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A Legacy of Poverty

New Census Numbers Fail to Reflect the Severity of Inherited Problems

SOURCE: AP/Jae C. Hong

Jorge Deleon files an unemployment insurance claim over the phone at a Nevada Jobconnect Career Center in Las Vegas. Unemployment has gone up since last year, workers are staying unemployed longer, and food stamp requests are on the rise, which could all push poverty rates higher.

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The current recession’s challenges continue to weigh on the nation, Congress, and the new administration. This morning the U.S. Census Bureau released its annual poverty numbers, revealing that 39.8 million people, or 13.2 percent of the population, lived in poverty during 2008. This is 2.5 million more people than the previous year and 1997 was the last time the nation had a rate that was approximately this high.

While this is certainly not good news, these numbers don’t show the full extent of the problems inherited by President Barack Obama, which include the facts that poverty will almost certainly increase in 2009, that poverty numbers never fell to the levels that existed prior to the recession of 2001, that poverty will likely increase during the post-recovery period, and that the nation has a history of underestimating economic hardship. Thankfully, Congress can take several steps to help those already living in poverty and prevent more people from falling into it.

The current Census numbers report survey data from 2008 and therefore don’t reflect the deepening impact of the recession that has been occurring in 2009. Certain indicators clearly suggest that poverty has only worsened this year:

  • Unemployment and underemployment have gone up. At the end of last year the seasonally adjusted unemployment rate was 7.2 percent and has since risen to 9.7 percent, representing 3.8 million additional people. Millions more have become discouraged and stopped looking for work or are otherwise underemployed, only working part time because their hours have been cut back or they can’t find full-time work.
  • Workers are staying unemployed longer. As the recession marches on, workers are experiencing much longer durations of unemployment. The average length of unemployment was 19.7 weeks at the end of the last year, but it currently stands at 24.9 weeks—a level never before seen since the Bureau of Labor Statistics began keeping tabs on unemployment in 1948.
  • Food stamp requests are on the rise. The number of people requesting food stamp assistance has been steadily growing. In December 2008, 31.8 million people participated in the program. The most recent data from June of this year indicates that number has grown to 35.1 million.

In addition to the strong likelihood that poverty is increasing over the course of this year—affecting the Census’ 2010 poverty report—the nation and the current administration must prepare for likely increases over the next couple of years. Not only will unemployment likely continue to rise in 2010 and possibly remain high for some time after that, but historical patterns suggest that it typically takes some time for those at the bottom of the economic ladder to actually feel the effects of an economic recovery. Poverty continued to rise even after the last three recessions were over.

Recessions during the Reagan and George H.W. Bush years were followed by one and two years of increases in poverty respectively. Similarly, after the 2001 recession ended, poverty continued to increase for three additional years and never did return to the previously low level that existed just before George W. Bush took office. Thus, the share of people living in poverty hadn’t fallen down from the higher levels of the last recession by the time the new recession began. If the current recession follows these patterns there will be upswings in poverty through at least 2011 and possibly beyond that.

Examining the current and anticipated number of people considered poor by the U.S. Census Bureau doesn’t even tell the whole story. The Center for American Progress has joined others in arguing that currently used income thresholds are too low and are otherwise imperfect. In 2008 a family consisting of two parents and two children was considered impoverished if its income fell below $21,834. As a nationwide figure, this does not account for regional differences in the cost of living or the impact of individual family factors (for example, high health care or child care costs) on disposable income. Thus, a family with an ill member and high health care costs that lives in San Francisco or New York City and lands just above the poverty line is probably doing far worse during this recession than what their poverty status would indicate.

Despite these flaws, today’s numbers help shed some light on how the deteriorating economy is affecting certain groups, including the following:

  • Women. Mounting job losses during 2008 caused increases in poverty amongst both men and women. With a poverty rate of 13.2 percent, working-age women are more likely to be poor than their male counterparts, whose rate is 10.1 percent. Elderly women and unmarried women have a history of being particularly disadvantaged.
  • Children. With a poverty rate of 19 percent, children continue to be the age group most likely to be poor. Seven hundred forty-four thousand more children falling below the poverty line has grave implications for long-term hardship—i.e., educational and life outcomes—especially when the recession coincides with potential decreases in funding for educator staffing and successful school reforms that have been benefiting low-income children..
  • Black and Hispanic populations. Across multiple categories, including those listed above, black and Hispanic individuals and families are disproportionately poor, with rates of 24.7 percent and 23.2 percent respectively. Children are particularly affected—although African Americans were the only racial grouping that did not experience a statistically significant increase in poverty during 2008, black children continue to have the highest child poverty rate of 33.9 percent with Hispanic children not being that far behind at 30.6 percent.

The growing number of people living below the poverty line—and some of those just above it—will require additional help. Strategic investments in antipoverty programming can help those already living in poverty and minimize the predicted increases in these numbers.

The federal government will have no choice but to play a significant role in these efforts because nearly every state is immersed in a budget crisis and many local governments are also feeling the pain. As a result, many are cutting services for their residents, including services that benefit low-income individuals and families. The American Recovery and Reinvestment Act that was passed at the beginning of this year will go far in helping to address these ills by providing new funds to state governments and increased investments in federal safety net programs. However, Congress will need to do more and likely over a much longer period of time than is covered by the recovery package.

Congress can help turn the tide against poverty by doing the following:

  • Extend unemployment insurance benefits. According to the National Employment Law Project, over 400,000 U.S. workers will exhaust their unemployment benefits by the end of this month. This number will grow to 1.3 million by the end of December when the federal share of extended benefits ends. Congress must enact a further extension before the end of the year.
  • Increase investments in federal safety net programs. As Congress works to complete appropriations legislation for fiscal year 2010 and then moves to the 2011 budget process at the beginning of next year, it should pay attention to the budget crises occurring at the state and local level and continue to grow federal investments aimed at addressing poverty. It should adopt new funding priorities and allow for necessary spending on essential social programs while minimizing the impact on the federal deficit.
  • Advance a comprehensive antipoverty agenda. The Center for American Progress has developed a comprehensive policy agenda for reducing poverty. Fortunately, much progress has been made on this agenda, but areas such as housing, child care, and programming for disadvantaged youth need more attention.

What’s more, due to frequent partisan disputes in recent years, Congress is behind in its efforts to reauthorize key pieces of legislation that could directly or indirectly reduce poverty while additional programs are up for reconsideration next year. These include the Workforce Investment Act, the Elementary and Secondary Education Act or No Child Left Behind, Temporary Assistance for Needy Families, the Child Care and Development Block Grant, the Child Nutrition Act, and the small issue of health care reform.

In short, there is much work to do and it is mostly confined to one congressional committee in each house. Congress needs to define priorities and make improvements that increase the effectiveness of the safety net and expand the number of people lifted out of poverty.

  • Approve a new poverty measure. Given the inadequacy of the current poverty measure, a new one must be adopted that takes account of factors that are economic burdens for families while also better accounting for the impact of federal government interventions that better financial circumstances. Senator Chris Dodd (D-CT) and Rep. Jim McDermott (D-WA) recently introduced legislation (S. 1625/H.R. 2909) that would accomplish this goal.

Joy Moses is a Policy Analyst with the Poverty and Prosperity program at American Progress.

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To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund, women's issues)
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Radio: Chelsea Kiene
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