By | September 22, 2014

What is the state of poverty, in this 50th anniversary of the War on Poverty? According to Census Bureau figures released last week, and to the surprise of some experts, following increases in poverty due to the Great Recession, the poverty rate finally began to fall in 2013, year four of the economic recovery.

The overall poverty rate declined to 14.5% in 2013 from 15.0% in 2012—the first significant decrease since 2006—and the poverty rate for children under age 18 was down significantly to 19.9% from 21.8%, the first time the child poverty rate has declined since 2000.

Yet, while the poverty rate has finally begun to fall, it is still two points higher than it was at the start of the Great Recession in 2007. Over 45 million Americans live in poverty. And, while the reduction in the poverty rate might initially feel reassuring, further examination of the numbers reveals persistently high levels of inequality reflected in economic trends for women, children, people of color, and folks at the lowest income levels.

Women and Children

Women still made only 78 cents for every dollar men earned in comparable employment, an insignificant increase of one cent from last year. Families maintained by a female householder had a median income of $35,154 compared to $50,625 for families maintained by male householders and $76,509 for households maintained by married couples. Although overall poverty rates fell for both men and women between 2012 and 2013, women still experienced poverty at a rate of 15.8% as compared to 13.1% of men.

The numbers grow starker when looking at women with children. In 2013, children represented 23.5% of the total population but 32.3% of people in poverty. One in five related children under age 6 lived in poverty, and 55% of related children under age 6 with single mothers lived in poverty, more than five times the rate for related children in married-couple families.

Black and Hispanic Households

Despite the significant, 3.5% increase in Hispanic median household income, a large disparity in income based on race and ethnicity remained. Median Hispanic household income was $40,963 while median White, non-Hispanic household income was $58,270. Black households had an even lower median income level of $34,598.

The ratio of Black to non-Hispanic White income, 0.59, has not changed significantly since 1972, the first year the Census Bureau collected data for this specific comparison. Not only are the gaps not closing, Black and Hispanic households have experienced larger and more persistent median income decreases than White households since median income was at its height in 1999, with Black households earning 13.8% less than they did in 2000, Hispanic households earning 8.7% less than in 2000, and non-Hispanic White households earning only 5.6% less since 2000.

In 2013, the poverty rate of black children (38%) and Hispanic children (30%) was much higher than that of non-Hispanic white children (11%).

Income Inequality

With the Gini Index, a Census-published measure of income inequality, unchanged from its record high level last year, and the median household income level far below pre-recession levels, the wealthiest households have disproportionately benefitted from the economic growth of the last four years. The share of national income that goes to the top fifth of households, which has been growing for decades, was 51.0%, a historic high. That means the top 20% of households received more of the nation’s income than the bottom 80% combined.

Capturing the Full Picture

The official poverty rate offers an important but flawed view of poverty in the United States because it does not account for important noncash income supports received by low-income individuals and families and it underestimates living expenses. Later this month, the Census Bureau will release the Supplemental Poverty Measure (SPM), which modernizes the poverty measure by accounting for the role of programs like the Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps) and refundable tax credits like the Earned Income Tax Credit (EITC) in measuring household income. The SPM provides a way of evaluating the effectiveness of these programs in fighting poverty. In 2012, if the Census Bureau counted SNAP benefits towards income, 3.7 million fewer people would have been living in poverty. Counting the EITC would have reduced the number of children in poverty by 2.9 million.

Conclusion

Even though the experts’ prediction of a stagnant poverty rate was wrong, they had something right: not much has changed. One in seven Americans and nearly one in five American children are poor. Moreover, women and children and people of color still experience huge income disparities compared with others, and the rich are benefiting from economic growth far more than the poor.

The author thanks MacKenzie Speer, Economic Justice and Opportunity VISTA, for her extensive work on this blog.

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