Poverty Rate Held Steady Last Year, Census Says

By Michael A. Fletcher
Washington Post Staff Writer
Wednesday, August 27, 2008

The nation's poverty rate held steady as median household income edged upward last year, according to annual census data released yesterday. The Census Bureau also reported that the number of people without health insurance decreased by more than 1 million people in 2007.

About 12.5 percent of the population fell below the official federal poverty threshold of $21,203 for a family of four last year, the census data showed, a figure that was not statistically different than in 2006. The number of children in poverty increased, however, by 500,000 to 13.3 million.

Meanwhile, the number of people without health insurance declined to 45.7 million from last year's record 47 million, the census report says.

Despite the apparent good news, the census report did not take into account the turmoil that has wracked the nation's economy this year, leading to sharp spikes in joblessness and a reduction in hours worked for many employees.

"You have mixed news here mirroring the mixed news in the economy last year," said Rebecca Blank, a senior fellow at the Brookings Institution. "But I think it is quite reasonable to say 2007 was a peak year. And still, median income is slightly below the 2000 level, poverty is higher and child poverty is way up. You have a cycle here that was very sluggish."

The report highlights the nation's growing income inequality and the lack of real wage growth for typical workers, seen by many economists as the most troubling aspects of the new economy. Even as median household income rose 1.3 percent in 2007 to $50,233 -- the third consecutive annual increase -- it still fell just short of the previous peak achieved in 2000, when inflation is factored in.

The economic recovery of earlier this decade has done "very little" to boost people's living standards, said Jared Bernstein, a senior economist with the Economic Policy Institute.

"They've done their part, contributing to strong productivity growth," he said, "but they've far too little to show for it."

Many U.S. workers have seen no real income growth since 2000, even though the economy has been mostly healthy and recorded strong corporate profits over much of that time period. Meanwhile, inequality has grown. The nation's top 1 percent of wage earners now account for 23 percent of total income, the highest level since 1928, according to Economic Policy Institute calculations.

"If we continue to turn a blind eye to the growing income gap between the very rich and the rest of us, we'll find ourselves in a country with no middle class," said Mike Fishman, president of Local 32BJ of the Service Employees International Union, whose chapter represents security guards, porters and other building workers in the District and nearby states. "Bridging our country's troubling income gap starts with universal health care because working families will never get ahead if they continue to be held back by medical bills and insurance premiums they can't afford to pay."

Census officials and health insurance advocates attributed the decrease in the number of uninsured to the growing popularity of government-sponsored health insurance, including Medicaid and the State Children's Health Insurance Program (SCHIP).

The number of people under 65 who are insured by government-funded health insurance increased by more than 2 million to 48.6 million, according to a recent analysis by officials at the University of Minnesota.

"Programs like SCHIP and Medicaid are lifelines for providing Americans with the health care they need, especially during times when the economy is soft and more people feel vulnerable to losing employer-sponsored health insurance," said Lynn Blewett, of the State Health Access Data Assistance Center at the University of Minnesota.

Elise Gould, an economist and health-care specialist at the Economic Policy Institute, called the reduction in the number of uninsured encouraging. Still, she noted, the number of people with private insurance decreased for the seventh consecutive year. "Unfortunately, we're still seeing an unraveling of the private insurance system," she said.

Maryland remained the state with the nation's highest median household income in 2007, an estimated $68,080 -- a 2 percent increase over 2006. Median household incomes were also up in the District and Virginia, to $54,317 and $59,562 respectively.

The report also revealed that racial disparities in household incomes remain sizable. Inflation-adjusted median incomes of black and Hispanic households rose last year for the first time since 1999, but they remained far below those of whites and Asian Americans. Blacks had the lowest median household income in the country, $33,916. That was 62 percent of the income of whites, which was $54,920 last year. Median Hispanic household income was $38,679 in 2007, while Asian Americans had the highest median income, $66,103.

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