Obama’s New Poverty Measure ‘Spreads the Wealth’

COMMENTARY Poverty and Inequality

Obama’s New Poverty Measure ‘Spreads the Wealth’

Nov 9, 2011 2 min read

Commentary By

Rachel Sheffield

Former Policy Analyst, DeVos Center for Religion and Civil Society, The Institute for Family, Community, and Opportunity

Robert Rector

Senior Research Fellow, Center for Health and Welfare Policy

On Monday, the Census Bureau released a new poverty measure created by the Obama administration. Based on this new calculation, census officials assert that more than 49 million Americans are poor — roughly 3 million more than they reported in September’s annual poverty report.

The news was previewed last week in an Associated Press story, which reported that “the ranks of America’s poorest poor have climbed to a record high” according to the Census Bureau. It said the data also indicate poverty is spreading further into mainstream America.

Unfortunately, these reports rely on flawed and misleading poverty measures.

The Census Bureau’s old measure failed to fully take into account the nearly $1 trillion a year in federal welfare benefits received by low-income families. How many of these benefits were counted toward an individual or family income when calculating poverty? Almost none. That’s part of the reason that, despite decades of increased welfare spending, poverty rates remained nearly unchanged.


The new measure, released Monday, does take more of these benefits into account when calculating poverty. But it further distorts the picture of poverty by placing income thresholds on an automatic elevator that climbs as overall income rises.

Thus, by this measure, even if the income of all Americans doubled immediately, poverty would not decrease, because the income thresholds would also double. Only if the incomes of the poor rise more quickly than those of the rest of the population would poverty decrease.

Although the old measure was inaccurate, the new measure is much worse. It will ensure that “poverty” can’t be alleviated except by extreme income leveling. The new measure is designed to provide a never-ending argument for the Left to insist that we must continue to “spread the wealth,” as President Obama put it so memorably when he was Candidate Obama, by throwing more money into welfare programs.

The federal government continues to pour taxpayer dollars into welfare programs, currently spending four times the amount necessary to pull every single poor person out of poverty. But government fails to address the major causes of poverty: lack of work — even in good economic times — and the rise in the out-of-wedlock birthrate in low-income communities.

In good economic times or bad, the typical poor family with children is supported by 800 hours of work during a year. That amounts to 16 hours of work per week. If work for each family were raised to 2,000 hours a year — the equivalent of one adult working 40 hours per week throughout the year — nearly 75 percent of poor children would be lifted out of official poverty.

Yet an even greater issue contributing to poverty is the high rate of babies born to single mothers. The out-of-wedlock birthrate was below 10 percent in the 1960s, when the government’s War on Poverty began; today four out of ten births are to unmarried mothers.

Children born into single-mother homes are nearly six times as likely to be poor as those born into families with married parents. Fully 80 percent of all long-term poverty occurs in single-parent homes.

Tragically, the Americans most likely to be poor already — those with a high-school diploma or less — are also most likely to have a child outside marriage. The soaring out-of-wedlock birthrate is creating a divided society, split down the lines of marriage and education.

Faulty poverty measures provide the foundation for an ever-growing welfare state, one that increases dependence on the federal government rather than seeking to alleviate the causes of poverty. We have to focus our policies on encouraging work and strengthening marriage in low-income communities. Welfare programs must not include marriage penalties, as they currently do.

America simply can’t address poverty head-on if we fail to take into account these critical factors — the lack of work and the breakdown of marriage. And if we fail to do so, we’re bound to see Americans grow not only more dependent on government, but more divided.

Robert Rector is senior research fellow in domestic policy at The Heritage Foundation, where Rachel Sheffield is a research assistant. They are co-authors of the recent report Understanding Poverty in the United States.

First appeared in National Review Online