Family Income Down, Poverty Up

[Guest guest]

http://www.motherjones.com/news/dailymojo/2004/08/08_534.html

 

August 27, 2004

Family Income Down, Poverty Up

 

Anyone paying close attention to White House spin over

the past three years would have pegged 2003 as a

banner year for the American economy. After all,

weren't we in the second year of an expansion, with

the economy growing at a brisk 3 percent clip? And

hadn't President Bush told us that his tax cuts were

working their supply-side magic and helping the

country " turn the corner " ? Too bad the American people

never got the message. According to a new data from

the U.S. Census Bureau, during 2003 poverty rose,

income levels stagnated, and an increasingly large

number of workers scraped by without health insurance.

Perhaps things aren't quite so rosy as we've been led

to believe.

 

The big news was that real median household income

actually fell 0.1 percent -- from $43,381 to $43,318

-- during the fairly robust recovery in 2003. And ever

since the beginning of George W. Bush's presidency in

2000, median household income has dropped a whopping

3.5 percent.

 

Meanwhile, the poor get poorer and the rich get

richer. The poorest 20 percent of U.S. households saw

their average income decline 1.9 percent between 2002

and 2003. The wealthiest 20 percent, for their part,

enjoyed a 1.1 percent increase in average income over

the same time.

 

The country made no progress whatsoever in closing up

existing race and gender income inequalities.

Hispanics actually saw their incomes decline

considerably, by 2.6 percent, in 2003. As for other

minority groups, black households still make about 62

percent of what white households make, and Hispanic

households now make about 69 percent. At the same

time, there was a real decline of 0.6 percent in wages

of women who worked full time -- the first such drop

since 1995. And, according to the Census, women earn

about 76 percent of what men earn. (A study published

earlier this year by two economists took issue with

the Census' methods and suggested that the gender wage

gap could be as high as 38 percent.)

 

The most eye-catching statistic is that poverty rose

dramatically in the United States -- an additional 1.3

million people ducked under the poverty line, raising

the percentage from 12.1 percent to 12.5 percent.

(Keep in mind, too, that some experts believe the

Census Bureau sets the poverty line too low.) And the

poverty rate for children rose from 16.7 percent to a

shameful 17.6 percent -- that's 12.9 million children

in poverty. Looking at long-term trends, poverty has

risen for three consecutive years, since the beginning

of the Bush administration.

 

Many of these statistics can be traced to the jobless

nature of the recovery. Pundits can banter all day

about household surveys versus payroll surveys and how

many jobs we've " actually " lost, but at the end of the

day, the employment-to-population ratio has definitely

plummeted under Bush's tenure -- from 64.4 in 2000 to

62.3 in 2003. And as Jared Bernstein has noted in the

American Prospect, full employment is necessary before

economic gains can be shared by all Americans.

 

Economists have proffered an endless supply of reasons

for the piddling job growth -- from large productivity

gains (firms are getting more output per worker,

obviating the need for further hiring) to structural

shifts in the economy (when certain job sectors

shrink, it takes time for those workers to retrain and

enter new sectors). But recent analyses have also

shown that Bush's tax cuts were partially to blame:

they contributed very little to the recovery, and a

smarter set of policies (tax cuts aimed at low- and

moderate-income families) would have probably spurred

greater growth and greater job gains. The notion that

the president couldn't have done anything about

poverty and income levels just won't fly.

 

It's worth noting, too, that the president has done

little to ease the painful transitions workers face

when they lose their jobs. At the end of 2003, the

Republican-held Congress let the Temporary Extended

Unemployment Compensation program expire. As a result,

during the first half of 2004, over 2.2 million

workers exhausted their unemployment benefits and were

unable to receive further aid -- a statistic

suggesting that the income and poverty data for 2004

will be just as bleak. Meanwhile, Bush has announced

plans to gut the welfare safety net, even though

evidence shows that the current welfare program is

abandoning families before they can find a steady

source of income. Even if Bush didn't cause American

poverty, he has certainly done nothing to alleviate

it.

 

There's also a good deal of evidence that the rising

cost of health care is crowding out wages and eating

into family income. Indeed, with businesses

complaining about skyrocketing health costs, any

conversation about wages and income will have to

grapple with questions about health care. The Census

data says that the percentage of the U.S. population

without health insurance rose from 15.2 percent to

15.6 percent in 2003. For the record, there are now 45

million people without any sort of health coverage.

Part of the problem is that businesses are dropping

workers from their insurance rolls -- the percentage

of people who receive health insurance from their job

dropped from 61.3 percent to 60.4 percent. Considering

that President Bush is crafting a health care agenda

designed to dismantle employer-based health coverage,

this could be a number to watch.

 

One of the most striking aspects of the Census report

was that the percentage of uninsured Americans rose

even though government programs like Medicaid

continued to expand. This is noteworthy because, as

the Center for Budget and Policy Priorities notes,

more than $1 billion in federal funds for the State

Children's Health Insurance Program (SCHIP) are soon

set to expire. Meanwhile, states such as Texas,

Florida, and Utah are cutting back on their SCHIP

programs, a trend that could soon lead to a massive

increase in the numbers of uninsured children. Without

an expansion of government health programs for the

poor -- as John Kerry has proposed -- the situation

will only deteriorate further over time.

 

The numbers, then, are very bad, and none of this

should come as good news to President Bush's

reelection campaign. The states experiencing drops in

household income over the last two years include

crucial swing states like Arizona, North Carolina,

Illinois, and Pennsylvania. (On the other hand, West

Virginia and Washington, two other swing states, have

made steady gains during that time.) And voters in

suffering states have shown themselves more than

willing to punish the president. Already, Kerry has

made inroads in solid Republican states like Kentucky,

Arkansas, and Texas -- all states suffering income

losses, according to the Census data. And Kerry has

garnered strong support from Hispanic voters -- many

of whom are no doubt irked over their 2.6 percent

income drop. If these trends continue, and families

continue to struggle, Bush could find himself the

victim of a vast disconnect -- between his sunny

speeches and the actual, disgruntled state of working

America.

 

-Bradford Plumer

 

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