In 2011, the percentage of Americans living in poverty declined from 15.1 percent to 15.0 percent according to the census figures released within the last few days. According to the Census Bureau, this is not a statistically significant change, meaning the number of Americans in poverty, 46.2 million, is roughly the same as in 2010.
Whether you consider the 10 basis point decrease in the rate of poverty over one year an actual decrease or not significant enough to make a headline, the news that the poverty rate didn’t increase is a positive development. Poverty had been increasing each year until these latest results. Keep in mind, though, that the poverty threshold increased. A family of four including two children earning $22,800 in 2010 would not have been considered living in poverty, while in 2011 the same family with the same income would. Inflation plays a role, and in the middle class, wages might follow inflation, but in or close to poverty, they don’t.
So taking inflation into account, the rate of poverty should have increased, with a higher threshold to overcome and stagnant wages in the lowest working class, but the rate didn’t.
I wouldn’t get too excited about the potential eradication of poverty in the United States, however. We have a long way to go. Dr. Cornel West and Tavis Smiley, crusaders for the impoverished, want society to focus on 150 million people in the United States, the poor, new poor, or near poor. Those living middle-class-like lives, paycheck-to-paycheck, where one medical emergency or job loss could send them into financial despair are included in this larger number.
Even if you don’t accept the idea that poverty should be the major economic issue deserving policy attention moving forward, there is little doubt that middle-income jobs are disappearing, being replaced by low-income jobs, forcing a good portion of Americans who aren’t ignoring their situation to re-think their long-term plans for financial independence. The new report from the census shows the Gini index, designed to measure income inequality, showed a significant annual increase for the first time since 1993, but overall since 1993, the Gini index has increased 5.2 percent. This puts numbers behind the idea that the middle class is shrinking and the poor and the wealthy are further separated.
With this kind of separation, the rich and the poor might as well live on different planets. Neither rich presidential candidate can personally relate to the difficulties many in this country face every day, but modern American democracy is designed in such a way that the only way to reach the highest government office is to have a significant amount of wealth.
Comparing these statistics to other countries around the world, the United States is not the worst in terms of income equality, but it isn’t very good. The opposite of income inequality is not necessarily a lack of capitalistic opportunity; a country can have a strong entrepreneurial class without ignoring its impoverished.
How important is poverty and income inequality to you for this election and the next century?
Published or updated September 13, 2012.