NCPA - National Center for Policy Analysis

Poverty Rate Rises, But Shows Some Surprises

September 25, 2002

Last year's recession pushed the poverty rate up for the first time in 8 years, but the level remains at a 23-year low, according to the Census Bureau.

  • The overall poverty rate increased to 11.7 percent in 2001 from 11.3 percent in 2000.
  • That means 32.9 million Americans were classified as living in poverty , up from 31.6 million.

Experts note the slight rises in poverty and declines in income are typical in recessions as joblessness increases and overtime hours and bonuses are cut. Some note that a different measure of income, which includes government benefits, shows median income fell only $121 in 2001. However, while news of an overall increase was expected, there were some surprises.

  • The poverty rate among whites rose from 7.4 percent in 2000 to 7.8 percent in 2001.
  • Meanwhile, the rate for Hispanics was down from 21.5 percent to 21.4 percent.
  • And the rate for blacks rose from 22.5 percent to 22.7 percent -- a statistically negligible increase according to Census Bureau officials.

Also unprecedented was the fact that poverty rate for all children remained unchanged at 16.3 percent and dropped among black and Hispanic children. In past recessions, single mothers quickly left the work force and went on welfare, sending the child poverty rate up 1 to 2 percent, experts say.

Census Bureau income estimates used to determine poverty don't include noncash benefits, including Medicare, food stamps, and some investment income. As a result, some identified as poor are far from it. A 1995 Heritage Foundation study found 41 percent of "poor" households owned homes, and 750,000 owned homes worth more than $150,000.

Source: Joseph Guinto, "Poverty Rate Inches Higher, But Sticks Near 23-Yr. Low Despite '01 Recession," Investor's Business Daily, September 25, 2002; "Poverty in the United States, 2001," September 24, 2002, U.S. Bureau of the Census.


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