Global Policy Forum

By Robert Pear

The proportion of Americans living in poverty rose significantly last year, increasing for the first time in eight years, the Census Bureau reported today. At the same time, the bureau said that the income of middle-class households fell for the first time since the last recession ended, in 1991.

The Census Bureau's annual report on income and poverty provided stark evidence that the weakening economy had begun to affect large segments of the population, regardless of race, region or class. Daniel H. Weinberg, chief of income and poverty statistics at the Census Bureau, said the recession that began in March 2001 had reduced the earnings of millions of Americans. The report also suggested that the gap between rich and poor continued to grow.

All regions except the Northeast experienced a decline in household income, the bureau reported. For blacks, it was the first significant decline in two decades; non-Hispanic whites saw a slight decline. Even the incomes of Asians and Pacific Islanders, a group that achieved high levels of prosperity in the 1990's, went down significantly last year. "The decline was widespread," Mr. Weinberg said.

The Census Bureau said the number of poor Americans rose last year to 32.9 million, an increase of 1.3 million, while the proportion living in poverty rose to 11.7 percent, from 11.3 percent in 2000. Median household income fell to $42,228 in 2001, a decline of $934 or 2.2 percent from the prior year. The number of households with income above the median is the same as the number below it. A family of four was classified as poor if it had cash income less than $18,104 last year. The official poverty levels, updated each year to reflect changes in the Consumer Price Index, were $14,128 for a family of three, $11,569 for a married couple and $9,039 for an individual.

The bureau's report is likely to provide fodder for the Congressional campaigns. The White House said the increase in poverty resulted, in part, from an economic slowdown that began under President Bill Clinton. But Democrats said the data showed the failure of President Bush's economic policies and his tendency to neglect the economy.

Mr. Bush said today that he remained optimistic. "When you combine the productivity of the American people with low interest rates and low inflation, those are the ingredients for growth," Mr. Bush said. But Senator Paul S. Sarbanes, Democrat of Maryland, said the administration should "start paying attention to the economic situation." Richard A. Gephardt of Missouri, the House Democratic leader, expressed amazement that Mr. Bush, after being in office for 20 months, was still blaming his predecessor.

Rudolph G. Penner, a former director of the Congressional Budget Office, said: "The increase in poverty is most certainly a result of the recession. The slow recovery, the slow rate of growth, has been very disappointing. Whether that has a political impact this fall depends on whether the election hinges on national conditions or focuses on local issues."

Although the poverty rate, the proportion of the population living in poverty, rose four-tenths of a percentage point last year, it was still lower than in most of the last two decades. The poverty rate exceeded 12 percent every year from 1980 to 1998. As the economy grew from 1993 to 2000, the rate plunged, to 11.3 percent from 15.1 percent, and the poverty rolls were reduced by 7.7 million people, to 31.6 million.

The latest recession showed an unusual pattern, seeming to raise poverty rates among whites more than among minority groups, Mr. Weinberg said. Increases in poverty last year were concentrated in the suburbs, in the South and among non-Hispanic whites, the Census Bureau said. Indeed, non-Hispanic whites were the only racial group for whom the poverty rate showed a significant increase, to 7.8 percent in 2001, from 7.4 percent in 2000. Poverty rates for minority groups were once much higher. But last year, the bureau said, they remained "at historic lows" for blacks (22.7 percent), Hispanics (21.4 percent) and Asian Americans (10.2 percent).

With its usual caution, the Census Bureau said the data did not conclusively show a year-to-year increase in income inequality. But the numbers showed a clear trend in that direction over the last 15 years. The most affluent fifth of the population received half of all household income last year, up from 45 percent in 1985. The poorest fifth received 3.5 percent of total household income, down from 4 percent in 1985. Average income for the top 5 percent of households rose by $1,000 last year, to $260,464, but the average declined or stayed about the same for most other income brackets. Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a liberal research institute, said, "The census data show that income inequality either set a record in 2001 or tied for the highest level on record."

Median earnings increased 3.5 percent for women last year, but did not change for men, so women gained relative to men. "The real median earnings of women age 15 and older who worked full time year-round increased for the fifth consecutive year, rising to $29,215 - a 3.5 percent increase between 2000 and 2001," Mr. Weinberg said. The comparable figure for men was unchanged at $38,275. So the female-to-male earnings ratio reached a high of 0.76. The previous high was 0.74, first recorded in 1996.

Democrats said the data supported their contention that Congress should increase spending on social welfare programs, resisted by many Republicans. But Wade F. Horn,the administration's welfare director, said the number of poor children was much lower than in 1996, when Congress overhauled the welfare law to impose strict work requirements. Of the 32.9 million poor people in the United States last year, 11.7 million were under 18, and 3.4 million were 65 or older. Poverty rates for children, 16.3 percent, and the elderly, 10.1 percent, were virtually unchanged from 2000. But the poverty rate for people 18 to 64 rose a half percentage point, to 10.1 percent.

Median household income for blacks fell last year by $1,025, or 3.4 percent, to $29,470. Median income of Hispanics, at $33,565, was virtually unchanged. But household income fell by 1.3 percent for non-Hispanic whites, to $46,305, and by 6.4 percent for Asian Americans, to $53,635. The Census Bureau report also included these findings:

There were 6.8 million poor families last year, up from 6.4 million in 2000. The poverty rate for families rose to 9.2 percent, from a 26-year low of 8.7 percent in 2000.

The rate in the South rose to 13.5 percent, from 12.8 percent in 2000. The South is home to more than 40 percent of all the nation's poor, and it accounted for more than half of the national increase in the number of poor last year.

The poverty rate for the suburbs rose to 8.2 percent last year, from 7.8 percent in 2000. The number of poor people in suburban areas rose by 700,000, to 12 million. There was virtually no change in the rates in central cities (16.5 percent) and outside metropolitan areas (14.2 percent).

The bureau said the number of "severely poor" rose to 13.4 million last year, from 12.6 million in 2000. People are considered to be severely poor if their family incomes are less than half of the official poverty level.

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