Incentives Matter in Fighting Poverty


Incentives Matter in Fighting Poverty

Jan 8, 2014 1 min read

Former Senior Visiting Fellow

Jennifer A. Marshall was a senior visiting fellow for the Institute for Family, Community, and Opportunity at The Heritage Foundation.

Fifty years in, the War on Poverty has fortified the welfare state–industrial complex while weakening society’s little platoons and disarming the vulnerable. Far from giving the poor “a fair chance to develop their own capacities,” as President Johnson sought, public assistance too often has created long-term dependence while undermining work and eroding marriage — the primary lines of defense against poverty.

At present the government spends nearly $1 trillion annually on 80 federal means-tested programs that provide cash, food, housing, medical care, and targeted social services for poor and low-income Americans. Despite nearly $20 trillion of taxpayers’ money spent since the War on Poverty began, the poverty rate remains nearly as high as it was in the mid-1960s.

If this war could be won with spending, it would have happened long ago. Instead, the sources of the problem are much deeper and more complex.

Since the mid-1960s, unwed childbearing has skyrocketed from 8 percent of all births to more than 40 percent, and from 25 percent to about 73 percent among black children. A child born and raised outside marriage is more than five times as likely to experience poverty as a child raised in an intact family.

Meanwhile, employment has declined among some segments of the population. Even in good economic times, the average poor family with children typically is supported by what amounts to 16 hours of work per week.

The welfare reform of 1996 demonstrated that incentives matter. It transformed the largest cash-assistance program from a handout to a work-activation program; benefits depended on recipients’ working or looking for work. Welfare rolls fell by half, and poverty among single mothers saw unprecedented declines.

But the 1996 reform changed the incentives in only one of the 80 federal welfare programs.

Much more must be done to serve our neighbors in need. The character of public assistance as whole must change to offer a hand up, not a handout. Programs such as food stamps and public housing should be transformed into work-activation programs. The serious, long-term work of restoring marriage must begin now for the good of future generations.

Of such an effort, we can say with LBJ: “We cannot afford to lose it.”

 - Jennifer A. Marshall is director of domestic-policy studies at The Heritage Foundation.

Originally appeared in the National Review Online