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Poverty

While poverty has been steadily declining since the last economic recession in the early 1990s, it is still higher than the 1970s, when dramatic reductions in poverty were achieved in the aftermath of the War on Poverty during the Kennedy and Johnson administrations.

Because of its persistence even in times of plenty, some may view poverty as an unsolvable problem. In fact, programs comprising the federal government’s existing social safety net — including Social Security, the Earned Income Tax Credit, cash assistance, and in-kind programs like food stamps and housing aid — have achieved substantial reductions in poverty. Studies indicate that a relatively small and affordable increase in resources for these programs could easily eliminate the last vestiges of poverty in the United States.

Official Estimates of Poverty

Before examining the impact of federal programs on poverty, it is important to discuss how poverty is measured. The official rate of poverty in the United States is estimated by the U.S. Census Bureau, which collects information on poverty and income in an annual survey. The official rate is determined by combining the money income of individuals and families before taxes with cash assistance received from government programs and comparing this level of income with established poverty thresholds, which vary depending upon the size of the family and are adjusted annually to account for the effects of inflation. In 1998 the poverty threshold for a single person living alone was $8,316. The threshold for a couple (two adults) was $10,634. For a family consisting of one adult and two children, it was $13,133; for two adults and two children it was $16,530.

The official estimate does not include non-cash government benefits, such as public housing, Medicaid, and food stamps, but the Census issues a number of alternative measures that attempt to account for the impact of these programs. Despite its imperfections, however, the official estimate is still the one most widely recognized and, because it has been used for decades, it continues to be useful for assessing long-term changes in the national rate of poverty.

According to the Census Bureau, 34.5 million Americans (12.7 percent) were poor in 1998, the latest year for which data is available. This represented a drop of about one half of one percent from the previous year, when the poverty rate was 13.3 percent. The official poverty rate has been dropping steadily since 1993, when it reached 15.1 percent following the recession of the early 1990s. It is still generally higher, however, than the 1970s when it ranged from 11.1 to 12.6 percent.

In 1998 the number of "severely poor" (people with family income below one-half of the poverty threshold) decreased from 14.6 million to 13.9 million. The number of "near poor" (people with family incomes above the poverty threshold but less 125 percent of the poverty threshold) dropped from 12.3 million to 11.6 million.

Distribution of Poverty

Poverty in America is far from uniform, varying by age, race, family composition and by region.

• Age: The official rate of poverty for children aged 0-17 is substantially higher than for other age groups. In 1998 the child poverty rate was 18.9 percent (13.5 million children), a one percent drop from 1997, when it was 19.9 percent. The poverty rate for children under age six was 20.6 percent, statistically unchanged from 1997. The poverty rate for adults aged 18-64 and for seniors aged 65 and over was 10.5 percent. The rate for adults aged 18-64 was down slightly from 10.9 percent in 1997, while the rate for seniors was statistically unchanged.
• Race: Blacks and Hispanics suffer higher rates of poverty than whites and Asians. The poverty rate for blacks in 1998 was 26.1 percent, statistically unchanged from the year before. The poverty rate for Hispanics was 25.6 percent, down from 27.1 percent. The rate for Asians and Pacific Islanders was 12.5 percent, down from 14 percent (not a statistically significant change). The poverty rate for non-Hispanic whites was 8.2 percent, down from 8.6 percent. Even though the poverty rate for whites is lower than for other groups, because whites make up the largest share of the population, nearly half of the poor (46 percent) were non-Hispanic whites in 1998.
• Family Composition: Marriage tends to be associated with lower rates of poverty. In 1998, the poverty rate for female-headed households with children and no husband present was 29.9 percent. By contrast, the poverty rate for married couples was just 5.3 percent.
• Region: Historically, the South has suffered much higher rates of poverty than the rest of the country, but the difference has narrowed in recent years. In 1998 western states suffered the highest rate of poverty (14.0 percent), followed by the South (13.7 percent), the northeast (12.3 percent) and the midwest (10.3 percent). Geographically, more significant differences can be found between inner cities (18.5 percent) and the suburbs (8.7 percent).

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