In US, fewer are poor, more are working

Over the course of 2006, low-income families in America fared a little better than they did the year before.

The nation's poverty rate dipped to 12.3 percent in 2006, from 12.6 percent – the first significant decline during the Bush administration despite the economic recovery, the Census Bureau reported Tuesday.

The primary reason is that more people are working, which helped boost median income last year to $48,200, a slight increase over 2005.

But there's a caveat. "This is the second consecutive year household income has increased, even though the overall household median income has not recovered to its 1999 prerecessionary peak of $49,200," says David Johnson, chief of the housing and household economic statistics division at the US Census Bureau.

The bureau's poverty rate measures a snapshot in time. Some experts say that focus masks a significant increase in economic instability for Americans that makes more people in the middle class vulnerable to poverty. That's because while the percentage of people in poverty at a given time may be declining (it's fluctuated between 10 and 15 percent for the past 20 years), more Americans overall are experiencing poverty at some time during their lives than at any time during the past 30 years, according to a study done at Washington University in St. Louis.

The study found that in the 1970s, about 24 percent of people between the ages of 20 and 29 experienced poverty for a year or more. In the 1980s, that went up to 30 percent. And in the 1990s, it increased to 38 percent. The reasons, according to Mark Rank, one author of the study, are the increase in lower-paying jobs, employment insecurity, and significant decreases in health-insurance coverage.

The Census Bureau reported yesterday that the number of people without health insurance has risen for the sixth in a row – up to 47 million last year.

Yet Professor Rank has also found that the length of time people remain in poverty has decreased, along with chronic poverty – in part because of welfare reform in the 1990s. So, while a bigger swath of people experience poverty at some point now, it's for shorter periods of time.

"The grip of poverty has become somewhat weaker, but the reach of poverty is wider," says Rank, a poverty expert at Washington University in St. Louis.

But some conservatives dispute that. They note that just because someone doesn't have income – which is what the Census Bureau measures – it doesn't necessarily mean they are poor. They could be between jobs, or taking a year off, says Robert Rector, a senior research fellow at the Heritage Foundation, a conservative think tank in Washington.

Mr. Rector has done surveys of people defined as "poor" by the government and found that of the 36 million Americans in poverty, almost three-quarters of them own their own car, 97 percent own a color TV, and 89 percent own a microwave oven.

That's led him to conclude that most "poor" people are materially better off than 20 years ago. The Census report released yesterday did find that while median income is still lower than it was in 1999, it's about 30 percent higher than in the late 1960s.

"Most people, when they hear the word poverty, think of malnutrition and food shortages. Certainly they're not thinking about households that have cable television, microwaves, and air conditioning, which most poor households have," he says.

He contends that only a very small minority of people defined as poor by the Census Bureau suffer real deprivation, such malnutrition or eviction.

Liberal analysts agree that living standards have increased for all Americans compared with 30 years ago. But many, including Jared Bernstein of the Economic Policy Institute in Washington, say the poverty rate 30 years ago is "a crazy low benchmark" to use in judging whether someone is poor in America today.

"The question [the conservatives] don't want to get near is, have the gains that low-income people have made been proportionate to overall growth?" says Mr. Bernstein. "Because income growth has been so unevenly distributed, the answer to that is unequivocally no."

Still, because of welfare reform, expansion of the earned-income tax credit, and other policies enacted during the 1990s, there are fewer poor people, most poverty experts note – partly because more people, particularly single mothers, are working. Experts also credit the growing economy.

"They may not be superduper jobs, but a lot are created every year," says Douglas Besharov of the American Enterprise Institute in Washington.

But experts also say that many of those working people are working poor. While they aren't in poverty, they still have a hard time making ends meet. Thus the strides made so far could easily be reversed if the economy goes into a recession and the unemployment rate goes up.

"Poverty is more tied to the economy than in the past because so many of these single-mother families now work," says Ron Haskins of the Brookings Institution in Washington.