Incomes Up as Poverty Hits 11.9%, Lowest Rate Since ’79

Incomes rose across America in 1999 for an unprecedented fifth year and poverty dipped to its lowest level since 1979, the U.S. Census Bureau reported Tuesday, underscoring the breadth of the nation’s economic prosperity as November’s election nears.

Driven by strong economic growth in the South and Midwest, median household earnings reached $40,800, the highest level the bureau has found since it first began collecting income statistics in 1967.

And poverty rates, driven down in the West and Northeast, fell for all racial and ethnic groups for the first time since the Census Bureau began collecting such data in 1969, settling at 11.9% overall. The annual census reports on household income and poverty showed that the incomes of African American and Latino households--with median earnings of $27,910 and $30,735, respectively, were at historic highs. But they remained stubbornly below the $42,504 median income of non-Latino white households. Asians and Pacific Islanders, with a median income of $51,200, saw income growth of 7.4%.

Even children, the Americans most likely to live in poverty, saw their economic lot improved in 1999. About 12.1 million children were poor in 1999, down 1.4 million and 2 percentage points (to 16.9%) from the year before. The poverty rate among the elderly, meanwhile, dropped to an all-time low of 9.7%.

President Clinton touted the new statistics as further evidence that Democratic policies have brought boom times to more Americans than ever before.

“This is a good day for America,” Clinton told a group of politicians and economists gathered at the White House. “We have proved that we can lift all boats in a modern, global, information-based economy.”

GOP Seeks Credit, Cites Welfare Reform

Republicans also claimed a share of the credit for prosperity of historic proportions. On Capitol Hill, the census report was hailed by the GOP authors of the 1996 welfare reform law, which imposed strict time limits and work requirements on those receiving public assistance.

“These exciting developments are the direct result of the welfare reform law Republicans wrote and finally pushed into law in 1996,” said Rep. E. Clay Shaw Jr. (R-Fla.). Without welfare reform, Shaw said, there would be “more children in poverty and more adults getting a welfare check instead of a paycheck.”

California was one of only four states, along with the District of Columbia, that saw improvements in both income and poverty measures. Arizona, New York and South Dakota also saw improvements in both measures. With an average poverty rate of 14.6% in 1998-99, California has lowered its poverty rate by 1.4 percentage points from 1997 to 1999. In 1998-99, the state’s two-year median income was $42,791, up 3.1% from the two-year median income computed for 1997-1998.

But one labor organization said that the latest census figures reflect a nation of families putting in longer hours as much as it does an era of new job opportunities and wage hikes. “Middle-income households are working more hours than ever to stay ahead,” said Lawrence Mishel of the Economic Policy Institute, a labor-backed research organization in Washington. From 1989 to 1999, a typical married, middle-income couple with children added 279 hours--about seven weeks--of work a year. About 33 of those extra annual hours were added from 1998 to 1999, helping to drive the median-income hikes seen in the census report, Mishel contended.

“That’s a ton of work, and the growth in hours explains most of growth in income over this last decade,” he added.

While Tuesday’s data suggested that economic well-being has improved across the spectrum of region, ethnicity and age, it highlighted troubling imbalances in two areas: between men and women and between haves and have-nots.

According to the census, the median income earned by women in the full-time, year-round work force lost ground slightly in 1999, while men’s median income grew by 1%. That widened an already-yawning earnings gap between women and men. While full-time, year-round working women earned 73.2 cents to every dollar earned by men in 1998, the 1999 figure slipped to 72.2 cents.

Meanwhile, inequities in income remained a strong feature of the American economy. The census found no significant change in the distribution of income among those up and down the economic ladder--either last year or in the last six years. The poorest 20% of Americans still receive 3.6% of all income distributed through the U.S. economy in a year. By contrast, the richest 20% of Americans receive 49.4%--almost half--of all income the economy delivers annually.

Reviewing the report’s findings Tuesday, White House economic advisor Gene Sperling emphasized that, while income disparities remain significant, the nation’s poorest citizens have made the most significant gains of all groups in the last seven years. That, he added, is a “dramatic turnaround” from the 1980-1992 period presided over by the Reagan and Bush administrations, when the top 20% of earners had income growth of 26.4% and the bottom 20% saw their incomes slide by 4.4%.

Benefits Are Seen ‘Across the Board’

“It shows that the economic progress is not just restricted to Silicon Valley or to the stock market,” said Martin Baily, chairman of the President’s Council of Economic Advisors. “It means that median family incomes and minority incomes are rising substantially too. It’s really encouraging to see the benefits going across the board.”

While Republicans and Democrats tussled over who should get credit for the benefits of welfare reform, few argued Tuesday that the 1996 overhaul of social policy was not strongly at work in the numbers released Tuesday. Indeed, there was strong evidence that some of the report’s most dramatic results stemmed largely from the landmark reform measure, which was passed by a GOP-controlled Congress and signed into law, over the objection of many Democrats, by Clinton.

Census Bureau analyst Daniel Weinberg told reporters Tuesday that declines in poverty “were concentrated in metropolitan areas, particularly central cities,” where welfare dependence also has been most widespread. In fact, 81% of the overall nationwide decline in poverty from 1998 to 1999 occurred within cities, with the remaining 19% coming in suburban and rural areas.

Wendell Primus, an analyst at the Center on Budget and Policy Priorities, called that “amazing,” adding that it reflects how deeply into the potential work force the strong economy has brought work opportunities.

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Poverty Rate Drop

The percentage of the U.S. population in poverty dropped to 11.9 in 1999, the lowest rate since 1979.

Source: U.S. Census Bureau