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Poverty Rates

U.S. Poverty Rrates

Today the U.S. Census Bureau released its annual report on poverty rates through 2018. The overall rate of 11.8% for 2018 was a mark of continued improvement from the 15% recorded from 2010-12 due to the Great Recession (blue line in the chart). There was also continued improvement to the rate of children in poverty from a recessionary high of 20% to 16.2%. But poverty increased yet again for those at least 65 years old from a low of 8.8% in 2015 to 9.7%.

The U.S. continues to have far too many suffering from severe hardship given our vast fortunes and wealth.

Improvements in poverty rates are good news—but, really, is this the best we can do? The U.S. continues to have far too many suffering from severe hardship given our vast fortunes and wealth. As the figure strikingly shows, momentous and permanent reductions in poverty haven’t occurred in the U.S. for many decades—since the War on Poverty. Since then the overall poverty rate has moved within a narrow band from 11.3% to 15.3% –depending on the business cycle. And childhood poverty is simply far too high all the time—with enormous increases especially during more severe downturns.

The current economic expansion, now over a decade in the making, is the longest on record. So, this may be about as good as it gets. Another recession is in our future and poverty rates will increase.

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Nuance in the report. As is typical, poverty rates vary considerably not just by age but by household formation, race and ethnicity, gender, region, population density, disability and educational attainment for example. Poverty rates are 8.1% for whites, 20.8% for blacks and 17.6% for Latinos (any race). Along educational lines rates are 4.4% for those with a BA degree but are 25.9% for those who lack a high school diploma. For more information see Figure 8 in the official Census report.

Another measure. The Census Bureau began publishing the Supplemental Poverty Measure (SPM) in 2011 to account for many of the government programs. The SPM makes additional adjusts to the official poverty measure that include: family size, regional cost of living, taxes paid or credited, medical expenses and child support. Many believe that the SPM substantially lowers official poverty. However, as is typical the new SPM report is mixed. The overall SPM is 13.1% or 1.3 percentage points higher than the official rate. SPM rates for children are lower (14.5%) but considerable higher (13.6%) for those at least 65 years old. For more comparisons see Figure 3 in the SPM report.

Today’s report shows that vast and growing wealth in the U.S. is not reaching our most vulnerable in the form of large, sustained reductions in poverty. These trends often surprise many Americans, as does the fact that the U.S. has the highest rates of poverty and child poverty in the developed world as our government programs do relatively less to alleviate hardship.

sylvia allegretto

Sylvia Allegretto
The Berkeley Blog