who have much; it is whether we provide enough for those who have too little." --
Franklin D. Roosevelt, 2nd Inaugural Address.
Despite strong economic growth and low unemployment, the median household
income stagnated, the Census Bureau reports.
By Joel Havemann and Ricardo Alonso-Zaldivar
LA Times Staff Writers
August 31, 2005
WASHINGTON — Family income stagnated last year and more Americans slipped
into poverty, the Census Bureau said Tuesday in a report that raised questions
about which Americans were enjoying the fruits of an economic expansion that
began in 2001. It was the fourth straight year that the report found an increase in
the U.S. poverty rate.
The report added color to recent polls showing that, despite strong economic
growth and low unemployment, most people are sour on the state of the national
economy and their own finances.
The Bush administration said the Census Bureau's annual statistical snapshot of
American households contained good news. Kathleen B. Cooper, undersecretary of
commerce for economic affairs, said the poverty rate was lower in 2004 than it had
been in all but one year of the 1980s and 1990s. Officials said that poverty rates
were one of the last statistics to show improvement in an economic recovery, and
that job gains should lift more people out of poverty soon.
Democrats blamed the administration's policies for rising poverty and stalling
income growth. "Wealthy Americans may be doing well in this economy, but most
Americans are losing ground," said Rep. George Miller of Martinez, Calif.
The Census Bureau report showed that median household income — the level at
which half of all households earn more money and half earn less — was $44,389 in
2004, a statistically insignificant $93 less than the 2003 median when adjusted for
inflation. Household income has been falling since reaching its all-time peak of
$46,128 in 1999. Not since 1997 has it been lower than its 2004 level.
Nearly 37 million Americans, or 12.7%, lived below the official poverty line in 2004,
the Census Bureau found in its survey. That was a rise of 1.1 million people from
2003, when the poverty rate was 12.5%
The poverty rate was last this high in 1998.
The Census Bureau also reported that 45.8 million Americans, or 15.7%, lacked
health insurance in 2004, essentially the same amount as the 15.6% in 2003.
Employer-provided health coverage continued to shrink, but public programs such
as Medicaid largely picked up the slack. Congress will soon consider cutting
Medicaid's growth by $10 billion over five years.
The news from Washington did not surprise Bonnie Ballard, spokeswoman for the
Heartland Alliance in Chicago, a 100-year-old organization that helps homeless and
low-income Americans. She said the rising cost of housing, gasoline and other
essentials was making it harder to escape poverty.
"People who are poor are staying poor, and they are even in deeper poverty,"
Ballard said. "The dollars don't go as far as they used to."
"This is not good news," Timothy M. Smeeding, a professor at Syracuse
University's Maxwell School, which focuses on public administration, said of the
Census Bureau figures. "We're four years into a recovery and we're not showing
any progress. In fact, quite the opposite."
In their search for a cause, Smeeding and others looked to the job market.
"We're not doing a very good job of getting people back to work who've lost good
jobs, particularly in manufacturing," Smeeding said.
Jared Bernstein, an economist with the Economic Policy Institute, a think tank
backed by organized labor, said the share of Americans holding jobs had fallen by 2
percentage points since the 2001 recession. The unemployment rate has gone
down to 5%, he said, only because many Americans have quit looking for work.
"When the job market isn't tight enough, workers don't have leverage to bargain
for their fair share of the recovery," Bernstein said.
Conservative analysts reacted to the numbers more positively. Douglas J.
Besharov, a scholar with the American Enterprise Institute, said that the poverty
rate tended to drop only after the economy had been generating new jobs for a
year or more, and that the economy did not begin generating new jobs
consistently until the middle of last year.
Charles Nelson, the Census Bureau assistant division chief who oversees the
income, poverty and health insurance statistics, told reporters that disappointing
numbers on incomes and poverty were not unusual even in the third year of an
economic recovery. He said the nation experienced a similar phenomenon during
the early years of the Clinton administration as the economy slowly came out of the
1990-91 recession.
"In the early 1990s, poverty rose for four years before it started turning the corner
and declining," Nelson said. "We'll see what happens next year."
As for stagnant median income, Nelson said it could signify that some workers
returning to the labor force after layoffs were starting over again in lower-paying
jobs. "When you're adding a lot of workers, sometimes the median [income] goes
down, but that's not a bad sign," he said.
Liberal advocates for the poor and for labor unions called that analysis wishful
thinking.
"Contrary to the impression that may have been created [by Census Bureau
officials], this three-year poverty trend is not typical for a recovery," said Robert
Greenstein, president of the Center on Budget and Policy Priorities. "If this were a
recession year, these would be quite reasonable results. But for the third year of
an economic recovery, they have to be branded as quite disappointing."
According to the Census Bureau data, income gains were concentrated in the
richest fifth of the population.
The poorest fifth of households registered a 0.1% income gain, and the middle
three fifths all lost. The top fifth gained 0.6%, with most of that going to the
richest 5% of the nation's households.
"The economy is growing, but the fruits of growth are clearly not reaching middle-
and lower-income families," said Bernstein, the Economic Policy Institute economist.
The Census Bureau's income and poverty data showed some unusual patterns.
Although the incidence of poverty remained greatest in the South, about half of
the 1.1 million additional Americans in poverty lived in the Midwest.
Median income fell by nearly 3% in the Midwest and 1% in the West while hardly
changing in the East or South.
Poverty rose for native-born Americans and declined slightly for the foreign born.
"This poverty is native; it's not immigrants," Smeeding said.
The poverty rate for non-Latino whites grew faster than for any other major ethnic
group. The median income for non-Latino whites fell by 0.2%. It rose for Latinos
by 1.1%.
The share of Americans covered by employment-based health insurance continued
to decline, from 60.4% of the population to 59.8%.
The number of year-round, full-time workers without health insurance increased by
456,000, to a total of 21.1 million people, the bureau reported. The total fraction
of uninsured Americans remained almost unchanged, as public programs covered
more people.
"The fact that we aren't losing ground is good news, but it clearly shows we're not
solving the problem here," said Grace-Marie Turner, president of the Galen
Institute, a health policy research group that favors the Bush administration's
proposed tax credits to help small businesses and individuals buy health coverage.
"We've got to be bolder in giving people a choice of coverages that they will find
appealing," Turner said.
Despite the growing availability of health savings accounts — insurance plans that
offer low monthly premiums and tax breaks to people willing to take responsibility
for routine healthcare costs — the proportion of Americans buying their own
coverage barely budged, from 9.2% to 9.3%.
