IPS Blog

This blogpost originally appeared on Truthout.

According to Census Bureau figures released today, 15 percent of the US population lives in poverty. In 2011, more than 46 million Americans lived below a poverty line that was set more than four decades ago, in 1969.

The poverty rate for children remains more than 20 percent for the third year in a row. More than one-third of black children and Hispanic children live in poverty.

In the words of Rep. Mike Honda (D-California), co-chair of the Congressional Out-of-Poverty Caucus, these figures are "a stark reminder that, although we are the wealthiest nation the world has ever known, far too many children are going to bed hungry."

In fact, the USDA reports that more than 16 million American children are "food insecure."

Today's census report also contained bad news on incomes.

Median household income (adjusted for inflation) was down an additional 1.5 percent from the already-low levels of 2010. Median income is now 8.9 percent lower than it was in 1999.

Income inequality, as measured by the Gini index - the degree of income inequality, with 0 representing total equality and 100 representing total inequality - reached a new record high of 47.7 percent. A Gini index of 50 would be equivalent to half of the population receiving all of the country's income, while the other half got nothing.

All this bad news comes against a backdrop of extraordinarily low employment rates. According to the Bureau of Labor Statistics, just over 58 percent of the adult population has any kind of job at all (full or part time), the lowest figure in 30 years.

Only 64 percent of adult men have a job of any kind, the lowest figure ever.

Today's official poverty rate of 15 percent is among the highest of the past 40 years. When the poverty line was first adopted in 1969, the poverty rate was just 12.1 percent.

The poverty line we use today was officially set on August 29, 1969. It represented a 1969 consensus of the basic minimum standard of living for American families in 1969. Other than adjusting for inflation, it has not been updated since.

In the technical discussions that preceded the official determination of the poverty line, experts considered a methodology that "would have resulted in poverty thresholds that were 25 percent to 30 percent higher than the existing thresholds," according to research published in the Social Security Bulletin.

In essence, 15 percent of Americans today live in what would have been considered poverty in 1969, more than 40 years ago. Had our standards gone up over the past 43 years, even more Americans would now be identified as poor.

In many ways, poor Americans are even worse off than they have been in the past. For example, a record low 69.3 percent of Americans are now covered by private health insurance. Nearly 10 percent of children have no health insurance coverage at all.

And state anti-poverty programs around the country are facing severe budget cuts.

According to figures from the Bureau of Economic Analysis, America's total economic output per person is now more than twice as high as it was in 1969 (adjusted for inflation).

With twice the resources, today's America is much better placed to end poverty than was the America of 43 years ago.

Today's Census Bureau report offers little cause for hope. After 43 years with no progress, poverty is now endemic in America. But we do have the financial means to reverse it, should we ever garner the political will.

Now here is what sounds like a New York Times headline to celebrate: “Dire Poverty Falls Despite Global Slump, Report Finds.” That report would be a 6-page World Bank briefing note, the press release for which is titled: “New Estimates Reveal Drop in Extreme Poverty 2005-2010.” Echoes The Economist: “For the first time ever, the number of poor people is declining everywhere.”

If it were only that easy. Let us dig into what the World Bank’s new briefing note really tells us and ask two questions: Do the statistics really show a fall in extreme poverty across the world? And, what policies lie behind the changing poverty figures?

What the figures tell us and do not tell us:

1. The figures do not tell us anything about the impact of the recession: The actual data cover 1981-2008; figures ending in 2008 cannot possibly tell us anything about the impact of a recession that started in the United States in late 2008. The briefing note alludes to “preliminary estimates” for 2010; based on these, the Bank makes the bold assertion that the Millennium Development Goal of halving poverty (defined as $1.25/day) from its 1990 level was achieved in 2010. But, preliminary estimates are, well, just preliminary estimates. These are extrapolated from significantly smaller samples. Hence, the data cannot back up the Bank’s confident claim because, again, the real data end in 2008. We have been following World Bank projections and estimates for decades now and have found them highly unreliable – and typically over-optimistic.
2. If one sticks to the 1981-2008 period, China is the key: Between 1981 and 2008, the entire drop in the number of people living in “extreme poverty,” that is those who live below $1.25 a day, is accounted for by China — where the number of extreme poor fell by 662 million. Over this period, the number of people living below $1.25 a day outside China actually rose by 13 million, and hovered around 1.1 billion people throughout this period. More people fell into poverty in South Asia over this period (interesting, given India’s rapid growth over the past decade) and in sub-Saharan Africa. Hence, a more accurate headline would have read: “Numbers in poverty plunge in China over past three decades from 1981-2008, while rising marginally in the rest of the world.”
3. To extend this last point: As we have argued elsewhere (pdf), in countries such as South Africa, where government services are generous, $1.25 a day goes further than, say, in Haiti. Furthermore, as nations grow rapidly, as have China and India over the past decade and a half, the amount of money needed for people in the cash economy to maintain a decent standard of living also rises. As for those who subsist in rural areas on less than $1.25 a day, many consume much of what they produce. Many live in self-built homes and depend on traditional medicines. While their poverty may be “extreme” by the Bank’s monetary measure, their quality of life may be much better than that of their urban counterparts, even though their incomes are often smaller.

Related to this, our experience living with poor families in rural areas suggests that it has been the opening of their natural resources to global agribusiness, factory fishing fleets, and corporate interests that often leads to real poverty. Millions have been pushed off their land over the past few generations into urban slums where they live in squalor, although they may bring home a few dollars a day. In sum, the statistics upon which most poverty elimination strategies are based are extremely misleading, and often steer experts toward the wrong solutions.

This raises the other question of what policies are behind the figures:

1. Neoliberalism and poverty: What is behind the data that shows those in poverty outside China increasing in most regions from 1981 to 2005? This period coincided with the heyday of corporate-friendly neoliberal policies in most countries. So the data could be read as a confirmation of what critics of neoliberalism have been saying: the wave of market fundamentalism contributed to increases in the numbers of people in poverty. That data also reveals that in one region, sub-Saharan Africa, the percent of people living below the poverty threshold also rose over this period. We hardly need to point out that in the one country where poverty plunged – China – leaders did not pursue blind neoliberalism, but instead combined state direction of much of the economy with market-openings in selected sectors.
2. How about the subsequent period from 2005 to 2008, a time range during which the data reveal poverty numbers and rates falling in all regions of the world? As opposed to 1981-2005, this was a period of spreading cracks in the neoliberal Washington Consensus. It was also a period of rising of commodity prices and rising of balance of payments surpluses in many Southern countries. As a result, many Southern countries were able to repay the IMF and World Bank and wean themselves from World Bank and IMF loans and neoliberal conditionality.

Hence, the new World Bank poverty figures may tell a very different story from what has been suggested elsewhere: The numbers in poverty outside China rose during the heyday of neoliberal policies, and began to fall as the grip of those policies was loosened after 2005.

Robin Broad is Professor of International Development, School of International Service, American University. John Cavanagh is director of the Institute for Policy Studies. They are authors of Development Redefined: How the Market Met Its Match. This post originally appeared in the Triple Crisis blog.

Our nation’s safety net program to help low income families and children afford enough food, SNAP, the Supplemental Nutrition Assistance Program, is slated for a $14.1 billion decrease in funding.  Unless Congress acts to reverse this, those receiving SNAP aid will see a substantial reduction in their monthly benefits, possibly beginning as early as 2013.  The decrease in monthly aid would mark an unprecedented event in the program’s history. 

Congress is raiding the SNAP program to pay for other domestic programs such as Medicaid and teacher salaries.  Although a large deficit can be a problem in the long run, studies show that short-term deficit spending in time of recession is beneficial to the economy. Further, SNAP is not only a proven anti-poverty program but also has the stimulative effect on the economy of producing $1.73 in economic activity for each dollar spent on the program. 

New information, which was released from the census bureau on September 28th, found that 20 percent of American children live in poverty.  The census report also found that in Mississippi alone 31 percent of children were living in poverty.  Further troubling is the fact that, in as many as 21 states nationwide childhood poverty was at or above the 20 percent mark.  Since SNAP has proven an effective anti-hunger program, it should be supported and expanded in desperate times, not curtailed.

If you rob Peter to pay Paul, the already hungry Peter will starve.  If we allow this kind of deficit hysteria to hijack our children’s well being, we will be a nation morally starved as well.