The United States Census Bureau (Census) claims to measure the number of poor people in the United States. The numbers generated are reported by the media and cited in government hearings and legislation and by politicians from all sides as though they were accurate. Unfortunately, the official Census poverty numbers are gross overestimates. Census knows this, as does anyone who has taken any time to understand the poverty numbers (see Robert Rector & Jamie Bryan Hall, How Poor, Really, Are America’s Poor?, March 5, 2020, Heritage Foundation) .
How are official poverty numbers overestimated? The estimates do not take account of large sums of effective income made available through means tested government welfare programs that target poverty. Effective income excluded includes food stamps, the Women, Infants and Children food program, Medicaid, housing aid, the earned income tax credit, the refundable child credit as well as other programs.
At best the Census poverty numbers might serve the purpose of providing a before and after comparison. If there were no government welfare programs, how many poor would exist. Then count the welfare program impact to show how much poverty was reduced. This still would fall short of a careful assessment because if there were no government programs, charity, at least in part, would fill the gap. Charity has been cut back as the result of substitution of government programs, but still exists on a substantial scale. How much does it reduce poverty? Census does not count charity. Further, if there were no poverty programs the incentive to work would go up, which would impact poverty.
After an adjustment for the price level, California is last on the current poverty list, not Mississippi. Repeat after me - California is the poorest state. This should go on the Mississippi license plate.
Of course, Mississippi still has poverty, just not nearly as much as advertised. Additional Census data that is not promoted (hidden) show this.
Is it true that one in six children are poor and that these children are hungry? No, it isn’t! Hundreds of billions of dollars are spent by the government on poor children. There may still be some poor children who are hungry, but it is nowhere near one in six.
Consider the following calculations by the Heritage publication. Suppose you have a single mother with two children who earns $13,853 at the minimum wage. If you counted welfare benefits she would likely collect, these programs would add $12,600 to income for a total of $26,500; about 30% above the poverty threshold for a family of three. Medicaid benefits, if used, could add up to perhaps another $10,000 and housing aid if available (1 in 4 eligible for housing receive aid) would add another $10,900. But Census would still place this family in poverty since only $13,853 is counted.
Do we have other measures of poverty from the government? Yes! Since the 1980s poor households have been surveyed regarding actual spending. Year after year it is found that these households report spending about $2 for every dollar Census counts. Poverty falls by half is these data are used.
Finally, we do not have national data that links welfare programs to recipients. So we don’t have any way to know how these programs are working on those they are supposed to help. In a study of New York state, it was found that three programs (Temporary Assistance to Needy Families, food stamps & housing) provided far more assistance than anyone knew. The resulting poverty rate for single mothers was cut in half.
Do poverty programs work to reduce poverty other than as stop gap efforts in the short run? Without accurate data on poverty, we cannot assess government programs and the poverty problem carefully and perhaps develop ways to better deal with poverty and reduce the true number of people in poverty. Why don't we have good data?
Chris Garbacz lives in Madison County.