Poverty Increases as Incomes Decline Under
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
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
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
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.