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Tuesday, September 13, 2011

The Poverty Rate

Our chapter on social welfare policy looks at poverty and government efforts to alleviate it. A release from the Bureau of the Census provides new data:

The U.S. Census Bureau announced today that in 2010, median household income declined, the poverty rate increased and the percentage without health insurance coverage was not statistically different from the previous year.

Real median household income in the United States in 2010 was $49,445, a 2.3 percent decline from the 2009 median.

The nation's official poverty rate in 2010 was 15.1 percent, up from 14.3 percent in 2009 ─ the third consecutive annual increase in the poverty rate. There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009 ─ the fourth consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published.

The number of people without health insurance coverage rose from 49.0 million in 2009 to 49.9 million in 2010, while the percentage without coverage −16.3 percent - was not statistically different from the rate in 2009.

This information covers the first full calendar year after the December 2007-June 2009 recession. See section on the historical impact of recessions.

These findings are contained in the report Income, Poverty, and Health Insurance Coverage in the United States: 2010.

Here is the perspective from the conservative Heritage Foundation:

The following are facts about persons defined as “poor” by the Census Bureau as taken from various government reports:

  • 80 percent of poor households have air conditioning. In 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.
  • 92 percent of poor households have a microwave.
  • Nearly three-fourths have a car or truck, and 31 percent have two or more cars or trucks.
  • Nearly two-thirds have cable or satellite TV.
  • Two-thirds have at least one DVD player, and 70 percent have a VCR.
  • Half have a personal computer, and one in seven have two or more computers.
  • More than half of poor families with children have a video game system, such as an Xbox or PlayStation.
  • 43 percent have Internet access.
  • One-third have a wide-screen plasma or LCD TV.
  • One-fourth have a digital video recorder system, such as a TiVo.

For decades, the living conditions of the poor have steadily improved. Consumer items that were luxuries or significant purchases for the middle class a few decades ago have become commonplace in poor households, partially because of the normal downward price trend that follows introduction of a new product.

Matthew Yglesias writes at the liberal ThinkProgress website:

When contemplating the rising poverty rate in the face of the economic downturn, it’s important to keep in mind that one crucial quirk of the way the Census Bureau calculates the poverty rate is that the value of things like food stamps and Medicaid isn’t counted in considering whether a family is above or below the line. If the government enacted a pure cash transfer, like higher EITC benefits, that would show up as lifting some families out of poverty. But if the government increases spending on non-cash anti-poverty programs, then whatever benefits those programs have doesn’t count unless they indirectly serve to boost the recipients’ market wages. This is defensible in many cases, but hardly in all of them. SNAP (“food stamps”) in particular is extremely cash-like. It’s not as good as a pure cash transfer, but it’s difficult to make the case that a family receiving an extra $50 in SNAP value isn’t clearly better off than it was before the increase in SNAP benefits.

This is important because an increase in SNAP benefit levels is something the 111th Congress enacted and President Obama signed into law back in 2009. In other words, the real evolution of living standards at the low end in the United States isn’t as bad as a cursory look at the press release would have you believe and the incremental improvement is entirely thanks to a progressive public policy intervention.