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Federal Reserve Bank of Boston’s Economic Education Newsletter

Spring 2014

Always
With Us:
Recurring Themes in
the Fight to End Poverty

In This Issue
4
9

Always With Us:

Recurring Themes In The Fight to End Poverty

Thrift, Training
and Temperance

15

Presidents on Poverty

16

Measuring Poverty:

18

Documenting Poverty

Who is Poor?

EDITOR’S NOTE
Ask a hundred randomly-selected Americans for their ideas on how to end poverty, and you’re sure
to get a range of opinions:

“They need to pull themselves
up by their bootstraps!”

The Ledger
Editor
Bob Jabaily
Graphic Design
Scott Nichols

“Help the poor learn to
manage their finances better!”

Online Production
Tom DeCoff
Evan McCullough
The Ledger is published twice
a year as a public service by
the Federal Reserve Bank of
Boston. The views expressed
in The Ledger are not necessarily those of the Federal Reserve Bank of Boston or the
Federal Reserve System.

“Faith-based lending!”

its !!”
“Tax cuts !” “Tax cred
“Tax increases?”
“More emphasis on early
childhood education!”

“Self-discipline and personal
responsibility are the keys!”

“Go to college!”

“More job training prog
rams!”

nt
“More funding for dece
ition!”
housing and good nutr

questions? comments?
suggestions?
contact:
Robert Jabaily
e-mail:
robert.jabaily@bos.frb.org
phone:
(617) 973-3452
mail:
Regional and
Community Outreach
Federal Reserve Bank
of Boston
600 Altantic Avenue
Boston, MA 02210
@BostonFed
Cover Photo:
Library of Congress

But overall, the views people hold are likely to reflect either of two broad philosophical outlooks. One
emphasizes personal responsibility, self-discipline, and private charity; the other leans more towards
government involvement, public funding, and professional expertise. In short, we Americans don’t
agree on the most effective way to address poverty or, for that matter, on a definition of “need.”
That’s nothing new, of course. Disagreement over the nature of poverty and the debate over how to
address it are both part of a long-running narrative that stretches all the way back to Jamestown.
This issue of The Ledger looks at three aspects of that narrative: 1) the recurrence of certain themes in
America’s response to poverty, 2) the ongoing discussion over how to define and measure poverty, and
3) some of the more notable efforts to document the lives of poor people and raise awareness of poverty.
A few words of caution: Don’t look for scholarly analysis or policy recommendations in the pages that
follow. (I’m not qualified to do the former and not foolhardy enough to attempt the latter.) The goal of
this issue is to provide broad, accessible background information that might serve as a basis for further
discussion of what has been – and continues to be – a formidable challenge.
The usual disclaimer: As always, the opinions expressed herein, do not reflect the official views or
positions of the Federal Reserve Bank of Boston or the Federal Reserve System … even if you agree with
every word.
Robert Jabaily, Editor
Robert.Jabaily@bos.frb.org

Always With Us:
Recurring Themes in the Fight to End Poverty
Certain themes and threads have run through America’s antipoverty
efforts since colonial times. This section looks at five of them:
•

No Free Rides: The Chronic Concern That Someone is Getting
Something for Nothing

•

The “Deserving,” The “Undeserving,” and “The Culture of
Dependency”

•

Cutting the Rolls

•

Personal Responsibility and Bootstraps

•

Thrift, Training, and Temperance

No Free Rides: The Chronic Concern That
Someone Else Is Getting Something for Nothing
The English settlement at Jamestown was scarcely two years old in
the spring of 1609, and its survival was in doubt. Malaria, typhoid,
dysentery, lack of food, and periodic attacks by native tribes had
sent a majority of the original colonists to their graves.
Faced with the colony’s imminent collapse, Captain John Smith
issued an ultimatum to those still alive, many of whom were highborn gentlemen averse to manual labor:

Countrymen, the long experience of our late miseries, I hope is
sufficient to persuade every one to a present correction of himself,
and think not that either my pains, nor the [investors’] purses, will
ever maintain you in idleness and sloth. I speak not this to you
all, for diverse of you I know deserve both honor and reward,
better than is yet here to be had: but the greater part must be
more industrious, or starve, how ever you have been heretofore
tolerated by the authorities of the Council, from that I have often
commanded you. You see now that power rests wholly in myself:
you must obey this now for a Law, that he that will not work shall
not eat (except by sickness he be disabled) for the labors of thirty
or forty honest and industrious men shall not be consumed to
maintain an hundred and fifty idle loiterers.

Image courtesy Library of Congress, Public Domain

Never mind that recent historical and archaeological
evidence suggests that poor judgment in choosing the
colony’s site, ineptitude in dealing with native people,
and a series of calamities—drought, severe storms,
disease, and a plague of rats that contaminated food
stores—may have had as much to do with Jamestown’s
near-demise as the colonists’ poor work ethic. The
storyline of a strong leader compelling “idle loiterers” to
do their share has become so ingrained in the popular
imagination that it may be impervious to historical fact.

The “Deserving,” The “Undeserving,”
and “The Culture of Dependency”

“...he that will not work shall not eat
(except by sickness he be disabled) ...”

The fear that “idlers” are getting a free ride has, to varying
degrees, affected efforts to address poverty in America.
An example is the longstanding preoccupation with
determining who among the poor is “deserving” of concern.

In the early 1700s, Puritan minister Cotton Mather
put a divine spin on John Smith’s earlier admonition
by stating unequivocally that “for those who indulge
themselves in idleness, the express command of God
unto us is, that we should let them starve.”3 Obviously,
“those who indulge themselves in idleness” belonged in
the “undeserving” column.
By the 1800s, a sizable number of well-born, welleducated reformers were dedicating themselves to
improving the lives of poor people. But even they
worried that dispensing money or other forms of relief
to those who did not work would create a “culture
of dependency.” Josephine Shaw Lowell, a founding
member of New York’s Charity Organization Society,
addressed the Seventeenth Annual Conference of
Charities (1892) and declared:

When John Smith declared “he that will not work shall
not eat (except by sickness he be disabled),” he drew the
first American distinction between the “deserving” and
“undeserving” poor. The “deserving poor” are widows,
orphans, the aged, the infirm, and the mentally ill.1 As for
the “undeserving poor” … officials in colonial Boston set
forth a description that left little room for doubt:

If the advocates of public relief contend that there

Persons going about in any town or county begging, or

into a greater poverty than any now suffers. …It is

persons using subtle craft, juggling, or unlawful games

not because paupers are primarily more lazy than other

or plays, or feigning themselves to have knowledge

people that they will not work for a living if they can be

in physiognomy, palmistry, or pretending that they

supported without working. If you will consider, you will

can tell destinies, fortunes, or discover where lost or

find that you do not know any one (or, if you do, you

stolen goods may be found, common pipers, fiddlers,

regard him or her as a most extraordinary individual)

runaways, stubborn servants or children, common

who works for a living when it is not necessary, when

“…the greater part must be more industrious, or starve …”

drunkards, common nightwalkers, pilferers, wanton

the living is supplied from some source without any

“…he that will not work shall not eat (except by sickness he
be disabled) …”

and lascivious persons, either in speech or behaviour,

conditions which are dishonorable or irksome.4

“…the labors of thirty or forty honest and industrious
men shall not be consumed to maintain an hundred and
fifty idle loiterers.”

callings, misspend what they earn, and do not provide

Captain John Smith
Jamestown 1609
Image courtesy Wikimedia Commons, Public Domain

Although Captain Smith addressed his remarks to a
collection of 17th century grandees, he unwittingly
established one of the central themes in a long-running
disagreement over the most effective way to address
poverty in America. Many of the stock phrases are there.
Update the language a bit, and you have the makings of
a modern-day speech on welfare reform:
“…think not that either my pains, nor the [investors’]
purses, will ever maintain you in idleness and sloth.”

1
2
3
4

Krawczynski, Keith, Daily Life in the Colonial City, Greenwood Press, 2013.
Ibid
Ibid
Proceedings of the National Conference of Charities and Corrections, Volume 17, 1892.

common railers or brawlers, such as neglect their
for themselves or the support of their families.2

should be no stigma attached to its receipt, the
answer is that, in that case, the tendency would be
toward the condition where the whole people would
be ready to accept an income from so-called public
funds, and that the resulting loss of energy and
industry would be sufficient to plunge any nation

In the 20th century, President Franklin D. Roosevelt
used the full power of the federal government in an
effort to alleviate the poverty and economic hardship

brought on by the Great Depression. But in his 1935
State of the Union Address he also declared that:
The lessons of history, confirmed by the evidence
immediately before me, show conclusively that
continued dependence upon relief induces a spiritual
disintegration fundamentally destructive to the national
fiber. To dole out relief in this way is to administer a
narcotic, a subtle destroyer of the human spirit. It is
inimical to the dictates of a sound policy. It is in violation
of the traditions of America. Work must be found for
able-bodied but destitute workers.
The Federal Government must and shall quit this
business of relief.5
Opponents of antipoverty programs still use Roosevelt’s
quote to bolster their position, but they rarely include the
next passage in which he told Congress:
We must preserve not only the bodies of the unemployed
from destitution but also their self-respect, their selfreliance, and courage and determination. …
The Federal Government is the only governmental
agency with sufficient power and credit to meet this
situation. We have assumed this task, and we shall
not shrink from it in the future. It is a duty dictated by
every intelligent consideration of national policy to ask
you to make it possible for the United States to give
employment to all of these three-and-a-half million

Federal efforts to combat poverty intensified during the
mid-1960s when President Lyndon Johnson committed the
country to a “War on Poverty” that resulted in the passage
of major antipoverty initiatives. Among them were
Medicare, Medicaid, an expanded food stamp program,
and the Head Start early childhood education program.
But Americans have never had a high tolerance for long
conflicts, and the War on Poverty was no exception. The
last two decades of the 20th century saw a shift away from
major federal antipoverty initiatives.
Ronald Reagan made welfare fraud a high-profile
campaign issue during his unsuccessful bid for the
presidency in 1976. (The term “welfare queen” entered
the political and public discourse at roughly the same
time, but there is no evidence that Reagan actually used
it in his campaign.) After winning the White House
in 1980, President Reagan pursued policies intended to
reduce direct federal involvement in antipoverty efforts.
His views, and perhaps the prevailing view in America
during the 1980s, might have been summed up best in a
1987 remark he made to reporters while walking to the
presidential helicopter: “We fought a war on poverty, and
poverty won.”
The push for a reduction in federal antipoverty efforts
continued into the 1990s and culminated in passage of the
Personal Responsibility and Work Opportunity Reconciliation
Act of 1996. In signing the legislation, President Clinton
declared, “Today we are ending welfare as we know it.”
For the time being, those on the personal responsibility/upby-your-bootstraps side of the philosophical divide wielded
greater political influence than those who favored a higher
degree of federal involvement and greater public funding.

people now on relief, pending their absorption in a
rising tide of private employment.6

5
6

Franklin D. Roosevelt, State of the Union Address, 1935.
Franklin D. Roosevelt, State of the Union Address, 1935.

Image courtesy Library of Congress, Public Domain

In his essay he argues that:

Cutting the Rolls
For as long as there have been public assistance
efforts, there have been calls to cut them. The Personal
Responsibility and Work Opportunity Reconciliation Act of
1996 is one of the more recent examples, but as Keith
Krawczynski notes in Daily Life in the Colonial City,
people without the means to support themselves in
colonial times were often auctioned off to the lowest
bidder and placed in private households, where they
served as cheap labor. “At times,” writes Krawczynski,
“the indigent were treated like unwanted dogs, bandied
about from one family to another by councilmen seeking
the cheapest terms or by caretakers tired of their charges.”

part because they are broad enough and vague enough to
suit the purposes of almost anyone who wants to use them
in just about any context.
But for those seeking a clear reference point, Ron Haskins’s
2009 essay—“The Sequence of Personal Responsibility” —
defines personal responsibility as “the willingness to both
accept the importance of standards that society establishes
for individual behavior and to make strenuous personal
efforts to live by those standards.” Mr. Haskins is CoDirector of the Brookings Center on Children and Families,
and, as his bio on the Brookings website notes, “he was
instrumental in the 1996 overhaul of national welfare policy.”

Personal responsibility also means that when individuals
fail to meet expected standards, they do not look around
for some factor outside themselves to blame. The demise
of personal responsibility occurs when individuals blame
their family, their peers, their economic circumstances,
or their society for their own failure to meet standards.
The three areas of personal decisionmaking in which
the nation’s youth and young adults most need to learn
and practice personal responsibility are education, sexual
behavior and marriage, and work.

When even that proved too costly, a number of colonial
communities opened almshouses. Also known as
poorhouses or workhouses, they were more cost
effective, but arguably less humane.7 Boston’s was
among the first, established in 1662 “for the relief of
the poor, the aged, and those incapacitated for labor;
of many persons who would work, but have not the
wherewithal to employ themselves; of many more
persons and families, who spend their time in jolliness
and tipling, and who suffer their children shamefully
to spend their time in the streets, to assist, employ, and
correct whom the proposed institution was provided.” 8
The practice of consigning indigent people to almshouses
continued into the 20th century. Nineteenth century
reformers considered it a form of protection, a way to
separate the “worthy poor” from the “vicious poor.” 9

Personal Responsibility and Bootstraps
“Personal responsibility” and the perennial call for poor
people to “pull themselves up by their bootstraps” are also
long-running themes in the history of poverty in America.
Both terms have been in widespread use for a long time, in
7

Krawczynski, Keith, Daily Life in the Colonial City, Greenwood Press,
2013.

8

http://www.cityofboston.gov/Images_Documents/Guide%20to%20
the%20Almshouse%20records_tcm3-30021.pdf

9

Ibid
Image courtesy Library of Congress, Public Domain

Again, this is not a recently emerged philosophical
position. The focus on personal responsibility “marks
more than a turn away from the War on Poverty,” writes
Joel Schwartz in Fighting Poverty with Virtue. “It also
marks a return to the antipoverty strategy of the moral
reformers of the 19th century.” 10
A strong sense of morality guided the efforts of 19th
century reformers. Although they did not necessarily
agree on specifics, they were nearly unanimous in the
belief that improving the character of poor people was
one of the keys to alleviating poverty. Many of their
overall beliefs and principles found expression in the
popular writings of Horatio Alger.
Hardly anyone mentions Horatio Alger these days.
Contemporary critics either scorn or ignore his work.
Yet Horatio Alger (1832–1899) was once among America’s
most popular and influential writers, winning
considerable fame as the author of “boys’ fiction.” His
books sold millions of copies and profoundly influenced
popular American thought during the 50-year period
following the Civil War. The term “Horatio Alger story”
was synonymous with “American success story.”
Alger’s writing — a mixture of fable and self-help —
reinforced the widely-held 19th century belief that
poverty was no barrier to success in America’s fluid
society, and any American boy, no matter how poor,
could rise in the world and achieve success through
hard work and clean living. Each of his stories followed
the same rags-to-riches formula: A poor boy eager for
financial success has to overcome a particular weakness
or form of temptation and triumph over a villainous
rich man and/or the villainous rich man’s malign
son. Invariably, the hero prevails through hard work,
courage, strength of character, and good fortune, with
good fortune often coming in the form of help from a
benevolent businessman who tells a young protagonist
something along the lines of “I hope, my lad, you will
prosper and rise in the world. You know in this free
10 Schwartz, Joel, Fighting Poverty with Virtue, Indiana University Press, 2000.

country poverty is no bar to a man’s advancement.”
Although Alger’s popularity has long since faded,
many of the beliefs expressed in his stories continue
to have an impact on present-day policy discussions
and public opinion. A sizable number of Americans
continue to believe that personal responsibility,
hard work, and virtuous living are viable standalone substitutes for government-funded antipoverty
initiatives. More than a third of the respondents in a
2013 NBC News/Wall Street Journal poll agreed that “too
much welfare” and a “lack of work ethic” are chiefly
responsible for persistent poverty.
Yet in a 2012 survey conducted by the Pew Research Center,
55 percent of the respondents said they or a member of
their household had received benefits from one of six
major federal entitlements programs, including Social
Security, Medicare, Medicaid, welfare, unemployment
benefits, or the Supplemental Nutrition Assistance
Program (also known as food stamps).
So, here’s the question: At a time when income inequality
is rising and upward mobility seems to have stalled, why
do Horatio Alger’s 19th century views still hold such
sway?
Part of the answer may be that the personal
responsibility “thread” is tightly woven into America’s
rags-to-riches narrative, and that narrative is entwined
with how we see ourselves. If we were to acknowledge
that, despite our best efforts, poverty is a condition that
can carry over from one generation to the next, then we
also might have to consider the possibility that: a) hard
work and tenacity might not be enough to overcome
any obstacle, and/or b) ours is a society in which class
boundaries are more rigid than we would like to believe.

Image courtesy Library of Congress, Public Domain

Thrift,
Training,
and
Temperance

Stephen Pimpare, author of A People’s History of Poverty in America, poses
an interesting question: “What happens if instead of asking ‘How has
policy changed over time?’ we invert our analysis and ask the question
‘How has the experience of being poor and in need changed over time?’”
One of the consequences of doing that, he contends, is:
Among other things, instead of comforting ourselves with a relatively
progressive story, a forward-moving story, an evolutionary story, that
no matter how bad things may be at any given moment in time, they
have in fact gotten better, what I argue is in fact the constants, the
consistency of that experience of poverty over the course of American
history has changed much less than we might like to believe.11
The same might also be said of the policies and plans for alleviating
poverty. Many have been around, in one guise or another, since the early
1800s and have tended to emphasize thrift, training, and temperance.
In Fighting Poverty with Virtue, Joel Schwartz notes that 19th century
reformers stressed the need to help poor people by:
[E]nabling them to help themselves, specifically by inculcating and
encouraging the poor to practice the virtues of diligence, sobriety, and
thrift (alternatively, by pressing them to avoid what can be thought of
as the three “I’s” – indolence, intemperance, and improvidence). To
mitigate poverty, then, the poor needed to work and earn, to avoid
drinking (which both made workers less employable and cost them
money that could have been spent on more essential goods), and to
spend within their means and if possible to save.12
To a certain extent that still holds true. The vocabulary may have
changed, the degree of moral judgment may have moderated, and the
overt sense of mission may have waned, but the underlying sentiment
seems to have remained fairly constant. The emphasis in contemporary
antipoverty efforts still seems to be on teaching, convincing, or coercing
poor people to: a) make better financial decisions (thrift), b) lead more
virtuous lives and exhibit greater self-discipline (temperance), c) stay in
school (training), or d) some combination of the three.
11 Pimpare, Stephen, A People’s History of Poverty in America, The New Press, 2008.
12 Schwartz, Joel, Fighting Poverty with Virtue, Indiana University Press, 2000.

Images courtesy Library of Congress, Public Domain

Encouraging Thrift
The financial crisis of the early 21st century prompted
an effort by the Department of the Treasury to “assist
the American people in understanding financial matters
and making informed financial decisions, and thereby
contribute to financial stability”—particularly in
low- and moderate-income communities. In addition,
nonprofit organizations, government agencies, and
financial institutions have been working to encourage
people in low- and moderate-income households to save
for specific purposes such as buying a house or financing
education expenses through individual development
accounts and matched savings programs.
Helping people to make better-informed financial
decisions and encouraging thrift are worthwhile goals,
but they are not new ones. Thrift Institutions—
mutual savings banks and savings and loan associations
— represented a 19th century innovation intended to
encourage saving and make credit available to lowerincome people.
In 1810, the Reverend Henry Duncan established the
world’s first mutual savings bank in Scotland, the Savings
and Friendly Society, for the benefit of his parishioners.
Six years later, Reverend Duncan’s idea took root in the
United States when the Philadelphia Savings Fund Society
and the Provident Institution for Savings (Boston) began
to accept deposits. By 1860, Massachusetts alone had 89
mutual savings banks, which held over $45 million worth
of savings deposits in more than 230,000 open accounts.
The mutual savings bank movement had definite moral
underpinnings. Most mutual savings banks were founded
and managed by people with a mission—public-spirited
citizens of means who understood the ways of finance and
were eager to help the “lower classes.”

“The greatest good,” wrote the Secretary of Boston’s
Provident Institution for Savings “is in affording the
humble journeymen, coachmen, chamber-maids, and
all kinds of domestic servants, and inferior artisans,
who constitute two-thirds of our population, a secure
disposal of their little earnings, which would otherwise
be squandered.”
Few, if any, mutual savings banks were concerned with
making a profit because they were mutually owned
by their depositors (as opposed to being owned by
stockholders or other private investors). In fact, an
officer of the Savings Bank of Baltimore proudly noted
that his bank did not “take over $500 at any time, for
any person. … We have several instances of women, who,
during the summer, deposited a dollar per week. This is
the most desirable kind of depositor, for all this is saved
from luxury and dress.”
Mutual savings banks were not equally popular in every
region of the United States. In fact, the idea never quite
caught on outside the Northeast. Professor Weldon
Welfling offered the following explanation for their
limited geographic appeal:
As the West was being settled there was no preexisting class of gentlemen with the sense of civic
responsibilities that was held by the wealthier
merchants of Philadelphia, Boston, Baltimore, and
New York. The influence of gentlemen Quakers
and Puritans was not predominant in the pioneer
settlements, nor indeed was there a ”lower class”
dependent upon the wealthier for employment or for

In other regions, savings and loan associations (S&Ls)
helped wage earners become homeowners. People banded
together, formed an association, and regularly deposited
their savings. Members of the early S&Ls usually shared a
common affiliation, often working at the same occupation
or living in the same neighborhood.
Most members of America’s first S&L, the Oxford
Provident Society (1831), worked in the textile trades and
lived in Frankford, Pennsylvania. Many wanted to build
or buy their own houses, but few were able to borrow
money from conventional banks, which were primarily
interested in commercial customers.
With no place else to turn, the textile workers and a few
civic-minded citizens devised a system to create their
own source of mortgage funding. Each member paid an
initial fee of $5 and deposited $3 a month thereafter. Any
member who missed 12 consecutive monthly payments
could be expelled from the Society. (The 13 trustees who
ran the Society were also subject to certain penalties: 25
cents for missing a scheduled meeting and 25 cents for
attending a meeting in a state of intoxication.)
As the pool of savings grew, members of the Society were
allowed to bid for mortgage funds. Records show that
the Oxford Society’s first homebuilding loan went to Mr.
Comly Rich, who borrowed $375 and paid a $10 premium
for the loan. (The premium took the place of interest.)

assistance when the employment was lacking.13

13 Welfling, Weldon, Mutual Savings Banks; The Evolution of a Financial
Intermediary, Press of Case Western University, 1968.

Providing Emergency Credit
Providing alternatives to “payday lending” is another contemporary
antipoverty effort rooted in the 19th century. Payday loans —
small, short-term, high-rate loans provided by check cashers,
finance companies, and others — are targeted to low-income
people in need of money for emergency expenses. Because
the cost of using payday loans can be quite steep, a number of
agencies and organizations have been trying to offer consumers
alternatives. But one alternative has been in existence for more
than a century: credit unions.
During the 19th and early 20th centuries, factory hands and
salaried workers were expected to pay cash for whatever they
needed, even in the case of a medical crisis or other emergency.
Yet all too often, loan sharks and other unscrupulous lenders
were the only source of emergency or personal credit.
Credit unions offered a way for people in need to pool their
funds and create an alternative source of inexpensive credit.
Most were founded by people who shared the same workplace,
lived in the same neighborhood, or belonged to the same house
of worship. The first American credit union opened in New
Hampshire in 1908, and Massachusetts adopted credit union
legislation the following year.
Boston department store owner Edward A. Filene was an early
proponent. He took the position that credit unions benefited
employers as well as employees “because instead of having his
workmen harassed by loan agents, the employer gets workmen,
who, if they have to borrow in some emergency, borrow among
the men with whom they are working and who help them get
on their feet and get steady.”
Another early credit union supporter was Massachusetts
governor David I. Walsh, who observed that “credit unions would
be more of a benefit to the masses of people than even the savings
banks and the cooperative societies, for every banking door in
the Commonwealth is barred to the man who wants to borrow $25
without security. That’s the greatest thing about this movement;
it reaches a class the banks cannot reach. It will help all.”

Image courtesy Taber Andrew Bain via Flickr, Creative Commons Attribution

Training
Americans have an abiding belief in the power of education to
serve as a vehicle for upward mobility—a way to transcend the
circumstances of one’s birth.
A sidewalk tile on Boston’s School Street commemorates the 1635
founding of Boston Latin, America’s first public school, and as far
back as 1830 Horace Mann advocated universal public education
funded by local taxes. Today, the biggest expenditure in almost
any municipal budget is funding for education, and parents pay a
premium for certain addresses in order to live in a “good” school
district. That’s how strongly we value education.
Our belief in the value of higher education stretches back at least to
the 1860s when Congress passed the Morrill Act, which helped to
establish more than 70 “land grant colleges,” some of which are now
among the world’s most renowned institutions of higher learning.
And 80 years later, the Servicemen’s Readjustment Act of 1944—
better known as the G.I. Bill of Rights—opened college campuses
to an even broader student population. The G.I. Bill’s generous
education benefits provided returning World War II veterans with
an opportunity to improve their lives through higher education. As a
result, college enrollment increased sharply and campuses expanded to
meet the demand. Few measures, public or private, have done as much
to reinforce the relationship between education and the prospects
for a better life.
Little wonder, then, that so many people—parents, policy experts,
politicians—maintain a strong belief that “in the 21st century, one
of the best antipoverty programs is a world-class education.”14

“Back where I come from, we have universities, seats of great
learning, where men go to become great thinkers. And when they
come out, they think deep thoughts and with no more brains than
you have. But they have one thing you haven’t got: a diploma.”

But what if we’ve moved into a world where some of our old
assumptions no longer hold true? What if, instead of being a
vehicle out of poverty, education has become a gate—a barrier to
upward mobility? What if the inability to purchase credentials
in the education marketplace keeps poor people out of jobs for
which they might otherwise be qualified? What if the inability to
finance higher education, even a two-year certificate program—
now consigns poor people to a lifetime of low-wage service jobs?
Or, even worse, what if they acquire the necessary credentials after
going deeply into debt and still end up in a low-wage service job?

Advice from the Wizard of Oz to Scarecrow

Just asking.
14
Image courtesy Library of Congress, Public Domain

President Barack Obama, State of the Union Address, January 27, 2010.

Images courtesy Library of Congress, Public Domain

Temperance
Attempts to alleviate poverty by encouraging or
coercing men to consume less alcohol—an effort
otherwise known as the temperance movement—gained
momentum in the 1800s shortly after the Industrial
Revolution reached America. The nature of work
was changing rapidly, and as Joel Schwartz notes in
Fighting Poverty with Virtue, “industrialization and the
mechanization of agriculture increased the demand
for workers who were efficient and reliable—in other
words, sober.” And since most of the opportunities for
those workers were in urban areas, people abandoned
the countryside in large numbers.
Lured by city lights and the prospect of earning
steady cash wages, migrants packed themselves into
15 Schwartz, Joel, Fighting Poverty With Virtue, Indiana University Press, 2000.

city neighborhoods that lacked even the most basic
infrastructure to handle such an influx. All too often,
the combination of squalid overcrowding, relative
poverty, and alcohol led to predictable results: Troubling
increases in “wife-beating, family desertion, and
assaults, as well as heightened government expenditures
to support drunkards and their families.”15
Many antipoverty reformers responded by urging
moderation or an outright ban on the sale and
consumption of alcohol. Organizations such as the
Women’s Christian Temperance Union and the AntiSaloon League gained and wielded considerable political
influence during the late 1800s and early 1900s.
In 1917, Congress quickly approved the 18th
Amendment, which prohibited the manufacture,

sale, transport, import, or export of “intoxicating
liquors.” It took just 13 months for three-quarters of the
states to ratify the amendment, and in October 1919
Congress passed the Volstead Act, which created a legal
mechanism for enforcing Prohibition. (An interesting
side note: If the 16th Amendment had not created a
federal income tax in 1913, Prohibition might never
have happened, because taxes on liquor were a primary
source of government revenue.)
Although Prohibition ended in 1933, temperance
continues to have an impact on antipoverty policy,
but the emphasis is now on drugs rather than alcohol.
Provisions of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 gave states the
authority to require drug testing of people who apply

for or receive public assistance benefits. As of early 2014, nine
states had passed legislation regarding drug testing or screening
of public assistance applicants or recipients, and at least 24 states
had proposed similar measures.
Unlike earlier efforts to discourage or ban alcohol
consumption, the antidrug temperance movement of the
late 20th and early 21st century has led to unintended
consequences for people living in or on the edge of poverty.
Chief among these has been a sharp rise in the number of people
imprisoned for drug-related offenses, a trend that has contributed
to the United States having the highest incarceration rate in
the industrialized world.
According to the Sentencing Project, an advocacy group for
sentencing reform, “At the Federal level, prisoners incarcerated
on a drug charge comprise half of the prison population, while
the number of drug offenders in state prisons has increased
thirteen-fold since 1980. Most of these people are not highlevel actors in the drug trade, and most have no prior criminal
record for a violent offense.”
Left unsaid is the impact such policies have on efforts to alleviate
poverty. Every dollar spent on incarceration or enforcement is a
dollar that might otherwise go to improve education, housing,
nutrition, and health care. Every person sent to prison for a
nonviolent drug offense adds one more person to the rolls of exoffenders who will have difficulty finding a job.
Note to readers: For insight into the complexities of confronting
drug use and treating addiction, take a few minutes to listen to
this radio report: Recovering Addict Receives Unexpected Help
produced by National Public Radio affiliate WBUR (Boston).

Image courtesy Library of Congress, Public Domain

Match each quote with a president and
write the letter next to the speaker’s portrait...

Jimmy Carter

D
C

G
E

J
G

“Given a chance to go forward with the
policies of the last eight years, we shall soon,
with the help of God, be in sight of the day
when poverty will be banished from this
nation.”

“In this society, we are conservative
about the values and principles which
we cherish; but we are forward-looking
in protecting those values and principles
and in extending their benefits. We have
rejected the discredited theory that
the fortunes of the Nation should be in
the hands of a privileged few. We have
abandoned the “trickle-down” concept
of national prosperity. Instead, we believe
that our economic system should rest on
a democratic foundation and that wealth
should be created for the benefit of all.

“If a free society cannot help the many who
are poor, it cannot save the few who are rich.”

“A government big enough to give you
everything you want is a government big
enough to take from you everything you have.”

“Economic depression cannot be
cured by legislative action or executive
pronouncement. Economic wounds must
be healed by the action of the cells of
the economic body—the producers and
consumers themselves.”

B

“We can never insure one hundred percent
of the population against one hundred
percent of the hazards and vicissitudes
of life, but we have tried to frame a
law which will give some measure of
protection to the average citizen and to his
family against the loss of a job and against
poverty-ridden old age.“

Bill Clinton

C
J

“Today, we are ending welfare as we know
it, but I hope this day will be remembered
not for what it ended, but for what it began.”

F
“I call my philosophy and approach
compassionate conservatism. It is
compassionate to actively help our
fellow citizens in need. It is conservative
to insist on responsibility and results.
And with this hopeful approach, we will
make a difference in people’s lives.”

A third of a century of centralizing
power and responsibility in Washington
has produced a bureaucratic monstrosity,
cumbersome, unresponsive, ineffective.
A third of a century of social experiment has
left us a legacy of entrenched programs
that have outlived their time or outgrown
their purposes.
A third of a century of unprecedented
growth and change has strained our
institutions, and raised serious questions about
whether they are still adequate to the times.
It is no accident, therefore, that we
find increasing skepticism—and not
only among our young people, but
among citizens everywhere—about the
continuing capacity of government to
master the challenges we face.
Nowhere has the failure of government
been more tragically apparent than in its
efforts to help the poor and especially in
its system of public welfare.”

L
H
“The size of the federal budget is not an
appropriate barometer of social conscience
or charitable concern.”

M
I
“The fact is prosperity has a purpose.
It is to allow us to pursue ’the better
angels,’ to give us time to think and
grow. Prosperity with a purpose means
taking your idealism and making it
concrete by certain acts of goodness.
It means helping a child from an
unhappy home learn how to read—
and I thank my wife Barbara for all
her work in literacy. It means teaching
troubled children through your presence
that there’s such a thing as reliable
love. Some would say it’s soft and
insufficiently tough to care about these
things. But where is it written that we
must act as if we do not care, as if we
are not moved?
Well I am moved. I want a kinder,
gentler nation.”

N
“In the 21st century, one of the best anti-poverty
programs is a world-class education.”

Barack Obama
F- George W Bush

G-John F Kennedy

H-Lyndon B Johnson

I-Richard Nixon

J-Gerald Ford

K-Jimmy Carter

L-Ronald Reagan

M-Geaorge HW Bush

N-Barack Obama

Richard Nixon

George W Bush

“Every gun that is made, every warship
launched, every rocket fired signifies in the
final sense, a theft from those who hunger
and are not fed, those who are cold and
are not clothed. This world in arms is not
spending money alone. It is spending the
sweat of its laborers, the genius of its
scientists, the hopes of its children. This is
not a way of life at all in any true sense.”

“We face an urban crisis, a social crisis—
and at the same time, a crisis of confidence
in the capacity of government to do its job.

E-Dwight D Eisenhower

Lyndon B Johnson

“While far from perfect, this legislation
provides an historic opportunity to end
welfare as we know it and transform our
broken welfare system by promoting the
fundamental values of work, responsibility,
and family.”

E
D

“The measure of a society is found in how they
treat their weakest and most helpless citizens.”

FI

D-Harry Truman

John F Kennedy

George HW Bush

“This social security measure gives at
least some protection to thirty millions of
our citizens who will reap direct benefits
through unemployment compensation,
through old-age pensions and through
increased services for the protection of
children and the prevention of ill health. “

“Unfortunately, many Americans live on
the outskirts of hope—some because of
their poverty, and some because of their
color, and all too many because of both.
Our task is to help replace their despair
with opportunity.”

K
H

C-Bill Clinton

Dwight D Eisenhower

Ronald Reagan

“This administration today, here and now,
declares unconditional war on poverty
in America. I urge this Congress and all
Americans to join with me in that effort.”

B-Franklin D Roosevelt

Harry Truman

The American people have decided that
poverty is just as wasteful and just as
unnecessary as preventable disease. We
have pledged our common resources to help
one another in the hazards and struggles
of individual life. We believe that no unfair
prejudice or artificial distinction should bar any
citizen of the United States of America from an
education, or from good health, or from a job
that he is capable of performing.”

H

A-Herbert Hoover

Franklin D Roosevelt

Gerald Ford

A

Answers:

Herbert Hoover

Presidents on Poverty

Americans have never completely agreed on the most effective way to
combat poverty, and our level of engagement has varied with the times.
Need examples? Here are a few excerpts from presidential speeches on
poverty. Your task: Match the excerpt with the appropriate president.

Measuring Poverty: Who is poor?
Before the 1800s —back before government, nonprofit
foundations, and think tanks began to involve
themselves in large-scale antipoverty initiatives —
there was little interest in measuring poverty, mainly
because there was no real need for measurement. For
most of human history religious organizations, local
politicians, and the landed gentry dispensed small
amounts of largesse to those who were lucky enough to
gain favor or notice.
Even the charitable efforts of 19th century antipoverty
reformers were smaller-scale local operations that
mostly provided meals, clothing, and other forms of aid

directly to needy people in a defined area. Donors to
those charities rarely required more than a rough tally
of meals served or people helped.
In 1869 Massachusetts established the first labor
statistics bureau with a goal of using government
statistics to help improve the lives of working class
families. And in 1900, the English chocolatier and social
researcher Benjamin Seebohm Rowntree published
Poverty: A Study in Town Life, based on statistical
research he had undertaken in York. But for the most
part, efforts to define and measure poverty did not
gain momentum until the 1930s, when the federal

By 1963, Orshansky was working for the Social
Security Administration – the agency that oversees
many social safety net programs – and was assigned
to report on “poverty as it affects children.” But her
team had no good measure of what constituted poverty
– so Orshansky decided to develop her own.
She used a 1955 Department of Agriculture report
which found that families of three or more spent about
one third of their after-tax income on food. So, to
calculate a poverty line Orshansky decided to multiply a
low-income household’s food budget by three, figuring
that if a family was tightening its belt, it would cut all
expenses by about the same amount, proportionately.
For the food budget itself, Orshansky used the
Department of Agriculture’s “economy food plan.”
It was the cheapest of four plans developed by the
Department of Agriculture, and was designed to
reflect what a family living for a short period of time on
a severely constrained budget might need to get by.
In 1962, it allotted $18.60 a week for a family of four
with two school-aged children—or $143.47 in today’s
Image courtesy Library of Congress, Public Domain

government engaged in large-scale relief efforts aimed at
easing the effects of the Great Depression, and then later
in the 1960s, when President Lyndon Johnson declared
war on poverty.

You Know You’re Poor If …
Some call it the “poverty line,” others refer to it as the
“poverty threshold.” In either case, there is general
agreement that Mollie Orshansky, a statistician at the
Social Security Administration, developed the federal
government’s first widely used measure of poverty.
This is how it happened:

dollars. It was even less costly than two other “low
cost” plans the department had developed, and, as a
1962 report explained, “relie[d] heavily on the cereals,
dry beans, peas, and nuts and potato groups, and
on the selection of the less expensive items in each
of the 11 food groups.” It was only for “emergency
use,” and not intended to constitute a family’s diet
over the long-term. In a 1965 article, Orshansky said her
threshold, dependent on this budget, should be used
to measure when a family had “inadequate” funds, not
adequate funds.
Her new standard came at a fortuitous time.
The Johnson administration had declared a “war
on poverty,” and public agencies needed a way to
measure the extent of the problem. In 1965, the
Office of Economic Opportunity adopted Orshansky’s
thresholds as their poverty cut-off, and in 1969,
her thresholds were made the government’s official
definition of poverty.
Excerpt from: http://billmoyers.com/2013/09/18/why-is-thefederal-poverty-line-so-low/

Aside from updates for inflation, the federal poverty
threshold has changed little since the 1960s, and that has
been a point of contention. The most frequent criticism
is that the federal poverty threshold counts only cash
income and does not take into account programs intended
to counter the effects of poverty programs such as the
Supplemental Nutrition Assistance Program (SNAP) or the
Earned Income Tax Credit.
Even Orshansky herself had reservations. “The best that
can be said about the measure,” she once wrote, “is that
at a time when it seemed useful, it was there.”16
In addition to the federal poverty threshold, there
are federal poverty guidelines. The Federal Poverty
Guidelines (Federal Poverty Levels, FPL) are the official
measure of the minimum income needed to meet the
basic needs of individuals and families. The amounts
are often used to set eligibility and benefits for public
programs. But numerous studies have documented
that the FPL is an outdated and inaccurate reflection
of the actual incomes families need. It is also a poor
metric to identify the economic needs of custodial
grandparents.17 A detailed explanation of the difference
between the threshold and guidelines is available here.

The Poverty Rate and the Supplemental Poverty Measure,
New England and the U.S., 2012
Poverty Rate, 2012
16

Poverty Rate

16

Supplemental Poverty Measure

15.1
13.7

14

12.6

13.8

13.1

12

11.2

13.6
11.3

11.1
10.2

10

10.1

7.6

8

6

4

2

United States

Connecticut

Maine

Massachusetts

New Hampshire

Rhode Island

Vermont

Source: Federal Reserve Bank of Boston, based on U.S. Census Bureau data.

concise summaries of the complexities involved … and
they spare us the danger of navigating those particular
political and ideological shoals:

How the Census Bureau Measures Poverty
U.S. Census Bureau
https://www.census.gov/hhes/www/poverty/about/overview/
measure.html

The Supplemental Poverty Measure (SPM) was developed
to address FPL shortcomings, but being based on current
spending, it doesn’t necessarily measure actual need. It
includes people who spend only $100 on food per
month, but that amount may represent food insecurity.
A better way to measure economic security is to capture
the actual costs associated with basic needs, such as
shelter, food, health care, and transportation.18

How is poverty measured in the United States?

Despite acknowledged shortcomings, proposals to
change the federal poverty threshold and other
federal poverty measures have run up against political
pushback and disagreements over how to define
poverty. The following online resources provide clear,

Measuring Poverty in the United States

Institute for Research on Poverty, University of
Wisconsin-Madison

What’s the Best Way to Measure Poverty: Income
or Consumption?
Matthew Philips, Freakonomics blog
http://freakonomics.com/2011/09/14/whats-the-best-way-tomeasure-poverty-income-or-consumption/

The Mismeasure of Poverty
Sheldon H. Danziger, The New York Times, September
17, 2013
http://www.nytimes.com/2013/09/18/opinion/the-mismeasureof-poverty.html

http://www.irp.wisc.edu/faqs/faq2.htm

Why is the federal poverty line so far off?
John Light, Moyers & Company

Communities & Banking

http://billmoyers.com/2013/09/18/why-is-the-federal-povertyline-so-low/

A quarterly magazine from the
Federal Reserve Bank of Boston,
Communities & Banking offers
insightful articles on a variety
of topics that affect the lives and
fortunes of low- and moderateincome people.

Nancy K. Cauthen and Sarah Fass, National Center for
Children in Poverty, Columbia University
http://www.nccp.org/publications/pub_825.html

16 “Mollie Orshansky, Statistician, Dies at 91,” The New York Times, April 17, 2007.
17 Measuring Poverty: A New Approach, C. Citro and R. Michaels, eds. (Washington, DC: National Academies Press, 1995); and D.I. Padilla-Frausto and S.P. Wallace,
“The Federal Poverty Level Does Not Meet the Data Needs of the California Legislature” (policy brief, UCLA Center for Health Policy Research, Los Angeles, 2012),
18 U.S. Census Supplemental Poverty Measure, http://www.census.gov/hhes/povmeas/

13.8

Documenting Poverty
There are also a variety of alternative measures that seek to
evaluate well-being rather than trying to define poverty:
The Genuine Progress Indicator (GPI) focuses on “the
quality of life we create not only for ourselves but for
everyone with whom we share the planet” by measuring
factors such as crime and family breakdown, household and
volunteer work, income distribution, and pollution.
The Human Development Index (HDI) offers a global
perspective on the question of how well people are living.
Devised by the United Nations in the 1990s, the HDI is a
composite of three different indicators: (1) life expectancy at
birth, (2) education as measured by a combination of school
enrollment and adult literacy, and (3) standard of living as
measured by a variation on GDP per capita that adjusts for
price differences between countries (purchasing power
parity in U.S. dollars).
Index of Social Health is “a broad-based gauge of the
social well-being of the nation, similar in concept to
the Dow Jones Average or the Gross Domestic Product.”
Published annually since 1987, the index uses government
data for 16 social indicators to create profiles and rankings
for all 50 states. In 2008, Minnesota ranked number one
with a score of 75 out of 100, and New Mexico finished at
the bottom with a score of 26.8.
The Elder Economic Security Standard Index is an
evidence-based measure of economic security that reflects
the current actual cost of basic needs at the county level
for retired adults age 65 and over, who receive no public
assistance. The index was developed by Wider Opportunities
for Women and the University of Massachusetts, Boston,
Gerontology Institute to address the failings of the FPL for
older adults. The UCLA Center for Health Policy Research and
the Insight Center for Community Economic Development
adapted the index and calculated it for California. As of
September 2011, California law requires Area Agencies on
Aging to use the index for program and planning purposes.

Collecting data is an important tool in the overall effort to
understand and alleviate poverty, but as columnist Mark
Shields likes to say, “Numbers don’t bleed.” Maybe that is why
some of the most effective vehicles for raising awareness of
poverty and sparking action to address it have combined
compelling narrative with powerful visuals. Here are five:
Image by Jacob Riis, courtesy Library of Congress, Public Domain

How the Other Half Lives, Jacob Riis, 1890
More than a century before anyone expressed concern for
the 99 percent, Jacob Riis created an eye-opening account of
“how the other half lives.” Riis used the skills he had acquired
working as a police reporter, combined with the relatively
new technology of flash photography, to create a late 19th
century account of life in the squalid slums of New York.
Photographs of the Un-rich and the Un-famous: Lewis Hine
Lewis Hine (1874-1940) photographed people whose lives
were a constant struggle to make ends meet: children who
spent 12-hour days inside factory walls, newsies who lived
on the streets and survived by their wits, immigrants
who tried their best to make sense of a strange new land,
and hundreds or even thousands of men and women who
worked long hours for short money. Hine’s images truly
are haunting; once you see them, they stay with you for
life. (See also: http://digitalgallery.nypl.org/nypldigital/explore/
dgexplore.cfm?col_id=175.)

Let Us Now Praise Famous Men,
James Agee and Walker Evans, 1941
James Agee was the writer, Walker Evans the photographer.
Fortune magazine brought them together in 1936 for
an eight-week assignment to document the lives of
sharecropping families in rural Alabama. Their work
formed the basis for Let Us Now Praise Famous Men
published in 1941. To read Agee’s prose and look upon
Evans’s images is to gain an inkling of what it must
mean to face each day with little hope and even less money.

CBS News Harvest of Shame, 1960
Back before they decided that “reality” meant putting various
groups of narcissistic adults in front of a TV camera, the
networks did some pretty good reporting on issues related
to poverty. Harvest of Shame was one of the standouts. The
55-minute CBS News documentary focused on the plight of
migrant workers, who, in the words of CBS correspondent
Edward R. Murrow, were “the forgotten people; the undereducated; the under-fed.”
The program aired on the day after Thanksgiving 1960,
in an effort “to shock the consciousness of the nation.”
Hard to imagine that would happen today. (See also: http://
billmoyers.com/2013/07/19/watch-edward-r-murrows-harvest-ofshame/ and http://www.cbsnews.com/news/harvest-of-shame-50years-later.)
Paycheck to Paycheck, HBO, 2014
If you are thinking that all the good reporting on
poverty took place back in some golden age that never
was, you should set aside an hour of your life to watch
Paycheck to Paycheck: The Life and Times of Katrina Gilbert.
Produced in association with The Shriver Report: A
Woman’s Nation Pushes Back from the Brink, it follows
a “single Tennessee mom through her day-to-day life, as
she works full time as a certified nurse’s assistant but
has to choose between paying for her medication and
finalizing her divorce.” And if you can’t watch the show,
here’s an alternative suggestion: Try spending a week or
two living on $9.49 an hour.

Issues … But No Answers
Broad questions kept popping up while I was working on this issue of The Ledger.
They didn’t come from any particular philosophical, political, or ideological
direction. They just kept circling back into my head during walks home from the
train station at the end of each day.
Are they the major questions regarding poverty? Maybe not. Do they have
answers? None that I could come up with. Which is why I’m hoping you will
share your thoughts.
robert.jabaily@bos.frb.org

Question One:

Question Two:

Question Three:

How effective can antipoverty initiatives be
in an economy characterized by insecurity in
the labor market and wage stagnation?

Are degrees the new bootstraps?

Do large multinationals, many of which
started as American companies, still care
if there is a strong American middle class?
If not, what are the implications for low-income
Americans who aspire to middle class status?

Shipping jobs offshore in large numbers created a
labor surplus, and technology added to that surplus,
especially in the types of jobs that once offered
low-income people an entryway into the middle
class. On top of that, the balance between labor and
management has skewed so far in management’s
favor that many workers just keep their heads down
and try to cope as best they can because they know
there’s a large pool of job-seekers—both here and in
other countries—willing to take their place. Given
all that, what hope is there that antipoverty measures
can do anything more than provide temporary, shortterm relief?

Most of the people who make public policy are welleducated holders of many degrees. Education has
been their path to success, so maybe it’s only natural
that they should believe so strongly in the power of
education, particularly higher education, to have a
similar effect on others.
But what if we’ve moved into a world where some of
our old assumptions no longer hold true? What if,
instead of being a vehicle out of poverty, education
has become a gate—a barrier to upward mobility?
What if the inability to purchase credentials in the
education marketplace keeps poor people out of jobs
for which they might otherwise be qualified? What if
the inability to finance higher education, even a twoyear certificate program—now consigns poor people
to a lifetime of low-wage service jobs? Or, even worse,
what if they acquire the necessary credentials after
going deeply into debt and still end up in low-wage
service jobs?
Follow-up Question: Some policy experts say there
is a mismatch between the available jobs and the
skill level of potential employees. But even if that’s
true, how long will it be before many of those jobs
are performed by machines or lower-wage workers in
other countries?

In 1914, Henry Ford introduced a plan to pay
autoworkers $5 a day, nearly double the rate that
most had been earning. His rationale was that higher
wages would reduce turnover, increase productivity,
and put workers in a better position to buy a Ford car.
But in the current American economy, higher
productivity has not led to higher wages. In fact
wages for U.S. production workers have been fairly
stagnant for the past 30 or 40 years. And large
multinationals have focused increasingly on the
rapidly growing number of middle class consumers
in developing countries. It’s enough to make one
wonder if companies still care as much about the
buying power of American consumers. And if they
don’t, what does that mean for low-income Americans
who aspire to become middle class … or for moderateincome Americans struggling to remain middle class?