Recession has pushed millions more to poverty
WASHINGTON – The withering recession pushed the number of Americans who are living in poverty to a 51-year high in 2009 and left a record 50.7 million people without health insurance, the Census Bureau announced Thursday.
The 43.6 million Americans who were poor last year – up from 39.8 million the year before – were the most since poverty estimates were first published in 1959. The national poverty rate of 14.3 percent, up from 13.2 percent in 2008, was the highest since 1994.
The bureau also found that median income – the amount at which half of U.S. households earn more or less – had fallen 4.2 percent by 2009 since the recession began in 2007.
Encompassing a near-record rise in unemployment from 5.8 percent in 2008 to 9.3 percent in 2009, the Census Bureau’s annual income, poverty and health insurance survey is the first to capture the social and human toll of the Great Recession at its height.
It leaves no doubt that individuals and families of all incomes, races and ages are suffering.
“It’s not a pretty picture at all for the typical American household,” said Harvard University economist Lawrence Katz. “Only families headed by, essentially, people with professional degrees and Ph.D.s, if you look at the data, have withstood the recession without large losses in earnings.”
President Barack Obama said the grim news made it clear that much work remained to bring the nation back from the recession, but he added that the groundwork to do so has been laid.
“Because of the recovery act and many other programs providing tax relief and income support to a majority of working families – and especially those most in need – millions of Americans were kept out of poverty last year,” Obama said in a statement.
Income assistance from the American Recovery and Reinvestment Act – last year’s economic stimulus measure – includes unemployment insurance, food stamps and tax cuts.
The $28 billion in extended unemployment insurance benefits paid in 2009 helped keep 3.3 million more people from falling into poverty last year, said David Johnson, the chief of the Census Bureau’s division on housing and household economics.
Food stamp benefits under the Supplemental Nutrition Assistance Program kept 2.3 million more people out of poverty, the survey estimates.
The new law’s tax cut provisions probably won’t be reflected until next year’s data.
Heidi Shierholz, an economist at the Economic Policy Institute, a nonpartisan research center, said the stimulus’ biggest contribution was the estimated 1.3 million to 2.7 million full-time jobs that were created or saved in 2009, according to the Congressional Budget Office.
“Today’s report is ugly. Without (the recovery act) it would have been a lot uglier,” Shierholz said.
The dark data in the census survey weren’t surprising, considering the length and intensity of the recession. However, the 2009 findings were markedly worse than the 2008 data, which probably understated the severity of the recession because most of the nation’s job losses that year occurred after the survey was conducted in March.
Those job losses and work reductions for hourly employees caused the number of uninsured Americans to rise from 46.3 million people in 2008 to 50.7 million in 2009. The number of Americans who have health coverage decreased – from 255 million in 2008 to 253.6 million in 2009 – for the first time since the data began to be measured in 1987.
Most of that decline was reflected by a drop in the percentage of people who have private or job-based coverage. The number of people with either fell from 201 million in 2008 to 194.5 million last year. The percentage with job-based coverage fell from 58.5 percent in 2008 to 55.8 percent last year, the lowest coverage rate since 1987.
As more people lost jobs and were unable to afford private coverage, enrollment spiked in government insurance programs such as Medicaid and the Children’s Health Insurance Program. In all, the number of people with government-sponsored coverage went from 87.4 million to 93.2 million last year.
Help is on the way through new provisions of the health overhaul legislation that take effect this year, said Ron Pollack, the executive director of the consumer advocacy group Families USA. These include allowing adults under age 26 to get coverage through their parents’ plans and using state high-risk pools to cover adults with pre-existing conditions who can’t get coverage in the private market.
The survey found that a record 6.3 percent of Americans are living in “deep poverty,” or earning less than half of the federal poverty level of $21,954 for a family of four. The weak labor market also created a record 12.9 percent poverty rate for working-age Americans ages 18-64.
The nation’s median household income held steady in 2009 at $49,777. That’s mainly because household income fell in 2008 due to inflation fueled by increasing energy costs, Shierholz said. That situation righted itself in 2009 as energy prices plummeted and there was no inflation. “So real earnings got a big boost in 2009,” Shierholz said.
Median earnings increased 2 percent to $47,127 for men and $36,278 for women last year, but only because more low-earning, full-time workers have lost the jobs in the recession, Harvard’s Katz said. That causes average incomes to appear to increase “even though nobody is doing better. So don’t be misled,” he said.