Census Bureau's Annual Poverty and Income Report Paints a Dark Future

Census reportEvery year the Census Bureau releases its annual report on the state of Poverty, Income, and Health Insurance in the United States. This report looks back on the data for the previous year. Last week the Census Bureau released its report for 2012. But more than looking back on the past, the report is interesting, and disturbing, for what it suggests about our future.

The continuing struggle of young adults. The youngest working age group, ages 15-24, is the only age group whose income has not increased over the past 30 years. In 1982, the median salary of a householder aged 15-24 was $31,563. In 2012, the median salary of a householder aged 15-24 was $30,604 (the difference is not statistically significant). In addition, in 2012, young adults aged 25-34 living with their parents had a 43 percent poverty rate if their poverty status is determined using only their own income and not their parents’ income.

These data speak to the problems faced by young adults. It is during these initial years of career building, when young adults generally do not yet have families, that they have both the resources and the capacity to lay a solid foundation for their entire adult life. It is also the time to build credit and begin saving for retirement and emergencies. A consequence of this stagnant median income is that young adults in 2012 are increasingly having to push these activities into their thirties. Ultimately, lowered income means lowered opportunities for young adults to invest in themselves and their future families.

The lack of a post-recession recovery. Median income and the poverty level were not statistically different in 2012 than they were in 2011. Fifteen percent of the American people lived in poverty, 20 percent more than before the recession. Real median household income lingered at $51,000, 8.3 percent lower than the pre-recession level. Thus, even now, three years after the recession has ended, the recovery has yet to reach the 46.5 million Americans living in poverty.

The poverty rate understates the true level of destitution. Fifteen percent of the overall population lived in poverty, with the poverty rate for children at 22 percent. But forty percent of those who lived in poverty—20 million people, including seven million children—lived in extreme poverty, meaning their income was less than half of the federal poverty level. A family of three in extreme poverty has an annual income below $9,765.

Income inequality has grown enormously over time. Over the past 45 years, the average household’s income has increased by $8,000, while the income of households at 90% of the median income has increased by $56,000, and the income of households at 95% of the median income has increased by $77,000. As a result of this unequal income growth, the disparity between the living standards of middle class and wealthy Americans is far different today than it was in 1967. A household at 90% of median income now has roughly three times as much income as the average household, and a household at 95% of median income has roughly four times as much.

The release of the Census Bureau reports comes against the backdrop of the U.S. House of Representatives’ vote to shred the safety net for low-income Americans by cutting $40 billion from the Supplemental Nutrition Assistance Program (SNAP) over the next ten years. As bad as poverty is in America, it would be far worse without safety net programs like SNAP, which lifts nearly four million Americans out of poverty.

Kali Grant contributed to this blog post.

 

New Poverty Data, Still Not Looking Good for Millions

The Census Bureau recently released new data capturing the state of poverty in the U.S. using the Supplemental Poverty Measure (SPM). The U.S. government uses two measures for quantifying poverty: (1) the official poverty measure and (2) the SPM

The official measure, also known as the Federal Poverty Level (FPL), is used to determine the eligibility of individuals applying for means-tested public benefit programs, such as the Supplemental Nutrition Assistance Program (SNAP), Medicaid, and Temporary Assistance for Needy Families (TANF).  

In March 2010, the U.S. Census Bureau announced that it would develop an alternative way to measure poverty and created the SPM. The SPM is an attempt to update the official poverty measure or FPL; it is generally agreed that the FPL is outdated and therefore underestimates the level of poverty in the U.S. The SPM is not intended to replace the FPL, but rather to supplement it. Thus, the FPL will continue to be the measure for determining eligibility for public benefits.

The SPM is a more robust tool for examining the overall picture of poverty in the U.S. For years, statisticians, policy analysts, and advocates argued that the official poverty measure was overly simplistic, as it is simply calculated by looking at gross pre-tax income. The SPM, on the other hand, takes into consideration geographic location, necessary expenses, taxes, and alternative forms of income such as public benefits. The final calculation of the SPM is the “sum of cash income; plus in-kind benefits that families can use to meet their food, clothing, shelter and utilities needs; minus taxes (or plus tax credits); minus work expenses; minus out-of-pocket medical expenses and child support paid to another household.”   

According to the first SPM data, which was released last November, 49.1 million, or 16%, Americans lived in poverty in 2010, significantly more than the official poverty measure for the same time period, under which 46.6 million people, or 15% of Americans, were living in poverty.

The new SPM data released earlier this month found that approximately 49.7 million or 16.1% of Americans were living in poverty in 2011 versus 46.6 million, or 15%, under the official poverty measure.  Although the report shows that there was no statistical change in the overall SPM poverty rate between 2010 and 2011, the data is still grim. According to the new SPM data, African American and Hispanic populations have significantly higher poverty rates than whites and Asians; 25.7% of all African Americans and 28% of all Hispanics were living poverty in 2011, compared to 14.3% of whites and 16.9% of Asians. Women were also more likely to be living in poverty compared to men;  53.5% of people living in poverty in 2011 were women versus 47% of men. As for poverty levels by age, according to the official poverty measure, 22.3% of children (under 18), 13.7% of adults (ages 18-64), and 8.7% of seniors (65 and above) were living in poverty in 2011. While under the SPM, 18.1% of children (under 18), 15.5% of adults (18-64) and 15.1% of seniors (65 and above) were living in poverty in 2011

Most importantly, the SPM examines the impact of various government programs on poverty. The new SPM data reveal that without Social Security the overall poverty rate would increase from 16.1% to 24.4%. Similarly, without refundable tax credits the overall rate would grow from 16.1% to 18.9%. Alternatively, if people didn’t have expenses such as child support, income and payroll taxes, work-related expenses, and medical out-of-pocket expenses, the overall poverty rate would decrease from 16.1% to 12.7%

The 2011 SPM data allow us to understand the current poverty levels in our society more clearly. There are somewhere between 45 and 50 million Americans living in poverty according to the SPM and the official measure. Yet, these measures still understate the number of people in poverty, since they focus solely on income poverty and do not even consider asset poverty. Asset poverty means having insufficient funds to meet one’s needs for three months if income were to disappear for those three months. According to the Urban Institute, 1 in 5 people, or 60 million Americans, were asset poor in 2010. Unfortunately in the 2012 election, tackling domestic poverty issues was not on either the candidates’ agenda or the media’s agenda. In a country with so much wealth and an overall increasing wealth gap as well as a worsening racial wealth gap, it is totally unacceptable that so many people are living in or on the edge of poverty, and we as a country need to bring this issue to the forefront.

This blog post was coauthored by Alex Hoffman.

 

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

Income and Employment Data from the 2010 American Community Survey

Last week the Census Bureau released data on the national poverty rate. As was discussed in our recent blog about this data, the number of people in poverty in 2010 was the largest in the 52 years for which poverty estimates are available. There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009, and the nation's official poverty rate in 2010 was 15.1 percent, up from 14.3 percent in 2009.

This week, the American Community Survey (ACS) data were released. The ACS is a sort of mini-census conducted annually that polls roughly three million homes per year. This survey provides demographic, social, economic, and housing data for states, congressional districts, counties, and other localities. In other words, it provides much more data on what is happening at local levels.

According to the ACS, real median household income fell between 2009 and 2010, decreasing by 2.2 percent from $51,190 to $50,046. No state showed an increase in real median household income

The ACS data also show a continued decrease in employment. Between 2008 and 2010 the nation experienced a 4.9 percent decline in the employment/population ratio, from 71.5 percent in 2008 to 66.6 in 2010. In fact, all of the 50 largest metropolitan areas, except New Orleans–Metairie-Kenner, Louisiana, experienced a significant decrease in their employment/population ratio during this time period.

Although the recession was “officially” over by mid-2009, the nation’s employment ratio continued to decline between 2009 and 2010, dropping from 68.2 percent to 66.6 percent. Although this decline was smaller than the 3.3 percent decline that occurred between 2008 and 2009, the overwhelming majority of the 50 largest metropolitan areas (43) continued to experience declines between 2009 and 2010

Income and Unemployment in Illinois

In Illinois, median household income, at $52,972, is slightly above the national average of $50,046. Yet, Illinoisan’s still experienced a 3.7 percent decline from last year’s median household income of $54,992. In terms of employment/population ratios, Illinois is again slightly above the national average of 66.6 percent, at 72.2 percent, however, the decrease between 2008 and 2010 shows that the downward trend in this ratio is continuing. In 2008, Illinois’ employment ratio was 72.2 percent, in 2009 it was 68.7 percent, and it’s now at 67.4 percent.

White House Jobs Bill

On September 8th the President, speaking before a joint session of Congress, unveiled the proposed American Jobs Act bill. The bill, which proposes tax credits for American businesses, and payroll tax cuts for all workers, is intended to get the economy going again. As President Obama stated: "The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed. It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services."

Of particular interest, given the ACS data on unemployment, the bill, which is a combination of tax cuts, investments in infrastructure, funding for job training, and benefit extensions, contains provisions for extending unemployment benefits for the long-term unemployed. The need for job creation and the extension of benefits for those currently unemployed is underscored by the ACS data.

A complete copy of the 2011 American Community Survey data is available from the Census Bureau. A summary and the full text of the American Jobs Act of 2011 are available on the White House website.

 

Poverty Rate Soars to Record High in 2010

Poor manAccording to the annual poverty data released by the Census Bureau yesterday, there were 46.2 million Americans living in poverty in 2010, up from 43.6 million in 2009 (an increase of 2.6 million). In other words, more than1 in 6 Americans were poor in 2010. This is the highest number since the Census Bureau began gathering data 52 years ago, superseding last year’s all-time high.

The national poverty rate climbed to 15.1 percent in 2010, an increase over 2009’s rate of 14.3 percent. This is the fourth yearly increase. The South was hit hardest, as its poverty rate climbed by 1.2 percent—twice the rate of any other region in the country.

Experts believe that these figures understate the real level of poverty in the U.S. For example, many more young adults are staying or moving back home because they can’t find jobs, and others have doubled up with friends and relatives. If only their incomes, as opposed to the entire household’s, are counted, then instead of the official poverty rate of 8.4 percent, 45.3 percent would be in poverty.

Additionally, the government’s methodology for determining poverty inadequately measures the real poverty rate in America. The federal poverty line of $22,314a yearfor a family of four and $11,139 for an individual is based on methodology designed in the early 1960s that fails to capture people’s spending and living needs in today’s economy.

The Census Bureau will release a Supplemental Poverty Measure in October 2011. This new measure, which the Bureau announced last March, is intended to provide an alternative, modernized measure of economic well-being. It will use a more accurate measure of a family’s income by including income from government programs (e.g., tax credits, nutritional support, housing and energy assistance), while deducting expenses (e.g., child support obligations, child care costs, work expenses, taxes and medical costs). It will not replace the official poverty measure and will not be used to determine eligibility for government programs. 

Income
Middle-class American families’ income fell in 2010. The median household income fell 2.3%, or $1,154, in 2010, adjusting for inflation. Overall, median income has changed very little compared to rising consumer prices over the last 30 years. Adjusted for inflation, the middle-income family earns only 11% more than they did in 1980, while the top 5% richest Americans saw their incomes surge 42%.

Income inequality has also increased. The top-earning 20 percent of Americans—those making more than $100,000 each year—received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by those below the poverty line. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968. Between 1999 (the year that household incomes peaked before the 2001 recession) and 2010, income at the 50th and 10th percentiles declined 7.1 percent and 12.1 percent respectively, while the decline in income at the 90th percentile was only 1.5 percent. Although there was no change in the income ratios in the 90th to 10th percentile, the 90th to 10th percentile income ratio increased from 10.42 to 11.67 percent. Households in the top 20 percent by income saw incomes fall by 0.7 percent, while those in the bottom 20 percent saw incomes fall by over six times as much—4.5 percent—in inflation-adjusted dollars.

Households in the Midwest, South and West experienced declines in real median income between 2009 and 2010. On the other hand, median household income for the Northeast stayed about the same. More detailed state-by-state data will become available when the Census Bureau releases the American Community Survey next week on September 22nd.

Interestingly, the data note that, because more families have “doubled-up households,” the poverty statistics may significantly under count actual household poverty levels.Doubled-up households are defined as households that include at least one "additional" adult: a person 18 or older who is not enrolled in school and is not the householder, spouse, or cohabiting partner of the householder.

In spring 2007, prior to the recession, doubled-up households totaled 19.7 million. By spring 2011, the number of doubled-up households had increased by 2 million to 21.8 million, and the percent rose by 1.3 percentage points from 17 percent to 18.3 percent. Nearly 6 million young adults age 25-34 (14.2 percent) resided in their parents' households, compared with 4.7 million (11.8 percent) before the recession, an increase of 2.4 percent. As noted earlier, while it is difficult to precisely assess the impact of doubling up on overall poverty rates, the poverty rates for young adults age 25-35 would go from 8.4 percent to 45.3 percent if only their income was considered rather than the entire family’s income. 

Minorities
The Census Bureau poverty data show the poverty rate for African-Americans increased faster than for the rest of the population and was just over 27 percent. Blacks and Hispanics were hit particularly hard by the recession. The rate of blacks living in poverty climbed by 1.6 percent, and Hispanics’ rate increased by 1.3 percent. In comparison, the white poverty rate grew by 0.7 percent, and the Asian poverty rate actually fell by 0.4 percent.

One recent analysis concluded that the gap in wealth between white households and households of blacks and Hispanics was the largest in 2009 since the government began publishing data on this topic a quarter century ago. According to the report, about a quarter of all Hispanic (24%) and black (24%) households in 2009 had no assets other than a vehicle, compared with just 6% of white households.

Health Insurance Coverage 
The Census Bureau’s report also showed that the number of people without health care coverage rose to 49.9 million last year from 49.0 million in 2009, though the percentage of uninsured was from the 2009 rate of 16.3 percent. The Northeast and the Midwest appear to have had the lowest uninsured rates in 2010.

The increase in the number of people without health insurance is due mostly to working-age Americans who lost employer-provided insurance in the weak economy. Between 2009 and 2010, the percentage of people covered by employment-based health insurance declined from 56.1 percent to 55.3 percent, while the percentage covered by government health insurance increased from 30.6 percent to 31.0 percent. Reaching a new low, this is the tenth year of decline in the share of people with employer-provided insurance. Interestingly, however, the percentage covered by Medicaid (15.9 percent) was not statistically different from 2009. Moreover, an additional 2% of young adults age 18-24 gained coverage due to the health care reforms that allow them to remain under their parents’ health insurance until the age of 25.

The number of uninsured people isn’t likely to decrease if the unemployment rate remains high. Despite the historic Affordable Care Act health care reform legislation passed last year, many Americans will remain uncovered for a while because many of the Act’s primary expansions in coverage will not take effect until 2014

Children and the Elderly
The share of children under 18 living in poverty also jumped to 22% from 20.7% in the previous year. In 2010, 16.4 million children younger than 18 lived in poverty, compared with 15.5 million in 2009.

Historical Impact of Recessions 
These data cover the first full calendar year after the technical end of the  December 2007-June 2009 recession. The data are bleak but not surprising.

Given that in 2010 the unemployment rate was 9% and the number of Americans who were unemployed for 6 months or more was at an all-time high, the single most important factor in the increase in poverty may be the increase in the number of people who did not work at all last year. Since the start of the recession in 2007, the number of men working full time, year-round with earnings has decreased by 6.6 million, and the number of women has declined by 2.8 million.

Taken together, the data all point to the severe and widespread financial strains of a nation in the throes of an economic crisis. And the Census data report, coming shortly after President Obama’s proposed package of $447 billion in tax cuts and spending to revive job growth and the recovery contained in the American Jobs Act, is almost certain to intensify the debate over the government’s role in helping the poor and unemployed at a time of budget deficits and painful cutbacks in public services.

As the poverty rate approaches levels not seen since Lyndon B. Johnson launched the War on Poverty in 1965, it is crucial that American families tell Congress just how important such government safety nets have been to their economic well-being. The 2010 data show that there has been a sharp increase in those households that are in “deep poverty” (i.e., households living at less than half of the federal poverty level). Deep poverty has risen to an estimated 6.3%—20.5 million people—an increase of more than 25% since 2000. This number is an indicator of “disconnected” households with little meaningful attachment to employment.  As experts note, as government programs to assist those Americans suffering from this economic downturn are cut, it won't take much for “deep poverty” to claim a share of the population the country hasn't seen in over three decades. If that happens, the current poverty numbers, as astounding as they are, will seem meager.

 

Poverty by Any Other Name Is Still Poverty

PenniesLast September the Census Bureau released the 2009 poverty statistics, which showed that 14.3 percent of Americans are living in poverty. At 43.6 million people, this number has not been this high during the 51 years that the U.S. has published poverty rates.  Additionally, also published last September, the American Community Survey (ACS), which offers additional demographic and geographic information about poverty levels, revealed that in Illinois, 13.3 percent of the population is living in poverty. Another 6 percent of Illinois families are experiencing ‘extreme poverty’, surviving on $11,025 a year for a family of four.

Both the Census Bureau’s and the ACS’s estimates are calculated using the official poverty measure, a formula created in the mid-1960s based on the cost to feed a family. Yet, advocates, government agencies, and social service providers alike have pushed for a new, more accurate way to measure poverty. 

Since 1979, the Census Bureau has published a variety of experimental poverty measures using expanded definitions of income and alternative methods to account for inflation.

The Annual Social and Economic (ASEC) Supplement released annually by the Census Bureau, is one such alternative measure. The most recent statistics, published this month, revealed that 23.7 percent of Americans lived in poverty in 2009, a number almost 10 percent higher than the official poverty measure. This ASEC data takes into account government benefit transfers (e.g., public assistance, medical assistance, etc.) in its calculation and shows that without public benefits the poverty rate would be much higher.

In the meantime, last May the Census Bureau announced that it will introduce a Supplemental Poverty Measure (SPM) starting in the fall of 2011. The SPM will have many advantages over the official measure in that it will include factors such as family structure, public assistance, child support payments, and homeownership in its analysis. The Bureau is working hard at developing and testing different measures and it recently posted the following key findings from its initial research using the SPM:

  • The SPM poverty rate for all persons is 15.7 percent as opposed to 14.3 percent for the official rate.
  • The SPM poverty threshold is $24,869 whereas the official poverty threshold is $21,834.
  • The SPM calculates that 16.1 percent of the elderly are living in poverty. When out-of-pocket medical expenses are taken into consideration, the percentage drops drastically to 8.7 percent, indicating that medical expenses are a huge factor for the elderly.
  • The Earned Income Tax Credit (EITC) and food assistance (SNAP) appear to be effective at reducing poverty among children. According to the SPM calculation, the EITC reduces child poverty by 4 percent and SNAP reduces child poverty by almost 3 percent.

The SPM will be especially useful in evaluating the effectiveness of anti-poverty policies such as EITC. It will not replace the official poverty measure, which means that eligibility for government benefit programs will still use the outdated and incorrect official poverty measure thereby precluding many  from receiving the benefits they need. It also appears that the ACS and perhaps the ASEC will also continue to be published. Ultimately, however, it is important that the SPM, which will present a clearer picture of poverty, becomes the official measure so that policymakers can better serve the ever increasing number of families living in poverty with the hope of one day eliminating poverty entirely.  

This blog post was coauthored by Kelly Ward.

 

They Say It's Over, We Say It's Not: Illinois Poverty Rates Still Up

Poverty in the Nation

Two weeks ago, the Census Bureau released data on the national poverty rate. As was discussed in our previous blog, the number of people in poverty in 2009 is the largest in the 51 years for which poverty estimates are available. There were 43.6 million people in poverty in 2009, up from 39.8 million in 2008, and the nation's official poverty rate in 2009 was 14.3 percent, up from 13.2 percent in 2008.

This week, the American Community Survey (ACS) data was released. The ACS is a sort of mini-census conducted annually that polls roughly three million homes per year. This survey provides demographic, social, economic, and housing data for states, congressional districts, counties and other localities. In other words, it provides much more data on what is happening at local levels.

According to the ACS, thirty-one states saw increases in both the number and percentage of people in poverty between 2008 and 2009. Poverty rates from the 2009 ACS for the 50 states and the the District of Columbia ranged from a low of 8.5 percent in New Hampshire to a high of 21.9 percent in Mississippi.

Poverty in Illinois

The percentage of Illinoisans living below the poverty line rose dramatically over the last decade. In 1999, the poverty rate in Illinois was 10.7 percent. The 2009 data show that 13.3 percent of Illinois residents were living in poverty last year.

The Heartland Alliance for Human Rights and Human Needs analyzed the 2009 data for the region. The Illinois fact sheet developed by Heartland Alliance reveals that the Illinois poverty rate in 2009 was 13.3%, an increase from 12.2% in 2008. Moreover, the Illinois child poverty rate in 2009 was 18.6%, an increase from 16.8% in 2008.

Other poverty measures in Illinois showed that median household income fell from nearly $60,000 in 1999 to just under $54,000 last year, a 10-percent decrease. The proportion of the population in "extreme poverty"--that is, living on less than half the federal poverty guideline--rose 18 percent over the same period, with 140,000 new Illinoisans joining the ranks of the extremely poor. Six percent of the state's population now lives below that threshold, which comes out to $11,025 per year for a family of four.

Recession Over?

Although the National Bureau of Economic Research, the organization that determines when economic downturns begin and end, recently reported that the Great Recession ended in June 2009, it acknowledged that economic conditions since then have not been favorable or that the economy has returned to operating at normal capacity. The effects of the recession, which began in December 2007, lasted 18 months, and was the longest and deepest downturn for the U.S. economy since the Great Depression, will continue for years.

Experts agree that the number of people in poverty could have been worse if the Recovery Act had not expanded benefits and federal support for programs like P-12 education, Medicaid, TANF, the Child Tax Credit, the Earned Income Tax Credit, and SNAP/Food Stamp programs. This federal support created jobs, helped both employed and unemployed low-income families make ends meet, kept some of them out of poverty, and allowed them to contribute to local economies by spending their paychecks and benefits in their communities, thereby supporting state budgets during dire financial times. Unfortunately, these important social safety net programs are in jeopardy due to the impending expiration of the Recovery Act and the ongoing massive state budget shortfalls, which are fueled by unwillingness in most states to raise necessary tax revenues. If federal and state politicians do not rise to the task, more people could fall into poverty and less money will be spent in local economies, which could trigger another recession.

Number of Americans in Poverty Highest in 51 Years

Homeless WomanToday the Census Bureau released the 2009 poverty data which shows that the number of people in poverty in 2009 is the largest number in the 51 years for which poverty estimates are available. There were 43.6 million people in poverty in 2009, up from 39.8 million in 2008 — the third consecutive annual increase. The nation's official poverty rate in 2009 was 14.3 percent, up from 13.2 percent in 2008. The data also show that nearly 21% percent of children, or roughly 15.5 million, were in poverty in 2009 versus 19% in 2008, or approximately 14.1 million in 2008.

Living in poverty means deprivation and hardship. For a family of four, life at the poverty level means trying to provide children with a roof over their heads, clothing, adequate health care and a nutritious diet on an annual income of $21,947.

The 2009 poverty data grimly illustrates the heavy toll that the recession has taken on the American people. The increase in poverty is made even more painful by the fact that it follows an economic recovery that utterly failed to reduce poverty--indeed, it was the first economic recovery on record where the poverty level at the peak of the recovery (2007) was actually higher than it was in the previous recession (2001).  

The unprecedented increases in poverty and child poverty are consistent with other data that show the severity of the current recession. For example, the unemployment rate in the United States doubled between 2007 (when the recession began) and 2009, going from 4.6 to 9.3 percent.  Also during this time, the number of Americans receiving food stamps increased by 33 percent, to over 35 million people.

The 2009 poverty data calls for two policy responses. First, Congress should extend or make permanent several key pieces of the Recovery Act aimed at low- and moderate-income households that otherwise will expire this year. Second, Congress should not extend the Bush tax cuts for the wealthy that are due to expire this year.

Continuing Recovery Act Provisions

The 2009 poverty data demonstrate the need to continue several provisions of the Recovery Act that help low- and moderate-income people make ends meet and begin to rebuild assets, while also stimulating the economy through consumer spending:

  1. The Temporary Assistance for Needy Families (TANF) emergency contingency fund (ECF) must be extended for one year. This fund has created 240,000 jobs in 37 states, making it the most successful direct job creation initiative since the Great Depression. It will expire at the end of September unless Congress takes action.

  2. The 2009 improvements to the Child Tax Credit due to expire at the end of the year must be made permanent. This credit provides assistance for parents in helping to defray the costs of having a child such as child care costs. The Recovery Act allowed low-income working families to count more of their earnings below $13,000 in calculating the value of their Child Tax Credit. These improvements have a dramatic effect for low-income families--for example, a parent working for the minimum wage and raising two kids saw her credit increase from $250 to $1,725. These changes will expire at the end of the year unless Congress takes action.

  3. Similarly, the 2009 improvements to the Earned Income Tax Credit (EITC) due to expire at the end of the year must be made permanent.  The EITC supports low- and moderate-income working people by providing a refundable tax credit.  These credits were expanded to help families deal with the recession. Specifically, the Recovery Act provided a temporary increase in the EITC for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. The Recovery Act also temporarily increased the beginning point of the phase out range for the credit. Since these credits help 13 million children currently living in poverty and millions of working families, Congress must ensure that these changes are made permanent.

  4. Extra weeks of unemployment benefits for the long-term unemployed will expire on November 30, and it is clear that they too need to be extended.

The Bush Tax Cuts for the Wealthy

The unprecedented level of poverty in the U.S. is further evidence that the Bush tax cuts for the wealthy should not be extended beyond the end of this year, when they are scheduled to expire.

The income gap between rich and poor--now at its widest since the Great Depression--was exacerbated by the Bush tax cuts. Households in the bottom fifth of the income spectrum received tax cuts averaging $29, while the top 1 percent of households received tax cuts averaging $41,077.

In addition, a recent report by the non-partisan Congressional Budget Office (CBO) concluded that extending the Bush tax cuts for the wealthy was the worst available policy option for stimulating the economy since wealthy people are much more likely to save their tax cuts than spend them. The CBO found that creating a temporary jobs tax credit or extending unemployment insurance benefits would generate three to five times more economic growth and create four to six times more jobs than extending the Bush tax cuts for the wealthy.

The increase in poverty and child poverty between 2008 and 2009 is further evidence that the Bush tax cuts for the wealthy should not be extended.

Note: On September 28, the American Community Survey data will be released. This data will provide more specific information about poverty levels in each state including, among other things, how median income differs by race/ethnicity, gender, family structure and education in each state and how that compares to the national average. Look for our blog’s analysis of this data as soon as it is released.

This blog post was co-authored by Dan Lesser.

 

The U.S. Census, Arrest Records, and Employment Discrimination

The U.S. Census rejected 69-year-old Evelyn Hauser from a job because of her past arrest, even though she was never formally convicted and even though she hasn’t had any interactions with the criminal justice system in the nearly three decades since. The federal government didn’t have a problem with her criminal record when it hired her for the 1990 Census, so a class action lawsuit is asking: “What’s the problem now?”

Ms. Hauser is one of the named plaintiffs in Johnson v. Locke, a federal class action lawsuit challenging the Census’ screening practices for applicants with arrest records. The purpose of this lawsuit is to effect “simple changes to the Census’ hiring process that not only reduce its discriminatory effects, but will promote the public interest by expanding [its] hiring base in historically under-counted communities, thereby helping to achieve [the federal government’s] mandated goal of counting all who live in the United States.”  

The screening process goes like this: for every person who applies for one of these over one million temporary but well-paying positions, the Census runs an FBI criminal background check. If an arrest turns up, the applicant is ineligible for employment unless she can, within thirty days, produce a court document describing the disposition, i.e., outcome of the case.   

There are several problems with this screening system. First, the FBI database is notoriously incomplete. Half of all arrest records in the database are missing dispositions, which means that a significant number of applicants with arrests will have to track down these court documents. The 30-day requirement is especially burdensome for Ms. Hauser and other people whose cases predate the computerization of court files. 

Second, without having a complete picture of an applicant’s criminal history, the Census risks basing its hiring decisions on arrests and thus violating Title VII of the Civil Rights Act of 1964. Title VII prohibits employment policies that unjustifiably and disparately impact racial minorities. Indeed, the Equal Employment Opportunity Commission – the federal agency charged with enforcing Title VII – advises employers that bans on people with arrest records discriminate against racial minorities. Not only do racial minorities experience higher arrest rates, but arrests also have limited value in screening applicants since they are not reliable indicators of criminal activity.

As a result of this screening process, the complaint notes, “All applicants, whether or not they will work with the public, who have an arrest record at any point in their lives – no matter how trivial or disconnected from the requirements of the job – face an arbitrary barrier to employment.”  All Ms. Hauser wants, though, is to “continue contributing to her community.”

For more information on this case, visit the Census Worker Class Action Website.