Poor America: Reading the Numbers on Poverty in the U.S.

If the economy is growing, adding jobs, and increasing productivity, why aren’t average Americans’ incomes growing? Reports of a healthy economy have left many people wondering why they’re poorer than they were last year.

The Census Bureau released its annual report on consumer income, finding that more Americans are living in poverty and going without health insurance than last year.

The new statistics surprised analysts who thought that the economic recovery would benefit lower and middle-income workers. But the Bush administration says it expected the rise in poverty, claiming that the latest statistics are merely the last vestige of the recession.

No one knows for sure if the growing poverty rates are a warning sign or, as suggested by Elizabeth Anderson, chief of staff in the economics and statistics administration in the Commerce Department, just a last, trailing indicator of the business cycle.

Rise in poverty, dip in health insurance

Although the economy grew by 3.8 percent in 2004, the number of Americans living in poverty rose to 12.7 percent, up from 12.5 percent in 2003. The 12.7 percent equals 37 million people, up from 32.9 million in 2001. When the abstract percentages are translated into actual individuals, the problem seems more severe.

The official poverty line is $19,307 for a family of four, or $12,334 for a family of two. These markers do not reflect regional costs of living, so the working poor experience different living conditions in different areas. For example, those living on the Texas-Mexico border, the lowest-income region in the country, may actually have higher relative incomes to those living in the Bronx, New York, which is technically the fourth poorest area in the country.

But it’s not just the poorest Americans who are seeing their wages dip. The median income fell as well, amounting to a 2.3 percent drop for men to $40,798 a year before taxes, and a one percent drop for women to $31,223 a year. These figures prove that the wage gap between men and women is alive and well.

In addition to gender, the Census Bureau tracks income levels by race. The poverty rate increased for whites to 8.6 percent from 8.2 percent and fell among Asians from 11.8 percent to 9.8 percent. Blacks and Hispanics didn’t experience any significant change.

Along with increasing poverty rates, more Americans are without health insurance. Although the portion stayed consistent at about 16 percent, the number of uninsured Americans rose from 45 million to 45.8 million.

Experts say that there would be many more uninsured if government health insurance programs such as Medicaid and the state children’s health insurance program weren’t taking over for employers.

Since health insurance is tied to employment in the U.S., it’s significant that employers were less likely to offer health coverage in 2004 than they were the year before.

Historical context

Poverty rates rise and fall just like the economy and often with the economy. In the last 45 years, poverty has decreased, increased, decreased again and increased again. In 1960, the poverty rate was at a much higher 22 percent. Poverty continually fell through the 60’s, reaching a low of 11.1 percent in 1973. The rate began to rise again in the 1980’s and fall in the economic boom of the 1990’s and has continued to rise again since 2001.

Median incomes have grown for the past three decades, generally improving the quality of life for middle-income families. But the gap between the rich and the poor or, income inequality, has widened, with the inequality more severe in 2004 than ever before. Income inequality may help explain the paradox of economic growth and rising poverty rates - those with the most capital are getting the most benefit from the economic recovery.

Overall, the statistics paint a picture of the rich getting richer and the poor getting poorer, with more white Americans slipping into poverty. But history shows us that poverty rates rise and fall and that the average American family is earning more and, arguably, living a better life than 45 years ago. That said, the healthcare piece must fit into the puzzle. The rising cost of healthcare and the growing number of uninsured threatens the American quality of life in a very real way.

How has your quality of life changed since last year? Four years ago? Ten years ago? What does the apparent contradiction between rising poverty and a growing economy say to you?

What do you think?

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Article Posted on: 9/5/2005