Child Poverty Has Plummeted in the Last 20 Years—Here’s Why

When President Bill Clinton signed welfare reform into law in 1996, Democrats predicted an “apocalypse.” U.S. Sen. Frank Lautenberg (D-N.J.) argued that the law would leave “children hungry and homeless . . . begging for money, begging for food and even at 8 and 9 years old engaging in prostitution.” Many Democrats chimed in with similarly alarmist language.

They were completely wrong.

A new report by the Manhattan Institute’s Scott Winship shows child poverty has actually declined substantially over 20 years. In fact, the 1996 welfare reform law has been deemed by many (including the liberal-leaning Brookings Institution) to be a resounding success, especially for never-married mothers.

Winship looked at 2.3 million children over 46 years of data and arrived at an encouraging conclusion: child poverty has fallen dramatically since welfare reform was passed. Winship argues that those who reach the opposite conclusion are ignoring important statistical effects that highlight the true story.

ChildPovertyGraph1

Source: Manhattan Institute

For example, poverty is often measured by household surveys — a method of data collection that does not include non-cash benefits such as food stamps, Medicaid or housing subsidies. Additionally, household surveys do not include “live-in romantic partners,” understating the household’s true income as a result.

When these factors are taken into account, Winship writes, poverty among the children of single parents hit an all-time low in 2014. “After additionally adjusting the poverty line over time to better reflect the cost of living, and valuing health benefits as income,” Winship notes, “poverty among the children of single mothers fell by nearly 11 percentage points from 1996 to 2014.” That’s huge.

Winship recognizes that people may have concerns with each of these corrections, so he dedicates pages to explaining why each correction was made and shows each change separately on a graph to better visualize how the rate changes with each correction.

Winship also addresses the claim that more children live in “deep poverty” — less than $2 a day on average — than did when the law was passed 20 years ago. Winship presents evidence that many of those classified as living in deep poverty actually spent more than $2 per day. This along with other factors suggests significant under-reporting of income.

ChildPovertyGraph2

Source: Manhattan Institute

Even looking at those with cash income of less than $2 a day, Winship notes that most increases in deep poverty happened to people unaffected by any changes effected by welfare reform.

“While children in single-mother families saw a decline in deep poverty from 1996 to 2014,” he writes, “it rose among [the elderly, people in childless households, and married college graduates], none of whom were affected by welfare reform.”

Undoubtedly, there are people living in very extreme conditions around the country, and we should continue to pursue policies that expand opportunity to give these people a chance to escape the cycle of poverty. But the Manhattan Institute report shows that the criticism surrounding the 1996 welfare reform law was unfounded.

“The idea that rolling back welfare reform would help the poor is wholly unjustified by the evidence and could reverse the gains among families with dependent children since 1996,” Winship argues. “None of the findings in this study suggests that the 1996 welfare reform was perfect, that welfare policy cannot be improved, or that the levels of deep poverty in the United States are sufficiently low. But policymakers should reject the increasingly conventional view that extreme poverty has dramatically increased and the view that welfare reform did more harm than good.”

We still have a long way to go. But thanks to the courage and perseverance of those in 1996 who saw a better way, America’s welfare system has improved significantly and pulled many out of poverty in the last 20 years.

Daniel Huizinga is a columnist for Opportunity Lives covering business and politics. Follow him on Twitter @HuizingaDaniel.