Number of U.S. poor holds steady but earnings gap grows

WASHINGTON (Reuters) - The poverty rate in the United States stabilized in 2011 for the first time in three years even as incomes fell and inequality grew, according to government figures.

The share of people living in poverty edged down to 15 percent from 15.1 percent in 2010, a "statistically insignificant" drop in the words of analysts at the U.S. Census Bureau, which released the report.

Unemployment benefits helped soften the blow from a harsh economic environment, the report said. All told, 46.2 million Americans lived in poverty last year, little changed from 2010.

But the share of aggregate income declined for Americans in the middle while those in the top 5 percent increased their share by 4.9 percent.

The Census Bureau's annual income reports are closely watched by economists as well as partisans looking to bolster their policy prescriptions, particularly in election years and even more particularly in this election year, with economic conditions and wealth serving as overarching themes.

There was a morsel for every point of view in today's report. The official White House blog took note of the slight decline in the poverty rate and a decrease in the number of Americans without health insurance reflected in the data.

Republican nominee Mitt Romney, without explicitly mentioning the census study, took aim at President Barack Obama as a president who is "is crushing the middle class."

Some conservative commentators including Rachel Sheffield at the Heritage Foundation said the report demonstrated that welfare did not really help Americans.

On the other side, Melissa Boteach, at the Democratic-leaning Center for American Progress, said it added "urgency" to "the need to tackle the deficit without damaging safety net programs."

"The big surprise in this data is that poverty has not gone up. I think we were all anticipating that poverty rates would have increased," said Jane Waldfogel, a professor of social work at Columbia University.

Analysts had expected poverty to rise because unemployment was elevated through much of 2011 and economic growth averaged only 1.8 percent.

The official poverty rate has been rising since just before the year 2000, accelerating with the economic stagnation of the past three years. It was 13.2 percent in 2008 and 14.3 percent in 2009.

FLAWED POVERTY MEASURE?

The median U.S. household income declined by 1.5 percent to $50,054 in 2011, the Census report showed.

Programs such as unemployment benefits and a large shift from part-time to full-time work appear to have cushioned the blow and kept more people above the poverty threshold, said David Johnson, head of social, economic and housing statistics at the Census Bureau.

"It think all those things going together ... is what's keeping this lower," he said.

The report also showed about 1.3 million more Americans had health insurance in 2011, the first full year that Obama's health care law took effect. The number of uninsured shrank to 48.6 million people from 50 million in 2010, the report said.

The poverty threshold for a four-person household is about $23,000. But many experts criticize the way Census calculates poverty, saying it does not paint a complete picture of resources available to a family.

Poverty advocates also say it really measures "deep poverty," since few families of four can get by on less than $30,000 a year, especially in many cities.

The Census' official poverty rate looks only at pre-tax income. It includes all cash income such as job earnings as well as unemployment benefits and Social Security checks but excludes benefits such as food stamps and tax credits.

If unemployment benefits - which were extended in 2009 under the president's $840 billion stimulus package - had been excluded from Wednesday's report the number of poor U.S. adults would have increased by 1.6 million people, Census found.

Additionally, if the federal earned-income tax credit, targeted at families with children and working part-time or low income jobs, had been included in computing income, the number of poor U.S. children would have fallen by 3 million, it added.

To work around the problem, the government last year introduced a supplemental poverty measure, to include tax payments and work expenses in estimating family resources.

That measure showed the poverty rate at 16 percent in 2010. The Census Bureau will release its 2011 update on November 13.

(Editing by James Dalgleish and Mohammad Zargham)

Source: http://news.yahoo.com/number-u-poor-holds-steady-gap-grows-173933420--business.html

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