10 Things You Might Not Know About Poverty
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Fifty years ago, Lyndon Johnson announced the war on poverty as the central message of his first State of the Union, less than two months after John F. Kennedy's assassination. Conservatives, following Ronald Reagan's quip, like to joke that the War on Poverty is over and poverty won. But as usual, the facts disagree.
We haven't vanquished poverty, it's true. But it's not Johnson's anti-poverty policies that have failed us. They've performed much better over the past 50 years than America's capitalist economy has, which has actually made poverty worse over that same period of time. If we want to make real, dramatic progress toward realizing the American Dream for all Americans, we need to arm ourselves with an accurate understanding of what the War on Poverty has actually achieved, as well as how it has fallen short, in order to make better policy for the future. What follows is a list of some of the most important facts to help guide our way.
1) Johnson's programs were never intended to end poverty all by themselves. They were supposed to accelerate and reinvigorate a process of poverty reduction that was already under way in post-WWII America—as was clearly laid out in the 1964 Economic Report of the President, one of the two key documents defining the original scope of the War on Poverty, along with Johnson's 1964 State of the Union.
"In the United States today we can see on the horizon a society of abundance, free of much of the misery and degradation that have been the age old fate of man,” the report stated. “Steadily rising productivity, together with an improving network of private and social insurance and assistance, has been eroding mass poverty in America. But the process is far too slow. It is high time to redouble and to concentrate our efforts to eliminate poverty."
The report cited impressive statistics to support its assessment. Poverty had fallen rapidly from 32 percent of the population in 1947 to 23 percent in 1956, but had fallen only another 3 percent in the next five years, when "total growth was slower and unemployment substantially higher." Even the earlier faster rate would still leave 10 percent of the nation in poverty by 1980, while the more recent, slower rate would leave it at 13 percent. Hence, the report concluded, "We cannot leave the further wearing away of poverty solely to the general progress of the economy."
2) The US economy has failed to keep reducing poverty as it did before 1964. After a few good years, the economy weakened substantially after 1973, undercutting the progress LBJ and his advisers had counted on. GDP grew 4.0 percent per year from 1948 through 1973, but only grew 2.7 percent annually from 1973 through 2011. The average annual unemployment rate from 1948 to 1973 was 4.8 percent, but since then it's been 6.5 percent, roughly 40 percent higher. That labor market weakness, combined with all-out attacks on labor unions, and a declining minimum wage, has significantly undercut the ability of tens of millions of Americans to raise themselves out of poverty simply by working an 8-hour day.
We see this in the shifting fortunes of the 1 percent and the 99 percent. From 1948 to 1973, the average income of the bottom 99 percent rose 102 percent, compared to just 46 percent for the top 1 percent. But from 1973 through 2012, the bottom 99 percent saw no increase whatsoever, while the top 1 percent gained an average of 187 percent. With this vast wealth shift to the top, it's no wonder the economy as a whole produced a net increase in the rate of poverty over this time, using new measures of market poverty.