Why America's poverty rate has persisted
The national poverty level remained unchanged last year, even as strong job growth brought optimism. The problem is that too many of those jobs pay too little, experts say.
Nearly 47 million Americans were living in poverty last year, a percentage that has remained largely unchanged, according to a census report out Wednesday.
The poverty rate from 2013 rose slightly from 14.5 percent to 14.8 percent, and real household median income slipped from $54,462 to $53,657. Researchers say that these differences are not statistically significant.
What's significant, however, is the fact that the number of people in poverty hasn’t considerably changed from official estimates for the past four years – even as the economy continues to make advances.
So why are so many Americans still living in poverty?
“Often we see the poverty rate lagging behind economic recovery. So I wasn’t initially surprised that the poverty rate didn’t go down as quickly as economic recovery [advanced],” says Julia B. Isaacs, a senior fellow at the Center on Labor, Human Services, and Population at the Urban Institute. “But it does appear that this recovery lasts longer than past recessions.”
While there has been strong job growth, one of the reasons for stagnant poverty numbers is that many of the jobs fall into the low-wage sector, says Ms. Isaacs.
“Good jobs and higher wages are what people need,” she adds. “I wish it weren’t so challenging to see job growth in those areas.”
Sectors that have seen large gains in the past year are healthcare and social assistance, financial and business services, and food and beverage establishments. Healthcare has swelled by 457,000 in the past year, and 31,000 jobs on average are added to the food industry each month, according to the Department of Labor.
But this may be doing little to alleviate the poverty burden, as nearly 6.5 million Americans work part time because they cannot find a full-time job or because their hours have been cut back.
“There are a lot of practices that have come in — some aided by technologies — that have allowed employers to cut back on their wage costs,” Sheldon Danziger, president of the Russell Sage Foundation, which supports research on poverty, told The Los Angeles Times.
There is some good news. The number of “discouraged workers” – that is, people who say they’ve given up on the job search – has gone down substantially by 151,000 from a year earlier.
And the number of people without health insurance in 2014 dropped by 8.8 million to 33 million – making it 90 percent of Americans who had coverage last year, according to NPR.
Sign-up increases came in every state, and in government as well as private coverage, said researchers. But it is the first full year measuring the impact of the Affordable Care Act, also known as Obamacare.
Social welfare programs are invaluable in relieving poverty, says Isaacs. Citing proposals to defund initiatives like the Supplemental Nutrition Assistance Program (SNAP), she urged lawmakers not “to retract the safety net.”