September 30, 1997 in Nation/World

Economy Leaves Poor In Dust American Incomes Show Some Gains, But Not For Everybody

R.A. Zaldivar Knight-Ridder
 

Though businesses are hiring and consumers are buying, the benefits of a steadily growing economy have not been getting through to America’s poor, the Census Bureau reported Monday.

The bureau’s annual income, poverty and health insurance report showed that middle-class incomes rose modestly in 1996. The median - or midpoint- household income stood at $35,492, an increase of $410, or 1.2 percent, from 1995.

But the poverty rate barely budged, with 13.7 percent of Americans living below the poverty line. That was only one-tenth of a percentage point lower than in 1995. About 36.5 million people - including 1 of every 5 children - were living below the official poverty level of $16,036 for a family of four.

“The fact that there is no news on poverty is bad news,” said Bill Frey, a demographer at the University of Michigan’s Population Studies Center. “The Dow Jones is going up, but poverty is not coming down.”

The number of Americans without health insurance increased by 1.1 million in 1996 to 41.7 million. But that increase was not significant enough to change the overall proportion of the uninsured.

However, a closer look merits some concern. Children accounted for most of the increase in the number of uninsured, with an additional 800,000 lacking coverage. The new federal budget allocates $24 billion over five years to help states expand health coverage for children.

Based on a survey of 50,000 households, the census reports are like an annual snapshot of the state of American families taken with a point-and-shoot camera instead of a telephoto lens. Some details can be fuzzy, but it is the best portrait available.

Critics say the reports understate income and overstate poverty. Many economists say they believe the government’s inflation measure exaggerates the true change in the cost of living. If they are right and the real inflation rate is lower, family purchasing power is greater than what the Census Bureau is reporting.

Also, the poverty rate doesn’t take into account the effect of some major anti-poverty programs, such as food stamps and the Earned Income Tax Credit for working families. If these and other anti-poverty programs were considered, the poverty rate would drop to 10.2 percent.

Nonetheless, whichever poverty measure is used, the rate barely moved from 1995 to 1996. Susan Mayer, a sociologist at the University of Chicago, said the modern high-tech economy is inhospitable territory for low-skilled workers.

“The kind of jobs that have been driving this economic boom are not the kinds of jobs that very low-skilled people can take advantage of,” Mayer said. “The poverty rate has been very resistant to changes in the economy.”

A closer look at the income numbers bears that out. The Census Bureau reported that families in the lowest fifth of the income ladder, averaging $11,388, made $210 less in 1996 than in 1995.

Middle- and upper-income families fared better in 1996, with upper-income families seeing the strongest gains. Families in the upper fifth of the income ladder, averaging $125,627, saw their incomes rise by $2,647, or 2.2 percent, in 1996. Families in the middle fifth, averaging $42,467, saw an increase of $630, or 1.5 percent.

“Income growth was strongly concentrated at the top,” said Isaac Shapiro, an analyst with the anti-poverty Center on Budget and Policy Priorities in Washington.

The income and poverty figures showed no significant changes for whites, blacks and Asian-Americans. Hispanics had a 5.8 percent increase in their median income in 1996, almost negating a 5.1 percent decline in 1995.

Women continued to close the income gap with men. Median earnings for year-round, full-time women workers stood at 74 percent of the median for their male counterparts - a record. But the narrowing was partly due to a drop in the earnings of men.

President Clinton told reporters that the improvement in household income for the middle class is more validation of his economic policies. “America’s middle class, no longer forgotten, is rising fast,” he said.

But another Democrat disagreed. Minnesota Sen. Paul Wellstone, who has been mounting a campaign to call attention to poverty, said an unacceptably high percentage of families are being left behind.

“This is simply not the goodness of America,” Wellstone said.


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