Poverty Facts and Myths


Poverty Is Not Inevitable

A widely held myth regarding why poverty exists, dates back centuries. It is the myth that poverty is simply inevitable. In fact, the origins of this myth can be traced back to Biblical times. A consequence of this myth is that it implies there really is not much we can do to alleviate poverty. That poverty is simply a part of the overall economic landscape. That like it or not, poverty is here to stay.

In sharp contrast, we argue that this is demonstratively false. Poverty can indeed be alleviated, often dramatically so. It is simply incorrect to argue that poverty cannot be substantially reduced.

A Largely Successful War on Poverty

We begin with the widespread myth that President Lyndon Johnson’s declared War on Poverty in 1964 was an abysmal failure. The War on Poverty put in place a wide array of government programs intended to reduce poverty. They included The Food Stamp Act, Medicare and Medicaid, the Special Supplemental Nutrition Program for Women, Infants, and Children, the School Lunch program, Job Corps, the Elementary and Secondary Education Act, Head Start, Legal Services, along with several others. All of these programs were designed to provide, as the administration often reiterated, “A hand-up, not a hand-out.” In addition to federal programs, there was an attempt on the local level to create greater opportunities through an array of community action programs.

Was poverty eliminated during the War on Poverty? No. Was it dramatically reduced? Absolutely. From 1959 to 1973 the overall rate of poverty was cut in half, from 22.4 percent in 1959, to 11.1 percent in 1973. Likewise, poverty for children was dramatically reduced, from 27.3 percent to 14.4 percent. The 1960’s were a span of time where poverty in the United States was cut in half. This should be seen as a major economic accomplishment. The War on Poverty played an important role in this decline, along with the robust economy of the period. It demonstrated that the nation’s poverty is not immovable, and that genuine progress is possible with a concerted effort by the government, along with a growing economy.

The Case of the Elderly

In 1959 the overall age group with the greatest risk of poverty was the elderly. By 2018 the age group with the lowest risk of poverty was the elderly. What happened? In four words – Social Security and Medicare.

In 1959 overall rate of poverty for those age 65 and over was 35.2 percent. Consequently, over one third of all seniors in the United States found themselves in poverty at the end of the 1950’s. There was a dramatic decline in elderly poverty throughout the 1960’s and 1970’s, with their overall rate falling to approximately 10 percent. By 2018, the rate of poverty for the elderly stood at 9.7 percent.

Elder poverty was reduced by two thirds across this span of time. Again, what happened? There was a concerted effort by the federal government to improve the well-being of the elderly. Social Security benefits were increased and expanded, as well as being indexed to the rate of inflation. Consequently, Social Security payments would keep up with the rising cost of living. In addition, in 1965 President Johnson signed into law the creation of the Medicare and Medicaid programs. President Nixon also signed off on the creation of the Supplemental Security Income program in 1972. This provided additional financial assistance to seniors who were disabled. In combination, all of these programs had a dramatic effect on lowering the rate of poverty for the elderly. It is estimated that if there were no Social Security today, the poverty rate for the elderly would rise from its current 9 percent, to approximately 40 percent.

Other Examples

Beyond the above examples, we could provide many more cases of situations and places where poverty has been dramatically reduced. Many European and OECD countries have much lower rates of poverty than the U.S. (see Fact 4). Perhaps the most monumental is terms of the sheer numbers of people affected has been the relatively recent decline of poverty in China. The estimate is that slightly over one billion people have been raised out of poverty from 1990 to 2015 largely as a result of the growing Chinese economy.

We can also point to cases where poverty has rapidly increased over short amounts of time. For example, the country of Venezuela has experienced an explosion in poverty due to the past policies of its leaders combined with a faltering economy.

The main point is that poverty is not fixed in time. Poverty can be dramatically reduced when the political will can be found to do so.