Seeking Alpha
Professor, economy, macro
Profile| Send Message|
( followers)  

The Bureau of the Census released data for U.S. poverty rates and family income today. The headline poverty rate for all individuals was essentially unchanged from 2011, at 15 percent. The poverty rate reached an all-time low of 11.3 percent in 2000. Median family income declined from $51,100 to $51,017, a change that is not statistically significant.

One of the most striking trends in recent poverty data has been the rise in poverty among the working-age population. As the following chart shows, when the government first began to publish poverty data, the elderly were the poorest segment of the population, with children in second place. Since that time, poverty rates among the elderly have fallen dramatically, while those of children have changed little. Meanwhile, the poverty rate for working-age individuals (defined as 18 to 65 years) has risen, and has continued to rise during the current economic recovery. It reached 13.7 percent of the population in 2010, and has not showed a statistically significant change from that level since.

(click to enlarge)

One might wonder why working-age poverty would not have decreased as a result of the gradual fall in unemployment rates. Another data series helps explain why it has not. The following chart shows the percentage of all poor people who worked full-time year around. It is ominous that the number of poor full-time workers, after trending down for many years, has begun to rise again even during the recent recovery, from a low of 8.3 percent in 2010 to 9.1 percent as of 2012.

(click to enlarge)

Traditionally, employment has been the surest way out of poverty, but that seems to be less and less the case in the United States. The latest data will intensify the search for ways to improve the situation of low-wage workers. There is no shortage of proposals. Increase minimum wages, as California has recently done. Organize workers in the fast food industry and other low-wage occupations. Enhance the Earned Income Tax Credit. It is small wonder that more and more people are beginning to doubt that waiting for the economy to "return to normal" will be enough.

Source: U.S. Working-Age Poverty Remains Near Record High In 2012