Despite recovery, poverty on rise

WASHINGTON – Family incomes stagnated in the United States last year and more Americans slipped into poverty, the Census Bureau said Tuesday in a report that raised questions about which Americans are enjoying the fruits of an economic expansion that began in 2001. It was the fourth consecutive year that the report found an increase in the U.S. poverty rate.

The report added color to recent polls showing that despite strong economic growth and low unemployment, most people are sour on the state of both the national economy and their own finances.

The Bush administration said the Census Bureau’s annual statistical snapshot of American households contained good news. Kathleen B. Cooper, undersecretary of commerce for economic affairs, noted the poverty rate was lower in 2004 than it was in all but one year of the 1980s and 1990s. Officials also said poverty rates are one of the last statistics to improve in an economic recovery, and that job gains should lift more people out of poverty soon.

Democrats blamed administration policies for rising poverty and stalling income growth. “Wealthy Americans may be doing well in this economy, but most Americans are losing ground,” said Rep. George Miller, D-Calif.

The Census Bureau report showed that median household income – the level at which half of all households earn more and half earn less – was $44,389 in 2004, a statistically insignificant $93 less than the 2003 median when adjusted for inflation. The median household income has been falling consistently since reaching its all-time peak of $46,128 in 1999.

Nearly 37 million Americans, or 12.7 percent, lived below the official poverty line in 2004, the Census Bureau found. That marked a rise of 1.1 million people from 2003, when the poverty rate was 12.5 percent

The poverty rate was last this high in 1998.

The Census Bureau also reported that 45.8 million Americans, or 15.7 percent, lacked health insurance in 2004, essentially the same number as the 15.6 percent in 2003.

Employer-provided health coverage continued to shrink, but public programs such as Medicaid largely picked up the slack.

“This is not good news,” said Timothy M. Smeeding, a professor at Syracuse University’s Maxwell School, which focuses on public administration. “We’re four years into a recovery, and we’re not showing any progress. In fact, quite the opposite.”

In their search for a cause, Smeeding and others looked to the jobs market. “We’re not doing a very good job of getting people back to work who’ve lost good jobs, particularly in manufacturing,” Smeeding said.

Jared Bernstein, an economist with the Economic Policy Institute, a think tank backed heavily by organized labor, said the share of Americans holding jobs had fallen by 2 percentage points since the 2001 recession. The unemployment rate has fallen to 5 percent, he said, only because many Americans have quit looking for work.

“When the job market isn’t tight enough, workers don’t have leverage to bargain for their fair share of the recovery,” Bernstein said.

More conservative analysts reacted to the numbers more positively. Douglas J. Besharov, an economist with the American Enterprise Institute, pointed out that the poverty rate tends to drop only after the economy has been generating new jobs for a year or more and that the economy did not begin generating new jobs consistently until the middle of last year.

Charles Nelson, the Census Bureau assistant division chief who oversees income, poverty and health-insurance statistics, said disappointing numbers on incomes and poverty were not unusual even in the third year of an economic recovery. He said the nation experienced a similar phenomenon during the early years of the Clinton administration, as the economy slowly came out of the 1990-1991 recession.

“In the early 1990s, poverty rose for four years before it started turning the corner and declining,” Nelson said. “We’ll see what happens next year.”

As for stagnant median income, Nelson said it could signify that some workers returning to the labor force after layoffs were starting over in lower-paying jobs. “When you’re adding a lot of workers, sometimes the median (income) goes down, but that’s not a bad sign,” he said.