US Poverty Scenarios

November 2021 update on US poverty scenarios

Poverty rates climbed from 2008 through 2011 as a result of the economic crisis that preoccupied the Obama administration’s first term. By the time the administration left office in 2017, the economic was booming but the poverty rate held stubborn at round 12 percent.  Very little progress appears to have been made since then. US government figures say the rate rose a full point to 11.4 percent in 2020.  It remains to be seen how the pandemic and government relief measures will affect incidence of poverty in 2022 and beyond.  

Nicholas Kristof cut a chunk of optimism out of my day today. The New York Times columnist cited the depressing – no other word comes to mind – statistic that the proportion of Americans living beneath the poverty line stands at 15 percent.  This is actually higher than it was in the late Johnson Administration despite, as Kristof points out, the nation having spent some $16 trillion on means-tested programs since that time.

That doesn’t mean the money has been totally wasted – the poverty rate might well be substantially higher today without those government programs.  But it does point out the extent, and the seemingly intractable nature, of the problem.  It can’t help leaving even the most committed social reformers scratching their heads for answers.

Lagging Upward Mobility

True, the resumption of economic growth will help, once employers start hiring again.  And yet even before the Great Recession, the poverty rate was still over 12 percent.   Add to that sobering data point the fact that near- and medium-term economic growth and job expansion are expected to be very modest.  Nor will a jump in low-end service jobs change much over the long-term if there’s not the possibility of upward mobility.  This is the case today, with good new jobs that promise of middle-class lifestyle limited to people with university degrees or technical skill-sets. (Recent studies indicate that upward economic and social mobility in the United States now lags that in many European countries.)

Maybe, as Kristof urges, President Obama will attempt to redeploy Afghanistan war resources to do nation-building at home.  While that would certainly be consistent with the spirit of his second inaugural address, anything ambitious will be very hard to pull off in the current political and budget environment. Perhaps the best that the Administration can hope for is to keep the deficit hawks at bay, protect the programs that help the most vulnerable groups, and innovate on the margins with promising new early-intervention initiatives – especially those that focus on child-rearing, pre-school and elementary education.

More Bleak US poverty scenarios

The daunting challenge for FSG scenario planning consultants is to imagine a substantial reduction in U.S. poverty in the years ahead.  Indeed, it’s somewhat easier to make the case for the more negative scenario of poverty continuing to rise.  But let’s not go there now.  We are bound to be surprised by something in the next four years – maybe even positive, substantive developments on the socio-economic front that are not yet apparent at the start of Barack Obama’s second term.  Anyway, let’s hope so.