While the median household income remained stagnant, America's official poverty rate dropped for the fourth consecutive year in 2018, according to U.S. Census Bureau's annual reports released recently.
It was the first time the percentage of Americans living in poverty fell significantly lower than where it was in 2007, the year before the most recent recession.
Some 38.1 million people, or about 11.8 percent of the U.S. population, lived below the poverty line in 2018, the data shows. That’s 1.4 million fewer people than the previous year, or a decrease of half a percentage point, according to the federal government’s measure on economic hardship.
In Missouri, the two-year average poverty rate in 2017-2018 was 11.9%, which is 0.5% higher than the previous two-year average.
Economists suggested a shift from part-time workers to full-time workers contributed to the improving numbers. Also a factor: The monthly unemployment rate’s steady decline from a high of 10% in October 2009 to a low of 3.7% toward the end of last year.
“A short path from poverty is employment, to work sufficient hours with sufficient wages,” said Lauren Bauer, fellow in economic studies at the Brookings Institution.
The median U.S. household income, meanwhile, increased to $63,179. While it’s the biggest dollar amount on record, it’s statistically insignificant from the previous year, according to the Census Bureau.
For comparison, the inflation-adjusted income the year before the recession was $60,895. In 1999, it was $61,526.
The Census Bureau did not release state-level median household income data in the report, but Missouri’s was at $51,542 in 2017, the most recent year available on the agency’s website.
The median household income, adjusted for inflation, is the point where half of the households have more income and the other half have less.
Despite economic improvements and strong labor markets for the past few years, inequality remains high.
More than half of all income went to the top fifth of households. Those at the 90th percentile of the income distribution made $233,895, while those at the 10th percentile made $13,775.
Racial disparities also exist. The median income for black households was just $41,361 compared to $70,642 for white households and $87,194 for Asian households, the data showed.
Trump praised report
The White House praised the higher household income and falling poverty rates and credited Trump administration policies in a statement released Tuesday.
“Before today’s release of the latest Census data, it was already clear that the growing economy was adding millions of jobs and pushing up wages for American workers,” the statement said. “We now have evidence that the gains were particularly important in 2018 for those typically left behind: Income increased the most for lower-income families. Inequality fell. Poverty fell, especially for black and Hispanic families, and for children in general.”
But the data show recent income growth actually lagged behind the previous three years. Median household income rose faster during the last two years of the Obama administration: 5.2% in 2015 and 3.2% in 2016. In 2017, Trump’s first year in office, it grew 1.8%.
Poverty is determined by household income and family size. A family of four — two adults and two children — is considered impoverished, for example, if their annual income falls below $25,465. An individual under 65 years old is considered poor if he or she earns less than $13,064.
Americans actually are doing worse on a day-to-day basis, said Jeremy Rosen, director of economic justice at the Shriver Center on Poverty Law. Any slight gains in income, he said, are offset by the even higher increases in the cost of housing, health insurance and childcare.
“Effectively, at the end of the day,” Rosen said, “you have less money.”
He also criticized the Trump administration for doing little to decrease inequality, calling the most recent tax cut a boon “for corporations and wealthy people” but not everyday citizens.
Some economists and advocates suggest those already on the lowest rungs of the economic ladder face significant barriers climbing out of poverty. Many are caregivers, children or people with disabilities, said Bauer, the Brookings fellow.
“It’s pretty consistent that about a third of the people in the U.S. who are poor are children,” Bauer said. “They're eligible to receive benefits, but they're nevertheless living in circumstances that are preventable with more income.”
The Census Bureau also released a separate report, the Supplemental Poverty Measure for 2018, which examines how well federal programs pull people from poverty.
It showed the federal food stamp program for families lifted 3.1 million people out of poverty last year. School lunches lifted 1.3 million people from poverty. And the federal nutrition program for women and children, called WIC, lifted 275,000.
Such programs are a lifesaver for many families, but not all Americans benefit.
Hallie Platt, a freshman at Collin College in Texas, said she struggles to make ends meet working for $11 per hour at a bridal shop. Platt said she wanted to move out of her parents’ house but can’t afford to pay rent.
“For people in my generation, we don't have any savings for emergencies,” Platt said. “And we're kind of just living paycheck to paycheck, hoping that nothing bad happens.”