Choices that lead to poverty @GarethMorgannz @povertymonitor

The best evidence that poverty can be a choice is the success of the 1996 US welfare reforms and other carrot and stick approaches to poverty reduction. Poverty in the USA dropped dramatically in the mid-1990s after being stable for decades.

The stick is the most important part of poverty reduction programs that have succeeded. The poverty is not a choice movement deny to themselves the most successful child poverty reduction tool of modern times.

The success of the 1996 US federal welfare reforms were not discussed in an experts report on solutions to child poverty published a few years ago by the Children’s Commissioner. It should have been.

After decades of no progress against child poverty, five-year time limits on federal welfare assistance along with mandatory work requirements encouraged a large number of single mothers to find work. Many of these single mothers who joined the workforce in the USA were high school dropouts with small children.

Child poverty fell dramatically among minorities after the 1996 US federal welfare reforms. Everybody was surprised by the massive increases in the employment of single mothers and the reductions in child poverty. Nobody expected young mothers with small children to have so much control over their destiny.

That ability of single mothers to find a job as a condition of welfare benefits after the 1996 US federal welfare reform contradicts the belief that poverty is not a choice.

Child poverty is concentrated among single mothers and in particular single mothers on a welfare benefit. The subsequent declines in welfare participation rates and gains in employment were largest among the single mothers previously thought to be most disadvantaged: young (ages 18-29), mothers with children aged under seven, high school drop-outs, and black and Hispanic mothers.

When welfare benefits are linked to work requirements, the 1996 US federal welfare reforms showed that a surprisingly large number of single mothers can find and keep a job. Employment are never married mothers increased by 50% after these US reforms; employment of single mothers with less than a high school education increased by two-thirds; employment of single mothers aged of 18 to 24 approximately doubled.

Brian Caplan has been among those to link self-destructive behaviours to many of those in poverty. He argues there are a number of reasonable steps that healthy adults can take to avoid poverty for them and their children:

  1. Work full-time, even if the best job you can get isn’t fun.
  2. Spend your money on food and shelter before getting cigarettes and cable TV.
  3. Use contraception if you can’t afford a child.

Caplan specifically includes among the undeserving poor the children of poor or irresponsible parents.

Caplan along with Charles Murray point out that a number of pathologies are particularly prevalent among poor:

  1. alcoholism: Alcohol costs money, interferes with your ability to work, and leads to expensive reckless behaviour.
  2. drug addiction: Like alcohol, but more expensive, and likely to eventually lead to legal troubles you’re too poor to buy your way out of.
  3. single parenthood: Raising a child takes a lot of effort and a lot of money.  One poor person rarely has enough resources to comfortably provide this combination of effort and money.  
  4. unprotected sex: Unprotected sex quickly leads to single parenthood.  See above.
  5. dropping out of high school: High school drop-outs earn much lower wages than graduates.  Kids from rich families may be able to afford this sacrifice, but kids from poor families can’t.
  6. being single: Getting married lets couples avoid a lot of wasteful duplication of household expenses.  These savings may not mean much to the rich, but they make a huge difference for the poor.
  7. non-remunerative crime: Drunk driving and bar fights don’t pay.  In fact, they have high expected medical and legal expenses.  The rich might be able to afford these costs.  The poor can’t.

Caplan is disputing that healthy adults who are poor are victims. That is central to the poverty is not a choice movement: the poor are victims. Many are not, especially the healthy adults.

Policy debates about how to reduce poverty must break out of poverty is not a choice mentality because as Caplan says:

Being poor is a reason to save money, work hard, and control your impulses.

The choices people can make to avoid poverty are finish high school, seek a full-time job, delay children until you marry, and avoid crime. Working against this is as women’s labour market opportunities improved, their interest in low-status men has declined. As Charles Murray explains, working class males have become less industrious:

In 2003-5, men who were not employed spent less time on job search, education, and training, and doing useful things around the house than they had in 1985. They spent less time on civic and religious activities. They didn’t even spend their leisure time on active pastimes such as exercise, sports, hobbies, or reading…

How did they spend that extra leisure time? Sleeping and watching television.  The increase in television viewing was especially large – from 27.7 hours per week in 1985 to 36.7 hours in 2003-5…

The demand to date and marry such men has declined because raising children as a solo mission has become more viable for mothers.

Saying poverty is not a choice undermines important messages about help but hassle that must be woven into the heart of the incentive structures of social insurance and the welfare state.

% of US, British, German and French sole parents who do not work

Source: OECD Family Database.

The rise of power couples in New Zealand

Source: Bryan Perry, 

How in-work family tax credits help

@BernieSanders had a seniors moment on the EITC



Who gained most from the 1996 US welfare reform?

The share of poorly educated single mothers with earnings rose from 49 percent in 1995 to 64 percent in 2000. This group was thought to be the least employable.