Today's Economist: The War on Poverty at 50

Washington Memo: 50 Years Later, War on Poverty Is a Mixed Bag

But looked at a different way, the federal government has succeeded in preventing the poverty rate from climbing far higher. There is broad consensus that the social welfare programs created since the New Deal have hugely improved living conditions for low-income Americans. At the same time, in recent decades, most of the gains from the private economy have gone to those at the top of the income ladder.

Half a century after Mr. Johnson’s now-famed State of the Union address, the debate over the government’s role in creating opportunity and ending deprivation has flared anew, with inequality as acute as it was in the Roaring Twenties and the ranks of the poor and near-poor at record highs. Programs like unemployment insurance and food stamps are keeping millions of families afloat. Republicans have sought to cut both programs, an illustration of the intense disagreement between the two political parties over the best solutions for bringing down the poverty rate as quickly as possible, or eliminating it.

For poverty to decrease, “the low-wage labor market needs to improve,” James P. Ziliak of the University of Kentucky said. “We need strong economic growth with gains widely distributed. If the private labor market won’t step up to the plate, we’re going to have to strengthen programs to help these people get by and survive.”

In Washington, President Obama has called inequality the “defining challenge of our time.” To that end, he intends to urge states to expand their Medicaid programs to poor, childless adults, and is pushing for an increase in the minimum wage and funding for early-childhood programs.

But conservatives, like Representative Paul D. Ryan of Wisconsin, have looked at the poverty statistics more skeptically, contending that the government has misspent its safety-net money and needs to focus less on support and more on economic and job opportunities.

“The nation should face up to two facts: poverty rates are too high, especially among children, and spending money on government means-tested programs is at best a partial solution,” Ron Haskins of the Brookings Institution wrote in an assessment of the shortfalls on the war on poverty. Washington already spends enough on antipoverty programs to lift all Americans out of poverty, he said. “To mount an effective war against poverty,” he added, “we need changes in the personal decisions of more young Americans.”

Still, a broad range of researchers interviewed by The New York Times stressed the improvement in the lives of low-income Americans since Mr. Johnson started his crusade. Infant mortality has dropped, college completion rates have soared, millions of women have entered the work force, malnutrition has all but disappeared. After all, when Mr. Johnson announced his campaign, parts of Appalachia lacked electricity and indoor plumbing.

Many economists argue that the official poverty rate grossly understates the impact of government programs. The headline poverty rate counts only cash income, not the value of in-kind benefits like food stamps. A fuller accounting suggests the poverty rate has dropped to 16 percent today, from 26 percent in the late 1960s, economists say.

But high rates of poverty — measured by both the official government yardstick and the alternatives that many economists prefer — have remained a remarkably persistent feature of American society. About four in 10 black children live in poverty; for Hispanic children, that figure is about three in 10. According to one recent study, as of mid-2011, in any given month, 1.7 million households were living on cash income of less than $2 a person a day, with the prevalence of the kind of deep poverty commonly associated with developing nations increasing since the mid-1990s.

Both economic and sociological trends help explain why so many children and adults remain poor, even putting the effects of the recession aside. More parents are raising a child alone, with more infants born out of wedlock. High incarceration rates, especially among black men, keep many families apart. About 30 percent of single mothers live in poverty.

In some cases, government programs have helped fewer families because of program changes and budget cuts, researchers said. For instance, the 1996 Clinton-era welfare overhaul drastically cut the cash assistance available to needy families, often ones headed by single mothers.

“As of 1996, we expected single mothers to go to work,” Professor Ziliak said. “But if they’re shelling out most of their weekly pay in the form of child care, they can’t make sense of doing it.”

The more important driver of the still-high poverty rate, researchers said, is the poor state of the labor market for low-wage workers and spiraling inequality. Over the last 30 years, growth has generally failed to translate into income gains for workers — even as the American labor force has become better educated and more skilled. About 40 percent of low-wage workers have attended or completed college, and 80 percent have completed high school.

Economists remain sharply divided on the reasons, with technological change, globalization, the decline of labor unions and the falling value of the minimum wage often cited as major factors. But with real incomes for a vast number of middle-class and low-wage workers in decline, safety-net programs have become more instrumental in keeping families’ heads above water.

The earned-income tax credit, for instance, has increased employment among single mothers and kept six million Americans above the poverty line in 2011. Food stamps, formally known as Supplemental Nutrition Assistance Program benefits, kept four million Americans out of poverty in 2011.

Above all, the government has proved most successful in aiding the elderly through the New Deal-era Social Security program and the creation of Medicare in the 1960s. The poverty rate among older Americans fell to just 9 percent in 2012 from 35 percent in 1959.

But for working-age households, both conservatives and liberals agree that government transfer programs alone cannot eliminate poverty. The answer, the White House has said, is in trying to improve households’ earnings before tax and transfer programs take effect.

“Going forward, the biggest potential gains that could be made on poverty would be in raising market incomes,” said Jason Furman, the chairman of Mr. Obama’s Council of Economic Advisers. “In the short run, that means things like the minimum wage, and in the long run, things like early education.”

If Congress approved a proposal to raise the federal minimum wage to $10.10 an hour from its current level of $7.25, it would reduce the poverty rate of working-age Americans by 1.7 percentage points, lifting about five million people out of poverty, according to research by Arindrajit Dube of the University of Massachusetts, Amherst.

But in the meantime, the greatest hope for poorer Americans would be a stronger economic recovery that brought the unemployment rate down from its current level of 7 percent and drew more people into the work force. The poverty rate for full-time workers is just 3 percent. For those not working, it is 33 percent.

Economic Scene: Debating Real Value of Health Benefits in Poverty Calculations

In July, the Congressional Budget Office — the nonpartisan arbiter of the costs and consequences of government spending — decided that we had not been valuing these benefits enough. In a report on how income and taxes are distributed across the population, it decided, for the first time, to value health benefits provided by the government at every penny they cost.

The decision stoked a long-simmering debate about how much health care is really worth to poor families who may not have enough to eat. The reclassification of health benefits added $4,600 a year to households in the bottom fifth of income. It shrank the nation’s yawning income gap and muted the increase of inequality over the last three decades. And it changed the picture of what the government does for Americans.

The reasoning behind the budget office’s action seems to make lots of sense: the government spends almost $8,000 on the average Medicaid beneficiary and more than $12,000 for each person on Medicare. Why shouldn’t that count as income? Without it, the recipients could not afford an essential, lifesaving service. Moreover, the budget office considers Social Security benefits as income. And that’s the way it treats the health insurance provided by employers to their workers.

But not everyone thinks health care is worth that much. In particular, the Census Bureau does not include health care and other noncash benefits when computing the official poverty rate. Even its Supplemental Poverty Measure — which was created to capture noncash sources of income, as well as all the costs faced by the poor — sets the value of Medicare and Medicaid at zero.

That approach is not unreasonable, either. To paraphrase Timothy Smeeding, the director of the Institute for Research on Poverty at the University of Wisconsin-Madison: you can’t eat health care. Medicaid benefits are enough to lift many people out of poverty statistically even if they don’t have enough money to afford housing, utilities and food.

And the addition of those benefits could alter how we view our progress. From 2000 to 2010, government spending for each Medicare recipient rose by two-thirds after inflation. But those increases probably didn’t make seniors feel wealthier, especially since their out-of-pocket expenses for medical care rose, too.

For years, the Congressional Budget Office followed the general approach of the Census Bureau: health benefits were worth only the amount that a family otherwise would have spent on doctors and other medical services — that is, money that could be used on something else. So Medicare, Medicaid or Children’s Health Insurance Program benefits to a family that didn’t have enough money to satisfy necessities like food, shelter and utilities were valued at zero, because without the government benefits the family wouldn’t spend on medical care at all.

The change in approach alters the calculation of who is living in poverty. Including these health benefits at face value raises by 25 percent the income of households in the poorest fifth of the population, to $23,300 in 2009 from $18,900 under the previous calculation. This is more than three times the average income of the poorest fifth of households before federal taxes and government benefits kick in, which in 2009 was $7,600. The gains from the new calculations are enough to vault a family of two parents and two children over the Census Bureau’s official poverty line of $21,756 and to almost breach the supplemental measure’s threshold of $23,854.

Because two-thirds of Medicare funds and 83 percent of Medicaid funds are spent on the poorest 40 percent of the population, the shift also narrows the nation’s income gap. Under the budget office’s old method, the richest fifth of American households made more than nine times the incomes of the poorest fifth, after taxes and government benefits. Under the new method, the rich take home less than 7.5 times what the poor do.

The new definition of income removes many seniors from the poorest group of Americans, as they are big consumers of Medicare. And it pushes more working families to the bottom of the income scale.

Accounting for health care this way also changes the view of what government actually accomplishes. Social scientists have noted with some dismay that taxes and government transfer payments have become less effective over the last 30 years at narrowing the income gap in American society. But including health benefits changes the outcome significantly because health care is becoming a much bigger part of government spending.

Under the budget office’s old methods, taxes and government spending in 2007 narrowed the income gap by 17 percent, as measured by the Gini index, which ranges from 0 when everybody has the same income to 1 when one plutocrat hoards it all. Including all government health spending as income, the government reduced inequality by 21 percent.

E-mail: eporter@nytimes.com; Twitter: @portereduardo