Fighting Poverty, Then And Now
By Joel Schwartz (03/22/05)
A few weeks ago Senate Republicans unveiled a twelve-point poverty alleviation program. Many items on that agenda are controversial, but one of them—a push to reauthorize the welfare reform legislation that was enacted in 1996—won’t be. Although Democrats disagree with Republicans on some of the details, they generally agree that welfare reform has been a success: welfare rolls have been cut by 60 percent since 1996, yet poverty is less common now than it was then.
Today’s widespread support for welfare reform points to a remarkable transformation in our approach to poverty. Forty years ago, Republicans joined Democrats in advocating a guaranteed annual income, to be given to all Americans regardless of whether they worked or could work; Richard Nixon supported a guaranteed annual income plan, which was almost enacted during his presidency. Today, Democrats join Republicans in supporting the abolition of a guaranteed annual income for the one group of people who had such a guarantee: indigent guardians of dependent children, almost all of whom are single mothers. Mothers on welfare were guaranteed government support before 1996, but that is no longer the case. Federal welfare payments are normally limited now to five years, and a work requirement ordinarily kicks in after two years.
What’s changed and why? Some argue that Americans were more compassionate 40 years ago and are more hard-hearted now. But that’s not the case. Instead, we know more about poverty now than we did 40 years ago. As a result, we’re not less compassionate now; we’re more effectively compassionate.
What, specifically, have we learned? Supporters of a guaranteed annual income believed that poverty simply amounted to a lack of cash; so the obvious solution was to provide the needed cash. Today, by contrast, we understand that cash is generally lacking when people don’t work, and when they don’t marry. (How does marriage reduce poverty? Not only can two live almost as cheaply as one, but two combined incomes also go farther than one.)
Because we recognize the importance of work and marriage, we no longer simply hand out cash to the poor. Instead we try to promote the self-advancing behaviors that enable the poor to earn cash themselves. Brookings Institution economist Isabel Sawhill has made this argument effectively. The way to avoid poverty is clear: “Those who graduate from high school, wait until marriage to have children, limit the size of their families, and work full-time will not be poor.” In fact, almost no poverty can be found in American households that follow these rules. The poverty rate stands at one percent for households in which the primary wage-earner has finished high school, is married, has no more than two children, and works full time (2,000 hours a year or more).
As Sawhill notes, the rich today “are working and marrying as much or more than ever while the poor are doing just the reverse.” For example, less than half of the heads of poor families worked at all in 2002. Sawhill calculates that if all healthy, working-age heads of poor families worked full-time at a wage commensurate with their education and experience, the poverty rate would be cut almost in half. If, on the other hand, welfare benefits were doubled, the poverty rate would drop by only one percentage point.
So the way to reduce poverty, Sawhill concludes, is not to hand out doles; instead we should encourage the poor to work and marry. Significantly, these are precisely the behaviors that welfare reform aims to promote; the 1996 legislation was designed (in its own words) to “end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage.”
One way that we fight poverty today is by making work more rewarding for the poor. To encourage the poor to work, the wages of the poor—and their health care, child care, and transportation to and from work—are often and appropriately subsidized by government programs. Before welfare was reformed, the poor were paid not to work, and their stipend was docked if they did work. By contrast, today the poor are given additional money, provided that they already work and earn some of their own. That policy isn’t less compassionate than a welfare entitlement or a guaranteed annual income. Instead it’s more intelligently compassionate, because it addresses the behavioral roots of poverty.
Our aim is no different today than it was 40 years ago; we wanted then, and we want now, to reduce and hopefully to eliminate poverty. Our means have changed, though, because we now know more about poverty than we did then. Not only do we fight poverty differently today; we also fight it more effectively.
Dr. Joel Schwartz is an adjunct senior fellow at the Hudson Institute in Washington, D.C. He is the author of "Fighting Poverty With Virtue: Moral Reform and America's Poor, 1825-2000" and he will speaking at the inaugural conference of The Center for Vision & Values at Grove City College taking place April 4 and 5, 2005.
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