Political Fallout Continues from Poverty Statistics

THE Bush administration, battered by a steady flow of bad economic news, confronted more disappointing statistics last week.

Recession and job losses, for example, last year pushed 2 million more people into poverty and worsened the prospects for those already there. In 1991, 35.7 million Americans fell below the poverty line of $13,924 for a family of four, or $6,932 for individuals, the Census Bureau reported.

Americans also earned less: Their median household income fell last year for the second year in a row, dropping in constant dollars 3.5 percent to $30,126.

Quickly analyzed by economists and political pundits, the findings became instant ammunition in this year's presidential campaign. Democratic presidential nominee Gov. Bill Clinton immediately blamed the Republicans for failed economic policies, saying that the poverty numbers, the highest since the 1960s, cast a shadow over President Bush's economic stewardship and the past 12 years of Republican administrations.

The White House has pointed to its efforts to help blunt the impact of the United States economic downturn on the poor by supporting more money for Head Start and Aid to Families with Dependent Children (AFDC). GOP defenders say that the steady rise in poverty reflects the failure of the Democrats' Great Society and War on Poverty programs of the 1960s, which began what they call the destructive welfare cycle.

Urban Institute economist Isabel Sawhill says that the politicization of poverty numbers misses important trends that increase the number of American poor and prolong their suffering.

First, she addresses the "devastating demographics among blacks" that are partly the cause and partly the result of poverty. While blacks do not constitute the majority of the poor, they are among the hardest hit. A third of all blacks are living in poverty, according to the Census Bureau report. The real median income level of female-headed black families (with no husband present) dropped 9.7 percent in 1991.

"The big story among blacks is the growth of female-headed families," Ms. Sawhill says. "In the 1970s, everyone was getting divorced. Today, they aren't getting married anymore." The collapse of marriage as an institution, she says, is "particularly striking in the black community." Forty-four percent of black men and women age 33 have never been married, and have children. The proportion of black children born out of wedlock is now 66 percent. Elderly make gains

Sawhill also cites generational gaps among the poor. "Poverty has dropped like a stone amongst the elderly and it has soared amongst children." Today, more than 22 percent of all children are poor. That's up from 15 percent in the early 1970s, she says. "We've done a better job of taking care of the elderly poor - the social security benefits and SSI [Supplemental Security Income] are much more generous than [programs helping the younger poor, such as] AFDC."

The second trend Sawhill identifies is the impact of the economy's restructuring. She notes the sharp decline in earnings among males with limited education, and the primary reason: the glut of unskilled labor caused by greater availability of cost-competitive imports in the US.

In an effort to reduce their costs and compete with overseas producers, US firms have drastically downsized during the past several years. Technology has increased the premium on skilled labor. And the country's growing service sector prefers better educated and female labor. Such developments have hurt minority males, Sawhill says.

Economists agree that much of the business restructuring is permanent and that most minimum-wage jobs offer insufficient benefits and carry a high tax burden. "The younger generation doesn't have good opportunities anymore," Sawhill says. When work is not as rewarding as it used to be, she adds, youths are more likely to "drop out."

Sen. Paul Sarbanes (D) of Maryland, who pores over the Labor department's monthly unemployment figures on the Joint Economic Committee, warns, "Americans expect their incomes to improve over their lifetimes and expect their children to do better than they did. Neither of these expectations is likely to be met if current economic trends are allowed to continue." Jobs program effects

Unemployment edged down slightly in August to 7.6 percent, due to a temporary government summer youth jobs program, but increased sharply among males. Unemployment during 1992, up a full percentage point from 1991, means that 1992 will push even more Americans under the poverty line, Sawhill says.

The income losses per person during the past two years of recession "have been protracted and deep - the largest in the past 30 years," says Lawrence Mishel, research director at the Economic Policy Institute and co-author, with Jared Bernstein, of "The State of Working America: 1992-1993." Mr. Mishel says, "This has not been a shallow recession. Income is a better indicator than unemployment, and median family income dropped 4.4 percent between 1989 and 1991."

Mishel also says that there is more economic distress in the suburbs, hurting Bush politically.

To Robert Rector, a senior policy analyst at the conservative Heritage Foundation, the Census Bureau poverty count is "grossly inaccurate." Mr. Rector, who has studied income distribution and the US welfare system for the past decade, is exasperated with what he believes to be a misrepresentation of statistics.

The Census Bureau counts only a fraction of overall federal, state, and local welfare aid as income for low-income households. Sawhill says there should be a broader measure that includes some of the noncash benefits the government grants to the poor.

"If they don't count food stamps, Medicaid, and public housing (which amounted to 2.7 percent of the GNP in 1990) then they must not think that such income is improving the condition of the poor and we can presumably cut them out and do the taxpayer a huge favor," Rector says.

He compares the period when the nation's poverty rate dropped from 30 percent of the population in 1950 to 15 percent in 1966, "before the War on Poverty and the large increases in welfare spending began," with the period from 1966 until the present. During the latter period, welfare spending quintupled and the government's official poverty rate remained virtually flat. Misleading accounting

But if the government counted cash welfare payments and even a small portion of noncash aid, such as food and housing aid (not medical and social service spending), Rector says, the income would put welfare recipients above the poverty threshold.

Rector blames the government for boosting poverty, and for simultaneously stating that the funds it has doled out over the years has done nothing to help needy people.

If noncash benefits are included, poverty still rose substantially last year to 11.4 percent.

Chronic welfare problems

All of the political angling on the poverty issue, Rector says, detracts from an urgently needed response to what he calls behavioral poverty - sharp increases in crime, single-parent families, drug abuse, and dysfunctional behavior.

"The real problems are not hunger and overcrowded living but that the welfare state per se rewards non-work and single parenthood," he says.

Rector comments: "Because the welfare state rewards single parenthood and non-work, the more we spend on welfare, the more government fuels the behavioral problems."