NC Budget and Tax Center, Poverty and Policy Matters

We haven’t lost the “War on Poverty” but much work remains

Last week, North Carolinians came together to commemorate the 50th anniversary of the North Carolina Fund, an effort that was launched amidst crisis levels of poverty. The mission of the NC Fund was to mount “an all-out assault on poverty,” and while short-lived, it served as a template for President Lyndon Johnson’s ambitious—and effective—national “War on Poverty.”

Those asserting that efforts to reduce poverty have failed point to an antiquated way of measuring poverty. But, when you examine more accurate poverty statistics, it’s clear that the North Carolina Fund and the War on Poverty have helped lift millions of Americans out of poverty.

As Arloc Sherman, a poverty expert at the Center on Budget and Policy Priorities, points out, the official poverty measure doesn’t reflect how safety net programs are helping people:  

 “The official poverty measure counts only families’ cash income before taxes.  It fails to count food stamps, the EITC, rental subsidies, and the like.  As a result, it counts the forms of assistance that have shrunk dramatically since the 1960s such as cash welfare payments to poor families with children, while leaving out the key forms of assistance that were created or expanded during this period and have powerful anti-poverty effects.”

Sherman ran the numbers to prove just how misleading it is to compare today’s poverty rate to the rates during the 1960s. He adjusted the poverty and income data to include the non-cash benefits—such as food stamps and tax credits for working families—that are left out of the official measure. Doing so provides a more accurate picture of how low-income folks have fared, revealing how much safety-net programs have helped. For instance, Sherman’s analysis showed that poverty dropped 8 percentage points between 1964 and 2011.  This data is not available at the state-level, but there’s no reason not to believe that North Carolina wouldn’t have similar results.

Sherman_War on Poverty_Graphic

And, an even better approach to measuring poverty accounts for the needs of contemporary families. With bi-partisan support, the federal government worked with experts to launch a superior poverty measure called the Supplemental Poverty Measure (SPM) in 2011. The SPM includes cash assistance and non-cash benefits such as food stamps, tax credits for working families, and rental and energy assistance. It also factors in geographic cost of living differences, work-related and child care expenses, out-of-pocket medical expenses, and income and payroll taxes.

The SPM can’t be used to compare poverty over time since it only goes back to 2011. During that year, however, the SPM rate of poverty was higher than the rate under Sherman’s measure (which, again, is simpler than the SPM because it only includes non-cash benefits and not taxes paid and certain out-of-pocket expenses) but lower than the official poverty rate. This suggests that the SPM rate of poverty would rank lower than the official poverty rate historically, signaling that the scope of poverty today is less prevalent than it was in the 1960s. In a glimmer of hope, the SPM poverty rate for North Carolina during the 2010-2012 period is 14.2 percent, or 2.6 percentage points lower compared to the official poverty measure.*

And yet, despite all the progress of the North Carolina Fund and the War on Poverty, poverty remains far too common, with millions of Americans—including many of our own neighbors—continuing to struggle. More can be done, especially around job creation and the problematic boom in low-wage jobs, both by the state of North Carolina and the federal government to continue the progress.

 

* Unlike the official poverty measure, only three-year estimates are available at the state level.

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