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The Truth About How Many Americans Are Living on Less Than $2 a Day

Over the last 20 years, welfare reform has reduced poverty trends, national welfare experts say.

President Bill Clinton signed into law the Personal Responsibility and Work Opportunity Reconciliation Act in 1996. This comprehensive, bipartisan welfare reform act contains work requirements and supports families moving from welfare to work.

After the law went into effect, welfare rolls dropped by 60 percent, employment among low-income Americans rose, and poverty rates for single mothers dropped to historic lows.

“The official poverty rate, this would be about $17 per day per person, drops dramatically after welfare reform,” Robert Rector, a senior research fellow at The Heritage Foundation, said Tuesday during a lecture at Heritage.

Rector, who played a key role in writing the original Temporary Assistance for Needy Families (TANF) legislation 20 years ago, says there has been a downward trend in official poverty levels. He says that both regular poverty and deep poverty are trending downward and there has been a reduction in dependency.

In Kathryn Edin and Luke Schaefer’s book “$2.00 a Day: Living on Almost Nothing in America,” Edin and Schaefer allege that 4 percent of all families with children live on less than $2 per person per day and that poverty is on the rise.

Of about 273,000 observations in a government survey collected over a 30-year period, researchers found 61 instances of families spending less than $2 per person per day. Extreme poverty levels of $2 per day per person are consistent with poverty standards in Third World nations.

Heritage’s Rector said of the book’s conclusions:

When you look at the survey data that is being used to proclaim that children live with less than $2 per day, the actual living conditions in those families in no way resembles anything that would be considered extreme deprivation. … When you look at consumption, you see that these families are spending over $20 for every dollar of income. When you look at over 30 years of consumption data, you can virtually find no families whatsoever that spend less than $2 per day.

Only 1 percent of Americans in the government data said they didn’t have enough food to eat.

“The reports of the death of welfare are greatly exaggerated,” Bruce Meyer, McCormick Foundation professor at the University of Chicago Harris School of Public Policy Studies, said Tuesday at The Heritage Foundation.

Meyer says that those at the bottom of the economic ladder are better off than when welfare reform passed.

Looking at consumption data gives you a better idea of people’s living standards than income data, Meyer said.

“Statements about a rise in extreme poverty are based on faulty data and should be dismissed,” Meyer said. “Conservatives should acknowledge that our programs have reduced deprivation, but liberals should acknowledge that we are spending more and more and not always spending it well.”

Almost 90 percent of Americans agree with the idea that welfare beneficiaries “should be required to work or prepare for work in exchange for receiving benefits,” according to recent polling from The Heritage Foundation.

Moving forward, Heritage’s Rector says that the same principles from welfare reform should be taken and applied more broadly to other programs.

This first appeared in the Daily Signal here.

Image: Creative Commons.