US poverty rate points downward

The national poverty rate declined to 12.7 percent in 2016. Increases of minimum wages at the state and local levels have had a direct effect on poverty rates across the United States.

Jay Janner/Austin American-Statesman/AP/File
Demonstrators in support of striking fast-food workers rally at a McDonald's restaurant on East Riverside Drive in Austin, Texas, on Nov. 29, 2016. Poverty rates fell in the United States in 2016 and some analysts say raising wages by a dollar or two an hour can significantly effect standards of living for workers.

Six million Americans left poverty over the past two years – equivalent to 8,219 people per day. 

A September 2017 report from the US Census Bureau found that the national poverty rate, defined by the government as a family of four earning less than roughly $25,000 annually, declined to 12.7 percent in 2016, from 14.8 percent in 2014. And a New American Community Survey released in September shows economic progress reverberated across the United States. The 2016 poverty rates of 43 states as well as those in 17 of the nation’s 25 largest cities were lower than their 2015 rates. 

Vermont was the only state to experience a statistically significant increase in poverty from 10.2 to 11.9 percent over the past year, but analysts could not say why. The state still has the 14th lowest rate in the nation. 

However, there is a common factor when it comes to states with significant poverty decreases, says Janelle Jones, an economic analyst at the Economic Policy Institute. Although the federal minimum wage has not risen since 2009, increases at the state and local levels have had a direct effect on poverty rates. Four of the five states with the biggest cuts when comparing their 2016 poverty rate to the 2015 rate (Oregon, Arkansas, Hawaii, and Montana) have also raised their minimum wage within the past two years.

“When you give low-wage workers one, two, or three more dollars an hour, it makes a significant difference in their standard of living,” Ms. Jones says. “It can be the difference between living at the poverty line and being able to lift yourself above it.”

Economists are especially encouraged by two consecutive years of poverty declines coinciding with increases in median household income. Since 2014, median household income in the US has risen 8.5 percent, reaching $59,034 last year.

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