Poverty Numbers Steady, Income Dips

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An intersection in East Harlem, one of New York City's poorest Census tracts.

Photo by: Marc Fader

An intersection in East Harlem, one of New York City's poorest Census tracts.

For the first time in four years, the U.S. poverty rate and the number of Americans living below the poverty line did not increase in 2011, according to data released Wednesday by the Census Bureau, which also found evidence that President Obama’s healthcare reforms reduced the number of uninsured people.

But for the second year in a row, median household income dropped last year. And for the first time in nearly two decades, income inequality increased.

According to the Census data, some 46.2 million Americans lived in poverty in 2011, comprising 15 percent of the population—numbers not statistically distinguishable from 2010 figures.

But by staying put the poverty rate remained higher than it has been since the early 1990s.

Meanwhile, the number of uninsured people fell from 50 million in 2010 to 48.6 million in 2011, with the uninsured rate dropping from 16.3 percent to 15.7 percent.

That drop was led by a 2.2 percent decrease in the number of people aged 19 to 25 who were uninsured. The Affordable Care Act mandated that people in that age category be considered dependents on their parents’ insurance. And for the first time in a decade, the percentage of people with private health insurance coverage did not decrease in 2011, while government insurance coverage increased.

But while poverty stayed steady and insurance coverage rose, median household income slipped 1.5 percent to $50,100 last year. Since the beginning of the recession, median income has fallen 8.1 percent.

And the Gini index, which measures income inequality, rose 1.6 percent, the first annual rise since 1993, the earliest year that’s comparable.

Other inequalities persist but didn’t worsen significantly in the past year. The median Asian family had twice the income of the median black family. Women on average made 77 percent of what men made. Hispanics were twice as likely to be poor as whites.

The Census Bureau suggested the stability of the poverty rate reflected an increase in the number of people working at the economy’s bottom rungs: The number of people in the lowest income quintile who worked leapt 17 percent last year. That increase in low-wage work, however, also exacerbated inequality in earnings.

In other explanations for the poverty level, the Bureau estimated that unemployment insurance benefits kept 2.3 million people out of poverty, while Social Security benefits allowed more than 21 million people to stay above the poverty line.

In a presidential election year where the economy is a bigger issue that it’s been in two decades, the poverty and income numbers are sure to fuel partisan chatter.

Both the president and Republican nominee Gov. Mitt Romney discussed poverty in their convention acceptance speeches.

“We believe that a little girl who’s offered an escape from poverty by a great teacher or a grant for college could become the founder of the next Google, or the scientist who cures cancer, or the President of the United States— and it’s in our power to give her that chance,” Obama told the Democratic crowd in Charlotte. “We know that churches and charities can often make more of a difference than a poverty program alone. We don’t want handouts for people who refuse to help themselves, and we don’t want bailouts for banks that break the rules. We don’t think government can solve all our problems. But we don’t think that government is the source of all our problems— any more than are welfare recipients, or corporations, or unions, or immigrants, or gays, or any other group we’re told to blame for our troubles.”

In Tampa, Romney told Republicans: “Today more Americans wake up in poverty than ever before. Nearly one out of six Americans is living in poverty. Look around you. These are not strangers. These are our brothers and sisters, our fellow Americans.”

Their competing depictions of poverty reflected their clashing narratives of what’s occurred in the last three and a half years—Obama’s story of hopeful pragmatism and incremental progress versus Romney’s tale of economic failure and despair. The numbers on poverty and income offer some support for each version, but probably provide the strongest backing to an alternate interpretation: that no one is sure what direction the economy is heading.

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