Washington, D.C. — Center for American Progress experts are available today and throughout the week to comment on the 2013 figures for poverty and income from the Bureau of the Census.
The following CAP experts are available for comment:
In advance of the data release, CAP’s Melissa Boteach, Vice President of Half in Ten and the Poverty to Prosperity Program, authored a new resource for policymakers and members of the media on what to look for in the new data.
1. The data represent a point-in-time estimate, but estimates that examine poverty over time reveal a much larger share of Americans experiencing poverty and economic insecurity.
Every year, the Bureau of the Census releases its estimate of how many Americans lived below the federal poverty line at a specific point in time during the previous year. For the past several years, the official poverty rate has remained steady at about 15 percent.
Hearing this statistic, one might conclude that the same 15 percent of Americans remain stuck at the bottom, year in and year out, constituting the nation’s poor. An important but rarely discussed fact is that it is nowhere near the same 15 percent year after year.
Other Census data show that nearly one in three Americans—31.6 percent of us—experienced a spell of poverty of at least two months between 2009 and 2011, but only 3.5 percent of the population was in poverty for all three of those years. Research by Mark Rank and others has indicated that more than half of all Americans will experience at least one year of poverty or near poverty at some point during their working years. When including those who experience a year or more of unemployment or turn to the safety net, that figure rises to nearly four out of five Americans.
Therefore, decisions before Congress on issues such as the minimum wage and the safety net affect a much broader swath of Americans than the data in tomorrow’s release would imply. For more background information, see the CAP product “Reimagining Our Social Contract: The Safety Net Is Social Insurance for All Americans.”
2. The economic recovery is not translating into income growth more broadly, keeping millions of families trapped in economic insecurity and undermining household balance sheets.
While there may be a modest decline in the poverty rate in 2013 for the first time since the Great Recession, a return to the relatively low poverty rates we reached at the end of the millennium—the 11.3 percent poverty rate reached in 2000 remains the lowest official rate since 1974—is not likely in the near future. Given that the vast majority of Americans, including those at the bottom of the income scale, rely on their paychecks and work-related benefits as their primary source of income, wage stagnation is an important variable linked to the lack of progress on cutting poverty. As economists at the Economic Policy Institute have recently documented, real wage growth has been negative since 2000 for workers in the bottom 30 percent of the wage distribution and basically stagnant for workers in the middle. Only workers in the top 5 percent have seen solid gains.
Flat incomes combined with rising costs have also meant that household balance sheets are in trouble. As wages for low- and middle-income families have flattened or declined over the past decade, it has been more difficult for them to keep pace with the rising costs of basic goods. This leaves families more vulnerable to economic shocks, which can send them spiraling once again below the poverty line.
Absent major reforms, these trends are likely to continue. In August 2014, low-wage industries such as food services, retail, home health care, long-term care, and temporary help comprised nearly 40 percent of new jobs in the private sector. Fortunately, there is evidence that strengthening basic labor standards is part of the solution. A recent Economic Policy Institute analysis showed that in the past year, real hourly wages declined for all workers except those in the bottom 10 percent of the wage distribution, with workers in states that raised their minimum wages accounting for the increase. This underscores that public policies—specifically, minimum-wage increases—have an important role to play in combating wage stagnation.
3. Young workers are still struggling to stay afloat, even though they have more education, on average, than previous generations.
In 2012, 20.4 percent of people ages 18 to 24 had incomes below the poverty level, as did 15.9 percent of people ages 25 to 34. This is in contrast to adults over 35 years old, whose poverty rate was 10.7 percent. What’s striking is that young people today are much more educated than their counterparts 50 years ago but face higher poverty rates than did those of the same ages and educational levels. Even poverty rates for young people with college degrees or more were twice as high in 2012 as in 1968.
Higher education is still an important platform into the middle class, and the more education one has, the less likely he or she is to be poor. However, without good jobs and good wages, the return that today’s young people see on their educational investment will continue to decline. Even more students will be saddled with outsized student-loan debts that will keep them from investing in home ownership, starting families, and affording basic necessities.
The high poverty rates of young people carry long-term consequences. Research that examined the long-term prospects of workers who started their careers during recessions revealed that they were followed throughout their careers by lower wages, more unstable earnings, and more periods of unemployment over the next 10 to 15 years. The 2013 poverty rates for young workers, and breakouts by educational attainments, will thus be important to examine in tomorrow’s release.
4. Fifty years after the Civil Rights Act, there has been some progress for women and people of color, but persistent racial, ethnic, and gender disparities remain.
The 50th anniversary of the Civil Rights Act of 1964 provides an important opportunity to reflect on how far we have come and how far we need to go in expanding economic opportunities for women and people of color. Tomorrow’s data release will provide new information to examine key trends in economic security for women and people of color in light of this milestone year.
Comparing 2012 data to 1964, there has been progress in cutting poverty, particularly for African Americans. Due in part to greater civil rights protections and opportunities in the labor market, black poverty rates fell from 55 percent in 1959 to 27.2 percent in 2012. That said, Latinos, African Americans, and Native Americans are still significantly more likely to live below the poverty line than white non-Latinos.
The story is more mixed for women. While elderly women’s poverty rates dropped from 32 percent in 1966 to 11 percent in 2012—a testament to the effectiveness of Social Security and other federal policies—the poverty rate for nonelderly women remains elevated. While the poverty gap between nonelderly men and women has narrowed slightly over time, this has more to do with the deteriorating economic positions of many men than with improvements for women.
These data do not take into account how the important elements of the safety net have improved the economic well-being of families, but they do provide a point of comparison in terms of income from work and cash benefits.
In examining tomorrow’s poverty data, it is important to remember that they represent a point-in-time estimate, not the much larger numbers of Americans who will experience poverty at some point in their lives. Moreover, entrenched levels of income inequality and stagnation for those at the middle and bottom of the income distribution are intimately related to stubbornly high poverty levels. Finally, taking a close look at the trends for young people, people of color, and women are critical to understand how the economy is experienced differently by key demographics of American workers and families.
To speak with our experts, please contact Allison Preiss at [email protected] or 202.478.6331.
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