Jimmy Mills, seen in 2015, hosts a Bible study in his home in Casa Grande, Arizona. He is a retired farmworker, raising his grandchildren. Photo by Mike Kane for Marguerite Casey Foundation's Equal Voice News

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Why Is Poverty Data Not Reflecting the Economy?

September 13, 2018

Paul Nyhan
By Paul Nyhan
Senior Writer and Community Relations

Why are nearly 40 million Americans, by the U.S. government’s official count, still living in poverty? Is it time for structural and policy changes so more families can thrive?

The U.S. economy is growing at a healthy rate. The unemployment rate is at its lowest point in more than a decade. But, the number of Americans – especially families – living in poverty last year barely changed.

In 2017, nearly 40 million people lived below the official poverty line in the U.S., an amount that isn’t statistically different than the 40.6 million in 2016, according to the U.S. Census Bureau’s annual report on poverty and income released Sept. 12. The 2017 number translates into a poverty rate of 12.3 percent, down only slightly from 12.7 percent the year before.

It’s a stark sign that low-income families are not sharing in the rewards of a strong U.S. economy that is creating a lot of jobs.

Last year, key economic trends seemed to be a recipe for dramatic improvements in both the number of people living in poverty and household income. The common measure of economic health, the Gross Domestic Product, grew a healthy 2.2 percent, and the jobless rate stood at 4.4 percent.

Yet, that was not the story in 2017.

The census report “is not a sign of an economy where the overall growth goes to ordinary people,” Heidi Shierholz, senior economist and director of policy at the Washington, D.C.-based Economic Policy Institute (EPI), said. “If we had an economy that worked for everyone and didn’t just work for the already well off, we could have seen income growth across the board.”

Some progressive economists, nonprofit leaders and working families are arguing for structural changes in the economy to ensure lower-income communities of all backgrounds benefit.

The high-level income numbers were somewhat positive. Overall, real median household rose to $61,372 in 2017, up 1.8 percent from 2016, when it was $60,309.

But, a closer look showed wide gaps. Among Black households, income actually fell 0.2 percent in 2017, and it dropped 2.9 percent between 2007 and 2017, EPI reported. That means overall Black household incomes have not recovered to levels before the Great Recession, which began in 2007.

“The retreat from broad-based income growth likely contributed to stalled progress in closing the nation’s still-large and persistent racial income gaps,” Valerie Wilson, director of EPI’s Program on Race, Ethnicity and the Economy, said in an analysis.

Agnes Flores hugs her granddaughter Anessa Ramirez at their mobile home in Casa Grande, Arizona in 2015. Flores, a Native American who grew up in Tohono O'odham Nation in southern Arizona, is raising her grandchildren. Photo by Mike Kane for Marguerite Casey Foundation's Equal Voice News

It’s a return to a longer running inequity gap. Black household income growth was stronger than among White households in 2015 and 2016, but that progress stalled in 2017, according to the EPI analysis.

“In 2017, the black-white income ratio returned to the well-worn 59%. If this sounds familiar, it may be because you’ve probably heard it several times over the last 50 years,” Wilson tweeted the day the census report was released.

For Hispanics, who are growing in political influence in the U.S. and are at the center of many national policy debates, the census bureau reported that 10.8 million of its community members were poor in 2017, a decrease from 11.1 million people in 2016.

Though communities of color are diverse, the number of Asians, Blacks and Hispanics officially living in poverty in 2017 totaled more than 21.7 million people, or more than 55 percent of all of the poor in the U.S. Of that number, Asians, a fast-growing group in the country, made up nearly 2 million people.

Whites continued to be the single largest group among the poor with nearly 17 million people, or about 43 percent of all Americans in poverty.

Poverty among children was largely unchanged, with 17.5 percent of U.S. children, or nearly 13 million youth under the age of 18, living below the poverty line in 2017. That was a small decline from 18 percent in 2016, according to the census report.

Despite the partisan debate over the Affordable Care Act, often called Obamacare, which continues to rage, the percentage of Americans without health insurance remained at 8.8 percent in 2017, essentially unchanged from the year before.

This year’s release of the national data for 2017 comes amid a high-stakes debate over the state of poverty in America. While hailing the decline in the poverty rate, the Trump administration suggested the census report was not the most accurate barometer. Instead, it suggested measuring poverty based on family consumption, instead of income, an approach that’s sure to be challenged by other policymakers.

The administration’s push for a consumption-based measure of poverty is potentially part of its broader push to overhaul, and many advocates think dramatically shrink, the social safety net, including Medicaid, food stamps and Temporary Assistance for Needy Families. Earlier in 2018, for example, the administration opened the door for states to propose work requirements for Medicaid recipients.

“It is important to ensure that welfare programs do a better job of promoting work, especially in today’s hot economy. Expanding work requirements in welfare programs can help achieve that goal,” the White House said in a statement released on Sept. 12.

This suggests a larger debate looms in the coming months. As the administration takes a more active role in trying to shape how poverty is seen in America, the fight over who has the strongest voice in telling that story could move to center stage in the nation’s capital.

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Paul Nyhan is the senior writer for Equal Voice. Equal Voice is Marguerite Casey Foundation’s publication featuring stories of America’s families creating social change. With Equal Voice, we challenge how people think and talk about poverty in America. All original and contracted Equal Voice content – articles, photos and videos – can be reproduced for free, as long as proper credit and a link to our homepage are included.

      2018 © Marguerite Casey Foundation

 

Why Is Poverty Data Not Reflecting the Economy?

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