Poverty Rate Remained Stable, But Income Inequality Grew In 2011

After three consecutive years of increases in American poverty, the number of Americans living on incomes at or below the poverty line remained stable in 2011, according to data from the U.S. Census Bureau released today. The poverty rate remained unchanged at 15 percent, meaning 46.2 million Americans are living at or below the federal poverty line, defined as $23,000 a year for a family of four. The poverty rate remained statistically unchanged across racial groups with the exception of Hispanics, the only group to see a statistically significant decline.

But median household income dropped 1.5 percent and the gap between the wealthiest Americans and those in the middle grew in 2011, according to Census data. As the following chart shows, the share of income grew for the richest Americans but fell for other groups:

The poverty rate had been expected to rise significantly. Shifts in the number of low-income workers moving from part-time jobs to full-time employment may explain the unchanged rate, David S. Johnson, the chief of the Census Bureau’s Social, Economic and Housing Statistics Division, said on a conference call.

According to the Census Bureau, unemployment benefits kept roughly 2.3 million out of poverty in 2011, while Social Security payments kept roughly 21.4 million out of poverty.

It is worth noting, though, that poverty experts say the official poverty numbers are often flawed, since they do not take into account government benefits, differences in cost of living, and other factors that could affect the overall statistics. The government last year developed an alternative measure of poverty to take some of those factors into account. Those numbers will be released in November. Adding in benefits like the Earned Income Tax Credit and the Supplemental Nutrition Assistance Program would remove 5.7 million and 3.9 million from poverty, respectively, according to the Census data.