The U.S. poverty rate rose to the highest level in almost two decades and household income fell in 2010, underscoring the lingering impact of the worst economic slump in seven decades.
Data released by the Census Bureau today showed the proportion of people living in poverty climbed to 15.1 percent last year from 14.3 percent in 2009, and median household income declined 2.3 percent. The number of Americans living in poverty was the highest in the 52 years since the U.S. Census Bureau began gathering that statistic. Those figures may have worsened in recent months as the economy weakened.
“Families are struggling to put food on the table, and they don’t have the purchasing power to help the economy recover,” said Isabel Sawhill, a senior fellow at the Brookings Institution in Washington.
Stagnating incomes and rising poverty will be at the heart of the 2012 presidential campaign that’s focusing on joblessness and will give added urgency to debates in Washington and statehouses across the U.S. over budget cuts to programs designed to protect families from hardship.
The ranks of people in poverty increased to 46.2 million from 43.6 million. The last time the poverty rate reached 15.1 percent was in 1993. It climbed to 15.2 percent in 1983. Median household income in 2010 was $49,445, down from $50,599 the year before.
Health Coverage
The number of those lacking health insurance increased to 49.9 million from 49 million, or about 16.3 percent of the population, a change the bureau said wasn’t statistically significant.
The income figures declined even as the U.S. economy expanded 3 percent in 2010. Growth has slowed this year to an annual rate of less than 1 percent, sparking concern that the financial struggles of families will continue to worsen and hamper the recovery.
U.S. households have little to cheer about as job creation stagnated last month and hourly wages retreated. The unemployment rate has hovered at or above 9 percent for more than two years. Consumer confidence fell to the second-lowest level this year for the week that ended Sept. 4.
“We would have hoped to have begun to climb out by now in terms of income and poverty rates, and that doesn’t seem to be happening,” said Sawhill, who was associate director of the White House budget office under President Bill Clinton.
Third Straight Increase
It was the third consecutive annual increase in the poverty rate, a trend that won’t reverse itself without “concerted action” on the part of policy makers, said Melissa Boteach, who leads a campaign to reduce poverty at the Center for American Progress, a Washington-based research group with ties to the Obama administration.
“The numbers should be a wake-up call to our elected officials that we need to act immediately to invest in job creation and protect vulnerable families,” she said.
Since the low point in the labor market downturn in February 2010, nonfarm payrolls have increased by 1.9 million, showing that without stronger growth, it will take years to recoup about 8.7 million jobs lost as a result of the recession that began in December 2007 and ended in June 2009.
The jobless rate rose to 9.6 percent in 2010 from 9.3 percent in 2009. Long-term unemployment, the percent of those without a job for 27 weeks or longer, increased to 43 percent from 31 percent, according to the Washington-based Economic Policy Institute.
Impact on Families
The figures “tell us how the changing economic conditions have really impacted the American family.” said Robert Groves, director of the U.S. Census Bureau, on a conference call with reporters.
President Barack Obama has proposed a $447 billion jobs bill. Yesterday he urged Congress to act on the proposal, which includes a cut in payroll taxes, spending to improve the nation’s infrastructure and aid to states to keep teachers and emergency workers employed.
The 2010 figures are part of an annual report on income, poverty and health insurance released by the Census Bureau. The data are based on a survey of about 100,000 addresses that’s used as the primary source of figures about the nation’s labor force.
Struggling to Make Ends Meet
The data show that in 2010, a year when corporate profits were soaring and the economy was pulling out of recession, middle-class Americans continued to see their fortunes decline. The earnings of women who worked full time were about 77 percent of those of men, about the same gap as in 2009.
“Even in good economic times, the number of Americans who were struggling to make ends meet and had declining income was going in the wrong direction,” said Boteach. “People are right to have some frustration that the economic gains of the last decade, when they were happening, weren’t shared.”
Since 2007, the year before the recession, median household income has fallen 6.4 percent, the census bureau said.
The growing poverty rate is likely to become an element of budget fights in Washington as a special committee of lawmakers looks to trim $1.5 trillion from the U.S. deficit during the next decade, and it may give momentum to calls from Democrats to raise taxes on the wealthiest Americans.
“Some in Congress have proposed cutting programs like food stamps and Medicaid, which were effective in keeping millions of people insured and above the poverty line at a time of widespread job loss,” said Arloc Sherman, a senior researcher at the Center on Budget and Policy Priorities in Washington.
Worsening Problem
“The data suggest that thoughtless budget-cutting could make problems of rising poverty and uninsurance significantly worse,” he said.
As defined by the Office of Management and Budget and updated for inflation using the Consumer Price Index, the weighted average poverty threshold for a family of four in 2010 was $22,314.
Adding to the woes is the number of Americans without health insurance.
About 256.2 million people had public or private health coverage last year, up from 255.3 million in 2009. The overall percentage of people with insurance didn’t change; the percent with private insurance, rather than coverage by public programs such as Medicaid, the federal-state health insurance plan for the poor, declined a half-percentage point to 64 percent.
Health-Care Fight
The Obama administration took early steps to enact an expansion of health-insurance coverage that Congress passed in March 2010. Republicans want to repeal the measure and have made it a central issue in the presidential campaign.
The health-care overhaul requires most Americans to obtain insurance, and promises coverage either through subsidized private plans or the government’s Medicaid program for people who can’t get insurance at work. The new coverage options won’t be available until 2014.
The number of Americans with private insurance was 195.9 million, unchanged from 2009, the census said. The number enrolled in public programs including Medicaid and Medicare increased to 31 percent, or 95 million, from 93.2 million in 2009.
Medicaid enrolled about 48.6 million people last year, the bureau said, or 15.9 percent of the population. The figures were little changed from 2009.
“The distress the consumers are feeling now is historic in its scope,” said Mark Cole, chief operating officer at CredAbility, a provider of non-profit credit counseling.
An index that tracks the financial condition of the average household published by Atlanta-based CredAbility hit a low in the fourth quarter of 2009. Out of the 31 years CredAbility has measured consumer distress, the worst rankings have occurred in the last 13 quarters.
While many families are cutting back to live within their means, in households that have been hit with job losses “things are not getting better,” Cole said.
To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net
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