Nick Eberstadt’s excellent piece on the Great Society’s role in shaping modern America ends on the rather pessimistic note that America’s domestic antipoverty policies have been a tragic failure. This is captured by the observation that dependence on the government is more widespread than at any time in history. While material standards of living have undoubtedly improved, there are still millions of people in poverty today. Male joblessness is high, and traditional family structures have given way to single parent families which tend to be less stable.
These are recurring themes in some of the work that I have authored or co-authored with my colleagues. Kevin Hassett and I have documented the changes in material standards of living since the 1980s for people at the bottom of the income ladder. We find tremendous improvement in access to many modern amenities for low-income households, which may be partly driven by the generosity of welfare programs. Of course, as Nick argues, this does not mean that the poor are well to do. But it does appear to corroborate the idea that “consumption-poverty” is a lot lower than poverty measured using income.
I would also argue that for all the failures that exist in current anti-poverty programs, there are many successes as well. And if we build on the successes, there is a path forward to tackle the important issues, particularly those of joblessness and single parent families. In a recent report that I co-authored with Abby McCloskey, we argue that to address the issue of joblessness, we should expand programs like the Earned Income Tax Credit that have been studied extensively and have been shown to encourage participation in the work-force, particularly by single mothers who currently benefit the most from the program.
If the EITC were extended to childless adults, this would help less-educated young men as well as noncustodial fathers enter the labor force and increase their participation as well. The EITC lifted 5.4 million people out of poverty in 2010, as per the Census Bureau. To tackle the issue of single mothers and their high rates of poverty, we need to reform the provision of child care subsidies particularly the way it exists in the tax code. Research suggests that increased child-care subsidies for low-income households significantly increase the probability that current and former welfare recipients work. The current child care tax credit pays out at levels that are well below actual costs of child care. Reforming the credit by expanding it and making it refundable could help low-income families significantly.
In general, I believe that there are areas of opportunity even in the current byzantine maze of antipoverty programs that could work towards reducing dependence and improving economic outcomes for people in poverty.
For full discussion, click here to see AEIdea's blog.