Poverty and Income in 2002

September 26, 2003

A Brookings Institution panel of experts gathered this afternoon to discuss the U.S. Census Bureau report on poverty and income for 2002, which was released this morning.

The annual report showed that almost 1.7 million people dropped into poverty last year, making it the second straight year that the poverty rolls have increased. Additionally, median household income fell 1.1 percent between 2001 and 2002.

“This is certainly bad news,” said Gary Burtless, a senior fellow at the Brookings Institution. “But it’s hardly unexpected given what we already know about our nation’s labor markets.”

Robert Greenstein, executive director at the Center on Budget and Policy Priorities, said the new data pointed to tough times ahead.

“Other factors continue to suggest that things will continue in an adverse direction next year,” said Greenstein. “It is likely—not certain—that we’ll have another rise in poverty and a drop in median income next year.”

Greenstein’s comments focused primarily on what he called, “the depth of poverty.”

“How far below the poverty line do people fall?…What you find from the new census data is that the average amount that people who are poor fell below the poverty line…is the largest amount in real terms ever registered in this census data,” said Greenstein. “For those who are poor, they are—on average—poorer than anytime in the last 23 years.”

Despite the figures, panelists made the case that things could be much worse, and much of the discussion focused on comparisons between the current recession and previous ones.

“It’s impossible to talk about good economic news in a recession,” said Robert Rector, a senior research fellow at the Heritage Foundation. “But comparatively speaking, this recession looks much milder, particularly for children, than previous recessions from the 1970s forward.”

Burtless also put the numbers into historical perspective, noting that “median incomes in the middle and the bottom held up much better during this recession than they did in the previous three.”

Another encouraging sign, Rector said, was that “the increase in child poverty is one-fifth of the historic norm.”

Brookings Senior Fellow Ron Haskins agreed with Rector’s assessment. “Children’s poverty has lowered substantially,” he said, “and is very near its historic low.”

Opinions differed as to why the current recession produced lower poverty rates than previous recessions.

“What explains the relatively good performance?” asked Burtless. “The unemployment rate rose a bit less sharply in this recession…and wages rose more strongly for those breadwinners who managed to hold on to their jobs.”

Rector attributed the historically mild losses to the fact that “this is a comparatively shallow recession…and welfare reform has been successful in buffering children from the effects of recession.”

Panelists also offered suggestions for reversing the downward trend in the Census findings. “If we could restore the marriage rate, that would significantly reduce poverty over the long term,” said Rector.

Greenstein criticized recent cuts in childcare and a “stingier set of unemployment benefits” and offered those as potential areas of improvement.

Kay Hymowitz, a senior fellow at the Manhattan Institute, suggested that “policies are less important than a shift in cultural promotions.”

“Is there a way that we can come up with some kind of consensus that young children, growing up, have to expect to get married before they have children?” said Hymowitz. “That is a message that I think kids are not getting.”

Citing recent data that suggests that marriage plays a significant role in reducing poverty, Hymowitz said that “there has to be a universal understanding that this will make a huge difference in the lives of children.”

An event transcript will be posted soon.