How the Welfare 'Racket' Twists Poverty and Harms Human Dignity

WASHINGTON, D.C. — Welfare policy experts at the Heritage Foundation on Tuesday debunked the myth that 1.5 million households are living under $2 per day in modern America, explained how liberal miscalculations gave that number, and made clear how this falsehood actually harms the poorest Americans.

"The way that we conventionally count poverty is a racket. It was designed to exaggerate poverty and promote greater spending," Robert Rector, an architect of the 1996 welfare reform law and a senior research fellow at the Heritage Foundation, told PJ Media after a panel discussion.

Rector and other welfare experts referred to the 2015 book $2.00 a Day: Living on Almost Nothing in America by Kathryn J. Edin and H. Luke Shaefer. Edin and Shaefer reach the 1.5 million families number by focusing on cash income rather than spending, and by refusing to count government assistance programs (such as Medicaid, food stamps, et cetera) as "income."

But even just focusing on income twists the meaning of poverty, warned Bruce Meyer, professor at the University of Chicago's Harris School of Public Policy Studies. "Low consumption is more closely associated with deprivation than low income," Meyer explained. When it comes to quality of life, income makes less of an impact than spending — especially among the poor.

Rather than judging poverty levels by income, sociologists should focus on spending, especially on rent and food eaten at home. "People know their rent, they're happy to report it. They're much less comfortable reporting their income," the professor explained.

Meyer even cited Edin's other book, Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work, noting that "almost all single mothers supplement their income" with informal earnings and transfers from family and friends. This money would be reported in their spending, but does not register on surveys about income.

In his remarks to PJ Media, Rector recalled how, after the food stamp program was introduced, some asked whether the government should count such assistance as income. "The bureaucracy and the left said, 'No, we're not counting that — it's not income, it has no effect on poverty.' And Irving Kristol said, 'Well, if it has no effect on poverty, what are we doing?'"

"Clearly there was an interest in miscounting it in order to have a very high number," he explained. This is the "racket" of welfare policy. "But that's a two-edged sword for the left," Rector argued: If they fudge the numbers to emphasize higher poverty rates, it leads to the question of whether the welfare state is actually reducing poverty. But if they actually reported the real living conditions of the poor, they would have to admit the problem isn't as bad as they say.