U.S. poverty rate holds steady near a generational high
WASHINGTON — The nation’s poverty rate held at a near-generation-high of 15% last year, while the typical income of American households flattened, according to the Census Bureau.
The bureau’s annual report on income, poverty and health insurance suggests that the economic wounds from the Great Recession are patched up but the economy still is struggling to return to full health.
In one respect, the data released Tuesday could be seen as positive because things seemed to stabilize after the devastating recession. For the first time in five years, household income did not decrease and the poverty level did not increase last year, officials said.
And there was further improvement in the healthcare coverage of Americans, an important indicator of economic security.
The share of people without medical insurance, private or government, dropped to 15.4% last year from 15.7% in 2011 and 16.3% in 2010, in part thanks to changes in the healthcare law. The percentage of uninsured children fell to a record low of 8.9% last year.
Still, the lack of broad improvement in the poverty rate and middle-class incomes last year was more evidence of the disappointingly weak and uneven recovery.
“Everything is flat — at a time when we need progress,” said Sheldon Danziger, president of the Russell Sage Foundation, which supports research on poverty and other social issues.
The report came as Federal Reserve officials met for a two-day meeting to assess the economy and vote on policy options. Many economists are expecting the central bank, though cautious about the outlook, to announce Wednesday a small pull-back on its massive bond-buying program to stimulate the economy.
Analysts worry that things will get tougher for many workers, especially those with lower incomes. They noted that Congress is considering cuts in food stamps and that many more jobless people face an end to or reduction in unemployment benefits in coming months.
The Census Bureau said that the median household income — the point at which half earned more and half less — was $51,017 last year. That was essentially unchanged from the previous year but 8.3% lower than in 2007 and 1.3% less than in 1989, after adjusting for inflation.
The income gap between high- and low-income households did not widen last year, officials said, but a key measure of inequality remained at the highest level on record.
The poverty figures for Latinos and blacks last year continued to be more than double the rate for whites, and the rate for children last year was a high 21.8%, essentially unchanged from in 2011.
“Government policies must do more to help those among the poor and near-poor who have been left behind by economic growth in recent decades,” Danziger said. “If safety-net programs are targeted to balance the budget, as House Republicans have proposed, poverty will increase.”
The number of people living in poverty stood at 46.5 million last year, or 15% of the country’s population, for the second year in a row.
That left the poverty rate at close to the peak since the War on Poverty began in 1965. The peak hit 15.2% in 1983, and in the recent business cycle, the rate reached 15.1% in 2010.
By the Census Bureau’s definition, the poverty line for last year was $23,283 for a household with four people, including two related children. For a single person, the threshold was $11,720.
Analysts had hoped for a small drop in the poverty level as the unemployment rate declined last year and more jobs were added.
But the report showed that the number of men with full-time, year-round jobs increased by about 1 million last year, compared with 1.7 million in 2011. There was no statistically significant change in the number of women working full time throughout last year. The poverty rate for those working full time, year-round is much lower than for people working less than that.
Moreover, with many companies reluctant to hire and the unemployment rate averaging 8.1% last year, down from 8.9% in 2011, workers generally had little ability or leverage to boost their earnings.
Men working full-time throughout the year had a median income last year of $49,398 — a tiny pickup from the prior year but less than what men had made in the early 1970s, adjusted for inflation. The median income of women working full-time last year saw a tiny drop to $37,791 from the previous year.
Experts were not optimistic that poverty or average-income trends would improve rapidly.
Although the nation’s unemployment rate has fallen to 7.3% last month, job creation has remained modest, with many new positions coming in industries such as retail and restaurants that provide fewer hours and lower wages.
“The combination of high unemployment and low-income jobs depresses wages for at least 60% of the workforce,” said Christine Owens, executive director of the National Employment Law Project, an advocacy group for workers.
“There’s nothing in this data that signals that the economic recovery has kick-started and things are getting better for most people,” she said.
The one bright spot in the report was health insurance coverage.
For the second year in a row, the percentage and the number of people with medical insurance rose. The increases last year came primarily from more seniors being covered by Medicare, reflecting the large baby boom population that is entering retirement.
Even so, the rate of people covered by private health insurance showed no significant change last year.
And the ranks of people ages 18 to 24 with health insurance tapered off last year after sharp gains in recent years, thanks to changes in the law allowing young adults to remain covered under their parents’ health plans until age 26.
