Journal Issue: The Next Generation of Antipoverty Policies Volume 17 Number 2 Fall 2007
Policy Initiatives Can Reduce Poverty: A Success Story
The stubbornness of poverty over the past several decades makes it clear that cutting poverty is a difficult business. But there is some good news on which to build a strategy for reducing poverty. Between 1991 and 2000, poverty among children in femaleheaded families plummeted from a little more than 47 percent to 33 percent, by far its lowest rate ever. This abrupt decline—30 percent in less than a decade—comes close to rivaling the 45 percent fall in the overall poverty rate during the 1960s. Even after four straight years of increases, caused in part by the recession of 2001, which saw poverty in female-headed families rise from 33 percent to nearly 36 percent, the poverty rate for these families was still nearly 25 percent below its 1991 peak.
By any measure, the 1990s decline in poverty among female-headed households is impressive and demonstrates that progress against poverty is possible. The poverty rate for these families before any government benefits in 1999 was 11 percentage points lower than the 1990 rate (50 percent as against 39 percent), reflecting the dramatic increase in employment and earnings achieved by single mothers during the intervening years. One explanation for this increase in work was the 1996 welfare reform legislation that imposed a five-year time limit on mothers receiving welfare and required them to search for work or have their cash benefit reduced or terminated. These reforms were followed by a huge increase in the number of poor mothers leaving welfare and increasing both their employment and their earnings, which in turn substantially lowered their poverty rate.
Adding government transfer payments, including Social Security, food stamps, housing, and the earned income tax credit (EITC), to these women’s market income produces a decline of 12 percentage points in a comprehensive measure of poverty—from 37 percent to 25 percent. By this broader definition, if the poverty rate in 1999 (25 percent) had been the same as in 1990 (37 percent), a total of nearly 4.5 million additional people, many of them children, would have been poor.
In sum, this combination of policy based on sticks (such as the work requirements, time limits, and sanctions of welfare reform) and carrots (such as child care and the earned income tax credit) is an effective strategy for fighting poverty. Moreover, it is consistent with the domestic philosophies of the nation’s two major political parties. Republicans emphasize that progress will not be possible unless individuals behave more responsibly— and more in accord with traditional American values—than they have in the past. Democrats emphasize that serious personal effort and responsible behavior alone will not be enough to allow millions of poorly educated adults and their families to escape poverty. Both individuals and government, in other words, have major roles to play in reducing poverty, and both parties can—and indeed have—supported work requirements and work support programs. Keeping this winning combination of approaches in mind, let us review some specific proposals for government action that will lead to further reductions in poverty.