50 Years After the War on Poverty, Poor People Are Not Better Off

This year is the 50th anniversary of President Lyndon Johnson’s War on Poverty, and a new paper published by the National Bureau of Economic Research puts us in a far better position to judge how it’s gone. It appears that government programs significantly reduce the number of people living below the poverty line. Yet at the same time, by any global standard, America’s performance in turning economic growth into poverty reduction is incredible—as a negative outlier.

The real value of the U.S official poverty line hasn’t changed much since it was defined in 1963. It’s still meant to be about three times the cost of the “minimum food diet” as defined five decades ago. Broadly, that cost has tracked the consumer price index. What a poverty-line income buys you today, give or take, should look pretty similar to what it could buy you in 1963. That means it doesn’t fully account for the fact that the costs of a lot of vital services, including health care, have grown faster than the general rate of inflation. Nor does it account for changing ideas about what “necessities” are. In 2006 the Pew Research Center reported that 68 percent said a microwave was a necessity and more than half said the same about a computer—two technologies that didn’t exist for consumers in 1963. Thanks not least to falling prices, many poor households now own these devices–81 percent owned a microwave in 2005 and 38 percent a home computer, compared with 88 percent and 68 percent for households overall. But the point remains that a wealthier society thinks more items are “necessary” than a poorer one, and that acts as a force for dissatisfaction and exclusion among those who have a hard time affording them.