Bloomberg News

Ranks of Poor Americans at Record High Even With Aid

November 14, 2012

Ranks of Poor Americans Stay at Record High Even With Aid

Trenton, the New Jersey capital and onetime factory hub, had 23 percent of residents live in poverty in 2011. The U.S. Census Bureau said 49.7 million Americans, or 16.1 percent, are in poverty, up from 49.1 million, or 16 percent, in 2010. Photographer: Emile Wamsteker/Bloomberg

The ranks of poor Americans remained at a record high number last year, even after government-aid programs such as food stamps, housing vouchers and heating subsidies were included, the U.S. Census Bureau said today.

The bureau said 49.7 million Americans, or 16.1 percent, are in poverty, up from 49.1 million, or 16 percent, in 2010, according to a new measure the government is using to supplement the official figures released in September. The new method, designed to offer a more comprehensive measure of poverty, includes government aid as income, while subtracting child-care costs, work-related expenses and medical out-of-pocket fees.

The official measure, which includes only pretax cash income and is used to determine eligibility for aid programs, put the poverty rate at 15.1 percent, the bureau said.

“The economy has just hammered the low-and moderate-income population,” said Indivar Dutta-Gupta, a policy adviser for the Washington-based Center on Budget and Policy Priorities.

The figures underscore the difficulty of battling poverty as the country struggles to rebound from the worst recession in seven decades and as taxpayers spend more than $600 billion annually to provide food, shelter and health care for the poor. The task takes on greater urgency as the government negotiates a budget accord to avoid $607 billion in spending cuts and tax increases scheduled to start on Jan. 1.

“The only hope is for more job creation as part of a budget deal,” Dutta-Gupta said.

Vulnerable Programs

The new measure put the poverty threshold for a two-parent family with two children at between $21,175 and $25,703 in 2011.

Some anti-poverty measures, such as the Medicaid health- insurance program for the poor, are off-limits to automatic spending cuts, though they still could be scaled back as part of a broader compromise. Others such as housing assistance are vulnerable to the automatic reductions; some programs, including food stamps, would likely be affected no matter what kind of deal is reached.

The Supplemental Poverty Measure, first released last year, showed that poverty increased among the working-age adult population. The alternative measure found the ranks of poor adults between the ages of 18 and 64 grew by 800,000 people to 30 million, or 15.5 percent of the population.

Poverty fell slightly among children, who remain the nation’s largest cohort of poor Americans in percentage terms. There were 13.4 million poor children in 2011, about 18.1 percent of the total, the Census Bureau said. The figure represented a drop from the 13.6 million estimated in 2010.

Elderly Poverty

The number of poor senior citizens remained steady at 6.2 million, about 15.1 percent of the population.

The supplemental figures showed poverty rose slightly last year for married couples, blacks, Asians, female-headed households, foreign-born non-citizens, urban residents, and people living in the Northeast and West. Poverty fell for whites, Hispanics, suburban residents, and people living in the South and Midwest.

Anti-poverty spending has climbed 49 percent to more than $600 billion during the past decade, according to a report last month by the Heritage Foundation, a Republican-leaning Washington research group. The foundation said almost half the money spent to combat poverty has been spent on health care.

The costs of the nation’s food-stamp program, which helped 44.7 million Americans in 2011, rose to $75.7 billion in the 12 months ended in September 2011, more than doubling in four years.

Preventing Poverty

Arloc Sherman, senior researcher at the Center on Budget and Policy Priorities, said a half-dozen temporary measures enacted during the economic downturn have prevented millions of Americans from falling into poverty.

They include tax credits, which kept 3.1 million people out of poverty; extensions in unemployment-insurance benefits, which helped 3.4 million; and expansions of the food stamp program, which aided 1 million people, he said.

Without government assistance, Sherman wrote in a November 2011 report, the national poverty rate in 2010 would have hit 28.6 percent.

“If significant federal cutbacks occur, the combination of those cuts, state budget cuts, and ongoing labor-market weakness may drive poverty still higher in the next few years and cause it to remain very high long after the economy recovers,” he wrote.

Declining Wealth

The 2007-2009 recession cut most deeply into the wealth of people in poor neighborhoods, according to a separate report released today by the Pew Research Center’s Economic Mobility Project.

The Washington-based research center found that high-income neighborhoods lost the greatest dollar amount during the recession, the worst downturn since the Great Depression, with wealth falling to an average of $154,000 in 2009, down 47 percent from $289,281 in 2007.

Pew reported that people in high-poverty neighborhoods were left with very little, with median wealth falling 91 percent to $3,000 in 2009, down from $32,778 in 2007.

The Pew study also reported that barely half of people living in poor neighborhoods were employed in both 2007 and 2009; more affluent neighborhoods had 70 percent of people remain employed during the downturn. More than 25 percent of people in poor neighborhoods were unemployed during both years, researchers said.

Highest Level

Even with the increase in spending, the number of poor Americans is at its highest level since the Census Bureau began measuring poverty five decades ago.

The government’s official figure of 15.1 percent of the population in poverty in 2011 is based on the traditional gauge, which is calculated by tripling a household’s annual food costs. The official poverty rate for a two-parent family with two children was $22,113 in 2010.

The supplemental poverty measure “serves as an additional indicator of economic well-being and provides a deeper understanding of economic conditions and policy effects.” the Census Bureau said in its report.

To contact the reporter on this story: Frank Bass in New York at fbass1@bloomberg.net

To contact the editor responsible for this story: Mark McQuillan in Washington at mmcquillan@bloomberg.net


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