Being "Poor" in America

Reading La Shawn Barber reminded me of a great Wall Street Journal article from a few years back. Thanks to the wonders of Google and the internet, a quick search produced the article.

America Has the World’s Richest Poor People
By Robert Rector
Wall Street Journal
September 24, 1998

Today the Census Bureau releases its annual report on income and poverty in the U.S. As it has for many years, the report will show more than 30 million Americans “living in poverty.” But a close look at the actual living standards of people defined as “poor” shows that the Census Bureau’s report is misleading.

For most of us, the word poverty suggests destitution: the inability to provide a family with adequate food, clothing and shelter. But only a small number of the 30 million plus people classified as “poor” by the Census Bureau fit this description. Although real material hardship does occur in America, it is rare. The bulk of the “poor” live in material conditions considered comfortable or even well-off just a few generations ago. Indeed, total spending per person among the lowest-income one-fifth of households actually equals those of the average American household in the early 1970s--after adjusting for inflation.

How poor are the “poor”? Consider the following statistics, all drawn from federal government reports:

• In 1995, 41% of all poor households owned their own homes. The average home owned by a poor person has three bedrooms, 1 1/2 baths, a garage and a porch or patio.
• More than 750,000 poor people own homes worth more than $150,000; nearly 200,000 own homes worth more than $300,000.
• Only 7.5% of poor households are overcrowded; nearly 60% have two or more rooms per person.
• The average poor American has a third more living space than the average Japanese and four times as much living space as the average Russian--that’s the average citizen in Japan or Rusisa, not the average poor person.
• Seventy percent of poor households own a car; 27% own two or more cars.
• Ninety-seven percent of poor households have a color television; nearly half own two or more color televisions. Nearly three-quarters have a videocassette recorder; one in five has two VCRs. Sixty-four percent own a microwave oven; half have a stereo system; more than 25% have an automatic dishwasher.
• Two-thirds of poor households have air-conditioning. By contrast, 30 years ago only 36% of the entire U.S. population had air-conditioning.
• As a group, the poor are far from being chronically hungry and malnourished. In fact, poor Americans are more likely to be overweight than middle-class ones. Nearly half of poor adult women are overweight. And 84% of the poor say their families have “enough” food to eat; 13% say they “sometimes” do not have enough to eat. Only 3% say they “often” do not have enough to eat.
• The average consumption of protein, vitamins and minerals is virtually the same for poor and middle-class children and in most cases is well above recommended norms. Poor children actually consume more meat than do higher-income children and have average protein intakes 100% above recommended levels. Indeed, most poor children today are supernourished, growing up, on average, to be one inch taller and 10 pounds heavier that the GIs who stormed the beaches of Normandy in 1944.

The Census Bureau’s poverty report is simply inaccurate: It overstates the extent of poverty in the U.S. and understates the real income of most Americans. While a number of errors contribute to the report’s inaccuracy, the most critical is that the census dramatically undercounts the true economic resources or annual income received by the American public.

The magnitude of the Census Bureau’s economic undercount can be revealed by comparing census figures with the Commerce Department’s National Income and Product Accounts, which measure the gross domestic product. In 1996, Commerce Department figures showed that the aggregate “personal income” of Americans (including personal payments of Social Security taxes) was $6.8 trillion. By contrast, aggregate personal income, according to the Census Bureau’s official income definition, was only $4.8 trillion.

Thus the Census Bureau missed $2 trillion in annual income, or roughly $20,000 for each U.S. household. The unreported $2 trillion exceeds the entire economies of all but a handful of nations in the world. It is true that much of this missing income belongs to the middle class and the rich, but a large slice is received by low income families as well. Most notably, official Census income figures fail to report more than a half trillion dollars in government assistance to low income and elderly households.

For decades, both conventional wisdom and the Census Bureau have told us that “the rich get richer and the poor get poorer.” This is untrue. The material conditions of lower-income Americans have improved dramatically over time. Most “poor” Americans today are better housed and better fed and own more personal property than average Americans throughout much of this century. In fact, living conditions in our nation as a whole have improved so much that our society can no longer clearly remember what it meant to be poor or even middle class in earlier generations.

But higher material living standards should not be regarded as a victory for the War on Poverty. Living conditions were improving dramatically, and poverty was dropping sharply, long before that war was declared. The principal effect of the War on Poverty has been not to raise incomes but to displace work and earnings with dependence on government. By rewarding dysfunctional and self-destructive behavior, the modern welfare state has contributed to the growth of a new “behavioral poverty” exemplified by illegitimacy, crime, school failure and drug abuse.

By exaggerating the extent of material deprivation and by distracting attention from the more important behavioral problems afflicting low-income communities, the census poverty report does society and the poor a disservice.

Mr. Rector is senior policy analyst for welfare and poverty issues at the Heritage Foundation.