The poverty level in the United States has not changed significantly in quite a long time. The poverty rate of 12.3 percent in 2006 differs little from 1996's rate of 13.7 percent or 1986's rate of 13.6 percent and is identical to 1975's rate. Poverty is consistently ranked as less important than many other issues, and only 6 percent of respondents in polls place poverty in their top two national issues.

What is the Poverty Rate?

The poverty rate is based on official federal income thresholds that vary according to family size and composition (children and adults). Every member of a family is considered poor if the family’s annual income – counting cash transfers such as Temporary Assistance to Needy Families (TANF) and Social Security benefits but excluding in-kind transfers and the earned income tax credit (EITC) – falls below the appropriate threshold.

Who is Most Affected by Poverty?

The incidence of poverty steadily declines with age; those younger than 25 are over-represented in poverty, while those older than 25 are under-represented. Whites are under-represented in poverty in Illinois, while blacks are grossly over-represented. African-Americans comprise only 12 percent of the non-poor Illinois population but more than one-third of the poor, while whites make up 65 percent of the Illinois population as a whole and only 40 percent of the poor.   Hispanics are also substantially over-represented in the poverty population.

Child poverty is a special concern, both because those under 18 comprise 35 percent of all poor individuals and because children may be particularly vulnerable to any adverse effects of poverty on lifetime potential. While there are more white children in poverty in Illinois, white children’s poverty is proportionate to their representation in Illinois’ population, while black children’s poverty is grossly disproportionate to their presence in the population as a whole.

Poverty in Illinois

There are two distinct landscapes of poverty in Illinois; highly urbanized areas and sparsely populated and/or depopulating areas. Densely populated counties such as Cook and Peoria have high poverty rates. In other areas in Illinois, it appears that those unable to flee an eroding regional economic base remain behind in poverty. Counties such as Vermilion, McDonough and Macon, for example, are experiencing population declines and high rates of poverty.

Poverty is a counter-cyclical phenomenon (i.e., robust economic growth tends to reduce poverty rates), and this generates year-to-year variation in the poverty rate as the overall strength of the economy waxes and wanes. In most years, Illinois tends to have a lower poverty rate than the entire United States but a high poverty rate for the region.

Long-Term Solutions to Poverty

Rigorous research from long-range longitudinal studies finds a very high degree of intergenerational correlation of both income and earnings. This high degree of immobility between economic classes in U.S. society, in fact, helps to explain the intransigency of poverty rates over lengthy periods. Given this reality, long-run solutions to the poverty problem must directly attack this link between generations and break it down for those at the low end of the income/earnings spectrum. Policies to maximize long-run human capital formation by focusing on the early years of life offer the most promise for reducing poverty in future generations.

            Education

It is well documented that poverty can be avoided through education. The extensive economic literature on the returns to education indicates that an additional year of schooling in the U.S. has a real financial return (in earnings) of 8-10 percent per year. While Illinois has an above-average share of citizens with at least a Bachelor’s degree (second in the region only to Minnesota), it also has a fairly high share of individuals without a high school diploma (within the region, only Indiana’s ‘dropout’ rate is higher).

            Short vs. Long Term Solutions

There are two broad types of anti-poverty policies that have either immediate or long-run impacts. Immediate relief in the form of assistance explicitly targeted to the poor is quite limited in scope and scale, as evidenced by the relatively few individuals lifted from poverty by these programs. Immediate relief from the social insurance (i.e., non-welfare) programs, on the other hand, has been extremely effective, but only for the very narrow groups (chiefly the elderly but also the disabled) who do not bear the stigma associated with the working-age poor and their children.

Long-run policies are aimed at poverty prevention. Both policies to increase education and preserve and enhance health are promising, as education and health are strongly linked to earnings. In both cases, however, the empirical evidence increasingly suggests that it is essential to intervene at very young ages in order to have a discernable impact. Implementing such policies requires a long-term and steady commitment to poverty reduction that focuses realistically on the conditions facing children born into low-resource families.