically be said to have less poverty than the U.S.?
Similarly, when the relative poverty concept is applied to states
within the U.S., Arkansas is found to have little poverty while
Massachusetts has a lot. Such "findings" are nonsense.
Analysis that compares low income persons across nations by a
single uniform standard produces different results. For example, the
real disposable income of the least affluent tenth of the U.S.
population can be compared to the real incomes of similar groups in
European and other advanced nations. Such analysis shows that the
lowest income Americans have the same or higher incomes when
compared to similar groups in most advanced nations.
Specifically, the lowest income tenth of families in the U.S.
has a higher disposable income than the lowest income tenth in:
France, Sweden, United Kingdom, Ireland, Australia, Spain, Italy,
Israel, Greece, and Portugal. Incomes of the bottom tenth in the
U.S. are roughly equal to those in France, Belgium, Netherlands,
Germany, and Canada. But U.S. bottom incomes are lower than such
incomes in Denmark, Switzerland, Norway and Luxembourg. Critically,
the median family income is substantially higher in the U.S. than
in all European countries except Luxembourg. (See charts 1 and
Stop Importing Poverty and Welfare
America is currently experiencing near record levels of
immigration. Each year roughly 1.5 million legal and illegal
immigrants enter and take up residence in the U.S. Currently one in
eight Americans is foreign born. One in ten Mexicans lives in the
Today's immigrants are disproportionately poorly educated. This
occurs because illegal immigration primarily attracts low skill
workers and the legal immigration system favors kinship ties over
skill levels. As result, one third of all adult immigrants lack a
high school degree, compared to only nine percent of
There is a common misconception that the low education levels of
recent immigrants are part of a permanent historical pattern, and
that the U.S. has always admitted immigrants who were poorly
educated relative to the native born population. Historically, this
was not the case. Throughout most of U.S. history, the education
level of immigrants was equal to, or greater than, that of
The steady influx of low skill (without a high school degree)
and semi-skilled (with only a high school degree) immigrants
inevitably leads to increases in the number of poor persons in the
U.S. Low and semi-skilled immigrants and their families now
comprise almost one fifth of all poor persons in the U.S.
While there is a common myth that immigrants use little welfare,
in reality, immigrants are heavy users of welfare services. In FY
2008, low and semi-skilled immigrants received some $90 billion in
means-tested welfare aid. This high level of welfare receipt is
especially striking since many in this group are illegal immigrants
currently barred from welfare use. Welfare expenditures would rise
even more strongly if illegal immigrants are granted amnesty and
eventual access to the welfare system.
Current immigration inflows operate against normal social goals
and policies. While society seeks to reduce poverty and dependence,
current immigration increases both. Immigration practices, both
legal and illegal, operate like a system of trans-national welfare
outreach bringing millions of poor and fiscally dependent
individuals into the U.S. Immigration policy and practice must be
redirected with a new focus on reducing poverty and welfare. Any
new policy should seek to benefit, not burden, the taxpayer.
Residence in the U.S. offers enormous economic opportunities and
societal benefits. Hundreds of millions more people would immigrate
to the U.S. if they had the opportunity. Given this context, the
U.S. must be selective in its immigration policy. In the future,
U.S. immigration policy should encourage high-skill immigration and
strictly limit poverty-generating low-skill immigration. In
general, government policy should limit immigration to those
who will be net fiscal contributors, avoiding those who will
increase poverty and impose new costs on overburdened U.S.
Specifically, immigration policy should seek to substantially
reduce the number of illegal immigrants in the U.S. and to increase
the skill level of future legal immigrants. To accomplish this, the
- Enforce the current law against employing illegal
immigrants. Illegal immigrants are predominantly low skilled.
Overtime, they impose large costs on the taxpayer. In 1986, the
U.S. gave amnesty to 3 million illegal aliens in exchange for a
prohibition on hiring illegals in the future. While amnesty was
granted, the law against hiring illegals was never enforced in more
than a token manner. As a result, there are now 11 to 12 million
illegal immigrants in the U.S. Since the majority of illegal
immigrants come to the U.S. for jobs, serious enforcement of the
ban on hiring illegal labor would substantially reduce employment
of illegal aliens and encouraging many to leave the U.S. Reducing
the number of low skill illegal immigrants in the nation and
limiting the future flow of illegal immigrants will reduce future
costs to the taxpayer.
- Reduce the number of legal permanent residence visas based
on kinship and increase the number of visas allocated to high
skilled workers. Under current law, the visa lottery and visa
preferences for adult brothers, sisters and parents tend to bring a
high proportion of low skill immigrants into the U.S. While low
skill immigrants create a fiscal burden for U.S. taxpayers, high
skill immigrants will tend to pay more in taxes than they receive
in benefits. The legal immigration system should be altered to
reduce the number of low skill immigrants entering the country and
increase the number of new entrants with high levels of education
and skills in demand by U.S. firms.
Reducing Child Poverty by Increasing
Low levels of parental work are a major factor contributing to
child poverty. In good economic times or bad, the typical poor
family with children is supported by only 800 hours of work during
a year: That amounts to 16 hours of work per week. If work in each
family were raised to 2,000 hours per year--the equivalent of one
adult working 40 hours per week through the year--nearly 75 percent
of poor children would be lifted out of official poverty.
The key to increasing parental work is to set up work
requirements attached to welfare benefits received by poor
families. Government has already had significant success with this
type of work-inducing strategy as part of the welfare reform
legislation of 1996. This reform replaced the old Aid to Families
with Dependent Children (AFDC) program with a new program called
Temporary Assistance to Needy Families (TANF). A key element in the
new program was a requirement that some welfare mothers either
prepare for work or get jobs as a condition of receiving TANF
As this work requirement went into effect, welfare rolls
plummeted and employment of single mothers increased in an
unprecedented manner. As employment of single mothers rose, child
poverty dropped rapidly. For example, in the quarter-century before
welfare reform, there was no net change in the poverty rate of
children in single-mother families; after reform was enacted, the
poverty rate dropped in an unprecedented fashion, falling from 53.1
percent in 1995 to 39.8 percent in 2001.
Unfortunately, the work-inducing provisions of welfare reform
were limited in scope and intensity. Even in the TANF program, over
half the adult beneficiaries are idle on the rolls and are not
engaged in activities leading to self-sufficiency. Work
requirements are nonexistent in closely related programs such as
food stamps and public housing.
But, increasing parental work can dramatically reduce child
poverty. To accomplish this, TANF work requirements should be
strengthened and new work requirements should be established for
able-bodied, non-working adults receiving food stamp or housing
Reducing Child Poverty by Reducing Non-marital
Currently, 38 percent of all children born in the U.S. are born
out-of-wedlock. Out-of-wedlock births commonly occur to the least
educated women in society. Most non-marital births occur to women
in their early 20's, only 15 percent occur to girls under 18.
Virtually no non-marital pregnancies are due to a lack of access to
Around half of the women who have non-marital births are
co-habiting with the father at the time of birth. Another quarter
are in a romantic relationship with the father. Both the mother and
the father tend to have positive attitudes toward marriage, but do
not regard being married or having a stable relationship as an
important pre-condition to having children.
Contrary to popular perceptions, nearly all the non-married
fathers-to-be are employed; on average, their earnings are higher
than the mothers'. The earnings of the father are sufficient to
have a strong potential anti-poverty effect on the mother and
child. In fact, if poor single mothers married the fathers of their
children, almost three-quarters would immediately be lifted out of
poverty. Unfortunately, without marriage and
commitment, most non-married fathers leave the mother a few years
after the child's birth.
The decline of marriage is a major contributing factor to high
levels of child poverty. Because healthy marriage has very strong
positive economic and social effects, policies should be undertaken
to strengthen the culture and practice of marriage in low income
communities. (Some argue it is sufficient to promote "fatherhood"
rather than marriage, but to have a significant economic and social
impact the father must be consistently present in the home over the
long term. This is extremely unlikely in absence of marital
To promote healthy marriage, government should include steps to
reduce the anti-marriage penalties embedded in means-tested welfare
programs. It should also offer life skills training to help young,
low income couples plan more realistically for the challenges of
conception, childbirth and child rearing. Voluntary education and
counseling should be offered to young adult women at risk of
non-marital pregnancy and childbearing with a focus on helping the
mother understand the benefits of commitment and marriage to
children and adults. This service could be offered through
referrals from current Title X birth control clinics which provide
contraceptives to over four million low income, young adult women
each year. Public education campaigns about the value of marriage
in low income communities where marriage has deeply eroded could
also prove helpful.
A free market system generates considerable wealth. By and
large, the market allocates this wealth fairly, according to the
productive contributions of workers, entrepreneurs, and investors.
However, there is no doubt that the distribution of economic
returns under market can be very unequal. Therefore, there is broad
consensus in our society that the government should, to some
extent, buffer and protect the least capable and most vulnerable
citizens against the rough edges of the wealth-generating market
However, there is no consensus for unconditional economic
redistribution for its own sake. The amount of assistance and
conditions for giving it remain hotly contested. There is little
support for assistance to individuals whose need for aid appears to
be largely self-inflicted. An abiding concern remains over the
culture of poverty which, by fostering self-defeating behaviors,
constricts the ability of individuals to support themselves and
There is little public support for a welfare system that rewards
idleness, or promotes single parenthood while ignoring or
penalizing marriage. Unfortunately, the current welfare system does
both. (Ironically, most plans for expanding welfare implicitly
increase the responsibilities of taxpayers while minimizing the
responsibilities of recipients.) There is little public support for
immigration policies that actively import poverty and welfare
dependence. Unfortunately, the current broken immigration system
does both. Most proposed reforms will increase the problem. In many
respects, the current welfare and immigration systems fail to
reflect core values of the American public.
Sadly, a major problem in developing reasonable policies to
reduce poverty in the U.S. is the implicit taboo on discussing the
real causes of poverty: lack of parental work, high levels of
out-of-wedlock childbearing, and low skill immigration. In most
discussions of poverty, political correctness prevails: The
predominant causes of poverty rarely receive more than a token
comment. This process was vividly apparent in the discussions about
poverty following the flooding of New Orleans by hurricane
But as long as the real causes of poverty are swept under the
carpet, policies to diminish poverty, and the more important social
ills of low income communities, will remain inefficient and
Click here to see Chart 1
Click here to see Chart 2