BUSINESS

Poverty rate posts 1st notable drop since '06; Latinos show big strides

An improving labor market drove the drop in the U.S. poverty rate to 14.5% last year from 15% in 2012

The poorest Americans, particularly those who are Latino, finally are showing signs of joining in the economic recovery as the nation's poverty rate dropped significantly last year for the first time since 2006.

The improving labor market drove the decrease in the rate to 14.5% from 15%, which was near the highest level in a generation, the Census Bureau said Tuesday.

The number of people with year-round, full-time jobs rose by about 2.8 million to 105.8 million last year. The increase included nearly a million households with children under 18 years old, helping fuel the first significant drop in the child poverty rate in more than a decade.

Latinos showed the most improvement last year, with their poverty rate dropping 2.1 percentage points and median household income posting its first increase since 2000.

But some analysts said the discouraging trends in recent years showed that much more needs to be done, such as increasing the federal minimum wage, to help Americans struggling to make ends meet.

"The fact unquestionably remains that the economic recovery has not done much to lift the living standards of most poor and middle-income households," said Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities and a former economic advisor to Vice President Joe Biden.

The income for the typical U.S. household barely budged last year, rising just $180 to $51,939. Adjusted for inflation, median household income remained about 8% below where it was in 2007, before the recession hit.

The 14.5% poverty rate still was two percentage points higher than it was in 2007. Because of population growth, the number of Americans living in poverty did not improve significantly for the third straight year, the Census report said.

There were 45.3 million people living below the poverty threshold, which last year was an annual income of less than $23,624 for a household with four people, including two related children.

In 2012, about 46.5 million people were living below the poverty line.

Still, analysts were heartened that the poverty rate was on the downswing after holding steady at around 15% since 2010.

"It's much better that poverty is going down than what it's been doing, which has been going up and remaining stagnant," said Sheldon Danziger, president of the Russell Sage Foundation, which supports research on poverty and other social issues.

The drop in the child poverty rate was particularly noteworthy, analysts said. It fell to 19.9% last year from 21.8%, according to the Census Bureau. The last time the child poverty rate dropped more than 0.2 percentage points was in 2000.

"If there are going to be improvements in the poverty level, you want to see them among children, and you want to see them among the race and ethnic groups that haven't been doing well," said William H. Frey, a senior fellow at the Brookings Institution.

Latinos were the only ethnic group to experience a significant change last year, with their rate dropping to 23.5% from 25.6%. The number of Latinos in poverty fell to 12.7 million from 13.6 million.

The median income for Latinos rose 3.5% to $40,963, the Census Bureau said. It was the first annual increase since 2000.

Mark Hugo Lopez, director of Hispanic research at the Pew Research Center, attributed the income rise to more young U.S.-born Latinos entering the workforce.

"U.S.-born Latinos tend to have more education, tend to be English-speaking, and those things will lead to somewhat higher earnings," he said.

Another factor could be a slowdown in Latino immigrants to the U.S. in recent years, Lopez said.

A boost in hiring more broadly last year helped improve the poverty figures.

The nation's unemployment rate dropped sharply in 2013, from 7.9% in January to 6.7% in December. And with more people working, particularly full time, incomes improved enough to lower the overall poverty rate.

That progress has continued into 2014, with the unemployment rate down to 6.1% in August. That suggests more improvement in the poverty rate this year, the White House said.

But Danziger said last year's improvements shouldn't overshadow the broader trends, which have shown little improvement in incomes.

"For decades, workers have been getting squeezed," he said. "Yes, it's terrific that more people are working full time, but if we had a higher minimum wage and companies would pay more, then we'd make much more progress."

The annual Census report also included data on health insurance coverage in 2013. There were about 13.4% of Americans, or 42 million people, without coverage for the entire year.

The percentage of people without health insurance was 15.4% in 2012. But Census officials said the 2013 figure should not be compared to the 2012 one because the methodology changed to better measure the effect of coverage that began this year under the Affordable Care Act.

A separate report Tuesday from the Centers for Disease Control said 13.1% of people lacked health insurance coverage in the first three months of this year, compared with 14.4% in 2013.

Times staff writer Don Lee contributed to this report.

jim.puzzanghera@latimes.com

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