Poverty and Spending Over The Years
The United States has dramatically increased federal spending fighting poverty over the last 50 years. Total welfare costs have risen from $445 per person in poverty in 1960 to $14,005 per person in 2011[i]. That totals $56,020 for a family of four even though the poverty level for such a family is $23,021. Total federal welfare costs include the expenditures of 13 large government programs (see U.S. Welfare Programs) plus the Medicaid Program which supplies health care to low-income Americans. The figures have been adjusted for the costs of inflation and stated in 2010 dollars.
Most of the welfare programs were created over the past 50 years and all of them expanded their scope and reach over this timeframe. Yet despite the increase in spending, the poverty level has remained fairly constant at between 12% – 15% of the population. We have spent more and more money but have not lessened the number of people in poverty[ii]. Why? The reason is because our system is poorly designed as described below.
Most of the welfare programs were created over the past 50 years and all of them expanded their scope and reach over this timeframe. Yet despite the increase in spending, the poverty level has remained fairly constant at between 12% – 15% of the population. We have spent more and more money but have not lessened the number of people in poverty[ii]. Why? The reason is because our system is poorly designed as described below.
Even without looking at health costs (Medicaid) in 1960 we spent $445 per person in poverty which steadily increased to where in 2011 we spent $8,059 per person. That totals over $32,000 for a family of four.
No Conditions Attached - The 13 Federal Antipoverty programs do not have Conditions attached to them such as time frames, work requirements or job training[iii]. Without Conditions the programs are merely handouts with no expectation of anything in return. Therefore we don’t encourage personal advancement or economic independence.
Doesn’t “Make Work Pay” - The combined programs discourage work because as participants raise their income from jobs they lose a greater amount in benefits. This is not always true for specific programs but is true when the system is viewed as a whole. For example, SNAP program benefits decrease as the income of the participant increases but not so much that the benefit loss is greater than the income gained. But when housing, school lunch or other programs are included the loss in overall benefits is so large as to discourage obtaining additional outside income.
Includes a marriage penalty – When a single parent is considering marring an individual with a job and it raises the combined income over the poverty level, even just slightly, the loss in benefits to the family can be extreme. Therefore the Antipoverty Programs discourage marriage. Yet in the long run marriage is one of the best defenses against poverty. Only 6% of families headed by a married couple are in poverty compared to 31% of families headed by a single, female parent[iv]. Therefore, a single mom is five times more likely to live in poverty than if she was married.
Lessening Responsibility and control – The Antipoverty Programs are directed at supplying a specific “need” (such as food or housing) but have the unintended consequence of lessening the responsibility and control of the poor. The school lunch program is a good example. In order to take advantage of the school lunch benefit the family must take a hot lunch from the Child Nutrition Program. The program doesn’t allow the family to obtain cash or a voucher to buy food so they can make a sack lunch. So even if the family would prefer a sack lunch and even if a sack lunch would be more economical, the family doesn’t have that option. Responsibility and control has been removed from the parent if they want to participate in the program.
The school lunch program is an “in-kind” benefit as opposed to a cash benefit. Most of the benefits from the Antipoverty Programs are in-kind benefits and they lessen the flexibility of the receiver to tailor the benefit for their particular circumstance. In part the programs were set up this way so that recipients could not abuse the system. For example a parent given lunch money to make a sack lunch might blow the money on something else and the child at school then has no lunch. By having an in-kind benefit equal to a hot lunch which is supplied at the school, the child is protected from this circumstance. This thinking however is short-sighted. If we really mistrust low-income families to make good decisions then shouldn’t we try and fix that as opposed to putting our efforts at full proof in-kind benefits?
More harm than good? - What has all our spending accomplished if we haven’t lowered the poverty level? We have paid out a lot of money and made many lives more comfortable and easier. But we have not promoted a large percentage of people to economic independence. Are we actually trapping people within government welfare, discouraging their independence and personal responsibility and therefore doing more harm than good?
This is a question with diverse opinions. Many argue that the middle class has shrunk over the last 50 years, that jobs for those with low education are limited and that the poor have few opportunities for advancement. Without government welfare it is argued, the poor would have little to fall back on and would lead lives of desperation. But others argue that many in poverty are not destitute at all and cite statistics such as nearly 99% of poor households own a TV, 84% have air conditioning, 75% own a car and over 43% own their own home[v]. They argue paying benefits to these households encourages laziness and that it is not fair to those who work hard to achieve an equivalent standard of living.
But no matter your view on what our welfare payments have or have not achieved, one fact remains. That fact is our uncoordinated, antipoverty programs are not effective at lowering the number of people in poverty and we have to take that as an overall failure. We can all agree that lives of independence and economic freedom are the goals of welfare and as it relates to this goal we have failed. Therefore, it is time to address the overall system and – it is time for true welfare reform.
Ideas for change are included on the Improvements Page.
Federal spending, population and poverty totals[vi]
Total People in Welfare Expenditure
Population[vii] Poverty[viii] Expenditures[ix] Per Person
(Millions) (Millions) (Billions) In Poverty
1960 179.5 39.7 $17.7 $445
1970 202.2 25.4 $43.9 $1,726
1980 225.0 29.3 $128.8 $4,399
1990 248.6 33.6 $138.1 $4,113
2000 278.9 31.6 $204.7 $6,483
2010 305.7 46.2 $357.5 $7,741
No Conditions Attached - The 13 Federal Antipoverty programs do not have Conditions attached to them such as time frames, work requirements or job training[iii]. Without Conditions the programs are merely handouts with no expectation of anything in return. Therefore we don’t encourage personal advancement or economic independence.
Doesn’t “Make Work Pay” - The combined programs discourage work because as participants raise their income from jobs they lose a greater amount in benefits. This is not always true for specific programs but is true when the system is viewed as a whole. For example, SNAP program benefits decrease as the income of the participant increases but not so much that the benefit loss is greater than the income gained. But when housing, school lunch or other programs are included the loss in overall benefits is so large as to discourage obtaining additional outside income.
Includes a marriage penalty – When a single parent is considering marring an individual with a job and it raises the combined income over the poverty level, even just slightly, the loss in benefits to the family can be extreme. Therefore the Antipoverty Programs discourage marriage. Yet in the long run marriage is one of the best defenses against poverty. Only 6% of families headed by a married couple are in poverty compared to 31% of families headed by a single, female parent[iv]. Therefore, a single mom is five times more likely to live in poverty than if she was married.
Lessening Responsibility and control – The Antipoverty Programs are directed at supplying a specific “need” (such as food or housing) but have the unintended consequence of lessening the responsibility and control of the poor. The school lunch program is a good example. In order to take advantage of the school lunch benefit the family must take a hot lunch from the Child Nutrition Program. The program doesn’t allow the family to obtain cash or a voucher to buy food so they can make a sack lunch. So even if the family would prefer a sack lunch and even if a sack lunch would be more economical, the family doesn’t have that option. Responsibility and control has been removed from the parent if they want to participate in the program.
The school lunch program is an “in-kind” benefit as opposed to a cash benefit. Most of the benefits from the Antipoverty Programs are in-kind benefits and they lessen the flexibility of the receiver to tailor the benefit for their particular circumstance. In part the programs were set up this way so that recipients could not abuse the system. For example a parent given lunch money to make a sack lunch might blow the money on something else and the child at school then has no lunch. By having an in-kind benefit equal to a hot lunch which is supplied at the school, the child is protected from this circumstance. This thinking however is short-sighted. If we really mistrust low-income families to make good decisions then shouldn’t we try and fix that as opposed to putting our efforts at full proof in-kind benefits?
More harm than good? - What has all our spending accomplished if we haven’t lowered the poverty level? We have paid out a lot of money and made many lives more comfortable and easier. But we have not promoted a large percentage of people to economic independence. Are we actually trapping people within government welfare, discouraging their independence and personal responsibility and therefore doing more harm than good?
This is a question with diverse opinions. Many argue that the middle class has shrunk over the last 50 years, that jobs for those with low education are limited and that the poor have few opportunities for advancement. Without government welfare it is argued, the poor would have little to fall back on and would lead lives of desperation. But others argue that many in poverty are not destitute at all and cite statistics such as nearly 99% of poor households own a TV, 84% have air conditioning, 75% own a car and over 43% own their own home[v]. They argue paying benefits to these households encourages laziness and that it is not fair to those who work hard to achieve an equivalent standard of living.
But no matter your view on what our welfare payments have or have not achieved, one fact remains. That fact is our uncoordinated, antipoverty programs are not effective at lowering the number of people in poverty and we have to take that as an overall failure. We can all agree that lives of independence and economic freedom are the goals of welfare and as it relates to this goal we have failed. Therefore, it is time to address the overall system and – it is time for true welfare reform.
Ideas for change are included on the Improvements Page.
Federal spending, population and poverty totals[vi]
Total People in Welfare Expenditure
Population[vii] Poverty[viii] Expenditures[ix] Per Person
(Millions) (Millions) (Billions) In Poverty
1960 179.5 39.7 $17.7 $445
1970 202.2 25.4 $43.9 $1,726
1980 225.0 29.3 $128.8 $4,399
1990 248.6 33.6 $138.1 $4,113
2000 278.9 31.6 $204.7 $6,483
2010 305.7 46.2 $357.5 $7,741
[i] Backup schedules and calculations available from FederalSafetyNet.com upon request.
[ii] The number of people in poverty is not influenced by the benefits received from federal, state or non-profit programs. For example, SNAP benefits are not included as income to a poor person when determining their poverty status.
[iii] The TANF program is one exception to this statement – it has a work requirement attached to it whereby the goal is to move participants from welfare to work over a five year period. However, without all the programs having a similar requirement the impact is diluted.
[iv] U.S. Census Bureau. Income, Poverty, and Health Insurance Coverage in the United States: 2011, Page 17. September 2012. Available from: http://www.census.gov/prod/2012pubs/p60-243.pdf
[v] The Heritage Foundation, Poverty and Inequality. Robert Rector and Rachel Sheffield, Air Conditioning, Cable TV, and an Xbox: What is Poverty in the United States Today? July 19, 2011. Available from: http://www.heritage.org/Research/Reports/2011/07/What-is-Poverty
[vi] Table presents selected years from 1960 to 2010. All years are available upon request from FederalSafetyNet.com.
[vii] U.S. Census Bureau. Income, Poverty, and Health Insurance Coverage in the United States: 2010; Historic Poverty Tables – People, Table2. September 2011.
[viii] Ibid
[ix] USGovernmentSpending.com [Internet]. Totals obtained in same manner as 2010 program costs as per the Safety Net Programs Page. Included Payments to States for Child Care Support Enforcement and Family Support for times frames prior to the TANF program. Retrieved October 20 - 25, 2011. Totals were then adjusted to 2010 constant dollars using the Consumer Price Index. Full data available upon request from FederalSafetyNet.com.