New York Times - Soaring Poverty Casts Spotlight on ‘Lost Decade’

The New York Times
September 13, 2011
Soaring Poverty Casts Spotlight on ‘Lost Decade’

By SABRINA TAVERNISE

WASHINGTON — Another 2.6 million people slipped into poverty in the United States last year, the Census Bureau reported Tuesday, and the number of Americans living below the official poverty line, 46.2 million people, was the highest number in the 52 years the bureau has been publishing figures on it.
And in new signs of distress among the middle class, median household incomes fell last year to levels last seen in 1996.
Economists pointed to a telling statistic: It was the first time since the Great Depression that median household income, adjusted for inflation, had not risen over such a long period, said Lawrence Katz, an economics professor at Harvard.
“This is truly a lost decade,” Mr. Katz said. “We think of America as a place where every generation is doing better, but we’re looking at a period when the median family is in worse shape than it was in the late 1990s.”
The bureau’s findings were worse than many economists expected, and brought into sharp relief the toll the past decade — including the painful declines of the financial crisis and recession —had taken on Americans at the middle and lower parts of the income ladder. It is also fresh evidence that the disappointing economic recovery has done nothing for the country’s poorest citizens.
The report said the percentage of Americans living below the poverty line last year, 15.1 percent, was the highest level since 1993. (The poverty line in 2010 for a family of four was $22,314.)
The report comes as President Obama gears up to try to pass a jobs bill, and.....
....analysts said the bleak numbers could help him make his case for urgency. But they could also be used against him by Republican opponents seeking to highlight economic shortcomings on his watch.
“This is one more piece of bad news on the economy,” said Ron Haskins, a director of the Center on Children and Families at the Brookings Institution. “This will be another cross to bear by the administration.”
The past decade was also marked by a growing gap between the very top and very bottom of the income ladder. Median household income for the bottom tenth of the income spectrum fell by 12 percent from a peak in 1999, while the top 90th percentile dropped by just 1.5 percent. Overall, median household income adjusted for inflation declined by 2.3 percent in 2010 from the previous year, to $49,445. That was 7 percent less than the peak of $53,252 in 1999. Part of the income decline over time is because of the smaller size of the American family.
This year is not likely to be any better, economists said. Stimulus money has largely ended, and state and local governments have made deep cuts to staff and to budgets for social programs, both likely to move economically fragile families closer to poverty.
Minorities were hit hardest. Blacks experienced the highest poverty rate, at 27 percent, up from 25 percent in 2009, and Hispanics rose to 26 percent from 25 percent. For whites, 9.9 percent lived in poverty, up from 9.4 percent in 2009. Asians were unchanged at 12.1 percent.
An analysis by the Brookings Institution estimated that at the current rate, the recession will have added nearly 10 million people to the ranks of the poor by the middle of the decade.
Joblessness was the main culprit pushing more Americans into poverty, economists said.
Last year, about 48 million people ages 18 to 64 did not work even one week out of the year, up from 45 million in 2009, said Trudi Renwick, a Census official.
“Once you’ve been out of work for a long time, it’s a very difficult road to get back,” Mr. Katz said.
Median income fell across all working-age categories, but was sharpest drop was among the young working Americans, ages 15 to 24, who experienced a decline of 9 percent.
According to the Census figures, the median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065, said Sheldon Danziger, professor of public policy at the University of Michigan.
Those who do not have college degrees were particularly hard hit, he said. “The median, full-time male worker has made no progress on average,” Mr. Danziger said.
The recession has continued pushing 25-to-34-year-olds to move in with family and friends to save money. Of that group, nearly half were living below the poverty line, when their parents’ incomes were excluded. The poverty level for a single person under the age of 65 was $11,344.
“We’re risking a new underclass,” said Timothy Smeeding, director of the Institute for Research and Poverty at the University of Wisconsin, Madison.
“Young, less-educated adults, mainly men, can’t support their children and form stable families because they are jobless,” he added.
But even the period of economic growth that came before the recession did little for the middle and bottom wage earners.
Arloc Sherman, a senior researcher at the Center on Budget and Policy Priorities, said that the period from 2001 to 2007 was the first recovery on record where the level of poverty was deeper, and median income of working-age people was lower, at the end than at the beginning.
“Even before the recession hit, a lot of people were falling behind,” he said. “This may be adding to people’s sense of urgency about the economy.”
The suburban poverty rate, at 11.8 percent, appears to be the highest since 1967, Mr. Sherman added. Last year more Americans fell into deep poverty, defined as less than half the official poverty line, or about $11,000, with the ranks of that group increasing to 20.5 million, or about 6.7 percent of the population.
Poverty has also swallowed more children, with about 16.4 million in its ranks last year, the highest numbers since 1962, according to William Frey, senior demographer at Brookings. That means 22 percent of children are in poverty, the highest percentage since 1993.
The census figures do not count noncash assistance, like food stamps and the earned-income tax credit, and economists say that as a result they tend to overstate poverty numbers for certain groups, like children. But rises in the cost of housing, medical care and energy are not taken into account, either.
The report also said the number of uninsured Americans increased by 900,000 to 49.9 million.
Those covered by employer-based insurance continued to decline in 2010, to about 55 percent, while those with government-provided coverage continued to increase, up slightly to 31 percent. Employer-based coverage was down from 65 percent in 2000, the report said.