U.S. Poverty Continues its Post-Recession Grip

Yesterday, the Census Bureau released the latest round of Income, Poverty, and Health Insurance Coverage data, giving us a look at 2011. The mixed picture that emerged in yesterday’s release reveals the effects of an economic recovery that has remained sluggish and weak since its official start in June 2009.

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There was good news. More people were working full-time, year-round jobs in 2011 compared to 2010 (1.7 million), and the number of residents without health insurance dropped by the largest margin since 1999 (1.3 million). But there was also bad news. Even amid net job growth and more full-time employment, the typical household’s income continued to fall, dropping by 1.5 percent to $50,054. And for the first time since 1993, income inequality grew significantly (1.6 percent), reflecting the uneven nature of a recovery that saw incomes at the top expand while the middle lost ground and the bottom earners stagnated.

Yet, contrary to the expectations of many economists, poverty did not change in 2011. The number of poor held steady at its historic high of 46.2 million. Likewise, the share of the population living below the poverty line ($23,021 for a family of four) remained statistically unchanged compared to 2010, at 15 percent.

These data only reveal so much, given that they lack the local-level detail to tell us how different places across the country experienced these trends. Just as the economic health and performance of individual metro varies widely, so, too, does the trajectory of poverty trends across and within metropolitan America. For that detail, we will have to wait for the release of the 2011 American Community Survey next week. In the meantime, though, findings from yesterday’s report suggest important factors to look out for.

• The South saw poverty drop slightly between 2010 and 2011. It was the only region in the United States to experience a significant change in that year, but state-by-state trends suggest a number of places continued to struggle with increasing poverty (see map). Between 2008-2009 and 2010-2011, 19 states experienced a significant uptick in their poverty rate, led by Louisiana, Nevada, and South Carolina.
• Poverty remained unchanged in metro areas and principal cities, but fell for residents living in “suburbs.” The decline in suburban areas came as more residents reported working full-time, year-round jobs. (Note that the Census Bureau uses a more expansive definition of principal cities than our research, and encompasses the full pool of 366 metro areas, rather than the 100 largest. Next week we will use the new ACS data to dig more deeply into how intra-metropolitan poverty trends in the nation’s largest metro areas may have changed in 2011.)
•  The safety net continued to play an important role in alleviating poverty. Key programs like Unemployment Insurance (UI), the Supplemental Nutrition Assistance Program (SNAP), and the Earned Income Tax Credit (EITC) provided critical supports to low-income families in 2011. Without UI, 2.3 million more people would have fallen below the poverty line. Counting SNAP toward income lifts 3.9 million people out of poverty, and EITC brings 5.7 million people above the poverty line.

Next week we will know more about poverty and income in 2011. But yesterday’s report brings home a difficult reality. The weak recovery has failed to make progress against poverty, and looming cuts to key safety net programs mean programs and policies that have served as effective bulwarks against poverty will likely erode. Let’s not forget the good news in yesterday’s numbers, but signs point to a difficult road ahead.