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U.S. Incomes Dropped Last Year, Census Bureau Says

Wichaar Desk

September 12th, 2012

 

 

WASHINGTON — In a fresh sign that the country’s middle class has yet to feel the gains from a weak economic recovery, median household income declined last year to $50,054, a level last seen in 1996, the Census Bureau reported Wednesday. This income measure, adjusted for inflation, was down by 1.5 percent from the previous year. It peaked in 1999, when the median income for American households reached $53,252.

The drop poses a political challenge for President Obama, as he presents himself as a champion of the middle class and defends his economic stewardship in a tightly fought presidential race. The numbers are sure to be used by both sides. The Republican candidate, Mitt Romney, is likely to seize on the decline as evidence of an ailing economy. President Obama, for his part, has emphasized the potentially damaging effects of Republican policies on the middle class.

There was a bright spot for President Obama. The share of 19- to 25-year-olds who were uninsured declined by 2.2 percentage points in 2011, a decrease that administration officials are likely to promote as an early success of its health care law.

Median household income, adjusted for inflation, was 8.1 percent lower than in 2007, the year before the most recent recession.

The change in the share of Americans living in poverty last year was not statistically significant. There were 46.2 million people in poverty in the United States last year. That figure represents 15 percent of the population, compared with 15.1 percent in 2010, census officials said. The number of people in poverty in the South declined.

David Johnson, a Census Bureau official in charge of the Social, Economic and Housing Statistics Division, said the lack of significant change may be explained in part by people moving from part-time work to full-time work.

“We think that increase in shift from part time to full time could have kept the poverty rate from rising,” Mr. Johnson said. Cash welfare assistance — the main benefit that is counted in the measure — has declined substantially over the years, while noncash benefits like the earned-income tax credit, food stamps, subsidized school lunches and housing assistance have increased and are not counted in the official poverty numbers.

Those benefits lift millions out of poverty, wiping out close to half of the increases in the numbers of people in poverty in recent years.

James Sullivan, a professor of economics at the University of Notre Dame, estimated that the rate would be about 11 percent if those benefits were taken into account. The Census Bureau does calculate a more representative rate, but will not publish it until later this fall.

  “It suggests that we’ve made no progress in the war on poverty, that it has failed,” Professor Sullivan said. “But we have made considerable progress.”

Justin Wolfers, a professor of economics and public policy at the University of Michigan, said: “It’s really good news that poverty didn’t rise.

“This is what lower unemployment brings.”

 

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