One of government’s major functions in recent decades has been to alleviate poverty. Programs such as Medicaid, Social Security, food stamps and many others have a mission to help households with limited resources. N.C. State University economist Mike Walden looks at whether they have actually had any effect on poverty?
Well, critics say no … because if you look at the official poverty rate, it’s barely changed over the last 25 years. It’s hovered between 13 and 15 percent. But some researchers look at that and say, ‘Now wait a minute, that poverty rate is based on measuring what those folks earn, that is what they get from working and bringing in earnings. It doesn’t account for what happens to them after they actually receive benefits from various poverty programs and what’s that done to their standard of living.’
So, we have a new study that tried to adjust for that and look at poverty in a different way. And essentially what it’s done … is it’s said, yes, for families we’re going to count what they earn, but we’re also going to count what they get in terms of various types of public assistance and how both of those … affect what they’ve been able to buy – that is, their standard of living.
And when the researchers did this, they saw a dramatic difference in the poverty rate. Now they have found that based on their measures, the poverty rate went from about 13 percent 25 years ago to under 5 percent today.
“Again, what this is saying is that the impact of the various poverty programs have worked to reduce poverty, especially when you look at how people live.”