Poverty rates unchanged
Wednesday, September 12th, 2012
Despite declining household incomes and increasing income inequality, the number of Americans living in poverty remained steady in 2011, according to new data from the Census Bureau.
The number of people in poverty, 46.2 million, is not statistically significant from those in poverty in 2010, although the number in poverty had increased in the previous four years.
And after three years of increases in the poverty rate, that rate decreased, but only by one-tenth of a percent, to 15 percent.
“I actually expected the poverty numbers to be higher than what they are, so they’ve stabilized,” said Dr. Jim Ziliak, director of the University of Kentucky Center for Poverty Research. “With this poverty report, there may be a little bit of reason for optimism,” he said.
Ziliak said that based on recent history, next year’s poverty figures should at least stay the same or perhaps decline further.
Median household income dropped 1.5 percent from $50,831 in 2010 to $50,054 in 2011. This marked the fourth consecutive year of declines in household median income. Household incomes now are 8.1 percent lower than they were in 2007, when the median income was $54,489.
Poverty rate declines most for Hispanics
The federal government classified poverty in 2011 as income below $23,021 for a family of four and $11,484 for an individual. Among racial and ethnic groups, poverty declined the most from 2010 to 2011 for Hispanics, from 26.5 percent to 25.3 percent. Changes for all other groups were statistically insignificant.
Among different age groups, households headed by those younger than 65 saw the greatest decrease in poverty. Elderly households have experienced large declines in poverty since the late 1960s, from nearly 30 percent to 8.7 percent in 2011.
“The big driver was the generosity of Social Security benefits and defined-benefit retirement plans,” Ziliak said. “Those things didn’t start showing up in U.S. labor markets until after World War II.”
The Census Bureau estimates 14.5 million more people older than 65 would be below the poverty threshold without Social Security income.
Notable decreases in poverty were seen in the South, the suburbs and among non-citizens because the number of people with full-time, year-round jobs increased. More than 1.2 million more people in South reported working full-time, year-round in 2011 than 2010, which the Census attributes to nearly 750,000 fewer people in poverty.
Nearly two million more people overall reported working full time, year-round in 2011, contributing to the stabilization of poverty figures, according to David Johnson, chief of the Census Bureau's Social, Economic and Housing Statistics Division, which released the annual report on income, poverty and health insurance.
“The work effort and the unemployment insurance is what’s keeping this lower,” he said.
Income continues long-term decline
Median household incomes have declined nearly 9 percent since they hit a historical peak of $54,932 in 1999. While the tepid recovery adds to some of the wage decline, one other factor is the aging of the nation. Households headed by someone older than 65 increased by 4.3 percent in 2011.
Ziliak says the “standard life cycle model in economics," where incomes increase with working age until retirement will pull down median incomes.
“It doesn’t mean we’re worse off because of that. Older households often have their homes paid, their children aren’t living in the home so they can meet their consumption needs easier than they did when they were younger.”
Of those workers who were gained full-time, year-round work in 2011, the greatest growth was on the lowest end of the income spectrum. The number of workers in the lower-paying jobs surged by 17 percent, higher than any other category, also dragging down median incomes overall.
The proportion of incomes in the mid-range of incomes has steadily decreased since data was collected in the late 1960s, and the recession has exacerbated that trend.
“We know the Great Recession has done a lot of damage and really hurt those middle-skill jobs, and we don’t know how many of those will come back,” said Harry Holzer, public policy professor at Georgetown University and co-author of the book, "Where Are All the Good Jobs Going?"
Incomes in non-Hispanic white and black households declined in 2011, while Hispanic and Asian households saw no significant change.
The greatest decline in income came for those ages 55 to 64. The only category to experience gains were the highest-income households. The top 5 percent saw an increase of 6.3 percent in 2011.
More people have health insurance
The number without health insurance declined from 50 million in 2010 to 48.6 million in 2011, mostly because more people in the 19-to-25 age category reported having insurance. A provision of the Affordable Care Act implemented in September 2010 allows parents to keep their children on their insurance plans through age 26.
More people had health insurance regardless of income. But health coverage still remains heavily correlated to income. A quarter of people in households with incomes under $25,000 lacked health-insurance coverage compared with fewer than 8 percent in households with incomes greater than $75,000.
The percentage covered by private insurance did not decrease for the first time since 1999. On the other hand, the percentage of people covered by government insurance continued its increase, from 31.2 percent in 2010 to 32.2 in 2011.
“Public insurance has been going up consistently for the past five years,” said Johnson of the Census Bureau. “This could be driven by more kids or by the elderly.”