Poverty, Economic Inequality and Public Policy in the United States: An Administrative Perspective

Introduction

The unconditional war against poverty in USA has been declared by the President Lyndon B. Johnson in his first state of Union address, in January 1964, when he said to the congress, “Many Americans live on the outskirts of hope- some because of their poverty, some because of their color, and all too many because of both.” In this address he also challenged the congress to work spontaneously on income, jobs, health, education, and housing. After over fifty years, this war on poverty had a significant mark on the scale and scope of anti-poverty programs which can be seen in the significant change in federal and state funding and administration. New entitlement welfare programs like Medicaid, food stamps, legal services, head start and job corps are either substantially funded or fully by the federal government to promote new programs and services. In these fifty years the country has seen a major changes in the antipoverty programs, the establishment of Earned Income Tax Credit (EITC) and its major expansions. In the welfare section, we can see the development of the enforcement system to support children, The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), The Child Care Development Block Grant (CCDBG), and the expansion of EITC in 1996, is a significant policy driven anti-poverty initiative of the government.

In this article, I would like to put a very precise research finding on both elderly and non-elderly population of USA who are suffering from Poverty. Because poverty in United States is really a matter of oxymoron. The per capita incomes of the country is the highest, but still the percentage of people in this country living officially below poverty line, is higher, comparison to any other industrialized nation in the world. I want to focus on this point, as my view on people of America that has grown from my childhood is unexpectedly changed after the data I found on the poverty and economic inequality in United States. I astonished to find, how a country which is so rich internationally, can have so many poor people. Even though, I did not find a single answer to this question, but my research on the economic factor has found how to examine the response of government and its nature to initiate anti-poverty programs and its impact on the society. Before that, I would like to give the definition of poverty as per the income and expenditure capacity of the households in United States. This will give us a clear picture on Poverty in the country and its reason including the policies the government has taken to response it.

Defining Poverty

           Poverty can be determined by the listing of goods and services which may be required to fulfill the minimum standard of living of a family. We will say the family is poor, if the family income is not enough to meet the purchasing capacity of the items he required in the daily life. The first criteria will be an absolute income test and the second will be the relative income test to see whether the income of that family falls below the level. If it is, then they are poor.          These two methods will define the poverty in a lay man language.

Source: DeNavas-Walt, Carmen, Bernadette D. Proctor, and Jessica Smith, U.S. Census Bureau, Current Population Reports, P60-233, Income, Poverty, and Health Insurance Coverage in the United States: 2006, U.S. Government Printing Office, Washington, D.C., 2007; p. 45.

Government Policy and Poverty

The government policy on the poverty is defined here as the support of the government to the families who are not employed and not have any relative to support them. Here I would like to discuss about the program which is popularly known as the Temporary Assistance for Needy Families (TANF), which began in 1996 with the Act Personal Responsibility and work Opportunity Reconciliation Act of 1996, which has been replaced by Aid to families with Dependent Children (AFDC). TANF is administered by states and funded by federal with a two year eligibility period, supported by many other programs including job placement services to counseling on nutrition.

Welfare Programs and the Poor

Source: U.S. Census Bureau, Current Population Survey, 2006 Annual Social and Economic Supplement.

But it is observed that all the families who are falling in the below poverty line cannot take the benefit of this. In 2006, many poor have received a substantial part of the aid falling below poverty line. But very less percentages of people or families are helped by these individual programs. We can say about only one sixth of families living below poverty line received housing aid, less than 40% households receive food stamps and medical services are received by slightly more households comparative to it. Although all the programs are funded by the federal, states had the power to standardize the programs and administer them, whether it is a cash aid or a non cash aid.

There are also many other trends of the poverty as we may discuss, the Labor Market Opportunities, Inequality and Macroeconomic Cycles are one among them. As, improvement of poverty rates significantly correlated with the economic expansions and during 1980 the expansion has seen only a modest decline in the poverty rate. Another factors are family structure, government tax and transfer programs followed by the immigration are the major impact on poverty in United States.

Conclusion

There is a need to have effective policies to combat poverty, but it is very critical to address the challenges without understanding how over a period of time these challenges evolved and how the people living in poverty can face these challenges. It is a great development of policy that there is a decline in the rate of poverty among children, but they still remain a large share of it. For non-elderly population there will be need of strong job market, and on the other hand the policies need to be addressed for those who have fulltime job but still live in poverty. There are several things that requires to bring in the streamline of policies. Particularly, female headship, establishing relation between labor market opportunities and labor force participation among women need to be taken care to reduce the poverty rates and at the same time labor market measures, which play a vital role in determining the overall rate of poverty, should be analyzed properly as they are important for demographic and other social changes for the reduction of poverty.

Reference:

1.   https://www.npc.umich.edu/publications/workingpaper05/paper19/Poverty-6-9-05.pdf

2.   https://www.brookings.edu/research/who-is-poor-in-the-united-states-a-hamilton-project-annual-report/

3.   https://courses.lumenlearning.com/suny-fmcc-microeconomics/chapter/government-policies-to-reduce-income-inequality/

4.   https://www.economist.com/blogs/freeexchange/2014/01/minimum-wage-and-state-microeconomics