Poverty Increases as Incomes Decline Under Bush

September 21, 2005
By Gene C. Gerard

The day after Hurricane Katrina hit, exposing much of the public to the tragic conditions of poverty in America, the Census Bureau quietly released its annual report entitled, "Income, Poverty, and Health Insurance Coverage in the United States." In some respects, it provided a demonstrable backdrop to the pockets of poverty common to New Orleans and other cities. It also explained why, despite President Bush's assertion last month that, "Americans have more money in their pockets," many people aren't faring as well as they once did.

The report indicates that in 2004 there was no increase in average annual household incomes for black, white, or Hispanic families. In fact, this marks the first time since the Census Bureau began keeping records that household incomes failed to increase for five consecutive years. Since President Bush took office, the average annual household family income has declined by $2,572, approximately 4.8 percent.

Black families had the lowest average income last year, at $30,134. By comparison, the average income for white families was $48,977. The average pretax family income for all racial groups combined was $44,389, which is the lowest it has been since 1997. The South had the lowest average family income in 2004.

Interestingly enough, as the Economic Policy Institute notes in their analysis of the Census Bureau's report, not all families did poorly last year. Although the portion of the total national income going to the bottom 60 percent of families did not increase last year, the portion going to the wealthiest five percent of families rose by 0.4 percent. And while the average inflation-adjusted family income of middle-class Americans declined by 0.7 percent in 2004, the wealthiest five percent of families enjoyed a 1.7 percent increase.

Earnings also declined last year. This is despite the fact that Americans are working harder. Since 2000, worker output per hour has increased by 15 percent. Yet for men working full-time, their annual incomes declined 2.3 percent in 2004, down to an average of $40,798. This decrease was the largest one-year decline in 14 years for men. Women saw their earnings decrease by 1 percent, with an average income of $31,223, the largest one-year decline for women in nine years.

Women earned only 77 cents for every dollar earned by men last year. Clearly, the gender gap remains real and pervasive. In all major industry sectors, women earned less than men. In the management of companies, women earned 54 cents for every dollar earned by men; 57 cents in finance and industry; and 60 cents in scientific and technical services.

Not surprisingly, the report revealed that poverty increased last year. There were 37 million (12.7 percent) people living in poverty, an increase of 1.1 million people since 2003. This was the fourth consecutive year in which poverty has increased. In fact, since President Bush took office, 5.4 million more people, including 1.4 million children, have found themselves living in poverty. There were 7.9 million families living below the poverty level in 2004, an increase of 300,000 families since 2003.

The average income last year for a poverty-stricken family of four was $19,307; for a family of three it was $15,067, and for a couple it was $12,334. The poverty rate increased for people 18 to 64 last year by 0.5 percent. The South experienced the highest poverty rate of all regions.

The Census Bureau report also demonstrated that health insurance coverage remains elusive for many Americans. Those covered by employer-sponsored health insurance declined from 60.4 percent in 2003 to 59.8 percent in 2004. Approximately 800,000 more workers found themselves without health insurance last year. The percentage of people covered by governmental health programs in 2004 rose to 27.2 percent, in part because as poverty increased, more Americans were forced to seek coverage through Medicaid. The percentage of the public with Medicaid coverage rose by 0.5 percent in 2004.

Last year was the fourth consecutive year in which employer-sponsored health insurance coverage declined. A total of 45.8 million Americans are now without health insurance. The uninsured rate in 2004 was 11.3 percent for whites, 19.7 percent for blacks, and 32.7 percent for Hispanics. Not surprisingly, the South had the highest portion of the uninsured population, at 18.3 percent.

Although we haven't heard President Bush say it much lately, he came into office as a self-professed "compassionate conservative." But as the report by the Census Bureau suggests, which was sadly symbolized by the plight of many poor residents of New Orleans, the country hasn't seen much of that compassion in the last five years.

Many Americans are working harder, earning less, and without the benefit of health insurance. It's easy to understand why the report was released a day after the largest natural disaster in a century, when much of the country was distracted.