Dispelling the myth that trickle down doesn’t work.
Since 1980, consumption by our lowest class has increased by 160% adjusted for inflation.
Today’s poorest, people contributing the least to the advancement of our society, can consume 160% more than in 1980.
Yes, the standard of living for the lowest class of people in the US has improved since 1980, though the extent of improvement depends on the measure used. Official income-based poverty metrics show only modest gains, with slower wage growth and rising inequality tempering progress. However, consumption-based measures—which better reflect actual access to goods, services, and necessities—indicate substantial improvement, driven by factors like expanded government benefits, tax credits, cheaper imported goods, technological advancements, and economic growth.
Key Measures and Trends
Factors Driving Improvement
In summary, while income metrics show limited progress amid inequality, consumption and adjusted poverty measures substantiate meaningful gains in living standards for the poorest, largely thanks to policy interventions. This aligns with broader indicators like increased access to technology, healthcare, and education. 4 6 8 16
Key Measures and Trends
- Official Poverty Rate (Income-Based): This is the US Census Bureau’s primary metric, based on pre-tax cash income compared to thresholds set in the 1960s (adjusted only for inflation). In 1980, the rate was 13.0%. It fluctuated with economic cycles but trended slightly downward overall, reaching 10.6% in 2024 (35.9 million people). This represents a modest decline of about 2.4 percentage points over 44 years, but critics note it understates progress by ignoring non-cash benefits (e.g., food stamps, housing subsidies) and tax credits. 47 35 41 The rate has not improved dramatically because real wage growth for the bottom 20% (lowest quintile) has been slow: only about 6.5–17% cumulatively from 1979–2023, or roughly 0.1–0.4% annually before the pandemic-era spike. 18 21 19 Inequality has widened, with the 90/10 income ratio rising from 9.1 in 1980 to 12.6 in 2018, meaning top earners’ incomes grew much faster. 2
- Supplemental Poverty Measure (SPM): Introduced by the Census Bureau in 2010, this broader metric accounts for non-cash benefits, taxes, and regional living costs. Recent SPM rates are higher than official ones (12.9% in 2024), but historical estimates (extended back by researchers) show a steeper decline. Using an “anchored” SPM (fixed 2012 threshold adjusted for inflation), poverty fell from about 19–20% in 1980 to 12.9% in 2024—a drop of roughly 30–35%. 58 47 53 This reflects the impact of expanded safety net programs like SNAP, EITC, and Medicaid, which lifted millions out of poverty. Without these, SPM poverty would be higher by 8–10 percentage points annually.
- Consumption Poverty: This alternative measure, based on actual spending on essentials (food, housing, transportation), is a stronger indicator of living standards as it captures borrowing, savings, and benefit use. From 1980 to 2022, consumption poverty plummeted from 33.8% to 6.0%—an 82% relative decline. 0 49 12 For below-median households, consumption rose over 160% from 1960–2015 (adjusted for biases in price indices), with gains accelerating since 1980 due to cheaper goods and services. 26 Material deprivation (e.g., inability to afford basics) also fell from 13% in 1980 to 7.8% in 2013. 11
Factors Driving Improvement
- Government Policies: The safety net has been the primary driver, not market incomes alone. Tax cuts, credits (e.g., EITC, Child Tax Credit), and programs like Social Security, SNAP, and housing aid reduced poverty by 40–50% more than pre-transfer measures suggest. 49 58 40 During the pandemic, stimulus and expanded credits kept consumption poverty stable despite income volatility.
- Economic and Social Changes: Higher education levels, economic growth, and declining prices for consumer goods (e.g., electronics, clothing) boosted access to amenities. For instance, low-income households saw increases in car ownership (doubled since 1980) and home size (10% more bedrooms). 26 8 Life expectancy, health access, and education for the poor also improved.
- Challenges and Disparities: Progress has been uneven. Racial gaps persist (e.g., higher poverty for Black and Hispanic Americans), and self-sufficiency (ability to earn enough without aid) remained flat at ~13% from 1980–2013. 11 40 Wage stagnation for the bottom 10–20% (e.g., 5% decline for low-wage workers 1979–2013) and rising costs in housing/healthcare offset some gains. 19 20 Inequality grew, with bottom 50% incomes stagnating while top 1% surged 300%+. 23 31
In summary, while income metrics show limited progress amid inequality, consumption and adjusted poverty measures substantiate meaningful gains in living standards for the poorest, largely thanks to policy interventions. This aligns with broader indicators like increased access to technology, healthcare, and education. 4 6 8 16
