Poverty rates, median income unchanged in 2012, despite recovery

WASHINGTON -- Reflecting the sluggish economic recovery, the nation’s poverty rate remained stuck at a near generation-high of 15% last year, while the average income of American households continued to stagnate, the Census Bureau reported Tuesday.

The number of people living in poverty stood at 46.5 million in 2012, representing 15% of the country’s population for the second year in a row. In 2010, the poverty rate reached 15.1%, the peak of the recent business cycle.

The poverty figure was 12.5% in 2007, the year before the Great Recession.

Analysts were expecting a small drop in the poverty level as the unemployment rate declined last year. But the census report showed that the number of men with full-time, year-round jobs increased by only about 1 million last year, a little more than half of the prior year’s gain. There was no statistically significant change in the number of women with full-time, year-round jobs in 2012.

What’s more, with many companies reluctant to hire and the unemployment rate averaging 8.1% last year (versus 8.9% in 2011), workers generally had little ability or leverage to boost their earnings.

The census report said the median household income -- the point where half earned more and half less -- was $51,017 in 2012. That was essentially unchanged from 2011.

With no gain last year, the average household fell further behind when compared with prerecession times. The 2012 median household income, after adjusting for inflation, was 8.3% lower than in 2007. (The recession began in December 2007 and ended in June 2009, according to the National Bureau of Economic Research, which dates business cycles.)

The most encouraging part of the Census Bureau’s annual report was on health insurance coverage, an important indicator of economic security. The share of people without medical insurance, private or government, fell to 15.4% last year from 15.7% in 2011.

The increase in the number of Americans with health coverage came primarily from more seniors being covered by Medicare, reflecting the large baby boom population that is entering retirement. The growing ranks of people age 18 to 24 with health insurance tapered off last year after two years of sharp gains thanks to changes in the law allowing young adults to remain covered by their parents’ health plans.

At 15%, the poverty rate remains at close to the peak level since the War on Poverty began in 1965. The highest since then was 15.2% in 1983.

For 2012, the poverty rate for children was 21.8%, essentially unchanged from 2011.

Analysts were not optimistic that poverty trends would improve rapidly.

The unemployment rate has since fallen to 7.3%, but job creation has remained modest, with many new positions coming in industries such as retail and restaurants that provide fewer hours and lower wages.

A number of additional factors are holding back personal incomes, including the federal spending cuts known as sequestration and the end of extended unemployment insurance benefits, which are counted as part of income.

“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,” said Sheldon Danziger, a poverty expert and president of the Russell Sage Foundation. “If safety net programs are targeted to balance the budget, as House Republicans have proposed, poverty will increase.”

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