WASHINGTON – The government’s first broad look at the recession’s impact on American households in 2008 showed that the nation’s poverty rate jumped to an 11-year high, incomes sank for most every group, and the number of people without health insurance rose to 46.3 million.
As bleak as these statistics were from the Census Bureau on Thursday, they captured only a part of the devastating effects of the economic downturn that worsened last fall and into this year. Analysts said they expect the official poverty rate, which rose to 13.2 percent from 12.5 percent in 2007, to keep climbing this year and next, reversing gains made in the 1990s.
With the unemployment rate averaging 8.9 percent this year, compared with 5.8 percent in 2008, incomes are likely to deteriorate further. Last year, the Census Bureau said, the median household income – the point at which half were more and half less – fell 3.6 percent from 2007, to $50,303.
That was the biggest decline for the first year of a recession since World War II, said Larry Katz, a Harvard University economist.
Given the meager income gains for most workers in prior recent years, he said, “We’ve basically seen a lost decade for typical American families.”
Although some analysts believe the economy is coming out of the recession, the Census Bureau’s annual report on income, poverty and health insurance was a sobering reminder of the widespread hardships inflicted by the downturn. And it added urgency to calls by various people for a national health care overhaul as well as a strengthening of other social programs aimed at helping unemployed and poor Americans and other vulnerable groups.
“We need to have both a growing economy and focused government policies if we’re going to make a dent in poverty,” said Sheldon Danziger, director of the National Poverty Center at the University of Michigan. He noted that poverty spiked in inner cities.
Overall, the nation’s poverty rate was at its lowest on record at 11.1 percent in 1973 but had hovered at roughly 12.5 percent from 2003 to 2007, when the economy was expanding.
About 39.8 million people fell below the poverty line last year, including more than 14 million children.
Jared Bernstein, economic adviser to Vice President Joe Biden, said the poverty figures were in line with expectations: “2008 was a good example of how much the economy hurt lower and middle-income people.”
About 3.8 million payroll jobs have been eliminated since January, and unemployment, at 9.7 percent, is projected by many economists to surpass 10 percent in the coming months. That indicates many more workers and their families this year have slipped into poverty or lost their health coverage, or both.
About 58.5 percent of the nation’s population last year was covered by private insurance provided through their employers, although that percentage has been steadily decreasing, the Census Bureau said.
The ranks of people without medical coverage, which increased from 45.7 million in 2007, were expected to have risen more sharply last year. But the decline in employment-based coverage was offset by expanding government safety-net programs and rising Medicare enrollment, which is driven by aging baby boomers. The number of uninsured children fell to 7.3 million from 8.1 million in 2007.