Middle, Lower Classes Feel Pinch
Bush could be hurt by new figures showing income rates down and poverty rates up.
By Peter G. Gosselin, Times Staff Writer
WASHINGTON — The annual income of middle-class Americans fell by
about $500 each last year, and the number of people in poverty rose by 1.7
million, the Census Bureau reported Friday, showing the lingering effects of
the country's long economic downturn and suggesting the political trouble that
may lie ahead for President Bush.
The census data marked the second straight year of such discouraging trends
after nearly a decade of continuous improvement. The rise in those classified
as living in poverty suggested that the damage of the 2001 recession was
finally beginning to reach low-income groups, which had been surprisingly
resistant to its ill effects.
Separately, the
government said Friday
that the U.S. economy
grew at a 3.3% annual
rate from April through
June, slightly faster than
the 3.1% rate it had
previously estimated and
its fastest pace since last
fall. Higher growth
usually increases income and reduces poverty, but
with employers still slashing payrolls, it is unlikely
that has happened yet.
There were 3 million more poor people last year
than in 2000, shortly before the economy slipped
into recession, according to the Census Bureau. Nationally, a family of four earning less than $18,244 a
year is classified as living in poverty.
And, at $42,409 after adjusting for inflation, median income was 3.3% below where it had been two
years earlier, census figures showed. Half of all Americans earn more than the median income, while
half earn less.
Analysts said the income and poverty trends have very likely deteriorated further this year. The
recession officially began in March 2001 and continued through November of that year, but economic
growth since then has been on again, off again.
"We're in the midst of an economic downdraft and there's more bad news to come," predicted
Syracuse University economist Timothy M. Smeeding. "My guess is that the numbers for this year are
going to be worse than they were for last year."
In California, census figures show that last year's median income decline appeared more pronounced
than for the nation as a whole, dropping $725, or 1.5%. But census officials cautioned that the agency
measures state trends slightly differently from national ones, so the two figures are not directly
comparable.
Officials also pointed out that at $47,724, the state's median income was higher than the nation's, so its
decline did not represent quite as substantial an economic setback.
In terms of poverty, the California rate climbed two-tenths of a percentage point to 12.8%, according
to the Census Bureau. The national poverty rate rose four-tenths of a percentage point, to 12.1%.
Some 34.6 million Americans were counted as poor in 2002, up from 32.9 million in 2001.
As with incomes, the state and national poverty rates are measured slightly differently.
The latest income and poverty trends might spell political trouble for any president. But they may prove
particularly troublesome for Bush, because the sharpest setbacks have come in swing states, especially
in the Midwest. Some are states he either narrowly won or lost in the 2000 election and is thought to
need in order to win reelection.
"This is a very serious threat," said Bill Schneider, a veteran political analyst with the American
Enterprise Institute, a generally conservative Washington think tank, and a commentator for CNN
News.
"Bush's biggest problem right now is the loss of manufacturing jobs, and these numbers show how
concentrated the damage is in the middle of the country."
The White House offered an upbeat assessment of the president's ability to revive growth and reverse
the latest trends.
"The poverty rate reflects the economic slowdown and the unemployment situation," said
spokeswoman Clare Buchan. "The president has a vigorous agenda aimed at helping everyone achieve
the American dream and participate in an ownership society," she said.
Democratic presidential contenders, meanwhile, heaped scorn on the president's performance.
"Another sign of the Bush administration's disastrous record of failed economic policies," said former
Vermont Gov. Howard Dean.
"With a record like this, he shouldn't be running for president, he should be running for the hills," added
newly announced challenger Wesley Clark.
With the presidential election season approaching, census officials offered 15 different ways to measure
income and 10 to gauge poverty — one apparently for almost any political taste. But virtually all the
measures pointed in the same direction — down in the case of income and up in the case of poverty.
The only one of the alternative measures to jump out was that for after-tax median income, which slid
0.8% last year. The decline was considerably less than the drop in pre-tax income and suggested that
the steady stream of tax cuts pushed by the administration has helped cushion the income fall for many
Americans.
But the latest income and poverty numbers indicated that a cushion of another sort — an egalitarian
sharing of economic pain among the nation's income classes and racial and ethnic groups, which had
been apparent in the 2001 numbers — is fading fast.
Among other things, the 2001 numbers showed the poverty rate for whites was climbing at a faster
pace between 2000 and 2001 than it did for blacks, Latinos or Asian Americans. And the minorities'
income appeared to hold up better than in the past.
In most recessions, minority groups are the first and most severe casualties. But the latest census
figures, covering 2002, suggest that this unusual burden-sharing is coming to an end.
While the median income of white households slipped between 0.3% and 0.6% last year, that for
blacks fell between 2.5% and 3%, for Latinos 2.9% and for Asians and Pacific Islanders between 4%
and 4.5%.
The poverty rate among whites rose between three- and four-tenths of a point, but poverty among
blacks rose between 1.2 and 1.4 percentage points. (In contrast to the past, the census last year
permitted household members to identify themselves as belonging to several racial groups, making it
difficult to give precise figures for most groups.)
"A lot of us were puzzled but pleased [in 2001] when it looked like blacks, single-parent households
and other disadvantaged groups were resisting the normal poverty-increasing effects of economic
downturns," said Northwestern University economist Greg Duncan.
"It doesn't look like they are able to resist anymore," he said.
"It looks like the 2001 recession was tough on everybody, even white-collar, highly educated workers,
but the recovery has been tough on minorities," said Jared Bernstein of the Economic Policy Institute, a
generally liberal Washington think tank.
Even with these recent changes, several economists, both liberal and conservative, said that the current
economic weakness is causing less poverty than in similar periods in the past. They said that almost two
years out from the November 2001 end of the most recent recession, poverty among children has risen
only about a half of a point. By contrast, at similar stages in the three previous downturns, child poverty
had risen between 2 and 3.4 percentage points.
"There's no way to put a positive spin on the income decline," said Gary Burtless, an economist with the
generally liberal Brookings Institution. But he said the difference in recent poverty figures shows that
"the labor market is not turning against low-skilled people the way it did during most of the last 20
years."
The latest numbers show "this has been a very unusual recession," according to Robert Rector, an
economist with the conservative, Washington-based Heritage Foundation. "It's been a long one, but a
very shallow one." "Bush's biggest problem right now is the loss of manufacturing jobs, and these numbers show how
concentrated the damage is in the middle of the country."
The White House offered an upbeat assessment of the president's ability to revive growth and reverse
the latest trends.
"The poverty rate reflects the economic slowdown and the unemployment situation," said
spokeswoman Clare Buchan. "The president has a vigorous agenda aimed at helping everyone achieve
the American dream and participate in an ownership society," she said.
Democratic presidential contenders, meanwhile, heaped scorn on the president's performance.
"Another sign of the Bush administration's disastrous record of failed economic policies," said former
Vermont Gov. Howard Dean.
"With a record like this, he shouldn't be running for president, he should be running for the hills," added
newly announced challenger Wesley Clark.
With the presidential election season approaching, census officials offered 15 different ways to measure
income and 10 to gauge poverty — one apparently for almost any political taste. But virtually all the
measures pointed in the same direction — down in the case of income and up in the case of poverty.
The only one of the alternative measures to jump out was that for after-tax median income, which slid
0.8% last year. The decline was considerably less than the drop in pre-tax income and suggested that
the steady stream of tax cuts pushed by the administration has helped cushion the income fall for many
Americans.
But the latest income and poverty numbers indicated that a cushion of another sort — an egalitarian
sharing of economic pain among the nation's income classes and racial and ethnic groups, which had
been apparent in the 2001 numbers — is fading fast.
Among other things, the 2001 numbers showed the poverty rate for whites was climbing at a faster
pace between 2000 and 2001 than it did for blacks, Latinos or Asian Americans. And the minorities'
income appeared to hold up better than in the past.
In most recessions, minority groups are the first and most severe casualties. But the latest census
figures, covering 2002, suggest that this unusual burden-sharing is coming to an end.
While the median income of white households slipped between 0.3% and 0.6% last year, that for
blacks fell between 2.5% and 3%, for Latinos 2.9% and for Asians and Pacific Islanders between 4%
and 4.5%.
The poverty rate among whites rose between three- and four-tenths of a point, but poverty among
blacks rose between 1.2 and 1.4 percentage points. (In contrast to the past, the census last year
permitted household members to identify themselves as belonging to several racial groups, making it
difficult to give precise figures for most groups.)
"A lot of us were puzzled but pleased [in 2001] when it looked like blacks, single-parent households
and other disadvantaged groups were resisting the normal poverty-increasing effects of economic
downturns," said Northwestern University economist Greg Duncan.
"It doesn't look like they are able to resist anymore," he said.
"It looks like the 2001 recession was tough on everybody, even white-collar, highly educated workers,
but the recovery has been tough on minorities," said Jared Bernstein of the Economic Policy Institute, a
generally liberal Washington think tank.
Even with these recent changes, several economists, both liberal and conservative, said that the current
economic weakness is causing less poverty than in similar periods in the past. They said that almost two
years out from the November 2001 end of the most recent recession, poverty among children has risen
only about a half of a point. By contrast, at similar stages in the three previous downturns, child poverty
had risen between 2 and 3.4 percentage points.
"There's no way to put a positive spin on the income decline," said Gary Burtless, an economist with the
generally liberal Brookings Institution. But he said the difference in recent poverty figures shows that
"the labor market is not turning against low-skilled people the way it did during most of the last 20
years."
The latest numbers show "this has been a very unusual recession," according to Robert Rector, an
economist with the conservative, Washington-based Heritage Foundation. "It's been a long one, but a
very shallow one." |
