Poverty and Inequality: Facts, Figures & Recommendations (Issues 2006)

Poverty and Inequality

By Robert Rector

For most Americans, the word "poverty" suggests destitution: an inability to provide a family with nutritious food, clothing, and reasonable shelter. Advocates of the welfare state often urge large expansions of welfare spending to combat allegedly "widespread" poverty in America, yet only a small portion of the 37 million persons classified as "poor" by the Census Bureau fit that description. While real material hardship certainly does occur, it is much more limited in scope and severity than one might imagine. The typical American categorized as "poor" by the government has not only a refrigerator, a stove, and a washing machine, but also a car, home air conditioning, a microwave, a color TV, a VCR, and a stereo. His home is in good repair and is not overcrowded. He is able to obtain medical care. By his own report, his family is not hungry, and he had sufficient funds to meet his essential needs during the past year. This individual’s life is not opulent, but it is also far from the popular images of poverty conveyed by politicians, the press, and activists.

Recommendations

Promote work. Today, expenditures per person of the lowest-income quintile (one-fifth) of households equal those of the median American household in the early 1970s, after adjusting for inflation. Rather than being materially poor, many of America’s "poor" suffer from the effects of "behavioral poverty"—a breakdown in the values and conduct that are conducive to healthy families, stable personalities, and self-sufficiency. The traditional welfare state’s core dilemma is that profligate spending intended to alleviate material poverty has led to a dramatic increase in behavioral poverty. This includes dependency and an eroded work ethic, lack of educational aspirations and achievement, inability or unwillingness to control one’s children, increased single parenthood and illegitimacy, criminal activity, and drug and alcohol abuse. In good economic times or bad, the typical poor family with children is supported by only 800 hours of work during a year: 16 hours of work per week. If work in each family were raised to 2,000 hours per 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. Congress should strengthen work requirements for recipients of welfare and other benefits.
Promote marriage. The decline in marriage is the second major cause of child poverty. Nearly two-thirds of poor children reside in single-parent homes. Each year, an additional 1.3 million children are born out of wedlock. Increasing marriage would substantially reduce child poverty: If poor mothers married the fathers of their children, nearly 75 percent would immediately be lifted out of poverty. Congress should increase funding for President Bush’s Healthy Marriage Initiative.

Charts & Tables

Chart 1: Just 33.4 Percent of Adults on TANF Worked in 2004
Chart 2: Poverty Status of Black Children 1970 to 2004