First Impressions of the 2012 Poverty, Income, and Health Insurance Data (with updates)

September 17th, 2013 at 10:16 am

[The following are some initial impressions from the income, poverty, and health insurance data released by the Census Bureau this morning.  NOTE: these data refer to 2012, so yearly differences, unless otherwise noted, are between 2011 and 2012.  Also, visit www.offthechartsblog.org throughout the day for CBPP's updates and analyses.]

The poverty rate held steady at 15%, the same rate as 2011; the real median household income was also unchanged, at about $51,000.

Thus, the good news from today’s 2012 income and poverty results is that for the first year since the great recession hit, things aren’t getting worse.  The bad news is that three years into an economic recovery, they’re not getting better either.  Yes, the economy has expanded over these past few years, but to use a seasonal analogy, today’s report is yet another piece of evidence that this growth has once again done an end run around middle and lower income households on its way to the top of the scale.

1st update:

Inequality and Its Impact on Poverty and Income: GDP grew almost 3% last year, yet today’s report shows that the economic recovery has yet to lift the living standards of middle and low income families.  Certainly, arresting the drop in middle-incomes and the rise in poverty that had been the pattern since the downturn took hold in 2008 is a plus and the first step to reversing those unfavorable trends.

But the lack of income gains in the middle and bottom of the scale amidst an economic expansion that’s three years old is an important and notable finding from the report.  Surely, many American households can reasonably ask, “what recovery?”

Of course, the growth that’s occurred since the expansion began in 2009 had to go somewhere, and other data sources clearly reveal that destination: the top of income scale.  Including gains from the sale of capital assets, a main source of income for the wealthy and a prime driver of inequality, the top 10% of households now holds over half of the nation’s income, their highest share on record dating back to the early 1900s.

Though the Census income data do not capture the effects of capital income, they too show that inequality is tied with 2011 for an all-time high in their data series.  The share of income held by the top 5%–22.3%–is the same as 2011, and the highest on record going back to the mid-1960s when this series begins.  Note that this share is up one percentage point from 2007—the last cyclical peak (in 2001 the share was 22.4% but this is statistically indistinguishable from last year’s high).

Note also that these gains in income share at the top have come at the expense of the bottom 80%, all of whom have lost ground by this measure.

Simply put, inequality is working like a wedge in our economy, diverting growth from middle and lower-income families such that the growth that has occurred has been insufficient to improve their conditions.

2nd update:

Some positive findings from today’ report:

–As noted, the fact that middle-income were flat in real terms and poverty did not go up is a positive development relative to the past five years.  Still, “things aren’t getting worse” is not a huge selling point, particularly given the outsized gains at the top of the income and wealth scales.

–One positive finding from today’s report is how effective safety net programs have been in offsetting some of the economic damage to lower income households.  Though the value of SNAP (formerly Food Stamps) is not counted in the official poverty rate—a notable shortcoming of that measure—the Census reported that the market value of SNAP benefits lifted 4 million people, including 1.7 million children above the poverty line last year.

–Unemployment Insurance (which is counted in the official rate) lifted 1.7 million people out of poverty (though that’s down from 2011–2.3 million–and 2010–3.2 million).

–The Earned Income Tax Credit, a valuable, pro-work wage subsidy to low-income working families (also not counted in the official rate) lifted 5.5 million out of poverty, including 2.9 million children of working parents.

–Health coverage continues to expand for some groups, particularly children.  The share of total uninsured fell last year from 15.7% in 2011 to 15.4% in 2012.  For kids, the uninsured share went down from 9.4% to 8.9%, an historic low.

The SNAP finding is especially noteworthy given current efforts in the House to severely cut the program.  Today’s data show that were such deep cuts in place last year, millions of economically vulnerable families would have suffered deeper poverty.

More to come…

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7 comments in reply to "First Impressions of the 2012 Poverty, Income, and Health Insurance Data (with updates)"

  1. Stephen Weinberg says:

    Thank you for your work digesting these releases.


  2. Mike O says:

    So when does the man who promised to fix all this actually start doing that? We are 4.5 years in and none of those that supported him seem to be supported BY him.


  3. joe soboslay says:

    I would like to get your expert opinion on the positive results of raising the national minimum wage to 15 dollars per hour in a short period of time. The need for the US economy to have a realistic bottom number for wage. The need for a sensible starting number because of our countries minimum requirements or set standards.


  4. John says:

    Wage stagnation, as evidenced by the constant median income, is no surprise to anyone lucky enough to have a job. I work in IT for a few large Health Insurance companies and Banks and based on what I see in the buildings I walk, we are importing an enormous amount of labor all the while American’s remain unemployed and wages are stalled.

    Add to that the Affordable Care Act and those of us who are self-employed are really getting the short end of the government policy stick. We are being forced to deal with retarded government policy that imports labor while it pays out unemployment benefits to unemployed Americans. This is short-sighted policy that only a Washington insider could love.

    We need to fix the immigration problem, but first we need to identify the RIGHT immigration problem. I’m less worried about Mexico than I am about all of the labor we import from India and China, et al. The entire Visa system needs to be frozen and furloughed until we are back to full employment. Further, we need to stop importing students. Aren’t American Colleges already too crowded? The cost to get an education in this country is way out of proportion beause the demand caused by imported college students allows colleges to raise their rates. There are too many competing for too few seats.

    Here is the basic idea. Let us educate Americans first. Let us employ Americans first. When and if we have need to import students or labor we can do it after we have taken care of our own. I don’t think we need to police the world, save the world, or tell the world how to live. I think we need to stick to our own concerns and let the balance of the world fight their own battles and solve their own problems.


    • purple says:

      Universities are surviving on rich foreign Asians paying the full load. The Chinese nationals coming to this country and going to UC Berkeley (for example) are not from the factory floor.

      Government funding is a small proportion of state universities budgets now and they are desperate for any sources of revenue.

      It’s not good, for one, it creates a screwed-up idea of what diversity is and two, it distorts American students’ perceptions of the rest of the world. Having a bunch of rich foreigners on campus does not substitute for including the poor of this country even if they share a similar skin color.


  5. David Simms says:

    There share of income held by the top 5% of earners is 22.3%. With this record high wealth disparity do we really need to double the number of work visas from one million to two million per year as the Senate immigration bill will do?

    This massive increase in the supply of workers will undoubtedly hold down wage rates.


  6. purple says:

    For political reasons, I don’t think SNAP should be counted as income. It’s just sweeping a problem under the rug, as well as leaving that group enormously vulnerable to attack. (“Look how low poverty rates are !”)

    If a separate measure is need, a ‘U-6′ for poverty rate, that would be better.


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