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Perfect Storm for the Poor

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By E. J. Dionne Jr.
Friday, September 1, 2006

After a week of remembering the horrors of Hurricane Katrina, the most depressing realization is how easily our leaders forgot their fervent promises to lift up our nation's poorest citizens.

All manner of politicians and columnists said in Katrina's wake that this was the time to revisit the problems of the destitute. The anguish of the people of New Orleans's Lower Ninth Ward would have at least some redemptive power if the country took poverty seriously again.

It didn't happen. The innovative ideas that came from all sides were swept off the table. The poor became unfashionable once more. Congressional conservatives changed the conversation. A concern for the struggling gave way to debate over how to offset spending on Katrina with budget cuts -- directed in large part at programs for the needy.

Perhaps the release of the Census Bureau's annual report on income, poverty and health insurance coverage in this particular week is a sign that God and statisticians have a sense of humor. The report reinforces what we knew at the time of Katrina -- that the poor are still with us and that the middle class keeps losing ground.

The "good" news is that the poverty rate, the proportion of Americans who are poor, didn't change much between 2004 and 2005, falling in a statistically insignificant way from 12.7 percent to 12.6 percent. The bad news is that the poverty rate, having risen steadily in recent years, is still higher than it was in 2001, when it stood at 11.7 percent.

Worse is that the proportion of the poor who are very poor has risen. People are considered in deep poverty if they have half or less of the yearly income of those at the poverty line. In 2005 half the poverty line for a family of three was $7,788; for a family of four it was $9,985. (Try living on that.) According to the new report, 43.1 percent of poor people lived in that sort of deep poverty -- a record since 1975, when the government started assembling such statistics.

In the six economic recoveries since the early 1960s, this is the first time the poverty rate was higher in the recovery's fourth year than it was when the recession was at its worst.

The number of Americans without health insurance rose, too, to 46.6 million in 2005, up from 45.3 million in 2004 and 41.2 million in 2001. The proportion without insurance is up from 14.6 percent in 2001 to 15.9 percent in 2005.

What about the middle class? Yes, the median income of American households rose by 1.1 percent last year after five years of decline. But most of the growth was in households headed by Americans 65 and over -- who are helped, rightly, by substantial government benefits. In households headed by people under 65, incomes fell yet again.

Want to know why so many men out there are mad? Check out Table A-2 on Page 38 of the Census report. (I'm grateful to my friend Bill Galston for calling it to my attention.) Adjusted for inflation, men's earnings were lower in 2005 than they were in 1973.

Dear liberals, who worry about the political leanings of angry men, and dear conservatives, who exploit that anger, do you have any proposals to end this income stagnation?

Yes, women have been slowly closing the gender gap in income. Among full-time, year-round workers, women earn 77 percent of what men do, compared with 57 percent in 1973.

But in the most recent year, the gap closed because women lost income at a slightly slower rate than men did. Between 2004 and 2005, the earnings for those working full time year-round dropped 1.8 percent for men and 1.3 percent for women. That's not how most women imagine achieving equality.

The census had some very good news for the well-to-do. The top fifth of American households received 50.4 percent of all income last year, the highest proportion since 1967, when the Census Bureau started following that trend. The biggest gains were concentrated in the top 5 percent.

"The economy is growing, and someone is getting the growth," said Sharon Parrott, a senior analyst at the liberal Center on Budget and Policy Priorities. "So now we know who it is."

President Bush and the Republican Congress, take a bow: You took power to make the well-off even better off, and you have succeeded brilliantly.

As for the poor and the middle class, maybe they'll do better after the next hurricane, or the one after that.

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