Surprise: Progressive "Anti-Poverty" Programs Increase Measured Poverty
/The Sunday Los Angeles Times on January 14 published an op-ed titled "Why Is Liberal California the Poverty Capital of America?" The author is Kerry Jackson of the Pacific Research Institute. I have seen the article picked up and/or cited at many locations.
Mr. Jackson notes that liberal California -- home to more and more generous welfare and "anti-poverty" programs than just about anywhere else in the country -- somehow comes out with the very highest measured "poverty" rate of all the 50 states.
Guess which state has the highest poverty rate in the country? Not Mississippi, New Mexico, or West Virginia, but California, where nearly one out of five residents is poor.
Funny, isn't it? Here at Manhattan Contrarian, my focus is more on my home turf of New York, but we have exactly the same phenomenon: far more and more generous welfare and "anti-poverty" programs than other places, and yet a higher measured "poverty" rate. The New York City official poverty rate was 18.9% for 2016, the latest year available. the official full-U.S. rate for the same year was only 12.7%. How could the most progressive places, the places that do the very, very most to "fix" poverty, end up with far more poverty as the government measures and defines it than those other places that do far, far less?
Here is Mr. Jackson's take:
[Despite the welfare reform of the 1990s] the state and local bureaucracies that implement California's antipoverty programs . . . resisted pro-work reforms. In fact, California recipients of state aid receive a disproportionately large share of it in no-strings-attached cash disbursements. It's as though welfare reform passed California by, leaving a dependency trap in place. Immigrants are falling into it: 55% of immigrant families in the state get some kind of means-tested benefits, compared with just 30% of natives.
Self-interest in the social-services community may be at fault. As economist William A. Niskanen explained back in 1971, public agencies seek to maximize their budgets, through which they acquire increased power, status, comfort and security. To keep growing its budget, and hence its power, a welfare bureaucracy has an incentive to expand its "customer" base. With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy. Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.
Well, first, I would like to welcome Mr. Kerry Jackson and the Pacific Research Institute to the small band of people in this country who have been pointing out the shocking counter-productiveness of our "anti-poverty" programs. Also, Mr. Jackson makes some good points. However, he is much too nice.
Self-interest in the social-services community "may be" at fault? I'm sorry, but a far more accurate statement is that the whole idea of government anti-poverty programs is to increase measured poverty and make absolutely 100% sure that it can never go down. If that were not the case, it would be completely impossible for the U.S. as a country to spend in excess of $1 trillion each year on "anti-poverty" efforts, year in and year out, and never see the rate of poverty decline by even a smidgeon. And, indeed, go up in very the places that spend disproportionally large amounts of the money.
If you are somehow thinking that the "social-services community" can't possibly be that venal and cynical, I'll just give you a couple of points to ponder:
- Nearly all "anti-poverty" handouts are provided to the beneficiaries either as in-kind distributions (housing assistance, food stamps, other nutrition programs, Medicaid, cell phones, clothing assistance, energy assistance) or as refundable tax credits (EITC). But the official poverty measure only counts "cash income" in the definition, and therefore excludes all of these things. A given family could get $100,000 or more per year in the in-kind benefits and tax credits (and many do, such as those here in Manhattan, where a spot in public housing in a desirable location can by itself be worth over $100,000 per year), and still be counted as "in poverty."
- When critics demanded that the in-kind handouts and tax benefits be counted, the bureaucrats came up with an alternative so-called "Supplemental Measure" of poverty. The Supplemental Measure does count most of the in-kind handouts, but at the same time it does away with any absolute standard of poverty, and substitutes a relative standard that keeps going up as the country as a whole becomes wealthier. Today, the government reports both numbers. (Note that the measure that Mr. Jackson cites in his article about California is the Supplemental Measure of poverty, rather than the traditional one. Funny, but the two numbers are about the same. Reverse engineering by cynical bureaucrats? Definitely!) Anyway, think about the Supplemental Measure for two minutes, and you will realize that the whole idea of a relative rather than absolute measure of poverty is to keep it from going down as the country gets richer.
What, were you expecting that hundreds of thousands of bureaucrats, given a trillion annual dollars to "fix" the problem of poverty, would come back after a year or two and say, "Problem solved, we fixed it. We don't need the money any more, so go ahead and zero out our budget and we'll go off and work on solving something else"? Of course, that has never happened in the history of government problem solving.
There is a serious collateral consequence of this situation. As Mr. Jackson points out, the social service bureaucrats need the poor to remain poor in order for the budgets and the spending to continue at current levels and increase. They have a tremendous incentive to trap the poor into dependency and keep them there as long as possible. This is a huge problem in this country that needs far more attention.