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Why does poverty remain so pervasive? Is it unavoidable? Are people from particular racial or ethnic backgrounds or family types inevitably more likely to be poor? What can we expect over the next few years? What are the limits of policy? These are just a few of the questions this book addresses. In a remarkably concise, readable, and accessible format, Iceland explores what the statistics and the historical record, along with most of the major works on poverty, tell us. At the same time, he advances arguments about the relative nature and structural causes of poverty—arguments that eloquently contest conventional wisdom about the links between individual failure, family breakdown, and poverty in America. At a time when the personal, political, social, and broader economic consequences of poverty are ever clearer and more pressing, the depth and breadth of understanding offered by this handbook should make it an essential resource and reference for all scholars, politicians, policymakers, and people of conscience in America.
In 1971, Robert Lampman, who had been a key economic adviser to President Lyndon Johnson on anti-poverty initiatives, predicted that poverty would be eradicated by 1980. James Tobin, another policy adviser, had been equally hopeful when he declared his views in a 1967 New Republic article entitled "It Can Be Done! Conquering Poverty in the U.S. by 1976."
Today these predictions seem decidedly naive. In fact, by the mid-1970s, with the country in the midst of a recession and an oil crisis, it had already become clear that these optimistic forecasts would prove inaccurate. Poverty rates fluctuated in response to economic booms and busts in the last decades of the twentieth century but saw no further overall decline; they are still particularly high among minority groups, children, and female-headed families. It now seems as unlikely as ever that we will witness drastic falls in poverty in the near future. This leads one to ask: Were Lampman and Tobin fabulously misguided, or did they in fact offer reasonable predictions given the trends at the time? Why does poverty remain so pervasive? Is poverty unavoidable? Are people from particular racial and ethnic backgrounds or family types inevitably more likely to be poor? What can we expect over the next few years? What are the limits of policy?
In addition to providing an in-depth examination of trends and patterns of poverty in the United States, I advance several arguments through the course of this book. First, views of poverty vary over time and place. What it meant to be poor in the early twentieth century is not the same today. Nor is the standard of what constitutes poverty in the United States the same as that in the developing world. Second, the persistence of poverty in the United States reflects more than just an aggregation of individual failings. Structural factors, such as the way we understand and define poverty, the inherent features of our economic system that produce income inequality, social inequities, and our policy responses to these problems shape current trends. Third, contrary to conventional wisdom, shifts in family structure have not been the most important factor explaining trends in American poverty rates in recent decades, though they were related to increasing child poverty rates in the 1970s and 1980s. Economic changes—such as economic growth and income inequality—have had the strongest association with trends in overall rates, regardless of how we measure poverty. Fourth, anti-poverty policies constitute a relatively small part of the federal budget and have only a moderate impact on poverty. The effect of policy on poverty is limited by the role of government in society the public supports. Public sentiment is in turn affected by trust in government, the development of communal institutions, and a belief in a common good. Racial conflict, confusion about the causes of poverty, and parochial concerns all stand in the way of efforts to reduce poverty and inequality.
These analyses are based on a synthesis of a wide range of studies and a firsthand examination of information collected in a variety of social surveys, such as the decennial census and the Current Population Survey. Thus, large portions of this study are based on statistical information about poverty rather than anecdotes or case studies. The strength of these data is that they provide us with a comprehensive overview of poverty across the United States. By combining this information with the historical record and social scientific theory, I am able to present a more complete understanding of the general nature and causes of poverty in America.
WHY LOOK AT POVERTY?
There are several reasons why poverty continues to be a critical issue in the United States. First, the hardship that often accompanies poverty plainly has adverse effects on individuals' physical and psychological well-being. A number of studies have shown that children raised in poor families are less healthy and worse off in terms of their cognitive development, school achievement, and emotional well-being. Poor adolescents, for example, are more likely to have low self-esteem, act out antisocial behaviors, and become delinquent. Poor individuals are also more likely to have health problems and die at younger ages. Some of the harmful effects of poverty are due to low income, while some result from other family conditions that often accompany poverty, such as family instability and low levels of education. Poverty often begets more poverty, as those who grow up in poor families are more likely to be poor themselves as adults. Many if not most people would probably agree that the continued suffering of some Americans in the midst of plenty is morally troubling.
Second, poverty has broader economic consequences. Economies thrive in societies with a vibrant middle class. Much of the strong economic growth in the United States in the twentieth century was fueled by the expansion of consumer markets. As the demand for new products soared, do did technological innovation, productivity, and wages and benefits. Declining levels of poverty contribute to a healthy economy by increasing the number of people who can purchase goods and services; that increase, in turn, stimulates economic growth and raises average standards of living.
Third, high levels of poverty have serious social and political consequences. Poor people often feel alienated from mainstream society. Poverty also provokes social disorder and crime, and it reduces public confidence in democratic institutions if people do not feel their needs are being addressed by the prevailing system. The ghetto riots of the 1960s, for example, reflected the economic, social, and political marginalization of African Americans in U.S. cities. The unequal distribution of resources has contributed to the fragmentation of society we experience today, both nationally and globally.
MYTHS ABOUT POVERTY
Myths about poverty abound. For example, a common misperception is that a majority of the poor are African American residents of inner cities. Even though blacks are overrepresented among the poor, they make up only about one-quarter of the poverty population. Another common misperception is that the poor do not work; in fact, nearly half of the poor of working age work at least part-time. William O'Hare describes this and a number of other common myths, including the widespread misperceptions that poor families are trapped in a cycle of poverty that few escape and that welfare programs are a major part of the federal budget.
Throughout this book I discuss three other general misperceptions. First is the common assumption that poverty represents a fixed measure of economic deprivation. Yet the historical record reveals that people's views of what it means to be poor have varied considerably over both time and place. Not only are poverty standards lower in developing countries than in the United States, but American standards of poverty were much lower in the early part of the twentieth century than they were just decades later.
A second common misperception is the belief that the growth in the number of female-headed families was largely responsible for stagnant poverty rates in the last few decades of the twentieth century. However, I present evidence indicating that trends in poverty were most strongly related to economic changes over this period. While changes in family structure had a strong association with child poverty rates, particularly in the 1970s and 1980s, this relationship disappeared by the 1990s, mainly because of a slowing of shifts in family structure during that decade.
A final misperception is that recent debates about welfare reform reflect distinctly modern social issues. Quite the contrary, debates about the effect of government transfers on markets, individual conduct, and poverty go back to the nation's earliest days. From the beginning, Americans have argued about the relative importance of alleviating hardship, on the one hand, and discouraging and limiting socially undesirable behaviors, on the other. The problem with these debates is that they have often been based on only a partial understanding of the causes of poverty and people also have different goals and priorities when seeking to address them.
PLAN OF THE BOOK
In chapter 2, I discuss views of poverty in America from colonial times to the present. Familiarity with the historical context helps inform current poverty and inequality issues. For example, one way in which recent debates on welfare reform echo past debates lies in how we decide who is worthy of support. There has long been a distinction between the "deserving" poor, such as the elderly, and the "undeserving" poor, such as able-bodied men and unmarried mothers. Until relatively recently, these distinctions could neither be refuted nor supported because of the lack of data and uniform measurement techniques.
Even as some of the central issues of poverty have remained the same, views of what it means to be poor have changed over time. As standards of living have risen, so have assessments of how much money it takes to support a family. Dollar estimates early in the twentieth century were about 50 percent of the estimates made a little over half a century later. Many believe that the current official poverty line, devised in the 1960s and updated annually to account for inflation, is now too low. In 2003 the average poverty line for a family of four was $18,810.
In chapter 3, I review alternative methods of measuring poverty. As the number of antipoverty initiatives grew in the wake of Lyndon Johnson's War on Poverty, it became clear that a standard poverty measure was needed to assess the effectiveness of these programs. The official poverty measure defines poverty lines for families of different sizes and composition and compares a family's reported income to that line to determine if that family is poor. These poverty lines are updated annually for inflation. This poverty measure remains in use to this day, though not everyone agrees that it represents the best way to estimate economic deprivation.
The two basic types of poverty measures are absolute measures and relative measures. Each of these has several possible variants. Absolute measures, such as the current U.S. official measure, typically attempt to define a truly basic needs standard and have thresholds that remain constant over time. Relative measures define poverty in terms of comparative disadvantage, which changes as living standards change. Each of these measures has its own strengths and weaknesses, and both are informative about the changing nature of economic well-being in society.
In my view, the best general measure of poverty has both absolute and relative components. The absolute core of poverty is not being able to meet basic needs; people who cannot meet them should be considered poor, regardless of general living standards. Yet poverty is relative in that people's beliefs about the amount of money needed to live within society rises as overall standards of living rise. One way to keep an absolute poverty measure meaningful is to simply revamp it by adjusting poverty thresholds every generation or so (or as needed). An alternative is a quasi-relative measure recommended by the National Academy of Sciences (NAS) Panel on Poverty and Family Assistance. Its basic strength is a poverty line that increases with inflation-adjusted spending on basic goods. Because of this and other advantages, this measure represents a strong, viable challenger to the current official U.S. poverty measure.
Chapter 4 describes the poverty population in detail. In 2003, for example, 12.5 percent of the U.S. population, or 35.9 million people, were poor, according to the official measure. Poverty rates are a little higher when using the NAS measure and significantly higher if using a common relative measure. As is well-known, poverty is more pervasive among some demographic subgroups—such as minorities, children, people with less education, and female-headed families—regardless of the poverty measure used. Poor people are also, unsurprisingly, considerably more likely to report material hardships, such as sometimes not having enough food to eat or missing utility payments. However, both rich and poor Americans alike report having basic consumer items such as TVs and refrigerators.
Evidence from studies looking at the dynamics of poverty indicates that a majority of people who fall into poverty remain in poverty for only a short time. Nevertheless, many families frequently move into and out of poverty, and a significant proportion of the poor also suffer long-term poverty spells. Studies show that the large majority of children who grow up poor do not remain so as adults. Nevertheless, as adults, they are considerably more likely to be poor than those who did not grow up poor.
Poverty varies widely across states and has become more concentrated within cities over the last few decades, though some rural pockets of poverty persist. Some argue that people living in high-poverty neighborhoods (and in remote rural areas) are not only spatially isolated from mainstream society but often socially isolated as well. Many urban problems, such as crime, welfare dependency, drug use, and substandard educational outcomes, are more common in high-poverty areas. Increasing poverty concentration has a variety of sources, including the decline in the number of economic opportunities for many inner-city residents and continued high urban levels of racial, ethnic, and class segregation.
When comparing poverty in the United States with poverty in countries around the world, two findings stand out. First, poverty in developing countries qualitatively differs from that in the United States and other developed countries. In impoverished countries, particularly in South Asia and Africa, a high proportion of the population fails to earn even $1 or $2 a day. Second, while the United States has virtually the highest gross national product (GNP) per capita in the world, it has higher levels of both absolute and relative poverty than other rich countries in Northern and Western Europe. It also has higher levels of relative poverty than just about all European countries.
In discussing the causes of poverty in chapter 5, I consider not only conventional theories about the effect of individual characteristics, such as educational attainment, but also theories that focus on the impact of structural factors. Understanding the workings of economic systems and social inequality is essential for explaining why poverty exists and why members of some groups are more likely to be poor than others. For example, factors that account for the racial-ethnic gap in poverty over the last few decades include not only differences in educational attainment and the prevalence of female-headed families but also residential segregation, economic inequality, and discrimination.
Some of the rapid decline in poverty among minorities over the last half century reflects the fall of legal barriers and the decline of discrimination. Today, past poverty, economic dislocation, wealth differentials, and family instability are barriers at least as important as racism and discrimination in explaining poverty levels among minority groups. Nevertheless, despite this progress, racial and ethnic disparities remain a critical problem in America.
While discrimination against women in the labor market has also declined, gender differences in earnings and poverty have not disappeared. Single-parent families headed by women are considerably more likely to be poor than other family types because they face the challenge of supporting a family on one income and often paying for child care while they work. Lower levels of education among women who head such families also contribute to their lower earnings, as does the fact that many such families do not receive sufficient child support from the absent father. Despite these obstacles, poverty rates among single-parent families, while still significantly higher than poverty rates among other subgroups, have declined over much of the 1990s, largely because of greater employment and earnings among single parents.
In chapter 6, I assess the relative association between trends in poverty and income growth, economic inequality, and changes in family structure over the last half of the twentieth century by analyzing decennial census and Current Population Survey data over that time. I find that income growth had the strongest correlation with trends in absolute poverty, and economic inequality had a larger association with trends in relative poverty rates. The negative association between both poverty measures and family structure changes—mainly the growth in female-headed families—increased from 1949 through 1990 and was greatest among African Americans and children. The relationship disappeared, however, for all groups during the 1990s, mainly as shifts in family structure slowed over the decade.
Excerpted from Poverty in America by John Iceland. Copyright © 2012 The Regents of the University of California. Excerpted by permission of UNIVERSITY OF CALIFORNIA PRESS.
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2. Early Views of Poverty in America
3. Methods of Measuring Poverty
4. Characteristics of the Poverty Population
5. Causes of Poverty
6. Why Poverty Remains High, Revisited
7. Poverty and Policy
Appendix: Data and Methods for the Analysis in Chapter 6