U.S. Poverty Rate Leveling Off

Four years into an economic recovery, the number of people living in poverty has finally stopped climbing.
( [email protected] ) Aug 30, 2006 03:28 PM EDT

WASHINGTON (AP) - Four years into an economic recovery, the number of people living in poverty has finally stopped climbing.

Household incomes edged up slightly in 2005, but 37 million people were still living below the poverty line, about the same as the year before, the Census Bureau reported Tuesday.

It was the first year without an increase in poverty since 2000, just before President Bush took office.

The numbers immediately became political fodder, with a little more than two months to go before midterm congressional elections that will determine whether Republicans continue to control the House and the Senate.

Some Republicans blamed the stubborn poverty numbers on immigrants holding down wages. Democrats blamed the Bush administration, noting that incomes are lower and the poverty rate is higher than when Bush took office.

Democrats also noted that the number of people without health insurance climbed for the sixth straight year, reaching 46.6 million people in 2005.

"I know what they say about putting lipstick on a pig, but I don't see how the Bush administration can spin these numbers in their favor," said Rep. Charles Rangel, D-N.Y.

Bush's budget chief said the new numbers show the economy's resilience following terrorist attacks in 2001 and Hurricane Katrina a year ago.

"Unemployment is low, wages are rising and there are more jobs in America today than at any other time in history," said Rob Portman, Bush's budget director. "While we still have challenges ahead, our ability to bounce back is a testament to the strong work ethic of the American people, the resiliency of our economy, and pro-growth economic policies, including tax relief."

The Census Bureau surveyed 100,000 households in the spring about their incomes and health insurance in 2005. New Jersey had the highest median household income, at $61,672. Mississippi had the lowest, at $32,938.

Mississippi also had the highest poverty rate, at 21.3 percent. New Hampshire had the lowest, at 7.5 percent.

The survey covered four months following Hurricane Katrina, which struck a year ago Tuesday. But the storm had little effect on the numbers because the survey covered incomes and health insurance for the entire year and the entire country, said David Johnson, the Census Bureau's chief of housing and household economic statistics.

The official poverty level is used to decide eligibility for federal health, housing, nutrition and child care benefits.

The poverty level differs by family size and makeup. For example, the poverty level for a family of four was $19,971 last year. For a family of two, it was $12,755.

About 12.6 percent of the population lived below the poverty line in 2005. That's down from 12.7 percent in 2004, but the change was not statistically significant, census officials said.

The last decline in the poverty rate was in 2000, during the Clinton administration, when it dropped to 11.3 percent. It increased every year from 2001 to 2004.

The median household income — the point at which half make more and half make less — was $46,326, a slight increase from 2004, but still below the peak of $47,671 in 1999.

"For the first time on record, poverty was higher in the fourth year of an economic recovery than when the recession hit bottom," said Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a Washington research group.

"These disappointing figures on median income and poverty are the latest evidence that the economic growth of the past few years has had an unusually limited reach," Greenstein said. "Many middle- and low-income families are not sharing in the gains."

Conservatives said large numbers of immigrants are driving down wages and incomes, especially among low-income workers. Rep. Joe Barton, R-Texas, said immigrants are skewing the health insurance statistics.

"As the Census Bureau's report (Tuesday) indicated, the group most likely to be without health insurance in America is, in fact, not American at all," Barton said. "Non-citizens swell the ranks of the uninsured dramatically when they arrive in America with hopes and dreams, but without insurance."

About a third of all immigrants — legal and illegal — were without health insurance last year, according to the Census Bureau's report. About 13.4 percent of people born in the U.S. had no health insurance.

Others pointed to employers cutting or eliminating health benefits.

The share of people with employment-based health insurance decreased slightly, to 59.5 percent, continuing a trend that has some advocates worried about workers' ability to afford health care.

"Much more cost shifting is being done by employers to employees," said Henry Simmons, president of the National Coalition on Health Care. "You may have insurance, but it's not the same insurance that you had before."

Copyright © 2006 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.