WASHINGTON (AP) — The ranks of America’s poor remained stuck at record levels, although dwindling unemployment benefits and modest job gains helped stave off what experts had predicted would be the fourth rise in a row in the poverty rate.With joblessness persistently high, the gap between rich and poor increased in the last year, according to two major census measures. Also, the median, or midpoint, household income was $50,054, 1.5 per cent lower than 2010 and a second straight decline.
A Census Bureau report released Wednesday provides a mixed picture of the economic well-being of U.S. households for 2011, when the unemployment rate improved to 8.9 per cent from 9.6 per cent in the previous year. The numbers are coming out not long before the Nov. 6 election in which the economy is the No. 1 issue and President Barack Obama is trying to make the case that the labour market, while not fully healed, is on the right track.
The overall poverty rate stood at 15 per cent, statistically unchanged from the 15.1 per cent in the previous year. The rate was better than a consensus estimate of demographers who had predicted, based on weak wage growth, a gain of up to half a percentage point, to levels not seen since 1965.
For last year, the official poverty line was an annual income of $23,021 for a family of four. By total numbers, roughly 46.2 million people remained below the poverty line, unchanged from 2010. That figure was the highest in more than half a century when records were kept. The 15 per cent poverty rate was basically unchanged from 1993 and was the highest since 1983.
Broken down by state, New Mexico had the highest share of poor people, at 22.2 per cent, according to rough calculations by the Census Bureau. It was followed by Louisiana, the District of Columbia, South Carolina, Arkansas and Georgia. On the other end of the scale, New Hampshire had the lowest, at 7.6 per cent.
“This is good news and a surprise,” said Sheldon Danziger, a University of Michigan economist who closely tracks poverty. He pointed to a continuing boost from new unemployment benefits passed in 2009 that gave workers up to 99 weeks of payments after layoffs and didn’t run out for many people until late 2011. Also, job gains in the private sector that helped offset cuts in state and local government workers.
“It would indicate the stimulus was even more effective than believed,” he said.
Bruce D. Meyer, an economist at the University of Chicago, said it was disappointing that poverty levels did not improve. He described it as a sign of lingering problems in the labour market even with recent declines in unemployment. “The drop in the unemployment rate has been due in significant part to workers leaving the labour force, because they are discouraged, back in school, taking care of family or other reasons,” he said.
The official poverty level is based on a government calculation that includes only income before tax deductions. It excludes capital gains or accumulated wealth, such as home ownership.
As a result, the official poverty rate takes into account the effects of some stimulus programs passed in 2009, such as unemployment benefits, as well as jobs that were created or saved by government spending. It does not factor in noncash government aid such as tax credits and food stamps.
David Johnson, the chief of the Census Bureau’s household economics division, attributed the better-than-expected poverty numbers to increases in full-time workers over the last year. He also estimated that expanded unemployment benefits helped keep 1.6 million working-age people out of poverty.
Social Security also lifted roughly 14.5 million seniors above the poverty line. Without those cash payments, the number of people ages 65 and older living in poverty would have increased five-fold, he said. Johnson also noted that that income inequality was widening. He said the top 1 per cent of wage earners had a 6 per cent increase in income over the last year, while income at the bottom 40 per cent of earners was basically unchanged.
“A lot of the increase is driven by changes at the very top of the distribution,” he said.
The share of Americans without health coverage fell from 16.3 per cent to 15.7 per cent, or 48.6 million people. It was the biggest decline in the number of uninsured since 1999, boosted in part by increased coverage for young adults under the new health care law that allows them to be covered under their parents’ health insurance until age 26.
Congress passed the health overhaul in 2010 to address the rising numbers of uninsured people. During this election year, the law has come under increasing criticism Republicans, including presidential nominee Mitt Romney, who has pledged to push a repeal if he is elected. The main provisions of the health care law will not take effect until 2014.
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