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Poverty in America: Are Welfare Efforts Truly Making a Difference to the Poor?

Poverty in America: Are Welfare Efforts Truly Making a Difference to the Poor?

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Note: The opinions and comments stated in the following article, and views expressed by any contributor to In Homeland Security, do not represent the views of American Military University, American Public University System, its management or employees.

By Dr. Stephen Schwalbe
Faculty Member, Public Administration, American Military University

With 43 million Americans currently living in poverty, it is of growing concern. The U.S. Census Bureau estimated the official poverty rate in 2016 was 12.7 percent.

While the overall number of people receiving welfare benefits continues to increase, so does the population of the U.S., now at over 326 million people. However, the percentage of people classified as poor has remained steady – between 10 percent and 15 percent for the past 50 years.

The manner in which the federal government classifies people as poor or impoverished is a function of their annual income. The federal government considers a family of four poor if it earns less than $24,858 a year.

The “deep” poverty of the 1960s is no longer in evidence today. Where the “profound” poverty seen during the Great Depression ranged between 20 percent and 30 percent of the population, it is just under six percent or approximately 18.5 million Americans today. Housing, food and material goods are more readily available to impoverished people today than they were to the poor several decades ago.

What Causes Poverty?

There are several causes of poverty in the United States. Some general reasons include:

  • Lack of education
  • Poor productivity
  • Racial discrimination
  • A culture of poverty
  • Poor family structure

One of the most significant contributing factors to our poverty levels is the state of the national economy. The federal unemployment rate is directly related to poverty levels. History has shown that as employment increases, poverty levels decrease.

One statistic showing the importance of education is that 46 percent of Americans who were raised in poverty and did not earn a college degree remained in the lowest income brackets, while only 16 percent of underprivileged Americans who earned a college degree remained in the lowest income brackets. The connection between education and poverty can be seen at all levels of education.

Welfare Programs Help to Make a Difference to Poverty

Social welfare, which has been around since the 1930s, is described as any type of federally funded assistance program to low-income citizens to help with their basic everyday needs. Numerous studies have shown that poverty decreases when countries adopt social welfare programs.

Since 1966, more than $19 trillion has been spent to fight poverty and 126 federal welfare programs have been created. However, to put that into perspective, welfare spending is just 10 percent of the federal budget.

Welfare benefits eligibility is based on many factors, including family size, gross and net income, crisis situations, pregnancy, homelessness and unemployment.

What most people refer to as “welfare” is the Aid to Families with Dependent Children (AFDC). This is a program created by the Social Security Act of 1935 to aid fatherless families or families where one parent was permanently disabled.

In 1996, President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) into law. This landmark legislation has three goals:

  • Reduce welfare dependence and increase employment
  • Reduce child poverty
  • Reduce illegitimacy and strengthen marriage

The PRWORA limits the amount of time a recipient may receive benefits without working. This limitation is designed to encourage people on welfare to become less dependent on government assistance.

The PRWORA showed early signs of success. The number of welfare recipients dropped by 60 percent soon after it was passed.

The old AFDC program was replaced by Temporary Assistance to Needy Families (TANF) as the key part of PRWORA. TANF is a federal block grant given to all states with very specific rules to help eliminate the dependence of people receiving welfare benefits. Each state makes its own determination on how to distribute these federal welfare funds.

Congress limited the dependency of people on TANF and other welfare programs to a cumulative maximum of 60 months. Only those people who are medically certified as disabled can receive welfare benefits for a longer period of time.

However, unemployment compensation is offered for a maximum of six months. To receive unemployment benefits, recipients must demonstrate weekly job searches and participate in either job training or an education program.

As for which welfare programs have the most participants, Medicaid accounted for 15 percent, food stamps accounted for 13 percent, housing assistance accounted for 4 percent and TANF accounted for just 1 percent in 2012.

TANF served 2.7 million people in 2016. Of those, 37 percent were Hispanic, 28 percent were white and 29 percent were black. The U.S. Census Bureau reported that 63 percent of TANF recipients participated in the program for a year or less.

Most Americans receiving welfare are children below 18 years of age. In fact, in 2012, nearly half of all children in the U.S. receive some form of governmental assistance. According to a 2013 Columbia University study, without these various welfare programs, the poverty rate would be 29 percent today instead of around 13 percent.

A 2014 study for the National Bureau of Economic Research, “Waging War on Poverty: Historical Trends in Poverty Using the Supplemental Poverty Measure,” claimed that had anti-poverty policies not been available between 1967 and 2012, the poverty rate today would be as high as 31 percent. As a result of the PRWORA, the number of families on welfare has gone down from a peak of 5.1 million in 1994 to 1.6 million in 2015.

Determining Success of Poverty Relief Efforts Difficult due to Problems in Defining Poverty

One of the biggest barriers to measuring the success of the war on poverty is the difficulty in actually defining and measuring poverty. In a 2007 report, Heritage Foundation’s Robert Rector pointed out that the average poor in America today have some luxuries by world standards, which is a far cry from people in developing countries. For example, his data showed that 43 percent of poor families owned their own three-bedroom home, 75 percent owned a car and 97 percent of them had at least one color TV.

Finally, many Americans want federal funding of social welfare programs to be cut because they believe that most people on welfare abuse the system. However, a report in 2016 found that only 10 percent of all welfare recipients commit fraud. It just seems as if the number is greater because there is more media coverage of welfare fraud today.

The bottom line is that there still exists many inaccurate perceptions about welfare programs in America today, from how much money is spent on them to who is receiving the aid and the level of fraud involved. America’s social welfare programs are generally very effective and needed more today than ever before.

About the Author

Dr. Stephen Schwalbe is an associate professor at American Military University. He is also an adjunct professor at Columbia College. Stephen received a Ph.D. in Public Administration and Public Policy from Auburn University in 2006.

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