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The Failure Of The War On Poverty

In 1930, the unemployment rate among African Americans was lower than it was for whites. That's right, at the height of the Great Depression, blacks were more likely to be employed than whites. 1930 was also the last year that we saw that happen.

Over the next 83 years and continuing even now, black unemployment skyrocketed and has stayed sky-high. Today, we see a trend that has continued for many years - unemployment among African Americans is more than double the rate among whites. What happened in 1930 that correlates with this problem? The first federal minimum wage was passed that year. This was one of the first actions taken by the federal government to mitigate poverty, eventually evolving into the "War on Poverty."   Almost a century of governmental programs designed to lift folks out of poverty has produced nothing but failure.

Today I'm going to discuss with you the history of the War On Poverty, how government programs have ruined our economy, and how this has been the worst thing that could have been done to try to help African Americans achieve equality of opportunity and personal liberty.

The 20th century saw a long series of new government programs that had never previously been conceived in America. Born of good intentions, these programs have had the perverse effect of steadily chipping away at economic and social opportunity for African Americans.

Walter Williams wrote a book about this in 2011 called Race and Economics: How Much Can Be Blamed On Discrimination? In it, he writes,

Some might find it puzzling that during times of gross racial discrimination, black unemployment was lower and blacks were more active in the labor force than they are today. Up until the late 1950s, the labor force participation rate of black teens and adults was equal to or greater than their white counterparts. In fact, in 1910, 71 percent of black males older than 9 were employed, compared with 51 percent for whites. As early as 1890, the duration of unemployment among blacks was shorter than it was among whites, whereas today unemployment is both higher and longer-lasting among blacks than among whites.

How might one explain yesteryear's lower black unemployment and greater labor force participation? The usual academic, civil rights or media racial discrimination explanation for black/white socio-economic differences just wouldn't hold up. I can't imagine even the most harebrained professor, civil rights leader or media "expert" arguing that there was less discrimination a century ago and that explains why there was greater black labor market participation. Racial discrimination or low skills can explain low wages but not unemployment.

During the 1930s, there were a number of federal government interventions that changed the black employment picture. The first was the Davis-Bacon Act of 1931, which mandated minimum wages on federally financed or assisted construction projects. During the bill's legislative debate, the racial objectives were clear. Rep. John Cochran, D-Mo., said he had "received numerous complaints ... about Southern contractors employing low-paid colored mechanics getting work and bringing the employees from the South." Rep. Clayton Allgood, D-Ala., complained: "Reference has been made to a contractor from Alabama who went to New York with bootleg labor. ... That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country." Rep. William Upshaw, D-Ga., spoke of the "superabundance or large aggregation of Negro labor." American Federation of Labor President William Green said, "Colored labor is being sought to demoralize wage rates." For decades after Davis-Bacon enactment, black workers on federally financed or assisted construction projects virtually disappeared.

The effects of this new law were immediate - about 500,000 blacks were thrown out of work when this law passed. And this is just the minimum wage law. There were a whole host of other programs, agencies, bureacracies and payouts created that were intended either to aid poor folks, end poverty or fight discrimination. And with few exceptions, these programs have all failed. Since the 30s, the size of government as a proportion of our Gross Domestic Product - the overall size of our economy - has gone from 2% to about 23%. So government has grown more than ten times as big as it used to be, and black unemployment has more than doubled over that same time period. Think that's a coincidence?

Think again.

As George Bush Sr. put it in the 1992 State of the Union address

"Welfare was never meant to be a lifestyle; it was never meant to be a habit; it was never supposed to be passed on from generation to generation like a legacy."

But this was not an original observation, and this is not a uniquely Republican theme. These alarms were first raised by some of the most liberal Democrats we've seen in American politics. For instance, Franklin Delano Roosevelt warned that the welfare state "must not become a narcotic and a subtle destroyer of the spirit".

Daniel Patrick Moynihan, a Democrat Senator from New York, was as liberal as they come. In 1965, in a preview of what was to come in federal legislation that became Lyndon Johnson's Great Society, he wrote the following:

From the wild Irish slums of the 19th century Eastern seaboard, to the riot torn suburbs of Los Angeles, ther is one unmistakable lesson in American history: a community that allows a large number of young men to grow up in broken families ... never acquiring any stable relationship to male authority, never acquiring any set of rational expectations about the future - that community asks for and gets chaos. Crime, violence, unrest, disorder ... that is not only to be expected; it is very near to inevitable. And it is richly deserved.

Moynihan had done a large amount of research into the effects of social welfare programs. He later pointed out that in 1964, around 75% of black children under age six were living in a married-couple family. By 1990, that number had dropped to 37.4%. Today, the rate of unwed motherhood in the black community is almost three times as high as the rate among whites - 68% to 26%. And remember, this is all happening at the same time that social programs are being greatly expanded, as well as tracking with the massive increase in unemployment in the African American community.

Thomas Sowell recently wrote a column debunking many myths of the War on Poverty, saying,

[The] quarterly magazine City Journal says in its current issue: “Beginning in the mid-sixties, the condition of most black Americans improved markedly.”

That is completely false and misleading.

The economic rise of blacks began decades earlier, before any of the legislation and policies that are credited with producing that rise. The continuation of the rise of blacks out of poverty did not — repeat, did not — accelerate during the 1960s.

The poverty rate among black families fell from 87 percent in 1940 to 47 percent in 1960, during an era of virtually no major civil rights legislation or anti-poverty programs. It dropped another 17 percentage points during the decade of the 1960s and one percentage point during the 1970s, but this continuation of the previous trend was neither unprecedented nor something to be arbitrarily attributed to the programs like the War on Poverty.

In various skilled trades, the incomes of blacks relative to whites more than doubled between 1936 and 1959 — that is, before the magic 1960s decade when supposedly all progress began. The rise of blacks in professional and other high-level occupations was greater in the five years preceding the Civil Rights Act of 1964 than in the five years afterwards.

While some good things did come out of the 1960s, as out of many other decades, so did major social disasters that continue to plague us today. Many of those disasters began quite clearly during the 1960s.

So the War on Poverty and our almost century long expansion of government programs has done little to have a positive effect on African American communities. What it has done is greatly expand our government, and to create a new political class - wholly separate from and superior to regular citizens - that has no interest in actually solving the societal ills that continue to persist. Indeed, all those folks would be out of a job if we ever decided to really solve poverty!

Instead, we should favor policies that encourage entrepreneurship, opportunity, equality of access, not outcome, family cohesion and strong communities. We should be mindful of the government's track record of utter failure when it attempts to intervene in private markets and private decisions. We should trust ourselves to make our own decisions far more than some unelected bureaucrat in a far away city. And it is far past time for us to stop allowing the government to steal resources from our communities and destroy cultural cohesion.

Tomorrow, August 31, 2013 at the Northwest Convergence Project and Symposium I will share these thoughts and more.  The NWCPS is a long term program to reach into impoverished communities and, through a network of faith leaders, think tanks, business leaders and others, help folks end their generational dependence on governmental programs.