Poverty Rate Continues To Climb

[Fred Jones]

Poverty Rate Continues To Climb

2004 Census Data Show Labor Market Is Still Struggling

By Jonathan Weisman and Ceci Connolly

Washington Post Staff Writers

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/30/AR2005083001727.html

Despite robust economic growth last year, 1.1 million more Americans slipped into poverty in 2004, while household incomes stagnated and earnings fell, the Census Bureau reported yesterday. The number of Americans without health insurance rose by 800,000, to 45.8 million.

The Census Bureau's annual report on income, poverty and health insurance sheds light on voter discontent with the economy in the face of seemingly strong economic data. The broad data draw a picture of a labor market still struggling to find its footing, three years after the 2001 recession.

"The poverty rate seems to be the last lonely lagging indicator of the business cycle," said E.R. Anderson, chief of staff in the Commerce Department's economic directorate, which oversees the Census Bureau.

The median household income stood at $44,389 last year, down slightly from the 2003 level of $44,482. But that level was propped up by more people going to work for lower earnings. A full-time male worker earned a median income of $40,798 last year, down $963 in inflation-adjusted dollars from 2003. Women's median earnings fell $327, to $31,223.

The poverty rate climbed in 2004 to 12.7 percent, from 12.5 percent in 2003 -- the fourth year in a row that poverty has risen. The increase was borne completely by non-Hispanic whites, the only ethnic group that saw its poverty rate rise. The percentage of whites in poverty rose from 8.2 percent in 2003 to 8.6 percent. African Americans saw no change in their poverty rate, which remained at 24.7 percent. The poverty rate for Hispanics remained at 21.9 percent, while Asian Americans' poverty levels dropped by two percentage points, to 9.8 percent.

The Midwest was the only region that saw both the poverty rate rise and median household income fall, a "double whammy," said Ron Haskins, a welfare economist at the Brookings Institution.

The percentage without health insurance -- 15.7 percent -- did not change, but only because the expanding federal insurance programs compensated for a continuing decline in employer-provided health care. Last year, 27.2 percent of the population received medical care through the government, up from 26.6 percent in 2003.

The findings on poverty and health insurance are directly linked, said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, noting that "more people are falling into the low-income groups that qualify" for Medicaid.

From the start of President Bush's first term in 2001 to 2004, the number of Americans without health insurance increased from 41.2 million to 45.8 million. Last year's uninsured rate was the highest it has been since 1998.

Two-thirds of the growth came from the Hispanic community, where the number of people without health coverage rose from 13.2 million in 2003 to 13.7 million last year.

Hispanic workers "are much less likely to have health insurance offers with jobs than they were 10 years ago," said Len Nichols, a health economist at the nonpartisan New America Foundation.

Michael J. O'Grady, an assistant secretary at the Department of Health and Human Services, said Bush's effort to expand the nation's network of community health centers will help bring care to more immigrants.

Michael F. Cannon, director of health policy studies at the libertarian Cato Institute, said more people are choosing Medicaid because it is a better deal than private coverage. "Medicaid has been expanded so much it includes a lot of people who could afford private coverage," he said.

But independent research suggests fewer companies are offering health insurance, Rowland said. "If Medicaid had not been offsetting some losses in the employer-based coverage, you would be seeing potentially another 1 million or 1.5 million more uninsured," she said.

In recent years, a growing chorus of economists and politicians have questioned the veracity of the poverty rates, median income level and number of uninsured. The Census Bureau's own alternative measurements of poverty -- which consider regional differences in cost of living, out-of-pocket medical expenses and more sophisticated inflation measures -- have consistently indicated that the official poverty level understates the problem. Conservatives object that the numbers do not capture assistance from food stamps, government insurance programs, housing aid or the earned-income tax credit.

The poverty data "are fundamentally flawed in measuring whether people are actually in some impoverished state of being," said Steven J. Davis, an economist at the University of Chicago's Graduate School of Business.

Charles Nelson, the Census Bureau's assistant division chief for income, poverty and health statistics, said the annual report does accurately capture the trends in poverty, income and insurance rates.

Locally, the picture was brighter. At $57,424, Maryland's median household income was above the national median, as was Virginia's, at $51,689, and the District's, at $46,574. With a median household income of $88,133, Fairfax County was the richest county in the nation in 2004. Of the five most affluent counties, three were in the Washington area -- Montgomery County was the fourth richest, with a median household income of $82,971; Howard County was just behind, with a median household income of $82,065.

Anderson said the new poverty numbers, while disappointing, were expected.

Poverty rates peaked years after the end of the recessions in the early 1980s and 1990s as well, she said.

"We're not happy about it, but going forward the trends are going the way we want them to go," she said.

Looks like I am still making money in the local economy while living in the richest county in the country according to the above numbers. However, it does not feel that way.