Event Summary: Poverty and Income in 2003

August 26, 2004

A Brookings panel of experts today discussed the findings of a new Census Bureau report on income, poverty, and health insurance coverage. The Census Bureau’s data, released Thursday, shows that the number of Americans living in poverty increased by 1.3 million in 2003, and the number of uninsured Americans rose by 1.4 million.

The Census Bureau defines poverty based on household size. For instance, poverty for a couple is defined as $12,015 or less, whereas the poverty line for a family of four was $18,810.

This is the third consecutive year in which the numbers for both the poor and the uninsured have increased, and although the negative numbers were expected, they nonetheless present an alternative to President Bush’s upbeat economic assessment as he campaigns around the country.

“It’s going to be easier for the Kerry campaign to use these numbers,” said Brookings Senior Fellow Gary Burtless. “It’s a very easy case to make when, over the past three years, income has gone down, health insurance coverage has gone down, and poverty has gone up.”

According to the Census figures, children are entering into poverty in large numbers and at a faster rate than other age groups. Roughly 800,000 additional children entered into poverty in 2003, increasing the rate of poverty in the under-18 population from 16.7 percent of all children to 17.6 percent.

Median household income, when adjusted for inflation, held steady at was $43,318, which was about the same as it was in previous years. Whites, blacks, and Asians saw no significant change in their income, although Hispanics saw their income drop by 2.6 percent. Asians had the highest income at $55,500.

Panelists disagreed on how to interpret the Bureau’s findings. Robert Rector, a senior research fellow at the Heritage Foundation, said the findings were mild compared to previous recessions.

“The impact on poverty here compared to the recessions of 1980 and 1990 is relatively mild,” Rector said.

Burtless partially agreed, adding that “unemployment did not rise as much in this recent recession as in others, so there’s been less hardship in the labor market and real wages have held up much better.”

But Burtless went on to note that the labor market is having a more difficult time recovering from the recession than it has in previous recessions.

“The percentage of adults in the U.S. who hold jobs has fallen down further—and stayed down longer—than we’ve seen in the past few recession cycles,” Burtless said.

Rector disagreed with much of the report’s methodology, arguing that large gaps and omissions existed that painted a disproportionately negative picture of income, poverty, and health care.

“We’re overstating the number of uninsured,” Rector said. He also contended that only one-third of families below the poverty line are “significantly deprived.”

“The median poor family has much higher living standards than most people think,” Rector said.

Brookings Visiting Fellow Margy Waller agreed that the numbers weren’t capturing the whole picture, but whereas Rector believed the Bureau’s numbers were too negative, Waller thought they probably weren’t negative enough.

“There are a number of expenses that don’t get counted,” Waller said, citing child care as a primary example.

Waller also was troubled by the Bureau’s finding that one-third of those beneath the poverty line were in “deep poverty,” with incomes of half the poverty line or less. She said that subsidizing child assistance, transportation, and housing “helps people get jobs, keep jobs, and move on up.”

“We need to be doing something to address working poor families who aren’t doing well enough to move out of poverty and those who seem to be suffering a great deal and dropping into the extreme poverty because they don’t have work or safety net assistance,” Waller said.

Georgetown Professor Cindy Mann said debating the Bureau’s detracted from the seriousness of the problem.

“We’ve got a significant poverty issue,” Mann said. “The differences shouldn’t distract us. The trend really hasn’t changed.”

Mann said she hoped that the new findings will reaffirm the need for effective public social programs, and cited one of the few positive findings in the report: health insurance coverage among children actually rose, thanks in large part to a robust surge in government insurance coverage.

“Were it not for these public programs,” Mann said, “these numbers would be much, much higher.”