The Poverty Rate: From 1948 to the War on Poverty

Jane Galt’s comment to the post from Cactus sent me searching for something on poverty rates before 1959 and Google lead me to a paper by Matthew Ladner. Ladner’s table 1 suggests that the poverty rate was near 30% in 1948. Ladner credits Tyler Cowen for noting the high growth rates that we have enjoyed since as far back as 1870 and adds:

President Franklin D. Roosevelt responded to the crisis by vastly increasing the size and scope of government in the area of poverty reduction. Economic historians now understand that the Federal Reserve and the Hoover and Roosevelt administrations exacerbated and prolonged the downturn with a series of policy mistakes. Monetary, trade, and labor market polices blunders worsened the Great Depression. Politically, however, Roosevelt’s administration received credit for fighting the Depression. Roosevelt created the political and intellectual foundation for governmental antipoverty efforts at the federal and subsequently the state levels. These efforts reached their crescendo with President Johnson’s War on Poverty programs, the apex of the American government’s antipoverty efforts. Johnson transformed government ambitions from simply alleviating poverty to actually eliminating poverty.

Alas – this paper next attributes the following to President Reagan: “Some years ago the United States declared war on poverty, and poverty won”. If Ladner wants to argue that poverty tends to rise during recessions and declines during sustained periods of economic growth, I’d tend to agree with that. But as far as this Reagan quip, let me turn the microphone over to Max Sawicky:

Uninformed people say we declared war on poverty and poverty won. The chart says JFK and LBJ beat the crap out of poverty, Nixon held it at bay, and Jimmy Carter sounded the long retreat. Obviously the business cycle plays an important role that the chart buries. I am fond of pointing out that notwithstanding Clinton’s excellent welfare reform, the rate has gone up repeatedly since 2001 right along with the Bush economic recovery, and the rate at its lowest during (rather than due to) the excellent 1996 welfare reform is no better than it was more than once in the 70s, under the bad old system.