Census Bureau Releases 2011 Poverty Data--Downward Trends Continue

Yesterday the U.S. Census Bureau released data on poverty and health insurance coverage for 2011. The headline is that poverty stayed the same in 2011 as it was in 2010. Not too interesting, unless one looks beneath the surface. 

Poverty: There are still 46 million people in America who live in poverty, including one in every five children. That’s 25 percent more people than at the start of the recession in 2007. The poverty level for a family of three is $19,090

Economic Recovery and Poverty: There is no assurance that poverty will decrease as the economy recovers. During the last economic recovery, economic growth was so weak and the monetary benefits of recovery were so unevenly shared that the official poverty rate grew from 11.7 percent at the start of the recovery in 2001 to 12.5 percent when the recovery ended in 2007.   

The Middle Class: Middle class living standards took another serious blow as median income fell by 1.5 percent in 2011. The median income has fallen by eight percent since the recession started in 2007. For a family with $50,000 in annual income, that’s a loss of $350 per month.

Government Programs Lifted Millions Out of Poverty: Unemployment insurance kept two million people out of poverty in 2011 and social security kept twenty-one million people out of poverty. In addition, Food Stamps (now called SNAP benefits) and the earned income tax credit are not considered when the official poverty rate is calculated because they are “non-cash benefits.” If counted, they would have lifted ten million people, including five million children, out of poverty.

Income Inequality:  Income fell for the bottom four-fifths of American households, and rose by two percent for the top-fifth, including five percent for the top five percent of households—a $15,000 increase in annual income. Apart from being unfair, this continuing growth in income inequality is a drag on economic growth and job creation, shifting resources away from persons who will spend them and stimulate economic activity.     

Overall, the Census numbers paint a picture of continuing high rates of poverty, government programs that provide an essential safety net, a major decline in middle class living standards, and an ever-widening gap between rich and poor that is undermining our economic recovery.  

This article is largely based on analysis by the Center on Budget and Policy Priorities

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