Poverty and Income in 2008: A Look at the New Census Data and What the Numbers Mean

The 2008 Statistics on Income, Poverty, and Health Insurance Coverage

Last year was the first year – but it will not be the worst year – of a recession. The Census Bureau’s latest statistics on income, poverty, and health coverage, published today, reflect the impact of that recession. Household income and Americans’ health insurance coverage fell last year, and the poverty rate went up. In some respects the new statistics may show greater income losses than typical families actually sustained, a point I’ll return to in a minute. There can be little doubt, however, the recession sharply reduced the types of income that the Census Bureau is trying to measure.

A crucial statistic to keep in mind is the Census Bureau’s estimate of the number of full-time, year-round workers. Between 2007 and 2008 the number of such workers fell 4.6 million, or 4.2%. Between those two years the number of adults between 18 and 64 increased 0.7%. If the economy were growing at a normal pace we should expect the number of full-time, year-round workers to grow by the same percentage, or 0.7%. The fact that full-time, year-round employment fell 4.2% in a year when the working-age population was growing 0.7% means there was a deficit in full-time, year-round jobs of nearly 5% in 2008.

The fall in full-time, year-round employment was considerably worse for men than for women. Whereas women’s employment dropped 3.2%, men’s employment fell 5.0%. Men suffered the bigger drop in employment, but women in full-time, year-round jobs suffered a bigger drop in their real earnings. Male earnings fell 1.0% compared with a decline in women’s earnings of 1.9%.

The implications of these employment and earnings numbers for income and poverty are pretty straightforward. People who had the good fortune to keep a full-time job saw their real earnings shrink between 1% and 2%. But a sharply smaller percentage of the adult population was working in full-time, year-round jobs. For the folks who lost a full-time or a year-round job, the drop in earnings was bigger than 1% or 2%.

Not surprisingly, the health insurance statistics reflect the trend in employment. In the United States, if you are under 65 and obtain health insurance through your job, you ordinarily lose access to generously subsidized insurance when you lose your job. Last year we saw the continuation of a trend that has been underway since the beginning of this decade. There was further decline in the percentage of Americans covered by employer-sponsored and other private health insurance.  For every age group between 18 and 54, the fraction of the population covered by private health insurance fell at least 1.0 percentage point last year compared with 2007. Private coverage fell 0.8 percentage points for 55-64 year-olds, and it also fell for children under 18 and for adults over 65.

There are a couple of bright spots in an otherwise gloomy health insurance picture. Coverage under government insurance plans expanded fast enough to offset the drop in private health coverage for Americans under 18 and past age 65. But government health insurance did not expand fast enough to offset the drop in private health coverage for the adult population between 18 and 64. Since 2000 private health insurance coverage has fallen in every age group in the population (see Chart 1). It has fallen fastest among children and working-age adults under 55, but it has fallen among older age groups as well. Overall health insurance coverage, under either a public or a private plan, has fallen among Americans in every adult age group (see Chart 2). The coverage rate dropped more than 5 percentage points among 25-34 year-olds and fell 4.3 percentage points in the population between 35 and 54.

It’s hard to imagine a set of numbers better calculated to reinforce the message delivered by President Obama last night. Private health insurance, mostly provided by employers, is covering a shrinking percentage of the working-age population. The only bright spots in health coverage are for two age groups where the government directly provides insurance or has made efforts to broaden public insurance coverage. The aged have been covered by Medicare since 1966, and starting in the late 1980s the federal government and the states have taken big steps to make health insurance freely available or affordable for children in working-poor families. Outside of those two groups, the situation is pretty grim, and it is getting worse over time. By depriving millions of workers of employment, the recession has made insurance loss an even worse problem.

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