Every year the Census Bureau releases ts 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.