U.S. poverty up, income down, report says
WASHINGTON (AP) – Income declined while poverty levels rose last year, the Census Bureau reported Tuesday, a double dose of bad economic news that coincided with the first recession in a decade. After nearly a decade of decline, the U.S. poverty rate stood at 11.7 percent last year, up from 11.3 percent the previous year, which was the lowest level since 1974. More than 32.9 million people lived in poverty last year, 1.3 million more than in 2000.
The median household income declined 2.2 percent to $42,228 after remaining flat the previous year. It was the first statistically significant decline in a decade. Median income refers to the point at which half of households earn more and half earn less.
Income levels fell for every group except the very richest and very poorest. All racial groups experienced a decline, although Asians and blacks experienced the most substantial drops.
Democrats seized on the dreary numbers to criticize Republican policies and push for an extension of unemployment benefits.
Senate Banking Committee Chairman Paul Sarbanes, D-Md., said the Bush administration has focused too much attention on tax cuts and not enough on the needs of the most vulnerable citizens. “The administration needs to show that it has some understanding that there’s an economic problem out there and that they’re prepared to do something about it,” he said.
President Bush said he remains upbeat about the economy.
“When you combine the productivity of the American people with low interest rates and low inflation, those are the ingredients for growth,” he said. “But I understand we got a lot of work to do.”
Joel Naroff, an economist and president of Naroff Economic Advisers of Holland, Pa., said the declines are cyclical and were to be expected after a decade of unprecedented growth.
He said the economy will continue to struggle and incomes will be depressed until managers feel more comfortable about hiring.
Asians saw the biggest drop in income – 6 percent – followed by blacks at about 3 percent and whites and Hispanics at around 1 percent.
Some analysts were baffled that poverty rates increased more for whites and Asians than blacks, while there was a slight decrease for Hispanics. That is counter to trends in previous recessions, said Wendell Primus, an economist with the liberal-leaning Center for Budget and Policy Priorities.
“Frankly, I’m puzzled,” Primus said. “We were expecting poverty to tick up. But do I have a good answer? No.”
Robert Rector of the conservative Heritage Foundation attributed the differences to the effects of the 1996 welfare overhaul, which nudged more people off public assistance rolls and into jobs.
Tim Smeeding, an economics professor at Syracuse University, said it was hard to predict any overall patterns stemming from the recession so far.
“We just turned the corner in 2001 from expansion into recession, so it’s hard to discern patterns yet,” Smeeding said. “The thing is, this report gets us into January of this year, and since then, things haven’t gotten better and probably have gotten worse.”
Daniel Weinberg, chief of the Census Bureau’s economic statistics division, said every region saw a decline in median household income except the Northeast, where it was flat.
The poverty rate for all children under 18, regardless of race, rose from 16.2 to 16.3 percent. It declined for blacks, Hispanics and Asians, but increased for whites, though the bureau said the changes weren’t statistically significant.
Wade Horn, the assistant secretary for children and families at the Health and Human Services Department, pointed to that drop as evidence of the successes of the landmark 1996 welfare overhaul, which imposed tough new rules for people receiving cash aid. Debate in Congress continues over whether to toughen work requirements or add money for child care, with less than a week remaining before the law expires.
There was good news for women in the report. Those 15 and older working full-time and year-round earned 76 cents for every dollar a man earned, the highest ratio in history.
The figures in the report come from a survey of 78,000 households taken in March. Census officials say all the figures are estimates that could vary slightly from actual values.
Figures for whites refer to those who are not Hispanic. Hispanic is considered by the federal government to be an ethnicity, not a race; therefore, a person of Hispanic ethnicity can be of any race.
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