Sascha Hume '23
In President Biden’s address to a joint session of Congress on April 29th, he boasted that his “American Rescue Plan” would lift more than five million children out of poverty this year alone, which would “cut child poverty in half”. His words reminded me of the most famous effort by an American President to eliminate poverty in the United States, the “War on Poverty” launched by President Lyndon B. Johnson.
In his 1964 State of the Union Address, President Johnson declared “unconditional war on poverty in America”. He was inspired by The Other America (Michael Harrington’s study of poverty in the United States), the late President Kennedy’s New Frontier initiative, and his own experience teaching impoverished children in Texas. He called on Congress to assist him in the anti-poverty effort, and, starting in August of the same year, the Democrat-controlled House and Senate followed suit. The War on Poverty encompassed many different federal and local initiatives, but it can be summarized largely by discussing four of the major pieces of legislation passed from 1964-1965.
First, the Economic Opportunity Act (or “Poverty Bill”), passed in August of 1964, created several agencies to fight poverty at the community level, such as the Job Corps and Urban and Youth Community Action. Rather than redistributing wealth, these programs were intended to provide low-income citizens with the skills necessary to find work, so that they could eventually provide for themselves. Most of the federal programs created by the Act were administered by the Office of Economic Opportunity, which was created alongside the programs.
Next, the Food Stamp Act, passed in the same month, turned the Pilot Food Stamp Program (which had been administered since 1961) into a permanent program, and brought it under congressional control. The program was appropriated with a budget of $75 million (to expand to $200 million after two years).
Third came the Elementary and Secondary Education Act, which was passed in April of 1965, following the Democrats’ landslide victory in the 1964 presidential and congressional elections. The Act primarily provided additional funding for state public school systems, but also created new federal grants, scholarships, and education centers, with a focus on low-income and special-needs students.
Last and arguably the most important of the four main programs was the Social Security Act (or Social Security Amendments), passed in July of 1965. It created the United States’ first ever public health insurance programs, Medicare and Medicaid.
And now, the question which is invariably brought up whenever the War on Poverty (or any of LBJ’s programs) is brought up: Did it work?
Such a question cannot be answered in full without an in-depth analysis of all of the programs, and an estimate of poverty rates had the programs never been implemented. In this article, I will focus only on a few important statistics which shed some light on the effectiveness of the programs.
Given that the “war” was fought against poverty, assessing the changes in the poverty rate since the implementation of the War on Poverty programs can provide some general insight on their levels of success. (While diving into the nitty-gritty of each specific policy would provide a more robust analysis, that is beyond the scope of this article). There is no one “correct” metric for measuring poverty, so several different metrics are compared in most analyses. According to the Census Bureau's Official Poverty Measure (OPM), the percent of the US population living in poverty fell from 19 percent in 1964 to 12.2 percent in 1969, when LBJ left office. The rate continued to decrease, bottoming out at 11.1 percent in 1973 before recessions caused it to increase again. It has fluctuated ever since, standing at 10.5 percent in 2019 (the most recent year for which we have data for) after several consecutive years of decreases.
Some economists and statisticians consider the OMP to be an inaccurate measurement of the real level of poverty present in the United States, due to the rate not accounting for non-cash benefits, and for having a poor updating threshold. In response to the criticisms, the Census Bureau adopted the Supplemental Poverty Measure (SPM) in 2011. The SPM includes non-cash benefits, but also has a more accurate, area-specific, higher threshold for necessary purchases than the OPM. A paper published by the Institute for Research on Poverty (IPR) in 2013 used the SPM to estimate the poverty rate from 1967 - 2012. The paper reported a drop from 25.6 percent in 1967, to around 22 percent in 1969, 19.2 percent in 1973, and around 17.5 percent in 1979, before an increase from which it did not recover until 1999. The rate in 2012 (the most recent data point when the paper was written) was 16 percent, meaning that the 1967 poverty rate had been cut by over 40 percent.
But wait, you might be saying, that’s simply the overall poverty rate. How do we know what role government programs had in that decrease? The same IPR paper also estimated the poverty rate for 1967 - 2012 with government taxes and transfers removed from the SPM, and actually found an overall increase, from 27 percent to 29 percent. Economists can only make educated guesses and estimates as to what the poverty rate would have been had the War on Poverty programs never been implemented, so this statistic is not necessarily a slam dunk in the initiative’s favor. One could argue that, absent all of the programs, higher economic growth would have led to an even larger decrease in poverty. However, the statistic does show clearly how much the reduction in American poverty since 1967 has been due specifically to government programs.
It is important to try to assess the specific effects of certain policies rather than just look at an overall change, if one wants to assess the policies’ effectiveness. Three War on Poverty policies which represent well the different aspects of the policy initiative as a whole are Medicaid, Food Stamps, and Head Start (a program which provides early childhood education for low-income children). In a 2017 study published in Health Affairs, researchers created a health-inclusive poverty rate, and found Medicaid to reduce said rate by 3.8 percentage points. A 2018 study from the Urban Institute found the Food Stamp Program to reduce the SPM by 2.6 percentage points, or a 17 percent change from 15.4 percent to 12.8 percent. Another 2018 paper, from the University of Michigan, studied disparities between children who attended Head Start and children who did not. Attendees were found to be 12 percent less likely to fall into poverty as adults than non-attendees.
In conclusion, there is a lot to be learned from studying the effects of the Johnson Administration’s anti-poverty legislation, and our legislators today ought to pay attention to such research as they craft the social programs of the future.