Recession Pushes U.S. Income Gap To All-Time High

Earlier this month, the U.S. Census Bureau released poverty data for 2008, which showed that the poverty rate has risen to an eleven-year high of 13.2 percent, with 39.8 million people in poverty (including 14 million children). This the highest number of people living below the poverty line since 1960. (And for those keeping score, in 2008, the poverty line for a family of two adults and two children was $21,834; for a family of two adults and one child, it was $17,330.)

Yesterday, the Census Bureau put out more detailed data on poverty and incomes, which showed that the economic downturn has widened the gap between the richest and poorest Americans:

The wealthiest 10 percent of Americans — those making more than $138,000 each year — earned 11.4 times the roughly $12,000 made by those living near or below the poverty line in 2008, according to newly released census figures. That ratio was an increase from 11.2 in 2007 and the previous high of 11.22 in 2003.

Of course, this gap will likely narrow again in the next few years, as the richest Americans likely lost quite a bit of their income in 2009 (in terms of absolute dollars). But even before the economic crash, income inequality was at its highest level since 1928, showing that there is more than the recession causing such a disparity.

Thanks to the income hit that low- and moderate-income Americans have had to endure (in the form of layoffs or reduced hours), use of food stamps has jumped 13 percent, to nearly 9.8 million U.S. households, the data shows. And the increase “was most evident in households with two or more workers, highlighting the impact of the recession on both working families and unemployed single people.”


“There are lots of people who are using food stamps for the first time, because they don’t have any other options,” said Mark Mather, a demographer at the Population Reference Bureau, a nonprofit research group in Washington. And if nothing else, one thing these numbers do is make the case for a stronger social safety net, as it’s abundantly clear onto whom the brunt of the recession is falling. And this means not just upping the dollar amount, but modernizing the system to ensure that it’s accessible.

For instance, the Houston Chronicle pointed out that “Texas isn’t coming close to meeting federal requirements to process food stamp applications within a month.” “Last month, about 38,000 new applicants were left awaiting approval even though the federal deadline had passed. About one in six applications is processed incorrectly,” the Chronicle found. This is inexcusable at the best of times, and unforgivable in the recession we’ve been dealing with. The entire social safety net — unemployment benefits, Food Stamps, and Temporary Assistance for Needy Families (TANF) — needs to be open to the people it is meant to serve, it it’s going to have a wide effect on mitigating economic downturns.