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The following article, which appeared in LBO #61 (December 1993), was written by Doug Henwood, editor and publisher. It retains its copyright and may not be reprinted or redistributed in any form - print, electronic, facsimile, anything - without the permission of LBO.

Who's poor?

NAFTA under his belt, Clinton is likely to turn to welfare reform as the weather turns colder. At first glance, it's extraordinary that a relatively small portion of public spending is such a hot matter -- $24 billion a year spent on the principal welfare program, AFDC, is what the government pays in interest to its creditors every six weeks, or what the Pentagon spews in four. This isn't how the public sees things. A 1992 survey by Fairness and Accuracy in Reporting asked citizens which of three functions the government spent the most money on; 42% picked foreign aid, 30%, welfare, and 22% the military -- an exact inversion of reality.

But "welfare" isn't just about the provision of income to the poor; it's about class, sex, race, and myths of the national identity. Poverty in a land of universal opportunity has to be the result of features outside the realm of the normal. Accordingly, poverty is seen as something concerning nonwhite urban single mother families, hotbeds of social pathology spawned by 1960s libertinism, drug culture, and feminism. These pathologies are then socially transmitted across generations, creating a habit of dependency. (Moral-cultural explanations have replaced genetics as the modern form of scientific racism.) Though the yahoo version of this is most familiar, there are liberal variants as well; for an example, you could pick almost any issue of the New York Times at random, where you would learn that homelesslness is caused by schizophrenia, drug use, and an inability to defer gratification.

Do the poor resemble the cliche? No, as an hour spent with the Census Bureau's recently published annual povery report reveals. While almost two thirds (62.5%) of poor adults are women -- nonwhite urban single-mother families constitute a fraction of the American impoverished, 15.4%. Rural whites of all family types, account for 19.5% of the poor -- well above urban single moms. White suburbanites of all family types -- and they do come in all types -- account for an even larger share (24.1%), though you don't hear much about them.

Studies of the "intergenerational transmission of welfare dependency" reported in the 1992 Green Book (published by the House Ways & Means Committee) do not support the popular "like mother, like daughter" stereotypes. Two long-term studies, for example, found that about one in five daughters of "highly welfare dependent" mothers themselves became highly welfare dependent, with the rest showing only light welfare use or none at all. Other studies show that most single mothers began their spells on welfare because of a divorce or a husband's death. In recent years, there has been a sharp growth in the number of single mothers who were never married. But in the words of a 1992 General Accounting Office report, "The new growth in never-married mothers ... differed from the sterotype: They were not unemployed teenaged dropouts but rather working women aged 25 to 44 who had completed high school."

This is not to deny the existence of a cohort of urban teenage mothers with glum prospects; though they may account for only a fraction of the poor, their poverty rate is a scandalously high 45.8% overall -- 37.3% for whites, 54.5% for blacks, and 56.8% for Hispanics. But centering discussions of poverty on citydwelling nonwhite unmarried mothers disguises the fact that American society produces an enormous number of poor people, urban, suburban, and rural; working and unemployed; abled and disabled; young and old; and of every ethnic group. Any serious analysis of social hierarchies is quashed by the yahoo's model.

It's often said the poor don't work, but 40% of poor adults do work, though few of them do full time. But that doesn't mean the balance are leading lives of unearned idleness. Of the poor who can't work, 22% are disabled, 21% are retired (despite the alleged profligacy of Social Security), 31% (almost all women) have family responsibilities, 17% are in school, and 10% can't find work. The picture hardly comports with moral decay as the source of poverty; it points instead to scarce and crummy jobs, lousy income supports and education benefits, and the impossibility of child care.

Wavy line

By the official definition of poverty, 14.5% of the population are poor. But what about this official line? Conservatives have long objected to both the official measure and relative measures. They argue that today's poor enjoy a standard of living beyond the wildest dreams of 18th century aristocrats, with TV and convenience foods that no courtesan or prince could imagine. They also argue that the official measure, which is based only on cash incomes, ignores the value of noncash benefits like Food Stamps, rent subsidies, and Medicaid, and also ignores the value of "housing services" consumed by poor people who own the houses they live in. ("Consumption of housing services" is how economists describe the pleasures of inhabiting your space.)

Responding to this pressure, the Census Bureau has been publishing for the last several years 14 experimental redefinitions of income and poverty. The right-pleasing ones that throw in every last benefit that this stingy welfare state offers manage to redefine poverty downward by almost a third -- from 14.5% to 10.4%. This is done by counting Medicaid, Medicare, and the value of owner-occupied housing as the equivalent of cash income. But medical insurance, nice as it is, is of no use to someone who can't make the rent, and figuring the value of owner-occupied housing involves all kinds of estimates and imputations. Here's the Census Bureau's explanation of the latter: it "applies a rate of return to home equity to obtain an estimate of the income that the household would receive if it chose to shift the amount held as home equity into an annuity paying income to the household." The interest rate used to compute this is "the average rate of return on high-grade municipal bonds." Poor folks who own their place would be comforted to learn they're enjoying such complex pleasures.

But you could more justifiably redefine the poverty rate higher. The current poverty line is based on 1950s research, which showed the average family spent a third of its income on food; therefore, statisticians reasoned, a poverty income was three times what they thought the minimum food budget should be. The poverty line was fixed by this reasoning in 1963, and has simply been adjusted for inflation ever since -- with no allowance made for all the changes of the last 30 years, notably the sharp rise in housing, medical care, and child care costs. (In 1992, the poverty line for a family of four was $14,335.) Work by Patricia Ruggles of the Urban Institute has shown that a ground-up refiguring of basic needs using a modern market basket would yield a poverty line almost 70% higher than the present one, a definition that would yield a poverty rate nearly twice as high as the official rate.

Other definitions are also possible. One popular among poverty scholars is an income less than half the average (median). This is technically simple to estimate, since it doesn't require defining some minimum standard of consumption; it merely means running a computer over income data the Census Bureau already collects. And, more importantly, a relative standard of poverty reflects the psychological fact observed by Adam Smith: poverty is the lack of those necessities that "the custom of the country renders it indecent for creditable people, even of the lowest order, to be without." Thus poverty in Mexico is different from poverty in the U.S., and poverty in 1993 is different from 1963.

For the last several years, Jack McNeil of the U.S. Census Bureau has been computing relative income data, which classifies the population into those earning less than 25% of the median, 25-50%, etc., on up to 300% of the median. McNeil's figures show that in 1992, 22.7% of the population had an income under half the median. McNeil's and Ruggles' work could be summarized in one sentence of simple English: around a quarter of the residents of this very rich country are poor. There must be an awful lot of moral weakness going around.


percent of 1992 poor who were:

male                      42.6%
female                    57.4

white non-Hispanic        49.6
black                     28.8
Hispanic                  18.0
other                      4.7

central city              42.4
suburban                  31.8
nonmetropolitan           25.8

Shares by race include double-counting 
because a few Hispanics (1% of the 
population, 13% of Hispanics) also 
appear as black and especially other.

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