Chad Stone is chief economist at the Center on Budget and Policy Priorities.
A recent AP story highlighted experts' predictions that when the Census Bureau releases the latest poverty data in September, they very likely will show that the official U.S. poverty rate reached a 46-year high in 2011. Does that mean antipoverty programs have failed over the last half century, as many conservatives claim? Hardly.
First, as we at the Center on Budget and Policy Priorities explain in our guide to statistics on historical trends in inequality, the official poverty measure
…is an unreliable guide to trends in poverty since 1970 and significantly understates progress in reducing poverty since then. The official measure is based on Census money income, which includes cash assistance but excludes non-cash assistance like food stamps, housing assistance, and refundable tax credits. Since 1970, cash public assistance for households that are not elderly or disabled has declined sharply, while non-cash assistance has increased substantially. The official poverty measure reflects only the decline in cash assistance.
An influential 1995 National Academy of Sciences report on poverty measurement offered a host of ways to measure poverty better, including accounting for both noncash government benefits that help families meet their basic needs and the expenses related to getting and holding a job, which reduce disposable income. Researchers have found that measures reflecting the Academy recommendations show significant poverty reduction compared with the official measure. The Census Bureau recently introduced a Supplemental Poverty Measure that reflects the Academy recommendations and subsequent research on poverty measurement. The Supplemental Poverty Measure will not replace the official measure but will allow comparisons between the two going forward.
A second important reason why the likely rise in the official poverty rate does not mean U.S. antipoverty policy has failed is that the nation is still struggling to climb out of the deep economic hole that the financial crisis and Great Recession created. Poverty rises in economic downturns and often continues to rise until the economy is well on the way to recovery. And this slump has been especially deep and protracted.
In fact, this Center on Budget analysis shows that our antipoverty measures were highly effective in keeping large numbers of Americans out of poverty in the current slump—when we apply the National Academy Sciences approach to measure poverty. As the chart shows, existing policies and new initiatives in the 2009 Economic Recovery Act kept millions of people from falling into poverty in 2010. These programs reduced the severity of poverty for many millions more.
None of this means we should be complacent about our antipoverty programs. Poverty would be far worse without them but, for the poverty rate to fall in the coming years, these programs must be complemented by a strong economy in which the gains from growth are broadly shared. Moreover, as conferences like this one on understanding and addressing poverty in the 21st century remind us, policymakers must enact smart policies in the longer run to lift and keep people out of poverty in a changing economy.
What we know about antipoverty programs should, however, make us very wary of arguments for cutting programs that help low-income households based on glib but false assertions that these programs have not worked.