New census data released last week made national headlines for its grim news on America's historically high levels of poverty. However, a new paper reads between the lines, and concludes that the country is making progress in reducing poverty.
New data released by the U.S. Census Bureau last week was stark: median household income fell last year, the income gap between rich and poor hasn't been this wide in more than 40 years, and the number of Americans living in poverty remained at the highest number ever recorded.
However, as Derek Thompson reports, a new paper
from Bruce D. Meyer and James X. Sullivan say those statistics are misleading.
"We may not have won the war on poverty, but we are certainly winning,"
they write.
"When they looked at poorer families' consumption rather than income,
accounted for changes in the tax code that benefit the poor, and
included "noncash benefits" such as food stamps and government-provided
medical care, they found poverty fell 12.5 percentage points between 1972 and 2010," writes Thompson.
"What's the story? Tax cuts for the low-income combined with tax credits
for parents (such as the child tax credit) and working poor (like the
Earned Income Tax Credit) accounted for much of the collapse in poverty,
the authors find. Increases in Social Security also helped poverty
rates fall under 10 percent by the new measure."
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