Weekend Reads | The War on Poverty, 60 Years Later

by Kevin Schofield

This weekend's read is a report from 2021 analyzing the results of the "War on Poverty," declared in 1964 by then-President Lyndon Johnson. This isn't the first attempt to decipher whether the "war" has been won or lost, nor will it be the last. But it turns out to be an interesting dive into the issues around how we define poverty.

In March 1964, Johnson said:
"… I have called for a national war on poverty. Our objective: total victory. There are millions of Americans—one fifth of our people—who have not shared in the abundance which has been granted to most of us, and on whom the gates of opportunity have been closed."

There certainly wasn't any debate at the time that millions of Americans were living in poverty, but there were questions about where Johnson's "one fifth of our people" (i.e., 20%) statistic came from. In 1963, President John F. Kennedy's Council of Economic Advisers began informal discussions of how to measure poverty, and reportedly settled on a threshold income of $1,500 for individuals and $3,000 for families that would lead to a poverty rate of about 20%; while he never said so explicitly, it's generally believed that Johnson was referring to these figures in his 1964 speech. Later that year, Johnson's Council of Economic Advisers published a detailed analysis supporting the 20% estimate. Further confusing matters, in 1965, the federal government adopted an Official Poverty Measure, which used a different formula while still maintaining the 20% estimate.

Through the intervention of a number of government-funded programs, by 1967, the official poverty rate had dropped to about 14%. But for the next 50 years, it bounced around between 11% and 15% with no clear trend. In 1988, President Ronald Reagan said in his State of the Union Address, "… the Federal Government declared war on poverty, and poverty won." In 2014, Republican Rep. Paul Ryan remarked that the poverty rate was "the highest in a generation." According to the Official Poverty Measure, in 2019, 10.5% of U.S. residents lived in poverty.

But things are not nearly that cut-and-dried. As the report points out, there are significant problems with the Official Poverty Measure. The most serious one is that because it focuses almost entirely on direct income, it doesn't factor in benefits from arguably the three most significant anti-poverty government programs: Medicaid, an "in-kind" benefit that provides health care to low-income residents; SNAP (previously known as "food stamps"); and tax credits for low-income taxpayers, such as the Earned Income Tax Credit, housing credits, and the Child Tax Credit — all of which let poor people keep more of the income they make. These programs have an enormous impact: In 2019, 22.9% of Americans received Medicaid, 10.9% received SNAP benefits, and 3.4% received low-income rental housing tax credits — a total of $706 billion of federal anti-poverty spending on these three programs alone.

Additionally, while the Official Poverty Measure adjusts for inflation, it uses the Bureau of Labor Statistics' standard CPI-U measure of inflation, which has two faults: First, over the long term, it has consistently overstated inflation (making the 2019 equivalent of 1963 poverty-level income a much higher threshold to meet); and second, it doesn't provide a consistent measurement of inflation over time, because the government has tweaked it to adjust to consumers' changing buying patterns.

To be sure, plenty of alternatives to the Official Poverty Measure have been proposed that purported to fix its problems. But, according to the report, none of them does so in a way that lets us take a read on how Johnson's "war on poverty" has gone. The report's authors suggest that there are three conditions for a true poverty measure that will meet this goal:

1. It must start with a baseline poverty rate of around 20% in 1963;
2. The poverty threshold must remain constant in (accurately) inflation-adjusted terms;
3. It must incorporate the full array of anti-poverty programs, including in-kind benefits and tax credits.

Not surprisingly, they propose a new method for calculating the poverty rate that meets all of these goals. By their measure, the true poverty rate in 2019 was only 1.6% — at least by the 1963 standard.

We can quibble about this number, but the more interesting question, discussed at length in the report, is about how we define poverty. Johnson's original statement that about one-fifth of the population lived in poverty at that time was fairly arbitrary. As a thought exercise (and to point out how ridiculous the original poverty estimate was), the report runs the calculation in reverse: Rather than anchoring it to a 20% poverty rate in 1963, it anchors it to the Official Poverty Measure's estimate of 10.5% in 2019. Under that constraint, and accounting for in-kind and tax credit programs, the poverty rate in 1963 was 69.9%.

But we have to ask ourselves a more fundamental question: Is "poverty" a relative term based upon a standard of living that we expect (and what it takes to afford it), rather than an absolute one based upon a specific amount of income? And if so, is it based on an accepted standard of income, or consumption? For example, some experts have suggested that we could define "living in poverty" as making less than half of the median income (about 20% of the population made less than 55% of the median income in 1963). Or, we could define it as having enough income to cover a certain set of essential and discretionary expenses: food, clothing, shelter, transportation, health care, plus enough other things to make life worth living.

Defining poverty as relative to the median income is problematic, because not only has median income risen much faster than inflation, but also the distribution of incomes has changed dramatically. In 1963, a large fraction of Americans had income close to the median; today, incomes are much more spread out.

On the other hand, defining poverty by consumption — essentially creating a "functional" definition of poverty instead of a purely financial one — is also problematic because of shifting notions of what an acceptable life is. Certainly our standards for acceptable housing and health care have increased dramatically since 1963. But so have other standards for living: for example, in 1950, only 9% of households had a television; by 1960, it was more than 87%, and today, it's nearly universal. Today, some call internet access a "basic human right"; that is a subject of ongoing debate, but it's certainly true that we rely on the internet (and broadband speeds) for more and more of our daily routine. A similar argument could be made for mobile phones. We could decide that someone is living in poverty if they don't have the means and access to participate and thrive in society at a basic level, even as our society evolves along with our standard of living. There is a strong, principled argument for that notion. But in so doing, we make it nearly impossible to measure whether we're making progress in raising people out of poverty, since our society's notion of an acceptable standard of living constantly shifts.

The report's authors conclude that President Johnson's original "war on poverty" is over and has largely been won, despite politicians' statements to the contrary: By the 1963 standard of income, almost no one lives in poverty in the United States anymore. But the question seems irrelevant today: None of us wants to live by the 1963 standard. It seems that we're in need of a new framework — and vocabulary — for talking about poverty in our country.

Evaluating the Success of President Johnson's War on Poverty: Revisiting the Historical Record Using an Absolute Full-Income Poverty Measure

Editors' Note: This article was updated on 07/25/2023 to correct a previous error. President Lyndon Johnson's "War on Poverty" was declared in 1964, not 1963.

Featured image by Natpant Prommanee/Shutterstock.com.