Progress in Reducing Poverty: Let’s Make It Permanent

The Urban Institute reports that the American Rescue and CARES Acts kept 10.3 million Americans out of poverty, reducing the rate to an all-time low of 7.7%, down from 13.9% in 2018. The poverty rate among children fell the most, by 56%. Federal stimulus checks had the largest impact, followed by the 15% increase in SNAP benefits (food stamps), the unemployment insurance bonus and the modified Child Tax Credit. 

These bipartisan actions cushioned the pandemic’s impact on nearly all Americans. All four of these changes, however, are temporary. Only the Child Tax Credit remains in effect, and that expires next year.

A just-published book, Poorly Understood: What America Gets Wrong about Poverty, explores why U.S. anti-poverty efforts are considerably more limited than those of other high-income countries. 

First, poverty is more common than most Americans realize. Long-term studies tracking people over years find that 60% of Americans experience poverty when they are between the ages 20 and 75. Second, upward mobility is more limited than Americans generally assume. Data from 15 countries reveals that only two have less intergenerational mobility than the U.S. Third, U.S. aid to the poor is considerably less than is commonly thought. Compared to other rich countries, the U.S. has a poverty rate that’s double the average, but it spends (as a percentage of GDP) half as much on poverty reduction.

Several factors explain why the U.S. tolerates more poverty than other rich countries. First, the American ethos that anyone can get ahead – it only requires hard work – discourages safety-net spending. Second, some whites oppose anti-poverty efforts because they believe (correctly) that Blacks will benefit disproportionately. Blacks are twice as likely to live in poverty (although the number of poor whites is larger). Other contributing factors include the role of money in politics, weak unions, the Senate’s anti-democratic structure and the Electoral College, which gives small, conservative states disproportionate power.

The reconciliation bill before Congress would make these four drivers of poverty reduction permanent. Help kids stay out of poverty by supporting Democrats’ efforts to permanently reduce poverty and income inequality, and begin healing our country.

Jack Fiedler

Sister Bay, Wisconsin