The Census Bureau recently released its official statistics on poverty and family income for 1989. There was some good news: Real median family income climbed in 1989, representing increases in six of the past seven years. Real incomes for black households increased 5.1 percent in 1989.
Despite the strong growth in median family income, media attention has focused on those ostensibly "left behind" during the economic expansion of the 1980s.The report's figures show 31.5 million people living in "poverty," a number unchanged from the previous year but greater than in 1965, when the War on Poverty began. How can this be?
The truth is that the census data overstate the number of people living in poverty and understate the living standards of low-income Americans. This is a serious matter, since the government is now spending about $180 billion a year to fight "poverty."
The Census Bureau report, for example, doesn't tell us that 38 percent of the people identified as "poor" own their own homes.
It also doesn't tell us that more than 100,000 "poor" people own homes with a value in excess of $200,000; or that 62 percent of "poor" households own a car - 14 percent own two or more cars; nearly half of all "poor" households have air-conditioning; 31 percent have microwave ovens; and nationwide, more than 22,000 "poor" households have heated swimming pools or Jacuzzis.
These facts underscore a large conceptual gap between the "poor" as defined by the Census Bureau and what most Americans consider as poor. In reality, numerous government reports based on data collected by the Census Bureau indicate that most "poor" Americans today are better housed, better fed and own more personal property than did the average middle-class, U.S. citizen throughout most of this century.
In 1988, for example, after adjusting for inflation, the poorest fifth of the U.S population spent more per capita than the median U.S. household in 1955.
International comparisons of living standards are similarly revealing. The average "poor" American, for example, lives in a larger house or apartment than does the average West European.
This is the average middle-class West European, not poor West Europeans. U.S. and European census data also indicate that poor Americans eat far more meat, are more likely to have basic modern amenities such as indoor toilets than do West Europeans in general.
The Census Bureau counts as "poor" any household with a "cash income" less than the official poverty threshold of $12,675 for a family of four in 1989.
Yet, the bureau's own data show that low-income households spend $1.94 for every $1.00 in "income" reported. This anomaly is possible because of the seriously flawed methodology employed in compiling the official census data.
In counting the number of "poor," the Census Bureau ignores all assets; and it discounts nearly all welfare received by the poor, which alone amounts to $11,120 per household. Thus, calculations of the living standards of low-income households disregard billions of dollars in non-cash assistance provided to the poor.
The material well-being of America's "poor" should not be viewed as the ultimate bottom line in America's War on Poverty. Studies reveal that the largest effect of welfare spending is not to raise income but merely to replace self-sufficiency with dependence.
With a better picture of poverty in America, policymakers could concentrate their efforts where they are needed most: restoring family cohesion and the work ethic.