Chapter Five

        Poverty           

            President Lyndon B. Johnson announced the “War on Poverty” in his 1964 State of the Union address.  Today we are still fighting that war, and egalitarians for once do not insist that a war must have an exit strategy.  This chapter evaluates how we are doing in this apparently never-ending war.            

Poverty: America’s Worst Statistical Indicator?   

As the title of this section, I have appropriated part of the title of a short piece by Nicholas Eberstadt since it seems particularly appropriate for the material discussed here.  The central point is that poverty is overstated by the Census Bureau data cited in the last section.  There are several reasons for this, most of them familiar from our discussion of income inequality statistics in Chapter Two.  We saw there that the conventional data overstate inequality, in part because they understate the standards of living of those with low incomes.  Since low income defines poverty status, the points made there are directly applicable to evaluating data on poverty.

My own conjecture (based on some indirect evidence) is that if the Census figures were corrected for the three problems discussed here, the final poverty rate would be in the range of one to three percent.  Thus, to answer the question posed earlier (whether the true poverty rate could really be as low as 1.4 percent), that appears to me to be eminently plausible.  Moreover, recall that the adjustments discussed here relate to the one-year income based measure of poverty.  Using consumption instead of income, or basing the poverty rate on persistent long-term poverty, would produce an even lower poverty rate. 

        It should be clear by now that the official poverty rate bears no resemblance to reality, presenting a vastly exaggerated view of the number of people with very low standards of living.  In short, I concur with Nicholas Eberstadt’s judgment that the official poverty rate may be “America’s Worst Statistical Indicator” (though the “income shares” approach to measuring inequality is perhaps as bad).  In arriving at this conclusion, let me emphasize that I am conceiving poverty as the absolute (real) standard that was the basis of the government’s original definition of poverty.  If one thinks that norm was too low then, or is too low by today’s standards, then one may well conclude that a good deal of poverty exists in America today.  No one denies that the 12.6 percent of the population the government identifies as poor have standards of living well below that of the typical American family.  But before we redefine poverty, we should acknowledge that poverty as conceived when the “War on Poverty” was announced has been largely eradicated. 

        It is interesting that neither the political left nor political right is particularly interested in publicizing this accomplishment.  On the left, I suspect that the motivation involves a fear that the American public would be less sympathetic to increased spending on welfare (which the left wants) if it knew the truth.  On the right, the motivation may be they do not wish to suggest that some government welfare programs may have actually worked.