Number of Poor May Be Millions Higher; Many Elderly in U.S. Will Face Poverty; Suburbs are the New Poverty Hot Spots

Census: Number of Poor May Be Millions Higher

January 6, 2011

AP – The number of poor people in the U.S. is millions higher than previously known, with 1 in 6 Americans — many of them 65 and older — struggling in poverty due to rising medical care and other costs, according to preliminary census figures released Wednesday.

At the same time, government aid programs such as tax credits and food stamps kept many people out of poverty, helping to ensure the poverty rate did not balloon even higher during the recession in 2009, President Barack Obama's first year in office.

Under a new revised census formula, overall poverty in 2009 stood at 15.7 percent, or 47.8 million people. That's compared to the official 2009 rate of 14.3 percent, or 43.6 million, that was reported by the Census Bureau last September.

Across all demographic groups, Americans 65 and older sustained the largest increases in poverty under the revised formula — nearly doubling to 16.1 percent. As a whole, working-age adults 18-64 also saw increases in poverty, as well as whites and Hispanics. Children, blacks and unmarried couples were less likely to be considered poor under the new measure.

Due to new adjustments for geographical variations in costs of living, people residing in the suburbs, the Northeast and West were the regions mostly likely to have poor people — nearly 1 in 5 in the West.

The new measure will not replace the official poverty rate but will be published alongside the traditional figure this fall as a "supplement" for federal agencies and state governments to determine anti-poverty policies. Economists have long criticized the official poverty measure as inadequate because it only includes pretax cash income and does not account for medical, transportation and work expenses.

"Under the new measure, we can clearly see the effects of our government policies," said Kathleen Short, a Census Bureau research economist who calculated the revised poverty numbers. "When you're accounting for in-kind benefits and tax credits, you're bringing many people in extreme poverty off the very bottom."

The official measure is based on a 1955 cost of an emergency food diet and does not factor in other living costs. Nor does it consider non-cash government aid when calculating income, which surged higher in 2009 during the recession.

Short's analysis, published Wednesday as part of a series of census working papers on poverty, shows that out-of-pocket medical expenses had a significant impact in affecting the number of poor — without those costs, poverty would have dropped from 15.7 percent to 12.4 percent.

The effect was seen most notably among older Americans. Under the official poverty rate, about 8.9 percent lived in poverty, mostly because they benefit from Social Security cash payments. But when taking into account out-of-pocket medical expenses and other factors, that number rises to 16.1 percent.

The numbers cited for 2009 are preliminary, but census officials say they offer a good representative look at the state of U.S. poverty and where the numbers are headed when new 2010 figures are released this fall.

Among the findings:

• Transportation, commuting and child care costs weigh on working-age Americans. The official poverty rate for those ages 18 to 64 is currently 12.9 percent, the highest since 1960s levels that launched the war on poverty. Under the revised formula, working-age poverty increases even higher, to 14.8 percent.


• Without the earned income tax credit, the poverty rate under the revised formula would jump from 15.7 percent to 17.7 percent. The absence of food stamps separately would increase the poverty rate to 17.2 percent.


• Taking into account millions of uninsured people in the U.S. had little effect in increasing poverty, mostly because those without insurance tend to forgo medical care rather than find ways to pay for it. Those with government-sponsored insurance generally saw decreases in poverty under the new formula, while those with employer-provided coverage saw increases. Still overall poverty for those with public insurance vs. employer insurance was higher, 31.1 percent compared to 7.2 percent.


• Under the revised formula, the West had the most people in poverty at 19.2 percent. It was followed by the South (16.1 percent), the Northeast (14.3 percent) and the Midwest (12.5 percent).

The supplemental figures could take on added significance at a time when many in the government point to an overhaul of Medicare and Social Security as the best hope for reducing the ballooning federal debt. With the potential to add more older Americans to the ranks of the poor, the numbers may underscore a need for continued — if not expanded — old-age benefits as a government safety net.

Many Elderly in U.S. Will Face Poverty: Study

January 6, 2011

Reuters – Nearly half of elderly Americans will face a future with at least one year below or close to the poverty line, according to a new study that showed a huge racial divide in prospects for the elderly.

Mark R. Rank, a professor at Washington University in St. Louis, said the results of his research contradict popular beliefs about the economic stability of America's elderly population.

"We have an image of the elderly as doing pretty well," he said, adding that data spanning 35 years does not support that assumption.

Elderly black Americans are almost twice as likely as whites to sink to the poverty level, according to the study. It estimates 64.6 percent of black Americans and 32.7 whites will face poverty.

"There are historical differences between whites and African-Americans. In all age groups, African-Americans are more likely at lower paying jobs and have much less assets," Rank explained.

As with income poverty, the study which was published in "Families in Society: The Journal of Contemporary Social Services," showed a sharp racial divide in poverty.

While 58 percent of those between 60 and 84 will at some point fail to have enough liquid assets to allow them to get through unanticipated expenses or declining income, African-Americans were found to be 2.4 times more likely to experience asset poverty.

The study also highlights the role of education in the financial future of the elderly, Rank said. Nearly 50 percent of people with less than 12 years of education are likely to experience poverty, compared to 20.5 percent with more than 12 years.

Rank believes that legislators should consider policies to encourage senior citizens to save more for retirement and to live together to share resources, as well as other measures to strengthen income safety nets.

"Given the current demographic and economic trends in America, this threat (of poverty) is quite likely to remain in the years ahead."

New Poverty Hotspot? The Suburbs

October 26, 2010

The Upshot at Yahoo News! - When most people think about poverty in America, they likely see a blighted inner-city neighborhood, someplace that the middle class abandoned decades ago.

But that image may no longer be apt: As several recent reports have stressed, more Americans are now living below the poverty line in suburbs than in cities. And thanks in part to the Great Recession, suburban poverty continues to rise sharply. What's more, many suburbs may not be as well set up as urban areas are to provide much-needed social services. Researchers fear that porous suburban safety nets are leaving a growing number of struggling Americans without access to the basic assistance they need to get them through hard times.

And before such needs get met, experts say, policymakers need to reckon with the changed state of poverty in America.

"We have to first change our perception, and catch up to the new reality of where poverty is," Elizabeth Kneebone, a researcher with the Brookings Institution's Metropolitan Policy Program, told The Upshot. "It's still a problem in cities, but it's an increasingly suburban problem as well."

As recently as 2000, more poor Americans were living in cities than in suburbs. But since then, according to a report released earlier this year by Kneebone and a Brookings colleague, Emily Garr, the ranks of the suburban poor have grown by 37 percent — more than twice the rate that poverty increased in the nation's cities. As a result, although the poverty rate remains higher in cities, by last year 1.6 million more poor people were in suburbs than in cities.

This trend was under way before the economic downturn began in late 2007 — but researchers say that the Great Recession appears to have exacerbated it.

"This recession has had an economic effect on suburbs that past recessions haven't," says Scott Allard, an expert on poverty and social welfare at the University of Chicago. "This is the first time suburbs have experienced significant levels of job losses."

Some ground-level reporting has helped flesh out the picture of growing suburban poverty. The proprietor of a food pantry in Northern California's suburban San Mateo County recently told CBS News that in 1999, her charity had given out 4,000 food bags. This year, she said, it'll be between 32,000 and 35,000 bags.

Why is suburban poverty disproportionately on the rise? One reason, say experts, is that the recession was triggered by a slowdown in the housing market, as foreclosures mounted particularly in suburban and exurban developments. That meant that industries dependent on that market — which also tend to be based in suburbs — were among the most severe casualties.

"Construction, real estate, manufacturing — these are more suburbanized industries, and they were hit first and hardest," says Kneebone.

Not surprisingly, the rise in poverty and joblessness has put greater strain on social service providers in suburban areas. A report released this month by Allard and his University of Chicago colleague Benjamin Roth (no relation to this reporter) found that 73 percent of suburban nonprofits are seeing more clients with no previous connection to safety-net programs.

But these providers — who administer programs such as Temporary Assistance for Needy Families, welfare cash assistance, and the Supplemental Nutrition Assistance Program (formerly the Food Stamp Program) — may not be equipped to deal with the flood. That's in part because, thanks to the broader economic climate, many of them are experiencing cutbacks in their own private and public funding.

More fundamentally, observers say, many suburbs, whose residents have in the past been disproportionately affluent, simply aren't set up to serve the poor. As Allard and Roth found, most suburban communities lack the kind of social service programs commonly found in urban areas, which have been grappling with poverty for decades. And some suburban nonprofits have trouble raising money from donors, because of the perception that poverty is predominantly an urban ill.

As a result, Allard said he found that "in many communities where need was rising, providers had fewer resources, fewer programs, fewer staff to help. And that creates kind of a bitterly ironic situation for low-income populations as they seek to cope with job loss, find work and provide for their families."

Advocates for the poor are urging the government to boost support for service providers, so that those serving suburban communities can be adequately funded, without taking scarce resources away from urban providers. But given enormous federal and state deficits, that may be a tough sell.

And the problem isn't likely to get better anytime soon, even if the economy picks up.

"Just as the poverty rate has been increasing in the suburbs for 10 years, it's not like once we hit recovery, the poverty rate will diminish," says Allard. "This will be an issue that these communities will have to deal with for a while."