STAT$: Poverty Looms Large in the U.S., 2016

FIFTY YEARS OF CENSUS POVERTY STATISTICS

by Allan Lichtenstein

THE CENSUS BUREAU’S release of the official poverty statistics for 2016 in mid-September highlighted a return of the overall poverty rate to its pre-Great Recession level, as well as noticeable reductions in poverty rates across the board, including for blacks, Hispanics, children, females, and single mothers with children.

The release was met with cautious enthusiasm by the experts who track poverty data, although it received limited press coverage. This should have been surprising, coming as the release did just days after two huge storms pounded Houston and Florida -- where, as usual, those most affected by the destruction were the poor and people of minority origin.

The fact is that poverty still looms shamefully large in 2016, and continues to tilt disproportionately towards blacks, Hispanics, children, females, and single mothers with children. In 2014, the most recent year for which worldwide data is available, only two of thirty-five OECD (the Organization for Economic Cooperation and Development) countries have a higher poverty rate than the United States.

Affirmation by various left-leaning think tanks of the downwards poverty trends shown by the new Census data is prompted by the likelihood that many anti-poverty programs, some of which were boosted during the Obama presidency, are threatened with the chopping block if Donald Trump and Paul Ryan fulfill their legislative agenda. These programs have had some success in blunting the effects of the recession, and in their absence, poverty would be even higher. Still, it is astonishing that it took eight years of economic recovery for the U.S. to get back to the official 2007 poverty level of 12.7 percent.

THIS YEAR marked the 50th anniversary of the U.S. Census Bureau’s first publication of national poverty statistics. It should be remembered that the methodology used to calculate poverty rates has not changed in fifty years. The poverty thresholds in 2016 for various household sizes are calculated using the same methodology as that developed by Molly Orshansky in 1965, adjusted only to reflect changes in consumer prices.

The table below highlights poverty thresholds for four prevalent household types. While these determine the official poverty estimates, thereby guiding much of the ensuing analysis and policy prescription, they should be treated with great caution. As is readily apparent, these dollar amounts are unrealistic and fall well short of providing a rigorous measurement of need, hardship or deprivation.

TABLE 1: 2016 POVERTY THRESHOLDS FOR VARIOUS HOUSEHOLD SIZES

In 2016, one in every eight people (12.7 percent) in the United States was living in poverty, down from 13.5 percent the previous year. This amounted to 40.6 million people, 2.5 million fewer than in 2015. Yet, looking back to 1973, little has changed. The poverty rate has not fallen below 11 percent over this period.

More telling, though, are the wide disparities in the poverty rates between the white non-Hispanic population and the black and Hispanic populations. Although poverty declined for blacks and Hispanics as well as for white non-Hispanics, more than one in every five blacks and almost every fifth Hispanic person was living in poverty in 2016, while less than one in every ten white non-Hispanic person lived in poverty. Poverty rates for blacks and Hispanics are still much more than double that for whites — the black-white ratio was 2.5-to-1 and the Hispanic-white ratio was 2.2-to-1.

FIGURE 1: POVERTY BY RACE AND ETHNICITY

With the growth of the Hispanic population, the racial and ethnic distribution of the population living in poverty has shifted. The Hispanic share increased from 11.2 percent in 1979 to 27.4 percent in 2016 (see figure 2). By contrast, whites made up 55.3 percent of the population living in poverty in 1979; by 2016, the white share had fallen to 42.5 percent. The share of blacks in poverty has also decreased, falling from 30.9 percent in 1979 to 22.7 percent in 2016.

Nevertheless, poverty is still disproportionately black and Hispanic. Their share of the poverty population is much greater than their share of the overall population. Hispanics comprised about 18 percent and blacks about 12 percent of the overall US population in 2016, while the white non-Hispanic share was about 61 percent.

FIGURE 2: SHARE IN POVERTY BY RACE AND ETHNICITY

MORE REALISTICALLY, close to 30 percent of the U.S. population is living in poverty.

The inadequacy of the official poverty measure calls for a more realistic measure of need. The Census Bureau publishes the Supplemental Poverty Measure (SPM), which, although an improvement over the Federal Poverty Measure (FPL), is also too conservative a measure of poverty.

The ubiquity of data based on the official poverty measure, however, compels its use in much of the poverty research in this country. A more realistic alternative to gauge the number of people living in poverty is to calculate the number of people living below twice the official poverty measure -- that is, living in households with incomes below $48,678 for a family of four (two adults and two children). Figure 3 below shows that about 30 percent of the population lived in such households, the lowest percentage in the last forty years. Nevertheless, this is still an extraordinary large number of people — more than 95 million people. Looking back to 1975, this percentage has fluctuated between 36 percent and 30 percent.

FIGURE 3: PERCENT OF PEOPLE AT VARIOUS LEVELS OF POVERTY

Alternatively, a gauge of the severity of poverty is to examine the percentage of people living in households with incomes below half the poverty measure; that is $12,170 for a family of four (two adults and two children).

In 2016, severe poverty dropped to 5.8 percent from the 6.1 percent level of the previous year. Nevertheless, there were 18.5 million people living in severe poverty in 2016. As figure 4 shows, the percentage and number of people living in severe poverty has grown substantially over time. In 2016, both these numbers were still higher than the 2007 levels at the onset of the Great Recession.

FIGURE 4: SEVERE POVERTY

Child poverty declined significantly in 2016 (see figure 5), yet child poverty rates were still much higher than the poverty rates for working adults and the elderly, which actually increased between 2015 and 2016. In 2016, a little more than 13 million children lived in poverty.

Although child poverty declined for blacks and Hispanics as well as non-Hispanic whites, the ratios for black-to-white and Hispanic-to-white actually increased in 2016. For every white non-Hispanic child in poverty there were 2.85 black children and 2.46 Hispanic children in poverty. Almost 31 percent of black children and almost 27 percent of Hispanic children lived in poverty, compared to almost 11 percent of white non-Hispanic children.

FIGURE 5: CHILD POVERTY BY RACE AND ETHNICITY

In 2016 poverty rates declined for all family types with children under 18. Overall, the poverty rate for all families with children under 18 was 15 percent, the equivalent of almost 5.7 million families. Nevertheless, poverty for families with children is disproportionately single-mother household poverty (see figure 6). About 61 percent of all families with children living in poverty are headed by single mothers. Moreover, with a poverty rate of 35.6 percent, the single-mother household poverty rate is 2.4 times the overall poverty rate for families with children and 5.4 times the poverty rate for married-couple families with children.

While the poverty rate for single-mother households has declined over time, it has never fallen below the 35.6 percent of 2016. By contrast, the poverty rate for married couples with children under 18 has fluctuated between 10 percent and 6.0 percent.

FIGURE 6: FAMILY POVERTY

Among single-mother households with children under 18 years of age, black and Hispanic single mothers are much more likely to be living in poverty than white non-Hispanic single mothers (see figure 7). In 2016, the poverty rate for black and Hispanic single mothers with children was 38.8 percent and 40.8 percent, respectively. By contrast, the poverty rate for white non-Hispanic mothers with children was 30.2 percent.

FIGURE 7: FEMALE FAMILY POVERTY BY RACE AND ETHNICITY

The poverty rates for non-elderly men and women (18 to 64) declined in 2016; yet the gap between men and women has not changed in 50 years (see figure 8). The male (18 to 64) poverty rate was 9.7 percent and the female rate was 13.4 percent, higher than both the 2007 rates at the onset of the recession and the 1966 rates, at the beginning of this data series. In total, 9.4 million men and 13.4 million women aged 18 to 64 were in poverty in 2016.

FIGURE 8: POVERTY BY GENDER

To put the U.S. poverty rate in perspective, a comparison can be made with the data collected by the OECD. In 2014, the most recent year with available data for all 35 member countries, the U.S. had third highest poverty rate (see figure 9). Sadly, Israel follows the U.S. with the second highest poverty rate; only Costa Rica is worse than Israel.

The OECD defines poverty as half the median household income for a particular country. In 2014, 17.5 percent of the US population lived in households with incomes below half the median household income.

FIGURE 9: INTERNATIONAL POVERTY RATE COMPARISONS, 2014

Allan Lichtenstein, a contributing writer to Jewish Currents, has a Ph.D in urban planning from Rutgers University and has been working in the field of poverty research for many years. He grew up in South Africa, lived in Israel for sixteen years, and has lived in the U.S. since 1986.