Chelsea Follett: Joining me on the podcast today is Kevin Corinth, a senior fellow, the Daniel C. Searle Chair and the deputy director of the Center on Opportunity and Social Mobility at the American Enterprise Institute, where he researches economic mobility, poverty, safety net programs, homelessness, social capital and other issues. Previously, he was also staff director of the Joint Economic Committee in Congress and chief economist in the White House’s Council of Economic Advisers. And he is also co-author, along with Richard V. Burkhauser, of a fascinating recent paper that examines the history of the so-called war on poverty titled ‘Poverty and Dependency in the United States, 1939 to 2023,’ which we’ll be talking about today. How are you, Kevin?
Kevin Corinth: I’m very good. Thank you so much for having me on.
Chelsea Follett: Thank you for speaking with me. So, let’s dive in. You’ve spent decades studying poverty and economic mobility and these related issues. What motivated you to revisit nearly a century of American poverty trends from 1939 to 2023?
Kevin Corinth: Because history matters. I mean, we have a lot of evidence on sort of what’s been happening in terms of economic progress, in terms of the real lives of people, whether they’re better off or not, over the past 50 years or so. But sometimes we lose the historical context of what was happening before that. And that’s especially important in the context of poverty in the United States. I mean, I think everybody’s heard of… Not everybody, but many people have heard of the war on poverty that President Lyndon Johnson declared in 1964, saying that we want to really end the scourge of poverty in the United States. And the good thing is that I think people are starting to come around to the idea that we actually have reduced poverty since 1964, which, I mean, is both good and it should be unsurprising. I mean, after over six decades, I would be very disappointed if we had not seen substantial improvements in material well-being. And that’s something that I’m very happy about because sometimes the left wants to say everybody is not well off, we need lots and lots more resources to make sure that people are actually seeing some improvements. Sometimes the right doesn’t want to give some credit to the safety net that maybe some of these programs do help people who are struggling at the bottom.
Kevin Corinth: And so I’m very happy with the idea that people are starting to come around to this fact that poverty has fallen substantially since 1964. And my co-author on the paper that you mentioned, Rich Burkhauser, and I, we did a paper a few years ago showing exactly that. So since President Johnson declared his war on poverty, we’ve seen a dramatic decline in poverty in the US from his 20% baseline to less than 2% today. And that’s not to say that nobody’s struggling today, but based on that 1963 baseline, you just increase the poverty line with inflation, you count all the resources people get, poverty has fallen a lot. So what motivated us to go back even further is to say, okay, well, we did see this dramatic reduction in poverty since we had this Great Society, all these programs, including Medicaid and the food stamp program, refundable tax credits. We have seen progress in that context. But we wanted to ask what happened before that? Were we seeing declines in poverty before we had a large and expanding safety net? And this has been a contentious issue for a while. I think some people maybe don’t want to touch it too much in part because if we were seeing poverty falling before the war on poverty was declared, maybe that suggests that we can see poverty reduction even if we don’t have a growing safety net, as long as we do have economic growth, which was the characteristics of that period. So, anyways, I think the motivation was really filling in that historical context, filling in that hole of what was happening before the war on poverty was declared and we had this great expansion of the social safety net.
Chelsea Follett: And we will get to all of that. But before we get into the findings, which are fascinating, why should people care about how we measure poverty? Could you say something about how different definitions can lead to some very different conclusions about whether or not the public policy intervention has done anything, whether or not poverty has actually gone down or not?
Kevin Corinth: Yeah, I think there’s two main… At least two main reasons. One of them is just we want people to have accurate information. I think that’s actually the most important. And then a second reason is we want to be able to measure the effects of programs. But more and more, I think that first reason is the most important. For probably lots of reasons, I think there’s growing pessimism among much of the American public, maybe the global public, for that matter, about how much living standards have actually improved over time. And in some ways, you can call that an academic debate. There’s things like how you measure inflation and how you measure income, the sharing units about people who share resources. But this idea that maybe living standards have not improved over time, I think is motivating a lot of the political turns that we’re seeing today, movement towards socialism, away from faith in sort of free transactions and free markets that has been a way to lift people up in the past, both people at the bottom and the top and the middle. And if we lose just accurate understandings of how much free markets have lifted people up over the past decades, if not centuries, I don’t know about probably before then too, I don’t know much about several centuries ago, but if we lose touch and lose our understanding of what we’ve gained with our sort of imperfect capitalist system, I think that can have very deleterious effects on policy today because then people start to think, “Well, if our current system isn’t giving us higher living standards, then maybe we want to try something different.” And I worry that a lot of times that leads towards sort of the socialist tendencies that we’re seeing today.
Kevin Corinth: And so I think it’s extremely important that people have an understanding of just the progress that has been made under our imperfect but existing system. And so poverty, of course, is one measure of well-being. There’s others. You can look at median income, you can look at… Some people like to focus on income inequality, some people look at consumption trends. But I think poverty is among the most important sort of… A lot of people would say that the way that you judge a society is based on how you treat its most vulnerable members. And I ascribe to that. I mean, if I didn’t think that we had seen substantial improvements in living standards over time, I would be very angry and I would be looking for different ways. And I still do look for ways to improve things even further, but I would be more focused on ways to change the system. So I think it’s extremely important how we measure well-being and how we measure poverty. The good thing about measuring poverty, you measure it almost the same exact way that you measure incomes and trends in median income over time. The only difference with a poverty measure, of course, is that you have to pick a poverty line because poverty is the number of people with income below some set threshold. A lot of the debate on poverty comes where to draw that line.
Kevin Corinth: And there’s a lot of research and just public discussion and debate about how to draw this line. And that’s fine. There should be a lot of public discussion about it. What drives me sort of crazy is that some people think of this as a scientific decision. It’s really not. I mean, where you draw the poverty line is a value judgment. It’s scientifically arbitrary. It’s not arbitrary in terms of our values; our values should determine where that line should be. But scientifically, it’s arbitrary. And to me, what you should do is, someone, you tell me what poverty line that you want. Sort of as an economist, social scientist, I don’t get to decide that. But someone else, you tell me where you want me to draw that poverty line and then let’s just update it with inflation each year to see what our progress has been. I mean, there are other measures of poverty, like a relative poverty measure where you say, “Okay, let’s take the median person, what’s their income, and then set the poverty line at half of that.” And that’s what countries in Europe, the European Union typically does. Some people want that for the U.S., which is fine as an alternative measure. It doesn’t measure material deprivation; it just measures how well people are doing off relative to those in the middle. Again, it’s a relative poverty measure.
Kevin Corinth: So that’s fine to look at as well, as long as we’re transparent about what we’re looking at. But for me, in terms of measuring the progress of society, I just want to know, are people at the bottom, are they doing better off today than they were a year ago, 10 years ago, 50 years ago, maybe 80 years ago? And I want them to be doing not just a little bit better, especially at those longer periods, but a lot better. And so how you measure poverty affects those conclusions a lot. This has been something that Rich Burkhauser and I and others have been looking at for a while. Decisions about what resources you include matter a lot. So the official poverty measure, which pretty much nobody likes, is not measuring poverty well. When it actually… It tries to be an absolute measure in that it increases the poverty line with inflation, but it uses an inflation measure that overstates how much prices go up each year. It doesn’t include in-kind transfers like the food stamp or SNAP program, which is our largest non-medical transfer today. It doesn’t include Medicaid for that matter. It doesn’t include refundable tax credits. It doesn’t adjust for taxes at all.
Kevin Corinth: So there are a lot of ways in which the official poverty measure falls short. And actually, based on the official poverty measure, we’ve seen essentially no decline in poverty over the past 50 years because of these problems. And so whereas… You know, when Rich Burkhauser and I are looking at it, we’re finding 90% reductions. So you can see just how much these decisions matter. How you adjust the threshold and which resources you include matter a lot. Fortunately, almost everyone recognizes the official poverty measure doesn’t make a lot of sense. Researchers from all stripes of political persuasions and different backgrounds, almost everybody. I guess there might be an exception or two, but people recognize that, and people pretty much recognize that we’ve seen declines. But this just shows you how much it matters for measuring poverty in terms of getting the right answer. And of course, getting the right answer matters a lot for people’s views of how society is doing, which matters a lot for what policies we end up adopting.
Chelsea Follett: So among those who do recognize that poverty has come down in the United States, many assume that it has fallen because of the War on Poverty or primarily because of government redistribution. But your paper tells a much more nuanced story. Your central finding is actually that poverty fell very dramatically before the War on Poverty even began. And you have this striking chart in the paper suggesting that the rate of poverty reduction actually slowed down after the launch of the War on Poverty. Could you tell me a little bit about that result and why do you think that people might be surprised by it?
Kevin Corinth: Yeah, I think you described that exactly right, that we do add a lot more nuance to this story about whether it’s government transfers lifting people out of poverty. And I would say nuance is the right word because there’s some things that we can’t do with this paper. I mean, we’re not looking at sort of the causal effect of redistribution of the social safety net on poverty. Right? We don’t have an experiment here. We didn’t say, “Here’s one United States, give them the War on Poverty. Here’s another version of the United States, don’t give them the War on Poverty and see what happens.” That’s the nature of what you would need to do to understand whether or not these transfer programs have actually caused the reduction in poverty. Of course, that’s impossible, but there’s… In some settings, when you look at specific programs, there might be ways that you could do that. And that has been done for looking at when you rolled out SNAP in the ’60s and ’70s, or food stamps in the ’60s and ’70s. It went to some counties before other counties. You can kind of see how things change in one county versus another. And people have done that type of research, and you typically find that there’s reductions in earnings and work, but also sometimes that there’s increases in total income.
Kevin Corinth: The problem is with all these types of studies that sort of have this kind of experimental type feeling to them is that you just cannot do that when you’re looking at such a massive change in society. It’s not that we’re changing one program for some people; it’s that we’re having a completely new contract with our country in terms of a broad social safety net. We quickly had Medicaid and Medicare coming online, a dramatic expansion of food stamps, a lot more Head Start, so investments in kids and spending on kids, however you want to look at that paradigm. You have later on these refundable tax credits like the EITC, Earned Income Tax Credit, which were expanded. So you really just cannot parse out these different effects. There’s sort of this whole societal change that happened that had to do with the program expansions, changes in expectations about whether families had to go it alone or whether there would be government help. There’s differences in knowledge and sort of culture that come along with it. And so I think we’d argue that it’s just not possible for someone to estimate the causal effect of the War on Poverty. That said, we sort of have N equals one, or one observation right now. We know before our paper came along, I would say we had what happened in the United States from the War on Poverty’s beginning until today.
Kevin Corinth: And if you look just at that, you see that poverty has declined a lot, which is great. A lot of people quickly want to say, “Okay, well, poverty has fallen a lot since 1963 or 1964. That must mean that what we were doing, the great expansion of the safety net, is the cause of that.” I think we strongly want to push back against that assertion. And one is just like, okay, of course you could say that it’s fallen, but we don’t know the reason. But what I think we do in this paper is we provide even more evidence than that. We provide this historical context saying, well, not only is it possible that poverty was falling in the absence of the social safety net, but actually it did fall in the absence of the social safety net, in fact, in the 25 or 24-year period before it began. And so we do find dramatic declines in poverty. You sort of start things out at the same baseline. 1939 is the first year, the earliest year that we can go back to, which is far further back than people have gone to before. If you wanted to, we could get into all the technical things that we’ve done using the decennial census, these data that the Census Bureau collects every 10 years. A lot of information needs to be processed and imputed and improved, and there’s some assumptions that need to be made. But anyways, we create this income measure going back to 1939, and that’s our first year because that’s the first year that the census actually asked people about their incomes.
Kevin Corinth: And so what we find is that if you take 1939 as your baseline, you’re finding actually even slightly larger decreases in poverty from 1939 until 1963, that 24-year period, compared to the 24-year period from 1963 until… What is it? 1980 something. I can’t remember. 24 years plus 1960 so 1987. So anyways, we find greater reductions in poverty beforehand than afterward. And what I think we conclude is that it’s actually possible to reduce poverty without a social safety net. Of course, the economy was very different back then, right? We were coming out of a Great Depression, we had the post-World War II boom. Economic growth was much faster before 1963 than afterward. And so something was different. But I think what I would say is that, okay, well, if we can have really strong economic growth, we can have really vast improvements in poverty. And what we can do is we can do so without increases in dependency and growth in spending on safety net programs. So it is possible to have that. It’s not a foregone conclusion.
Chelsea Follett: And that brings us to something I wanted to ask you about, which is the distinction between poverty and dependency, because in the paper you do distinguish between poverty reduction through government transfers and poverty reduction through rising earnings. So tell me, why is that important, that distinction between poverty and dependency? And why should policymakers pay attention to dependency alongside poverty?
Kevin Corinth: Yeah, it’s interesting. Actually, that’s the exact way that President Lyndon Johnson thought about it. I mean, he wanted to reduce… So he declared the War on Poverty in 1964 and he really wanted to reduce poverty, but he cared a lot about the way in which we did it, right? Because there are the two ways that you just mentioned. You can either reduce poverty by more redistribution, providing more resources towards people at the bottom. And that can help mechanically, right? If you provide more resources, that can help their incomes rise above the poverty threshold. There may be some behavioral effects, that maybe they work less, reductions in marriage, which could countervail some of those effects. But in general, one way to reduce poverty is to increase redistribution. The other way, which is the one that President Johnson wanted, was by increasing people’s earnings, right? So if you create more market income. And so if you have people who are more likely to work, participating in the labor force, or having higher wages, whether that’s through better training or through better schooling, whatever it may be, greater, more competition, less regulation, things that drive up wages. I don’t know if he was as focused on some of those things, but there are a lot of ways to increase people’s market income and earnings through their work, which can also increase their income above those poverty lines. And President Johnson explicitly stated that he wanted to not… I think by his words, not get people more on the government dole, but being able to earn their way out of poverty. And so that’s what he wanted.
Kevin Corinth: I think he was right to focus on that. I actually think a social safety net, for all of… Some of the negative consequences, is a good thing, and I’m sure President Johnson thought it’s a good thing too. But I would much prefer that people were able to exit poverty as a result of increases in their market income and their own earnings. And I think for a couple reasons… I think most people honestly share this view regardless of their political perspective. I think most people share it. But a couple of reasons why I would personally prefer that it came through market income is one that… I mean, just at a sort of a personal level, I think people get more pride and sort of satisfaction out of being able to overcome poverty through their efforts. And so when you work hard and you see that through your wages and that that’s what’s lifting you out of poverty, I think that that’s probably better psychologically for people than getting this resource from the government. I think there’s always a fear too, just sort of, again at an individual level, that we’ve had expansions of social safety net programs. Typically we don’t see much reduction, but in theory that could happen, right? And so lack of reliance on this external system, I think, is good for individuals to the extent that they are able to increase their market incomes.
Kevin Corinth: And then third, I think we can’t not say this, especially in today’s context where we have spiraling federal debt, is that there’s some point at which we cannot continue to afford continued expansions of these programs. And we’re just never going to have enough to transfer enough to people that they feel comfortable just on the basis of government transfers. So if we want to see people not just get a little bit above the poverty line, but to flourish and become part of the middle class and rise up the economic ladder, that’s going to require more than just government transfers. Not that that can’t supplement, and it certainly does. We have lots of ways in which government transfers supplement earnings. But I think if you’re seeing most of the income gains and reductions in poverty coming from market income, that that’s a more reliable and stronger way for people to get out of poverty and into the middle class. And it can do it with less federal and state spending. And I guess the other thing I should mention is it can come without some of the negative behavioral consequences.
Kevin Corinth: So whenever you redistribute resources to people with lower incomes, these programs are all means-tested, right? That automatically is going to create a penalty, an implicit tax on increasing your own earnings. Because if you increase your own earnings, that means you’re going to have… You’re going to reduce the amount of transfers that you receive. And those penalties can be… It depends on where you’re at, but they can be severe, and that can reduce people’s work and maybe their marriage possibilities or desire. And that can, again, stop people from moving up the economic ladder. So those are all reasons why, at least for me and I think a lot of people, that it’s typically better, if possible, to reduce poverty through increases in market income as opposed to more redistribution.
Chelsea Follett: I think that’s accurate. And again, your paper notes and you mentioned earlier in this podcast as well that there are limits to what the paper can tell us. It cannot tell us what the world would have looked like without the War on Poverty. But I am curious, just in your view, how much of the post-1960s slowdown in market income growth among lower-income households do you think may be connected to some of those changing incentives from welfare policy itself? And the United States today spends well over a trillion dollars on means-tested assistance. So looking at your historical evidence, what should taxpayers expect from that kind of spending? And how does your work inform the debates that we’re having today about programs like Medicaid and SNAP and housing assistance?
Kevin Corinth: Yeah, I think that’s kind of the million-dollar question, or many-trillion-dollar question maybe at that point. But to what extent is it really these… Did these programs and the expansion of the social safety net in the Great Society, is that a potential, one of the causes of the slowdown that we’ve seen in terms of economic growth? And I don’t think that’s the whole story. I think there’s a lot of reasons why we’ve seen declining economic growth, but I think it is probably a reason that we’ve seen diminished growth. Of course, when you have more redistribution, there’s a few reasons why that can slow growth. One of them is what we’ve talked about in terms of decreasing incentives for people to work or work more and higher wages, invest in their human capital, get married, and have all the benefits of those things, which can potentially slow economic growth. Of course, it also requires a lot of taxes to fund these programs. And that’s probably even, maybe even a bigger factor in terms of a way in which a bigger… More redistribution can slow growth. So when you have a Medicaid program that’s, what, $800 billion, and SNAP that’s over $100 billion or around there, over like $1.3 trillion is just social safety net, forget about Social Security and Medicare and disability insurance, just those social safety net programs at over a trillion dollars, it requires a lot of tax revenue to fund that. And taxes, well, either you can tax people today or you can borrow. If you tax people today, which we do some of that, a lot of that, that does reduce their incentives to earn more. We have very high effective marginal tax rates not only at the bottom, but also at the top and some at the middle a little bit too, right? So those are disincentives towards working and investing. And that can slow growth.
Kevin Corinth: Of course, a lot of times today we not only tax people, but we also borrow money. And the more we borrow, that means more taxes in the future. It means higher interest payments on our existing debt. And that also slows growth because that can drive up interest rates and we can get less investment, which is a spurring, which can drive wages and more growth. So no matter how you cut it, you definitely, by having a big safety net, not that we shouldn’t have a safety net, but through a growing safety net, that is a factor in reducing, mitigating economic growth and can offset some of the gains that you get directly from reducing poverty from these programs. But also if we have less growth, as we’ve seen in historical periods like what we show, then we maybe have reduced reductions in market income poverty. So, I don’t know, that’s the way I would put it. I don’t think we know at the end of the day. We don’t have that experiment of one version of the United States with these programs, one without, and we can’t compare. I think it’s a factor. I don’t think it’s the only factor. It’s probably not the biggest factor, but I think it’s an important one.
Chelsea Follett: And I think that just that fact again, that poverty was actually falling faster before the War on Poverty began would be very surprising to a lot of people, whatever conclusions you draw from it. So many people today are arguing that unconditional cash transfers are the future of social policy. People are talking about universal basic income in the age of AI. Some politicians, like Zohran Mamdani, argue that rising affordability problems call for a much larger government role in redistribution. And it’s not just on the left. You see some thinkers on the New Right claiming that economic growth is overrated and fails to improve quality of life in some very significant ways. Based on your research, what does the historical evidence suggest about the relative importance of economic growth versus expanding transfers in reducing poverty over time? And what lessons do you think this research holds for these current debates?
Kevin Corinth: Yeah, in terms of my perspective, and I think one that I think is right, growth in market income is a more likely and more robust way to reduce poverty than these programs. In terms of how that affects this debate… I mean, I do worry a lot about the guaranteed, or the universal basic income debate. This goes back a while. My former colleague at AEI, Charles Murray, has talked about it, universal basic income, although for him it was a replacement of the large safety net that we have into sort of this relatively modest universal basic income payment. And his idea was to say, let’s spend the same amount of money, but let’s do it in a way that doesn’t have some of these perverse incentives. And there’s something to say for that, but the debate has sort of moved on from that. It’s no longer a cost-neutral replacement of the existing social safety net with this modest universal basic income payment, and other than that you’re sort of on your own. Now it’s, let’s keep the existing means-tested programs, but now let’s have a universal basic income that is much more vast and goes up to… For everybody, even middle-class people, to rely on that as a major source of their income.
Kevin Corinth: And I think this is… I guess I have two feelings about it. One, I think it’s in the short term completely unrealistic. We’re not getting a universal basic income in the next five, 10 years. I mean, one, there’s just zero budget. We don’t have the budget space for it. The cost would be astronomical. There’s no way people would accept the taxes needed to get anything like that. You certainly could not do it just by taxing the rich or through a wealth tax. You would need vast expansions in taxes for middle-class people too, and undo some of the universal basic income payment that you would get. So I think there’s zero chance of this happening in the near term. But I worry a lot about it in the longer term. I mean, I do hope that we continue to see stronger economic growth. I don’t know what’s going to happen with AI, but I think in the back of people’s heads on this stuff is that they recognize that today we can’t afford a universal basic income and there’s no political… I shouldn’t say that. There’s insufficient political will to get it done. But I think in the back of people’s heads there’s this belief, and maybe they’re right, that with AI and all of the benefits that I think it can and likely will have, that we could see much stronger economic growth moving forward. And maybe we will be in a place in 10 to 20 years where we do have a much larger economic pie, that hopefully workers are a lot more productive, that we have a lot more income overall.
Kevin Corinth: And I think that people are seeing that as an opportunity to put into effect maybe a universal basic income, that once we can afford it, then maybe we should. And I think they’re laying the ground work today to say that maybe this is a good thing for our society. And I would worry about that for a couple reasons. One is that I think that that could reduce, if AI is driving this big economic boom, I think that if we put in place a large-scale universal basic income, that that could undo some of those gains. I think we’re going to still need human workers to do a lot of things, and there might be some disruption, which can be very painful. And I think we should, and we do have an unemployment insurance program for exactly that scenario. But I think if people start… If we do have these higher universal basic income payments, that that could discourage people from working, especially entering the labor market. For younger workers who are really facing this new economic system or climate, they may decide, “Oh, I may not need to enter into the labor market.” And as a result, if you have less labor, you aren’t getting this augmentation, which is really where you might see the sweet spot of where the value is being created, that we could see not as much economic boom as a result of the retreat of labor.
Kevin Corinth: And even if we don’t need human workers, which again, I don’t think this is the scenario that we’re going to see, but say you don’t need human workers as much and we could actually get by with just the machines doing everything, I think it would still be a terrible idea to have a universal basic income because in that case… I think people don’t just want… They don’t just need work and earnings to fuel their own material well-being, which is super important, but also just to fulfill their human dignity and have a human purpose to provide and to produce and to contribute to society. And there will be ways to contribute to society no matter what happens with AI. If we kind of take that away from people through a universal basic income or the universal high income that Elon Musk wants, I think that can be very damaging to society. So I worry a lot about that end of things too. So again, I think it’s not realistic today, but these long-term consequences are very important to think about, and I think they’re being given short shrift by people who are just focused on the upside of everybody getting this high income and we’re all happy. I don’t think we’d all be happy in that case.
Chelsea Follett: It’s interesting because many of the voices that are opposed to data centers, and those are necessary for the expansion of AI, are also very in favor of redistribution. Right? Not all of the talk of redistribution that we’re hearing is by AI backers. But your paper really highlights the importance of labor market earnings. It really highlights the importance of economic growth as a policy goal to reduce poverty. What policies can we pursue to increase earnings opportunities for Americans without expanding dependency? What are the alternatives? Are there ways that we can grow the economic pie and create long-term poverty reduction without over-reliance on redistribution?
Kevin Corinth: Thank you. That’s my favorite question because I think our paper shines really good light on that. We show in this historical period, really without the social safety net, we were seeing vast reductions in poverty. We can’t wave a magic wand and just get the economic growth that we had of the ’40s and ’50s and have it today. I mean, there’s things I think we could do to get more growth, but there’s not just one thing we could do and we get that growth again. So we do have to live in the real world of we do have a social safety net, and we want to design it in a way that reduces poverty and increases self-sufficiency, reduces dependence. And the nice thing that I like… Well, I like a lot of things about our paper, but one thing I really like about our paper is that we show in the 1990s there’s sort of an exception. So starting in the ’60s, there’s this… Poverty continues to fall, but only because people are getting transfers. If you just measure poverty based on people’s market income, you’d see basically a flatlining of poverty, maybe it even goes up a little bit. At the same time, you’re seeing greater dependence on government transfers. There is an exception. That pattern breaks starting in the early 1990s. Like the 1990 to 2000 period, you actually see a major reduction… Continued reduction in poverty, but it’s based on… A lot of it’s based on market income, and there’s actually a reduction in dependency. So this is the share of people who are reliant on government for at least half of their household income.
Kevin Corinth: And so something really major happened in the 1990s. This wasn’t just some fluke. What happened was welfare reform. So in the late ’80s, there was a lot of frustration about our cash welfare program. It was called AFDC, Aid to Families with Dependent Children. And there was concern that it was really breeding dependency and discouraging work among a growing population of single moms, that it was also having perverse incentives on unwed childbearing, declining marriage rates. And on the right and on the left too, I think there was growing concern that these programs were having these perverse incentives. And so what happened in the late ’80s and early ’90s is that states started experimenting with other ways of providing assistance through having time limits on cash welfare, work requirements. So if like you were able to work and your kids were in school or something, then you would be required to work, say, 20 hours a week. More investments in training programs and education. And anyway, all these things that states tried doing and seemed to be working. And then in 1996, or early 1997, we passed welfare reform legislation that sort of rolled this out across all states. Time limits on assistance, work requirements, and at the same time, expanded refundable tax credits that target families with children, including the child tax credit, which didn’t exist before 1997, and the earned income tax credit, which did exist but was much smaller until the 1990s.
Kevin Corinth: So these programs, unlike what happened in 2021, these programs required work because you didn’t get any of the benefits unless you worked. And then they sort of phased in as you worked more. I mean, there’s eventually there is a phase-out and that has major problems. But first-order things, these programs all encourage people to enter the labor force and to work and have more earnings, both by requiring work and rewarding work. And what you saw in that was just defied all pretty much… Not all. Defied many expectations about what would happen. We did not see a decline in poverty. Sorry, we did see a decline in poverty. We didn’t see a decline in people’s well-being. We saw a growth in work efforts. So single moms had something like a 10 percentage point increase in their labor force participation. We saw all types of measures of kids, their outcomes getting better, their test scores being improved by these programs, their long-run outcomes, which we could see later on, being improved by these changes. So in all these ways, people’s lives were getting better. But the thing is that it was accompanied by a reduction in dependency. So even though we were seeing decreases in poverty, we were seeing decreases in dependency. So people were not… They were still getting some benefits from these programs, but it wasn’t the dominant share. The dominant share was coming through market income, through their earnings.
Kevin Corinth: And so I think that the 1990s example shows that even in this era of a pretty large social safety net, if we design it correctly, paying attention to some of these perverse incentives, that if you encourage work and require work when possible, that you can see reductions in poverty and reductions in dependency at the same time. And so I do think that’s an important lesson for policymakers today, one that I think unfortunately the left has often forgot in these discussions about a universal basic income and sort of a child allowance. They’ve sort of forgotten that. But I think we need to keep that in mind because the 1990s was the sort of the first time we saw the same poverty reductions with low dependency that we saw in the pre War on Poverty era. And so I think that is a way that policymakers can recapture some of that pre War on Poverty glory while retaining the safety net that we have.
Chelsea Follett: I’m curious whether you have any thoughts on recent reforms that we’ve seen to SNAP and Medicaid and these other programs.
Kevin Corinth: Yeah, so this was a major effort. So of course in 2025, last summer, we had the signed on July 4th, the so-called One Big Beautiful Bill Act signed into law by President Trump. And this was a major reform in lots of ways. It retained the individual tax cuts that we got during President Trump’s first term, the Tax Cuts and Jobs Act, which I thought were good. I like lower taxes, and I think a lot of families benefited from that. But the other thing that was done… Lots of things, but one other thing that was done in the One Big Beautiful Bill Act was a reform to a couple of our major safety net programs, Medicaid and SNAP, in fact, our two largest safety net programs by a substantial margin. And what the reforms did were to a relatively modest expansion, I would say, of work requirements in the SNAP program. We’ve actually had work requirements in SNAP, food stamps, for decades now, but what changed was that these work requirements were expanded to a larger population. Instead of only being for non-disabled adults without kids who are 18 to 54, it increased that upper age limit to 64 years old. It also included now parents with older children. So if your youngest child is age 14 or higher, you’re now subject to these work requirements. They ended some of the gaming of the system that states were doing to apply for waivers of work requirements. They were sort of gerrymandering territories together or counties together to qualify for waivers of work requirements they shouldn’t have actually received.
Kevin Corinth: So anyways, the law expanded work requirements in SNAP and for the first time, at least at a federal level, it put into place work requirements for Medicaid, which was a bigger change because it just hadn’t been done before. For Medicaid, it’s a similar population. These are non-disabled adults who are working age and are not caring for young kids or disabled people in the home. And put into place… States have a lot of leeway on this, but these are important work requirements. So I see this as sort of continuing to understand and to put into place the lessons of welfare reform today. It’s a little bit of a different population because welfare reform really affected single moms with kids. The population affected by these expanded work requirements over the past year, some parents with older kids, but it’s also adults without kids at the home. But this is an important population, right? Because we did see that success with single moms during welfare reform. It was really their employment that was bolstered by those reforms. But at the same time, we’ve done very little for this growing group of oftentimes men who are without kids and they’re not disabled, they’re working age, but a growing number are dropping out of the workforce. We still have high rates of employment participation among men, but it’s sort of declining. And it’s not the men who are at home taking care of kids or doing all the housework. It’s men who are not doing other productive things at home, whether it’s watching TV or playing video games, whatever it is, all those types of things that may be less productive. And we haven’t really had policies that paid attention to that issue.
Kevin Corinth: And so what I think is good about these reforms is it takes that population seriously, expands the population a bit in terms of the age requirements and some of those with older kids, which I think is appropriate. And it says in order to continue to receive SNAP or Medicaid, you’ve got to put in some work effort. These aren’t huge work burdens. These are 20 hours a week of work, or if you’re not working, then training for work, or if you’re enrolled at least half-time in school. There’s hardship exemptions even if you’re not on disability insurance, but you have other hardship or reasons you can’t work. Those can also be factored in. So anyway, it’s an attempt to say, I don’t think it’s going to have as big of effects as we had in welfare reform just because it’s a different population and the benefit programs we’re talking about maybe aren’t as big as what we were talking about back in the ’90s. But I do think they push the needle in the right way and that it will be positive in terms of encouraging work. There are, of course, some drawbacks. There’s red tape that you put when… Whenever you do work requirements, there’s red tape that’s involved. Some people who really should not be losing benefits, they may lose benefits, and I think that is a very bad thing.
Kevin Corinth: But I think there’s a tradeoff that needs to be made, and it is really important for people’s mental health to be working. I think it’s important for the fiscal balance for people to work when they can work. And so I think it moves things in the right direction. And I think it’s… I was surprised… Not surprised, but I was pleased that I think Congress was able to do something which could be thought… I mean, it was estimated as a reduction in federal spending on transfer programs, which we’ve seen a ton of growth in these programs in the past decades and especially the past few years before President Trump took office. And I think it’s good that we can say, yes, we sometimes are going to expand programs, but it’s okay to reduce spending a little bit too here and there, especially if they accomplish goals that we care about like improving self-sufficiency and increasing work.
Chelsea Follett: If listeners remember only one lesson from your paper when they’re thinking about the war on poverty or when they hear the next debate about poverty policy today, what would you hope that lesson would be?
Kevin Corinth: I think it’s that economic growth is the number one solution to reducing poverty. If you don’t have strong economic growth, it is really hard to reduce poverty because you can expand programs, but without growth, it’s hard to fund them. We just won’t have the resources to fund them. So no matter where you’re at in terms of what you think about the social safety net, whether you think there shouldn’t be one, whether you like the one we’ve got, whether you want a much bigger social safety net, I think all of us need to agree that economic growth is the best way to achieve that. And we show that in our paper, right? Because even though we had a much smaller social safety net before 1964, we did see really dramatic reductions in poverty. So I think we provide evidence that if you don’t buy anything else in the paper, we do show that. And so it really is possible to reduce poverty without a large social safety net. And we really want to do that. We all want to reduce poverty. So let’s have economic growth. We can still have a social safety net. I think we should have a social safety net. We can disagree about specific ways to expand it or not expand it or to whatever requirements we’re going to have, and we can argue about that. But let’s all agree that economic growth is the thing that we all can do, that we all want to do to reduce poverty in the United States.
Chelsea Follett: Economic growth matters, GDP, despite what some commentators have claimed lately, right? All right. Thank you so much for speaking with me. This has been fascinating and I appreciate it. Everyone check out the paper. We will link it when we post this podcast. Thank you again for joining me.
Kevin Corinth: Thank you so much. It was my pleasure being on.