The Census Bureau just came out with its annual data on Income, Poverty and Health Insurance in the country (for the full report see here). The data reminds us, as if we need any real reminding, that the Great Recession has done most of its damage to those who are at the bottom of the economic ladder.
In 2010, 15.1% of the population were living in poverty, up from 14.3% in 2009 and 12.5% in 2007 before the Great Recession/Lesser Depression started. It is the fourth straight year that the poverty rate has increased. Poverty is defined as income under $11,139 for an individual and under $22,314 for a family of four (cash income, not counting things like food stamps or housing assistance).
The overall poverty rate is at its highest point since 1993. If it were to tick 0.1% higher it would go back to 1983 levels, and if 0.2 higher, we would be back to poverty levels hast seen in 1965. Such an increase seems highly likely given the number of long-term unemployed, and the number of those who have exhausted their unemployment benefits.
If extended unemployment benefits expire as scheduled at the end of this year, the number of people living in poverty will continue to soar in 2012. In 2010, unemployment insurance kept 3.2 million people out of poverty. Here are the highlights (lowlights?) of the poverty section of the report.
- The official poverty rate in 2010 was 15.1 percent — up from 14.3 percent in 2009. This was the third consecutive annual increase in the poverty rate. Since 2007, the poverty rate has increased by 2.6 percentage points, from 12.5 percent to 15.1 percent.
- In 2010, 46.2 million people were in poverty, up from 43.6 million in 2009 — the fourth consecutive annual increase in the number of people in poverty.
- Between 2009 and 2010, the poverty rate increased for non-Hispanic Whites (from 9.4 percent to 9.9 percent), for Blacks (from 25.8 percent to 27.4 percent), and for Hispanics (from 25.3 percent to 26.6 percent). For Asians, the 2010 poverty rate (12.1 percent) was not statistically different from the 2009 poverty rate.
- The poverty rate in 2010 (15.1 percent) was the highest poverty rate since 1993 but was 7.3 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available.
- The number of people in poverty in 2010 (46.2 million) is the largest number in the 52 years for which poverty estimates have been published.
- Between 2009 and 2010, the poverty rate increased for children under age 18 (from 20.7 percent to 22.0 percent) and people aged 18 to 64 (from 12.9 percent to 13.7 percent), but was not statistically different for people aged 65 and older (9.0 percent).
Statistics by Region
Between 2008 and 2010, the nationwide poverty rate is up by 1.9%. Only five states saw a decline in the rate over that period, while 45 states and D.C. saw an increase. Massachusetts and New Mexico saw the largest improvements with drops of 0.7 points (the other states with declines were Wyoming, New Hampshire and Nebraska).
Nevada saw the biggest increase, not especially surprising given that it is the poster child for the popping of the housing bubble and has consistently had one of the highest unemployment rates through that period. Its rate jumped by 5.6 points. Other states showing very large increases in the poverty rate include Mississippi (+4.6), Arkansas (+4.2), Oregon (+3.6) and North Carolina (+3.6%).
The states with the highest poverty rates continue to be in the South, both east and west. Mississippi has the highest rate (22.7%), followed by (Louisiana (21.6%), Georgia (18.7%), Arizona (18.6%) and New Mexico (18.6%). If it were a state, D.C. would be on that list with a poverty rate of 19.9%. New Hampshire has the lowest poverty rate by a fairly wide margin at just 6.6%, followed by Connecticut (8.3%), Wyoming (9.6%), Wisconsin (9.9%) and Utah (10.0%).
Statistics by Age
The likelihood of being in poverty decreases with age. In 2010, 25.3% of all children below the age of 6 were living in poverty, up from 23.8% in 2009. For all children under 18, the rate was 21.5% up from 20.1% in 2010. The poverty rate for those 18 to 24 was 20.7%, but it drops quickly to “just”14.9% for the 25 to 34 year old set.
For all working age adults (18-64) the poverty rate is 12.9%. The elderly are the least likely to live in poverty, with a rate of 8.9%. Prior to the introduction of Medicare, the elderly were the group most likely to be living in poverty. In that respect, the program has been an unqualified success.
Social Security has an even larger impact on reducing poverty among the elderly. If Social Security income were excluded, the number of seniors living in poverty would be higher by almost 14 million, quintupling the elderly poverty rate.
Statistics by Race
Poverty is especially acute in the minority communities. The poverty rate for blacks rose to 27.4% in 2010 from 25.8%, and 24.5% before the start of the Great Recession. For Hispanics, it was 26.6%, up from 25.3% in 2009, and 21.5% in 2007. The white poverty rate was 9.9% in 2010, up from 9.4% in 2009 and 8.2% in 2007. Black children, not surprisingly, were at an exceptionally high risk of living in poverty — 39.1% in 2010, up from 35.7% in 2008 and 34.5% in 2007.
Households Overall
Things are not just bad at the bottom of the income scale, but in the middle of it as well. After adjusting for inflation, median (half above, half below) household income fell by 2.3% to $49,445. That is down by 6.4% since the start of the Great Depression and is 7.1% below the peak all the way back in 1999. Real median incomes are at their lowest level since 1996.
“Households” refers to both Families and to individuals living on their own. The median income for families was $61,544 while for individuals on their own it was $29,730.
In 2010, all age groups saw real median income fall. The decline was particularly acute among young households, those where the head of household is 24 yeas old or younger, where the median income plunged an astounding 9.34%, the largest drop on record, and down 15.28% since 2007.
Despite a growing overall population, the number of households headed by someone under 25 years old has actually dropped each year since 2005. This is a key group as far as resolving the housing overhang is concerned. The low rate of household formation reflects kids moving back in with their parents. If they don’t have jobs, or if the jobs don’t pay, it is sort of hard to get your own place.
The news was not quite as bad for their older brothers and sisters. Median incomes for the 25 to 34 year group, fell by 1.90% and are down 6.69% from 2007. That is the key age for people buying their first house (the under 25 group tend to rent an apartment first when starting out).
The 35 to 44 year old group fared the best of any age group, with a decline of just 0.72% for the year, but down 5.64% since 2007. The next group up, though, the 45 to 54 year olds, saw a sharp 4.3% drop for the year, and its median income is down 9.24% from 2007. The pre-retirement group, those between 55 and 64 years old, saw a 2.31% decline for the year and is down 6.25% since 2007.
Median income for the elderly (65 or older) fell by 1.45% for the year. However, they have fared the best by far since 2007, with a 5.52% increase. In part that reflects a much larger than usual increase in Social Security payments in 2009. It also probably reflects increases in dividend income, which is generally a much larger fraction of total income for people in retirement than those who are still working. People living on a “fixed income” have generally done better in the lesser Depression than those who are not on a “fixed income.” Fixed is better than declining.
Distribution of Income
There was relatively little change on the year in the distribution of income between the top and the bottom of the scale, but if one takes a step back there has been a fairly relentless shifting of the size of the pie slices towards the top of the income distribution. The top 20% of the income distribution (Q5, or purple in the graph below) now gets 50.2% of the total income, up from 49.8% in 2000 and just 43.3% in 1970 (up in each decade snapshot). Of that, most has gone to the top 5%, with only a moderate increase in the income share of the 6th through 20th percentiles.
The top 5% now get 21.3% of the total income, up from 21.1% in 2000, and just 16.3% in 1970. In contrast, the share of income that is going to the bottom 20% has been shrinking. It does not look that dramatic on the graph, since it was low to begin with. It is down to 3.3% from 3.6% in 2000, and from 4.1% in 1970.
The next quintile up has also seen its share of the pie decline over time. It is currently at 8.5%, down from 8.9% a decade ago and 10.8%. The second graph combines the bottom two quintiles to show the share of income the bottom 40% get relative to the top 5% over time. As recently as 1980, the two groups gathered close to the same share of the national income pie, but the difference has widened dramatically over the years.
The relentless increase in the share of the income pie by the top of the distribution means that those retailers and manufacturers who focus on the wealthy have a tailwind, while those that focus on the bottom of the scale face a stiff headwind. In other, words good for Tiffany’s (TIF) and bad for Wal-Mart (WMT) and Family Dollar (FDO).
Health Insurance
The news on health insurance was also bleak. Despite spending almost twice as much per person on Health Care as any other country in the world, we now have 49.904 million people without health insurance, that is 16.3% of the population, up from 16.1% in 2009.
Since health insurance in this country is largely tied to employment, when people lose their jobs, they tend to lose their health care coverage as well. Yes, you can opt for COBRA coverage, but that will generally eat up your entire unemployment check. That effect was muted a bit until the middle of this year, with the government subsidizing up to 60% of COBRA coverage, but that assistance has now run out.
The 16.3% figure understates things a bit, because it is for the whole population. Medicare covers virtually everyone over age 65. Many children get health insurance through the CHIPs program. “Only” 9.8% of children under 18 were without health insurance, up from 9.7% in 2009.
The uninsured rate is much higher for the working age population, but generally declines with age. For those between 18 and 24 the rate is 27.2%, actually down from 29.3% in 2009. That decline is probably traceable to the provision in the ACA (aka "Obamacare") that lets parents keep their young adult kids on their health insurance plan.
The uninsured rate for those between 25 and 34 is 28.4%, up from 28.1% in 2009. The uninsured rate drops to 21.8% for those between 35 and 44, but up from 21.0% last year. Those who are between 45 and 64 had an uninsured rate of 16.3%, up from 15.6% in 2009. Of course, the older you get, the greater the probability that you are going to need that health care coverage in any given year.
It is getting less and less true, however, that health insurance coverage is dependent on your job. Only 55.3% of people got their health insurance coverage from their employers, down from 56.1% in 2009. The rate of private coverage from all sources, fell to 64.% from 64.5%. Since there are many cases of overlapping coverage, don’t try to add these percentages.
The government is covering more and more people. Medicare now covers 14.5% of the population, up from 14.3% in 2009. Medicaid covers even more, 15.9% up from 15.7%. The rise in the former reflects the demographic ageing of the country, the rise of the latter is a direct reflection of the increase in poverty.
Medicaid is the program for the poor, and there are now more poor people who qualify. Military Health Care, including the VA now covers 4.2% of the population, up from 4.1% in 2009. That is mostly a reflection of the returning veterans of Iraq and Afghanistan.
Very Discouraging, but Not Unexpected
This was a very discouraging, but hardly unexpected report. The burden of a weak economy always falls greatest on the most vulnerable in the society and if one has been looking at the unemployment rates by things like age, race and degree of education, this should not be a surprise. That is part of the reason that the political debate in the country, up until a week or so ago was so focused on deficit reduction rather than on how to bring down unemployment.
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