Fighting Poverty: Lessons from Recent U.S. History

Abstract

I n his 1964 State of the Union address, his first after assuming the presidency, President Lyndon Johnson declared a war: “This administration today, here and now, declares unconditional war on poverty in America.” The result of Johnson’s declaration was a series of major legislative changes, whose success (or failure) is still hotly debated. By the mid-1990s, the focus of policy concern had shifted from fighting poverty to reducing welfare dependence. However, one might argue that the 1990s, rather than the 1960s, were truly the decade in which the United States fought a war on poverty. The 1990s were a time of substantial legislative change in programs designed to assist low income families. At the same time, a remarkable change also occurred in the behavior of low income families, with plummeting use of public assistance and substantial increases in labor market involvement. I will start by documenting the magnitude and speed of these behavioral changes during the 1990s and then investigate the role of both the macroeconomy and policy in producing these outcomes. I end by discussing how these changes may or may not translate into improvements in long-term family well-being.