The graph to the left shows poverty and spending over the years. Poverty over the years is the percentage of the U.S. population in poverty (More on Poverty Line Page). The United States has dramatically increased federal spending fighting poverty over the last 55 years. Total welfare costs have risen from $2,271 per person in poverty in 1968 to $29,927 per person in 2023. That totals $118,706 for a family of four, even though the Poverty Threshold for such a family is $31,200. Total federal welfare costs include the expenditures of 13 large government programs (See the Welfare Programs Page) plus the Medicaid Program, which supplies health care to low-income Americans. The figures have been adjusted for inflation costs and stated in 2023 dollars [i]. More on welfare growth.
Even without including health care costs (Medicaid), we spent $1,760 per person in poverty in 1968, which steadily increased to $13,188 per person in 2023. That totals $52,753 for a family of four. The high costs in 2021 and 2022 were from expanding programs during the Coronavirus Pandemic.
Most welfare programs were created over the past 55 years and expanded their scope over this timeframe. Yet despite the increase in spending, the poverty level has remained relatively constant at 11% – 15% of the population. We have spent more and more money but have not lessened the number of people in poverty [ii]. Why? That’s because our welfare system is designed to make lives more comfortable, not to move people to financial independence. See more on the purpose of welfare.
Why Has Increased Spending Not Lowered Poverty?
The U.S. Welfare System is ineffective at reducing poverty by its very design. Individual programs were created over 70 years with little coordination and no master plan. The combined benefits of the system discourage both work and marriage, exacerbating poverty. The complex system is centered on in-kind benefits instead of cash and misses many of those most in need. For example, the system ignores the plight of the mentally ill and can enable the use of alcohol or drugs. See additional information on the Welfare Issues Page.
Does the Welfare System Encourage Dependency?
Over the past 55 years, we have spent trillions of dollars on welfare benefits and, in the process, made many lives more comfortable and easier. However, the controversial question is whether those benefits have helped lessen poverty. Have welfare benefits helped people establish their economic independence or led to dependency and sapped personal initiative and growth? More
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. It is argued that the poor would have little to fall back on without welfare and lead lives of desperation. But others argue welfare discourages work and encourages dependency, which is unfair to those who work hard for a living.
But no matter your view on what our welfare payments have achieved or have not achieved, one fact remains. Our welfare programs are not effective at lowering the number of people in poverty. To do that, we will have to reexamine the purpose of welfare.
[i] A spreadsheet for all years from 1960 to 2022, including data, data sources, and calculations, is included in the download below.
[ii] The number of people in poverty is not influenced by the benefits received from federal, state, or charitable programs. For example, SNAP benefits are not included as income for a poor person when determining their poverty status. For more information, see Money Income on Poverty Threshold Page. See also the SPM poverty measurement on the Poverty Statistics Page.