Franke: Will the ‘Poor’ Always Be with Us?
by Mark Franke
The local newspaper recently reported that my county has an official poverty rate of 13.1 percent, better than the other urban counties in Indiana. This is a good thing, right?
Much of what we think of when the word “poverty” comes up involves ubiquitous government programs that provide what is popularly termed the safety net. These programs seek to alleviate the symptoms of poverty such as the need for food or housing. While noble in intent, after all who doesn’t want to feed the hungry, what do they accomplish long term?
For the answer to our questions we must first address the alleviation of suffering aspect of poverty programs. Using Census Bureau data, we learn that 7.7 million families and 12.5 million individuals existed below the official federal poverty level in 2017. Calculating the aggregate gap below the poverty threshold (that amount of income needed to raise everyone out of poverty) the Census Bureau reports that it required $178 billion in 2017. The federal government alone spent $952 billion in welfare assistance, including administrative costs of administering these programs.
Inefficient, to say the least. But it can be said that real poverty as known elsewhere in the world has effectively disappeared in America today even though the official poverty rate has not changed much since Lyndon Johnson’s Great Society took off.
Give Johnson his due for that, but he does have some explaining to do about the negative effects of his programs on American families. Consider these results after 50 years of Great Society programs, taken from an American Enterprise Institute study in 2014:
- The number of Americans receiving anti-poverty benefits rose from 18 percent to 35 percent.
- While the economy absorbed the huge increase in women joining the workforce, the percent of unemployed working-age men rose from 6 percent to 17 percent.
- Most tragic of all, the percent of children being raised in single parent homes increased from 8 percent to 24 percent, driven largely by 4 in 10 births being to unmarried mothers. And these results cost us $22 trillion, yes trillion, in present-day dollars.
One suspects with good reason that there is a significant disincentive toward work in these programs. The Economist magazine published a study that took a hypothetical Virginia family of three and assumed total income at progressively higher earned income levels. The conclusion? There was no incentive to earn more between wage levels of about $15,000 and $45,000. Every new dollar in wages caused the loss of at least one dollar in public benefits.
Other studies show similar results. Economists call this phenomenon the welfare trap. I can attest to a similar situation from my professional life. I was a senior administrator in higher education with responsibilities including student financial aid. The way the formula works, every dollar increase in the income-based eligibility index resulted in the loss of two dollars in a student’s grants. Earn just a few thousand more dollars working overtime to contribute toward college costs and your child may lose both his federal and state grants.
Some incentive, isn’t it?
There was a time when most welfare came through private organizations, particularly churches. These programs have been marginalized by the welfare state. Marginalized, yet not eliminated. For example, I serve on the board of directors of Matthew 25, a Christian free medical and dental clinic for the uninsured poor in northeast Indiana. This clinic operates with a small dedicated staff of health professionals backed up by more than 400 volunteer providers serving nearly 20,000 hours pro bono each year. All funding comes through private contributions from for-profit health organizations, religious groups and individuals. No government funding is requested or accepted.
One need only look around one’s community to see dozens of not-for-profit organizations focused on helping those in need. So why do we still have poverty in all our communities? Not discounting our Lord’s statement that the poor will always be with us, what can be done?
Make the federal government efficient? Good luck. Cut out fraud and abuse? I suspect these efforts provide marginal savings at best but are still worthwhile. Address the causes of poverty rather than just the symptoms? That, at least, provides hope both for individuals living in poverty and for society at large.
DeKalb County, a small manufacturing county that has a “Can Do” mentality, is attempting this. Motivated by studies addressing generational poverty, several task forces are meeting to propose ways to reduce that. Even if no new programs are created, these well-intentioned people will have an impact. Why? Because these individuals will continue to look for ways to help even if only by one family at a time, with the prospect of that family’s descendants being free from poverty into the future.
Sometimes incrementalism is the most dynamic multiplier of all.
Mark Franke, an adjunct scholar of the Indiana Policy Review, is formerly an associate vice chancellor at Indiana University-Purdue University Fort Wayne.