U.S. Poverty Rate Rose Again in 2004

Family income stagnated last year and more Americans slipped into poverty, the Census Bureau said Tuesday in a report that raised questions about which Americans were enjoying the fruits of an economic expansion that began in 2001. It was the fourth straight year that the report found an increase in the U.S. poverty rate.

The report added color to recent polls showing that, despite strong economic growth and low unemployment, most people are sour on the state of the national economy and their own finances.

The Bush administration said the Census Bureau’s annual statistical snapshot of American households contained good news. Kathleen B. Cooper, undersecretary of commerce for economic affairs, said the poverty rate was lower in 2004 than it had been in all but one year of the 1980s and 1990s. Officials said that poverty rates were one of the last statistics to show improvement in an economic recovery, and that job gains should lift more people out of poverty soon.

Democrats blamed the administration’s policies for rising poverty and stalling income growth. “Wealthy Americans may be doing well in this economy, but most Americans are losing ground,” said Rep. George Miller of Martinez, Calif.

The Census Bureau report showed that median household income -- the level at which half of all households earn more money and half earn less -- was $44,389 in 2004, a statistically insignificant $93 less than the 2003 median when adjusted for inflation. Household income has been falling since reaching its all-time peak of $46,128 in 1999. Not since 1997 has it been lower than its 2004 level.

Nearly 37 million Americans, or 12.7%, lived below the official poverty line in 2004, the Census Bureau found in its survey. That was a rise of 1.1 million people from 2003, when the poverty rate was 12.5%

The poverty rate was last this high in 1998.

The Census Bureau also reported that 45.8 million Americans, or 15.7%, lacked health insurance in 2004, essentially the same amount as the 15.6% in 2003.

Employer-provided health coverage continued to shrink, but public programs such as Medicaid largely picked up the slack. Congress will soon consider cutting Medicaid’s growth by $10 billion over five years.

The news from Washington did not surprise Bonnie Ballard, spokeswoman for the Heartland Alliance in Chicago, a 100-year-old organization that helps homeless and low-income Americans. She said the rising cost of housing, gasoline and other essentials was making it harder to escape poverty.

“People who are poor are staying poor, and they are even in deeper poverty,” Ballard said. “The dollars don’t go as far as they used to.”

“This is not good news,” Timothy M. Smeeding, a professor at Syracuse University’s Maxwell School, which focuses on public administration, said of the Census Bureau figures. “We’re four years into a recovery and we’re not showing any progress. In fact, quite the opposite.”

In their search for a cause, Smeeding and others looked to the job market.

“We’re not doing a very good job of getting people back to work who’ve lost good jobs, particularly in manufacturing,” Smeeding said.

Jared Bernstein, an economist with the Economic Policy Institute, a think tank backed by organized labor, said the share of Americans holding jobs had fallen by 2 percentage points since the 2001 recession. The unemployment rate has gone down to 5%, he said, only because many Americans have quit looking for work.

“When the job market isn’t tight enough, workers don’t have leverage to bargain for their fair share of the recovery,” Bernstein said.

Conservative analysts reacted to the numbers more positively. Douglas J. Besharov, a scholar with the American Enterprise Institute, said that the poverty rate tended to drop only after the economy had been generating new jobs for a year or more, and that the economy did not begin generating new jobs consistently until the middle of last year.

Charles Nelson, the Census Bureau assistant division chief who oversees the income, poverty and health insurance statistics, told reporters that disappointing numbers on incomes and poverty were not unusual even in the third year of an economic recovery. He said the nation experienced a similar phenomenon during the early years of the Clinton administration as the economy slowly came out of the 1990-91 recession.

“In the early 1990s, poverty rose for four years before it started turning the corner and declining,” Nelson said. “We’ll see what happens next year.”

As for stagnant median income, Nelson said it could signify that some workers returning to the labor force after layoffs were starting over again in lower-paying jobs. “When you’re adding a lot of workers, sometimes the median [income] goes down, but that’s not a bad sign,” he said.

Liberal advocates for the poor and for labor unions called that analysis wishful thinking.

“Contrary to the impression that may have been created [by Census Bureau officials], this three-year poverty trend is not typical for a recovery,” said Robert Greenstein, president of the Center on Budget and Policy Priorities. “If this were a recession year, these would be quite reasonable results. But for the third year of an economic recovery, they have to be branded as quite disappointing.”

According to the Census Bureau data, income gains were concentrated in the richest fifth of the population.

The poorest fifth of households registered a 0.1% income gain, and the middle three fifths all lost. The top fifth gained 0.6%, with most of that going to the richest 5% of the nation’s households.

“The economy is growing, but the fruits of growth are clearly not reaching middle- and lower-income families,” said Bernstein, the Economic Policy Institute economist.

The Census Bureau’s income and poverty data showed some unusual patterns.

Although the incidence of poverty remained greatest in the South, about half of the 1.1 million additional Americans in poverty lived in the Midwest.

Median income fell by nearly 3% in the Midwest and 1% in the West while hardly changing in the East or South.

Poverty rose for native-born Americans and declined slightly for the foreign born. “This poverty is native; it’s not immigrants,” Smeeding said.

The poverty rate for non-Latino whites grew faster than for any other major ethnic group. The median income for non-Latino whites fell by 0.2%. It rose for Latinos by 1.1%.

The share of Americans covered by employment-based health insurance continued to decline, from 60.4% of the population to 59.8%.

The number of year-round, full-time workers without health insurance increased by 456,000, to a total of 21.1 million people, the bureau reported. The total fraction of uninsured Americans remained almost unchanged, as public programs covered more people.

“The fact that we aren’t losing ground is good news, but it clearly shows we’re not solving the problem here,” said Grace-Marie Turner, president of the Galen Institute, a health policy research group that favors the Bush administration’s proposed tax credits to help small businesses and individuals buy health coverage.

“We’ve got to be bolder in giving people a choice of coverages that they will find appealing,” Turner said.

Despite the growing availability of health savings accounts -- insurance plans that offer low monthly premiums and tax breaks to people willing to take responsibility for routine healthcare costs -- the proportion of Americans buying their own coverage barely budged, from 9.2% to 9.3%.

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The article states inaccurately the number of “Americans” in poverty and without health insurance. The figures, based on Census Bureau data, refer to the number of people in America and do not specify whether they are citizens.

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