3.2 Historical trends and current state of poverty in the US

Poverty in the US has evolved since the 1960s, with official and supplemental measures tracking its ups and downs. Despite efforts like the War on Poverty, rates have fluctuated between 11-15% since the 1970s, affected by economic cycles and demographic shifts.

Certain groups face higher poverty risks, including children, minorities, women, and rural communities. Recessions spike poverty rates, while recoveries often lag. Compared to other developed nations, the US consistently shows higher poverty rates, influenced by social spending and labor market factors.

Poverty Rates in the US

Historical Evolution of Poverty Measurement

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• Official poverty measure established in 1960s by Mollie Orshansky set threshold based on minimum food diet cost
• Supplemental Poverty Measure (SPM) introduced in 2011 provides more comprehensive assessment considering government benefits and regional cost-of-living differences
• SPM allows for more accurate comparisons across time periods and geographic areas

Trends in Poverty Rates

• Poverty rates peaked at ~22% in late 1950s
• Declined significantly during 1960s due to economic growth and social welfare programs
• Fluctuated between 11-15% since 1970s
  • Increases during economic recessions
  • Decreases during periods of economic growth
• War on Poverty initiated by President Lyndon B. Johnson in 1964 led to creation of various anti-poverty programs (Head Start, Food Stamps)
  • Resulted in temporary reduction in poverty rates

Demographic Shifts in Poverty

• Long-term trends show shift in demographic composition of the poor
• Decrease in elderly poverty rates over past several decades
  • Largely due to expansion of Social Security benefits
• Increase in child poverty rates
  • Attributed to changes in family structure and labor market conditions
• Rising poverty among working-age adults
  • Linked to wage stagnation and job market polarization

Demographics of Poverty

Vulnerable Populations

• Children experience higher poverty rates compared to general population
  • Particularly those in single-parent households
• Racial and ethnic minorities face disproportionately high poverty rates
  • Black and Hispanic individuals most affected
  • Due to historical and systemic inequalities (educational disparities, discrimination)
• Women more likely to experience poverty than men
  • Especially single mothers
  • Factors include wage disparities and childcare responsibilities
• People with disabilities have significantly higher poverty rates
  • Barriers in employment
  • Additional healthcare costs

Geographic and Socioeconomic Factors

• Rural communities often face higher poverty rates than urban areas
  • Limited access to economic opportunities
  • Fewer social services available
• Immigrants at higher risk of poverty
  • Especially recent arrivals and those with limited English proficiency
  • Employment barriers and limited access to social safety net programs
• Working poor represent significant portion of those in poverty
  • Employed but still fall below poverty line
  • Due to low wages and underemployment
  • Affected by decline in unionization and erosion of minimum wage value

Recessions and Poverty Levels

Economic Cycles and Poverty Rates

• Economic recessions typically lead to increases in poverty rates
  • Job losses
  • Reduced work hours
  • Decreased economic opportunities
• Great Recession of 2007-2009 resulted in significant spike in poverty rates
  • Effects lingered for several years after official end of recession
  • Poverty rate increased from 12.5% in 2007 to 15.1% in 2010
• Economic expansions generally lead to decreases in poverty rates
  • Benefits of growth often unevenly distributed
  • Some demographic groups experience slower poverty reduction

Lagging Effects and Recovery Patterns

• Poverty rates tend to be a lagging indicator
  • Take longer to improve even after broader economy begins to recover
• Concept of "jobless recovery" highlights disconnect between economic growth and poverty reduction
  • Job creation may lag behind other economic indicators
  • Example: 2001 recession followed by period of GDP growth but continued job losses
• Recent trends show economic expansions becoming less effective at reducing poverty rates
  • Factors include wage stagnation and changing nature of employment (gig economy, part-time work)

Policy Influences on Poverty During Economic Cycles

• Impact of economic cycles on poverty influenced by strength of social safety net programs
  • Unemployment insurance
  • Food assistance programs (SNAP)
  • Temporary Assistance for Needy Families (TANF)
• Labor market conditions affect poverty rates during recessions and recoveries
  • Availability of jobs
  • Wage levels
  • Job quality (benefits, stability)
• Income inequality plays role in how economic growth translates to poverty reduction
  • Higher inequality can lead to slower poverty reduction even during periods of overall growth

US Poverty vs Developed Nations

Comparative Poverty Rates

• United States consistently has higher poverty rates compared to most other developed nations
  • Particularly when using relative poverty measures (50% of median income)
• US poverty rate significantly higher than Nordic countries and many Western European nations
  • Example: US relative poverty rate ~17.8% vs. Denmark ~5.5% (OECD data)
• Child poverty rates in US particularly high compared to other developed nations
  • US child poverty rate ~21% vs. OECD average ~13%

Social Spending and Poverty Reduction

• US spends less on social programs as percentage of GDP compared to many other OECD countries
  • US social spending ~19% of GDP vs. France ~31% (OECD data)
• Differences in family support policies and social safety nets contribute to higher US poverty rates
  • Less generous parental leave policies
  • Limited universal childcare options
• International comparisons highlight role of healthcare systems in poverty rates
  • US system leaves more individuals vulnerable to medical-related poverty than countries with universal healthcare

Labor Market and Income Inequality Factors

• US has higher proportion of low-wage workers compared to many other developed countries
  • Contributes to phenomenon of "working poor"
  • About 25% of US workers in low-wage jobs vs. 15% in Germany (OECD data)
• Income inequality in US more pronounced than in most other developed countries
  • Contributes to higher rates of relative poverty
  • Gini coefficient for US ~0.39 vs. ~0.29 for Germany (World Bank data)
• Differences in labor market institutions affect poverty rates
  • Lower unionization rates in US
  • Less centralized wage-setting mechanisms
  • Weaker employment protections