The good and bad news about declining US poverty rates

Recent news articles have heralded a long-term decline in the U.S. poverty rate to “the lowest level on record,” including a “sharp” “stunning” drop in child poverty. The articles cite progress on the Census Bureau’s broadest yardstick of poverty, known as the Supplemental Poverty Measure, as a triumph of public policy — an “example of Washington succeeding at something big.”

A close look at the data, however, reveals a more nuanced story. Almost all of the cited progress on poverty stems from an increase in government payments to low-income people through safety net programs such as food stamps, housing and earnings subsidies and the child tax credit. Poverty measures that instead focus on people’s earned income from wages, self-employment, and investment paint a bleaker picture. 

The Census Bureau’s official (as opposed to supplemental) poverty rate — which is based mainly on earned income and excludes many safety net payments — shows no overall progress on poverty since the 1970s. Census data also show that the earned income of a broader group of moderate-income households — the bottom 40 percent — is almost unchanged over that time, after adjusting for inflation, ending a period of major gains between World War II and the 1970s.

The upshot is that government is, on the one hand, providing low-income people with larger payments to prevent severe economic hardship and cushion the impact of national crises like the Great Recession and COVID pandemic, as well as household emergencies like job loss or illness. But on the other hand, it isn’t succeeding, as President Lyndon Johnson had hoped in launching the Great Society programs, in breaking the cycle of poverty — that is, creating greater opportunity through education, training, economic development and other programs for low-income people to earn a decent living and rise into the middle class.

To paraphrase the proverb, we are giving people fish, but not enhancing their capacity to fish for themselves. Furthermore, our expansion of safety net payments carries the risk of damaging work incentives and inadvertently reinforcing the poverty cycle. Indeed, there is evidence from randomized trials that at least some government payment programs, such as housing vouchers and possibly cash transfers, cause people to work and earn less.

One main reason we haven’t succeeded in breaking the poverty cycle is that doing so is harder than just sending people a payment check. Randomized trials of government programs to improve educational and workforce outcomes of low-income people show that many programs simply don’t produce the hoped-for results. These include some major federal anti-poverty initiatives such as Head Start (a program providing preschool education and other services to boost school readiness of low-income children), Job Corps (the nation’s largest residential career training program for disadvantaged youth and young adults), and Regular Upward Bound (a program to prepare disadvantaged high school students to enroll in and complete college) — all found to produce small or no lasting improvements in participants’ lives.

But amidst the disappointing findings are some exceptional programs that show real success and, in doing so, illuminate a path to true progress on American poverty. 

For example, randomized trials show that certain “sectoral” job training programs for low-income workers — such as Per Scholas and Year Up — that focus on fast-growing industries and partner closely with local employers increase long-term earnings by a remarkable $5,000 to $8,000 per year. Career Academies in high-poverty schools, providing students with hands-on technical and career training as part of a small learning community, increase long-term earnings by $3,000 per year. ASAP, a comprehensive community college program that provides academic, personal, and financial support to low-income students, increases college completion rates by 11 percentage points. 

Breaking the poverty cycle, then, will require more than simply expanding the safety net or broadly increasing funding for education, training, and similar programs (many of which don’t work). It will require smart spending on solutions that — like the above examples — have been tested in the real world and proven to produce important gains in education, earnings and other life outcomes for low-income people. Social spending, in other words, must be based on evidence about “what works.”

In 1964, President Johnson pledged that “we are not content to accept the endless growth of relief rolls” and declared that “our American answer to poverty is … to help [the poor] lift themselves out of poverty.” Let us reaffirm this goal today and finally achieve it through an evidence-based war on poverty.

Jon Baron was a 2022 Democratic primary candidate for Maryland governor. Previously, he founded and ran the nonprofit Coalition for Evidence-Based Policy, chaired the National Board for Education Sciences, and served as Vice President of Evidence-Based Policy at Arnold Ventures.