Business | Economy

Poverty rises in world's biggest economy

One in seven Americans are poor, census says

  • AP
  • Published: 00:00 September 17, 2010
  • Gulf News

Treasury Secretary Timothy Geithner
  • Image Credit: AP
  • Treasury Secretary Timothy Geithner testifies on Capitol Hill in Washington yesterday before a Senate Banking Committee hearing on the Treasury Department’s report on international economic and exchange rate policies.

Washington: The ranks of the working-age poor in the United States climbed to the highest level since the 1960s as the recession threw millions of people out of work last year, leaving one in seven Americans in poverty.

The overall poverty rate climbed to 14.3 per cent, or 43.6 million people, the Census Bureau said yesterday in its annual report on the economic well-being of US households. The report covers 2009, President Barack Obama's first year in office.

The poverty rate climbed from 13.2 per cent, or 39.8 million people, in 2008.

The share of Americans without health coverage rose from 15.4 per cent to 16.7 per cent — or 50.7 million people — mostly because of the loss of employer-provided health insurance during the recession. Congress passed a health overhaul law this year to address rising numbers of the uninsured, but the main provisions will not take effect until 2014.

The new figures come at a politically sensitive time, just weeks before the Nov-ember 2 congressional elections, when voters restive about high unemployment and the slow pace of economic improvement will decide whether to keep Democrats in power or turn to Republicans.

The 14.3 per cent poverty rate, which covers all ages, was the highest since 1994. Still, it was lower than estimates of many demographers who were bracing for a record gain based on last year's skyrocketing unemployment. Many had predicted a range of 14.7 per cent to 15 per cent.

Analysts credited in part increases in government pension plan payments in 2009 as well as federal expansions of unemployment insurance, which rose substantially in 2009 under the economic stimulus programme. With the additional unemployment benefits, workers were eligible for extensions that gave them up to 99 weeks of payments after a layoff.

Another likely factor was a record number of working mothers, who helped households by bringing home paycheques after the recession took the jobs of a disproportionately high number of men.

"Given all the unemployment we saw, it's the government safety net that's keeping people above the poverty line," said Douglas Besharov, a University of Maryland public policy professor and former scholar at the conservative American Enterprise Institute.

Ethnic minorities

Poverty rose among all race and ethnic groups, but stood at higher levels for blacks and Hispanics. The number of Hispanics in poverty increased from 23.2 per cent to 25.3 per cent. For blacks it increased from 24.7 per cent to 25.8 per cent. The number of whites in poverty rose from 8.6 per cent to 9.4 per cent.

Child poverty rose from 19 per cent to 20.7 per cent.

In 2009, the poverty level stood at $21,954 (Dh80,623) for a family of four, based on an official government calculation that includes only cash income before tax deductions. It excludes capital gains or accumulated wealth, such as home ownership.

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