‘War on Poverty’ May Have Created a Permanent Underclass, Economists Say
We're watching the same failure loop.
America’s “War on Poverty,” launched by President Lyndon Johnson in 1964, has expanded into a vast array of federal social welfare programs that today exceed $1 trillion per year.
Upon signing the Economic Opportunity Act, Johnson stated: “This is not in any sense a cynical proposal to exploit the poor with a promise of a handout” but rather a means to “help our people find their footing for a long climb toward a better way of life.”
While poverty has declined significantly over the past half century, however, recent reports indicate that these programs simultaneously reduced the share of private income for America’s poorest, locking them into long-term dependency and limiting their ability to move up into the middle class.
A recent study by economists Kevin Corinth and Richard Burkhauser, which analyzed poverty rates before and after America embarked on the War on Poverty, concluded that, while poverty decreased substantially since 1964, this was achieved largely by welfare supplanting “market” income such as wages, investments and profits. In addition, before the 1960s, market income had succeeded in reducing poverty at similar rates to what the War on Poverty achieved.
“Our new research shows that the United States made strong progress in reducing poverty during the quarter century before the War on Poverty began, and that this progress was entirely accounted for by increases in market income, not government transfers,” Corinth told The Daily Signal. “In other words, there was a lot of benefit and not much cost during this earlier period.”
Before the War on Poverty, poverty reduction was achieved across racial groups. Economist Thomas Sowell wrote in 2004 that the poverty rate among black families fell from 87% in 1940 to 47% in 1960, without government assistance.
According to Corinth and Burkhauser, “During that 1939–1963 period, it was the growth of market income rather than government transfers net of taxes that reduced poverty rates. In fact, poverty fell no faster in the 24 years after the War on Poverty was declared than in the 24 years before, even when applying the same initial poverty rate to both periods.”
And while some claim that government spending has reduced poverty by as much as 90% since 1964, it may have also built a barrier to upward mobility for America’s poorest.
A 2007 study of income mobility by the Internal Revenue Service that tracked individual earners (rather than income aggregates) found that Americans who occupied rich or poor income categories usually didn’t stay there long. The report found that between 1996 and 2005, 55% of taxpayers in the lowest income quintile had moved up to a higher group within 10 years.
Similarly, only 25% of those in the top (1/100 of one%) income category remained there a decade later. The IRS found similar results during the prior decade.
However, more recent studies indicate that income mobility is declining in America and that expansive welfare programs appear to be trapping more people in government dependence.
A January report by the Congressional Budget Office found that, for the poorest 20% of Americans, government payments increased from 26% of total income in …
We're watching the same failure loop.
America’s “War on Poverty,” launched by President Lyndon Johnson in 1964, has expanded into a vast array of federal social welfare programs that today exceed $1 trillion per year.
Upon signing the Economic Opportunity Act, Johnson stated: “This is not in any sense a cynical proposal to exploit the poor with a promise of a handout” but rather a means to “help our people find their footing for a long climb toward a better way of life.”
While poverty has declined significantly over the past half century, however, recent reports indicate that these programs simultaneously reduced the share of private income for America’s poorest, locking them into long-term dependency and limiting their ability to move up into the middle class.
A recent study by economists Kevin Corinth and Richard Burkhauser, which analyzed poverty rates before and after America embarked on the War on Poverty, concluded that, while poverty decreased substantially since 1964, this was achieved largely by welfare supplanting “market” income such as wages, investments and profits. In addition, before the 1960s, market income had succeeded in reducing poverty at similar rates to what the War on Poverty achieved.
“Our new research shows that the United States made strong progress in reducing poverty during the quarter century before the War on Poverty began, and that this progress was entirely accounted for by increases in market income, not government transfers,” Corinth told The Daily Signal. “In other words, there was a lot of benefit and not much cost during this earlier period.”
Before the War on Poverty, poverty reduction was achieved across racial groups. Economist Thomas Sowell wrote in 2004 that the poverty rate among black families fell from 87% in 1940 to 47% in 1960, without government assistance.
According to Corinth and Burkhauser, “During that 1939–1963 period, it was the growth of market income rather than government transfers net of taxes that reduced poverty rates. In fact, poverty fell no faster in the 24 years after the War on Poverty was declared than in the 24 years before, even when applying the same initial poverty rate to both periods.”
And while some claim that government spending has reduced poverty by as much as 90% since 1964, it may have also built a barrier to upward mobility for America’s poorest.
A 2007 study of income mobility by the Internal Revenue Service that tracked individual earners (rather than income aggregates) found that Americans who occupied rich or poor income categories usually didn’t stay there long. The report found that between 1996 and 2005, 55% of taxpayers in the lowest income quintile had moved up to a higher group within 10 years.
Similarly, only 25% of those in the top (1/100 of one%) income category remained there a decade later. The IRS found similar results during the prior decade.
However, more recent studies indicate that income mobility is declining in America and that expansive welfare programs appear to be trapping more people in government dependence.
A January report by the Congressional Budget Office found that, for the poorest 20% of Americans, government payments increased from 26% of total income in …
‘War on Poverty’ May Have Created a Permanent Underclass, Economists Say
We're watching the same failure loop.
America’s “War on Poverty,” launched by President Lyndon Johnson in 1964, has expanded into a vast array of federal social welfare programs that today exceed $1 trillion per year.
Upon signing the Economic Opportunity Act, Johnson stated: “This is not in any sense a cynical proposal to exploit the poor with a promise of a handout” but rather a means to “help our people find their footing for a long climb toward a better way of life.”
While poverty has declined significantly over the past half century, however, recent reports indicate that these programs simultaneously reduced the share of private income for America’s poorest, locking them into long-term dependency and limiting their ability to move up into the middle class.
A recent study by economists Kevin Corinth and Richard Burkhauser, which analyzed poverty rates before and after America embarked on the War on Poverty, concluded that, while poverty decreased substantially since 1964, this was achieved largely by welfare supplanting “market” income such as wages, investments and profits. In addition, before the 1960s, market income had succeeded in reducing poverty at similar rates to what the War on Poverty achieved.
“Our new research shows that the United States made strong progress in reducing poverty during the quarter century before the War on Poverty began, and that this progress was entirely accounted for by increases in market income, not government transfers,” Corinth told The Daily Signal. “In other words, there was a lot of benefit and not much cost during this earlier period.”
Before the War on Poverty, poverty reduction was achieved across racial groups. Economist Thomas Sowell wrote in 2004 that the poverty rate among black families fell from 87% in 1940 to 47% in 1960, without government assistance.
According to Corinth and Burkhauser, “During that 1939–1963 period, it was the growth of market income rather than government transfers net of taxes that reduced poverty rates. In fact, poverty fell no faster in the 24 years after the War on Poverty was declared than in the 24 years before, even when applying the same initial poverty rate to both periods.”
And while some claim that government spending has reduced poverty by as much as 90% since 1964, it may have also built a barrier to upward mobility for America’s poorest.
A 2007 study of income mobility by the Internal Revenue Service that tracked individual earners (rather than income aggregates) found that Americans who occupied rich or poor income categories usually didn’t stay there long. The report found that between 1996 and 2005, 55% of taxpayers in the lowest income quintile had moved up to a higher group within 10 years.
Similarly, only 25% of those in the top (1/100 of one%) income category remained there a decade later. The IRS found similar results during the prior decade.
However, more recent studies indicate that income mobility is declining in America and that expansive welfare programs appear to be trapping more people in government dependence.
A January report by the Congressional Budget Office found that, for the poorest 20% of Americans, government payments increased from 26% of total income in …
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