Monday, April 23rd, 2018

U.S. Income Gap Between Rich, Poor Hits New High

Published on October 15, 2012 by   ·   No Comments


WASHINGTON — The U.S. poverty rate leveled off last year for the first time since the Great Recession, but the halting recovery deepened the financial pain for middle-class families and pushed to a new high the income gap between the country’s richest and poorest citizens.

The number and share of people living in poverty was essentially unchanged from 2010 levels. That ended four straight years of increases, though not in California, where the rate rose to a 16-year high, the Census Bureau said Wednesday.

There was no relief for the average American: The median household income, after adjusting for inflation, dropped 1.5% in 2011 from the previous year to $50,054. That is now 8.1% lower than in 2007, when the recession began late that year.

The biggest hit fell on the middle- and lower-income groups, while upper-end households saw their incomes essentially unchanged. That raised one common index of inequality in America to an all-time high.

The Obama administration cast the Census Bureau’s annual report as evidence that the president’s policies were taking hold after the deep recession. The report indicated that job growth in the South and in America’s suburbs helped keep the poverty rate steady last year, at 15% of the population.

And officials also took credit for the improvement in the nation’s health insurance coverage rate, especially among young adults who, under the new healthcare law, can be covered under their parent’s policies.

“It is clear that had President Obama not taken swift and aggressive action to grow our economy and create jobs, today’s report would have shown much higher poverty rates, lower incomes and a greater share of the population without health insurance,” said Rebecca Blank, the acting U.S. Secretary of Commerce.

But the data on the continuing setback for average-income families give Obama’s critics fresh material to challenge the president’s dominant campaign message: that he is a defender of the middle class.

Even as payroll employment has been growing since early 2010, many of the new jobs are low-paying. And while those added jobs are helping lift some people out of poverty, for those who once had higher incomes, those jobs are all that they can find in a weak labor market.

“It’s the middle that seems to be struggling more than the poor,” said Sheldon Danziger, a poverty expert and public policy professor at the University of Michigan.

Timothy Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin in Madison, said that households between the 20th and 60th percentile of incomes — roughly those that make $25,000 to $70,000 — are feeling the biggest strains.

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