US poverty rate falls to lowest since recession
The US poverty rate has fallen to its lowest level since before the financial crisis, according to data released by the Census Bureau on Tuesday.The data showed that 11.8 per cent of American families lived below the poverty line in 2018, down from 12.3 per cent in 2017, and lower than 2007, the year before the most recent recession. However, median household wages in 2018 were stagnant at $63,200 a year, unchanged from the previous year, after three years of increases. The data leave the Trump administration and the Federal Reserve with a familiar challenge: how to sustain US economic expansion, with wage gains for lower earners, while also offering meaningful help to the middle class.The drop in the poverty rate offers further evidence that in a “high-pressure” economy — unemployment has been at or below 5 per cent for 36 months — wage growth goes disproportionately to the lowest earners, such as retail or hotel employees. For a family of four, the poverty level is just above $25,000 per year. In the last year, there has been anecdotal evidence that workers have more bargaining power. In the Fed’s most recent Beige Book survey of businesses, for example, several districts reported increased costs for worker benefits, such as training, flexible hours and leave. But in August, wage growth, the ultimate sign of negotiating power, remained at 3.5 per cent for employees below management level. That is as high as it has been since the recession, but still lower than it was during previous expansions.“While any reduction in poverty or increase in income is a step in the right direction, most families have just barely made up the ground lost over the past decade,” said Elise Gould, senior economist at the Economic Policy Institute, a think-tank. The data from the Census Bureau, a yearly supplement pulled from the bureau’s Current Population Survey, also showed the disparities in US economic growth. In the last few years, the gap between black and white unemployment has closed to its lowest level in decades. But median annual income for black families in the US was at $41,400 in 2018. Hispanic families earned about $10,000 more last year. White families earned $70,600.
Among full-time prime-age workers, women earned 81.6 per cent of what men did in 2018, down slightly from 2017. The release also showed an increase in the portion of people without health insurance in the US, up 0.5 per cent to 8.5 per cent, or 27.1m people. That is the first increase since provisions of the Affordable Care Act — known as Obamacare — came into effect in 2014.The increase was strongest for working-age adults, but there was no clear geographic pattern. Uninsured rates increased in Texas, Ohio, Michigan and Washington, for example, but decreased in New York and South Carolina.