Ask your average man or woman on the street what the unemployment rate is, and they will probably get it pretty close. Why? We are bombarded by it all the time. When the official number comes down from U.S. Bureau of Labor Statistics, for both the nation and our state, it gets reported on the news. Every time a politician opens his or her mouth, we are reminded how he or she will “create jobs” and “turn our economy around”, and they always cite the unemployment rate. It’s everywhere. It’s ubiquitous. People care about it.
But there is an even more important economic indicator what was released yesterday by the US Census Bureau, and there’s a good chance you haven’t heard anything about it: the poverty rate. Granted, the poverty rate is only calculated once a year, for the previous calendar year, and much more goes into its calculation and analysis than seasonally adjusted jobless claims, but it is incredibly important.
So, what is the poverty rate? It’s pretty bad: 46.2 million people, or 15 percent of all US residents, lived in poverty last year. Keep in mind that the official poverty level for a family of four in 2011 was $23,021, so we are, in reality, talking about many, many more people struggling mightily. This might not sound so bad, except that this comes on the heels of years of increasing poverty in the United States.
But 46.2 million people is a tough number to put in context. Is that really high? How does that compare to other years? What was the poverty rate the previous year?
It’s actually about the same as it was the previous year, overall. But income for our worst-off families declined, even as they worked more hours.
Income at the 10th percentile declined 1.9 percent between 2010 and 2011; at the same time, the number of full-time workers in the bottom fifth households by income grew as people moved from part-time to full-time jobs. The ratio of income between those in the bottom 10th percentile of income and the top 10th percentile grew by 15 percent, a significant increase in the gap between our most and least prosperous households.
While this news isn’t great, there is some encouraging news. The Census data shows that programs can protect families against poverty. In 2011, the Earned Income Tax Credit (EITC) lifted 5.7 million people out of poverty, unemployment insurance benefits lifted 2.3 million people out of poverty and SNAP (formerly referred to as "food stamps") lifted 3.9 people out of poverty.
Unfortunately, all three of these programs – and many more that also help families struggling to make ends meet – are at risk. The House-passed Ryan budget and House proposals to replace automatic program cuts would end improvements to tax credits, ending eligibility for the EITC or Child Tax Credit for millions of families and reducing the amount of their tax credits for millions more.
Unless Congress extends federal unemployment insurance for the long-term unemployed, those benefits will end in December, cutting off more than two million unemployed workers. Both the House and Senate are considering proposals to reduce SNAP benefits. And even more worrying is that leaders at the state level here in North Carolina are considering eliminating our EITC credit, as well as severely cutting back on many of the anti-poverty programs the state has traditionally funded.
Good policy decisions can, and do, reduce the number of our fellow citizens who live in poverty. And since more of us are closer to that poverty line, thanks to that stubbornly high unemployment rate, just remember that the next time someone wants to “reduce the size of government,” the life that bloated, inefficient bureaucracy is saving just might be your own.