VOL. 36 | NO. 36 | Friday, September 07, 2012
US poverty rate 15 percent; record numbers persist
WASHINGTON (AP) — The ranks of America's poor remain stuck at a record 15 percent, the Census Bureau reported Wednesday.
Roughly 46.2 million people remained below the poverty line in 2011, unchanged from 2010. The figure is the highest in more than half a century.
And while joblessness is persistently high, the gap between rich and poor increased in the last year. The top 1 percent of wage earners had a 6 percent increase in income, while income at the bottom 40 percent of earners was basically unchanged, said David Johnson, the chief of the Census Bureau's household economics division.
"A lot of the increase is driven by changes at the very top of the distribution," Johnson said.
The report comes less than two months before the November presidential election, where the still-weak U.S. economy is the top issue for voters deciding between the leading candidates, President Barack Obama and Republican Mitt Romney.
Experts had predicted a fourth straight annual rise in the poverty rate, but dwindling unemployment benefits and modest job gains helped to keep that from happening.
"This is good news and a surprise," said Sheldon Danziger, a University of Michigan economist who closely tracks poverty. He pointed to a continuing boost from new unemployment benefits passed in 2009 that gave workers up to 99 weeks of payments after layoffs and didn't run out for many people until late 2011. Also, job gains in the private sector helped offset cuts in state and local government workers.
"It would indicate the stimulus was even more effective than believed," he said.
The overall poverty rate was statistically unchanged from the 15.1 percent in the previous year. The figure is the highest since 1983.
The median, or midpoint, household income was $50,054 — 1.5 percent lower than 2010 and a second straight decline.
The census report provides a mixed picture of the economic well-being of U.S. households for 2011, when the unemployment rate improved to 8.9 percent from 9.6 percent in the previous year.
For last year, the official poverty line was an annual income of $23,021 for a family of four.
Broken down by state, New Mexico had the highest share of poor people, at 22.2 percent, according to rough calculations by the Census Bureau. It was followed by Louisiana, the District of Columbia, South Carolina, Arkansas and Georgia.
On the other end of the scale, New Hampshire had the lowest, at 7.6 percent.
Bruce D. Meyer, an economist at the University of Chicago, said it was disappointing that poverty levels did not improve. He described it as a sign of lingering problems in the labor market, even with recent declines in unemployment. "The drop in the unemployment rate has been due in significant part to workers leaving the labor force, because they are discouraged, back in school, taking care of family or other reasons," he said.
The official poverty level is based on a government calculation that includes only income before tax deductions. It excludes capital gains or accumulated wealth, such as home ownership.
As a result, the official poverty rate takes into account the effects of some stimulus programs passed in 2009, such as unemployment benefits, as well as jobs that were created or saved by government spending. It does not factor in noncash government aid such as tax credits and food stamps.
Johnson attributed the better-than-expected poverty numbers to increases in full-time workers over the last year. He also estimated that expanded unemployment benefits helped keep 1.6 million working-age people out of poverty.
Social Security, a federal support program for older Americans, also lifted roughly 14.5 million seniors above the poverty line. Without those cash payments, the number of people ages 65 and older living in poverty would have increased five-fold, he said.
The share of Americans without health coverage fell from 16.3 percent to 15.7 percent, or 48.6 million people. It was the biggest decline in the number of uninsured since 1999, boosted in part by increased coverage for young adults under the new health care law that allows them to be covered under their parents' health insurance until age 26.
Congress passed the health overhaul in 2010 to address the rising numbers of uninsured people. During this election year, the law has come under increasing criticism from Republicans, including Romney, who has pledged to push a repeal if he is elected. The main provisions of the health care law will not take effect until 2014.