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  Print view: Growing Poverty in America

Growing Poverty in America

One in three Americans had incomes below the minimum a family of four needs to "make ends meet" at a basic level.

by Stephen Lendman
Tuesday, 21 September 2010

Kids wanting food
FDR cared about kids wanting food...
The US is slipping closer to third world status as poverty rose to 43.6 million in 2009. Yet when stimulus is desperately needed fiscal austerity is accelerating. Congress won't stimulate new jobs, so poverty will continue growing.

The newly released US Census report on "Income, Poverty, and Health Insurance Coverage in the United States: 2009 PDF graphic" way understates a growing problem as do most other government data. Unemployment for one, the Labor Department's headlined (U-3) 9.6% masks the true 22% based on 1980 calculations.

With America in economic crisis, the new Census report portends much worse ahead under a president and Congress doing little to address it, the Brookings Institution Isabel Sawhill expecting the problem to "get much worse long before it gets better." More on the new data below. First, some other confirmations of economic trouble.

The Federal Reserve's September-released Flow of Funds report shows household Q 2 2010 net worth plunged $1.5 trillion because of a $0.9 trillion drop in corporate equities and a $0.7 reduction in pension fund holdings. Overall, total household financial assets declined by $1.7 trillion to $43.7 trillion, a trend expected to continue for some time.

On September 15, RealtyTrac reported another disturbing one, saying:

"The number of homes taken back by lenders hit a new record high last month:" 95,364 foreclosures, about 2% higher than the previous May 2010 peak. According to its CEO, James J. Saccacio:

"The trend lines of decreasing default notices and increasing bank repossessions converged in August, with virtually the same number (of both) - a clear indication that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers." However, they can't mask a housing depression, the worst since the 1930s, showing no signs of ebbing. In Q 1, 2010, one of every seven mortgages was either delinquent or in foreclosure, now likely even more.

On September 9, Bloomberg writers Bob Willis and Vincent Del Giudice headlined, "Record Plunge in US Consumer Credit Signals Weakened Spending," saying:

"A record $21.6 billion drop in borrowing by Americans" provided more confirmation of a continuing trend. "Consumer credit fell by 10 percent at an annual rate in July to $2.5 trillion, according to a (newly released) Federal Reserve report....The drop was more than five times larger than economists' forecasts. Credit fell for a sixth (straight) month, the longest series of declines since 1991."

In early August, the US Department of Agriculture reported a record 40.8 million Americans (one in eight) on food stamps, a 19% increase year over year, and 18 straight months of record highs.

In January 2010, Feeding America (FA, formerly America's Second Harvest) confirmed the growing problem in its report titled, "Hunger in America 2010," a topic an earlier article addressed.

Since 2005, it cited a 27% increase, saying one in eight Americans are food insecure, meaning they don't get enough to eat. Included are 14 million children and three million seniors, and these numbers keep rising as the economy weakens.

The National Law Center on Homelessness & Poverty estimates over three million Americans experience homelessness annually, including about 1.3 million children. Even more are at risk because of growing numbers losing jobs and homes. For others, one health emergency makes them homeless.

In July, the National Association for the Education of Homeless Children and Youth (NAEHCY) and First Focus reported about one million homeless students. Based on Department of Education data, the total rose by over 40% from the 2006-07 school year - 2008-09, a number well over a million now and rising.

Since mid-2007, total household wealth plunged $13.9 trillion, another disturbing trend, confirming so many others, showing up poverty and other data.

The US Census Bureau Report

On September 16, the Census Bureau reported that US poverty rose to 43.6 million in 2009, an increase of 3.8 million in the past year - the largest total since the first 1959 estimates. It shows one in seven Americans are impoverished, the official 14.3% rate the highest since 1994, by the Bureau's conservative measures. Black and Hispanic Americans fared much worse at 25.8% and 25.3% respectively.

Child poverty also rose, those under 18 to 20.7% - at least one in five children, but according to the Economic Policy Institute (EPI), it's one in four at yearend 2009. For Blacks it's well over one in three and for Hispanics nearly the same.

The Bureau computes several alternative income and poverty measures in two categories:

  • one based on the 1995 National Academy of Sciences Panel on Poverty and Family Assistance, called NAS-based measures; and
  • the other from the Effect of Benefits and Taxes on Income and Poverty series (R&D).

Critics, however, maintain that government figures way understate the gravity of today's crisis, and even the Bureau admits that official thresholds were developed over 40 years ago. They haven't taken into account true rising inflation levels; other expenses like child care, transportation, high tuition and medical expenses, as well as stagnant or falling incomes in recent years. In addition, cost of living levels vary greatly around the country - among regions, between large and small cities, and between urban and rural areas.

For a family of four, the official poverty threshold is an annual $22,050 income, a figure far below reality. For example, a family of four in Peoria, IL needs $42,900 to be above poverty. In Chicago, it's $49,000 and in New York $72,000.

The Bureau also excludes 2.4 million prisoners, elderly residents in nursing homes and other long-term care facilities, students living at school, undocumented immigrants, itinerants, and families or individuals forced to double up for economic reasons, counted as a single higher-income household.

According to David Johnson, the Bureau's Housing and Household Economic Statistics Division head:

"If the poverty status of related subfamilies were determined by only their own income, their poverty would be 44.2%. When their poverty is determined based on the resources of all related household members, it is about 17%."

Income and poverty estimates are also pre-tax, excluding non-cash benefits, partly employer-provided, but diminishing as they shift the cost burden to employees. However, disposable personal income, after income, payroll, sales, property, and other taxes reveals a far higher poverty level than Bureau figures, and a much graver crisis for growing millions sinking below the real poverty threshold.

The Bureau's entire report is depressing, including saying one in three Americans had incomes below the $45,000 minimum on average a family of four needs to "make ends meet" at a basic level.

More as well from its section on health insurance coverage. Again, understating the gravity of the problem, it said people without insurance increased to 16.7% in 2009 from 15.4% in 2008, numbering 50.7 million and rising monthly.

Further, for the first time since 1987 (the first year comparable data was collected), the number of people with coverage dropped to 253.6 million in 2009 from 255.1 in 2008 because those with private health insurance fell by 6.5 million year over year. Included are over 7.5 million uninsured children and high percentages of poor Blacks and Hispanics.

Health care reform won't mitigate the problem. According to Dr. Olveen Carrasquillo of Physicians for a National Health Program:

The Bureau overlooked the pervasive and growing underinsurance problem, certain to keep growing annually. In addition, "Not having health insurance, or having poor quality (coverage) is a source of mounting stress and poor medical outcomes for people across our country." New research, he points out, shows that about 14.1 million children and 25 million non-elderly adults were underinsured in 2007, the figures far higher today and rising.

Further, "The government subsidies under the new health law will not be sufficient to provide quality (or even adequate) and affordable coverage to the vast majority of Americans. Tens of millions will remain uninsured, underinsured and without access to care."

Obamacare enriches providers at the expense of solving this enormous problem for most people, and in the out years, far greater numbers as costs rise exponentially and employers shift more of the burden to workers.

Growing poverty creates a deplorable burden overall, as America slips closer to third world status. For millions today, it's already arrived. Fiscal austerity is accelerating it when stimulus is desperately needed. Yet it's not forthcoming or planned because the Treasury and Fed won't put their money where our mouths are.

Stephen Lendman

Stephen Lendman lives in Chicago and can be reached at His blog is

Listen to Lendman's cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

Mr. Lendman's stories are republished in the Baltimore Chronicle with permission of the author.

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This story was published on September 21, 2010.

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