Poverty Rate Climbs Despite Recovery

By Cindy Noe

Vol. 10, No. 6, 1988, p. 18

Although the nation is in its fifth year of economic recovery, some eight million more Americans were poor in 1987–a total of 32.5 million–than in 1978, according to an analysis by the Center on Budget and Policy Priorities.

The Center, a Washington-based independent, non-profit research organization that specializes in the analysis of data and policy issues affecting low-income Americans, bases its figures on the recently released Census Bureau data on poverty. The Center found that the economic recovery has been uneven, according to director Robert Greenstein, with the poor sharing less fully in the gains than in prior recoveries, while the most affluent are moving farther ahead.

An equally disturbing fact found by the Census Bureau wee that although the employment rate was about the same in 1987 and 1978, poverty rates were substantially higher in 1987 than in 1978. The unemployment rate wee 6.2 percent in 1987 compared to 6.1 in 1978. But the 13.5 percent poverty rate in 1987 was far above the 11.4 percent poverty rate in 1978. Although more Americans were employed last year than in 1978, the poverty rate was higher, contrary to peat patterns when generally poverty rates declined as the unemployment rate dropped.

Among racial and ethnic groups the poverty rates rose. Poverty rates for black Americans climbed significantly in just the last year, from 31.1 percent in 1986 to 33.1 percent in 1987. This means that one of every three blacks were living in poverty last year. The number of poor blacks rose from 700,000 to 9.7 million.

Poverty rates also rose a full percentage point for Hispanics, from 27.3 percent to 28.2 percent, although the Census Bureau said this poverty rate increase was not statistically significant. The number of poor Hispanics rose from 353,000 people to 5.5 million people.

The largest increase in black poverty rates occurred among married couples, up 1.9 percent. The poverty rate among female-headed families, rose at a statistically insignificant rate, according to the Center’s findings. The proportion of poor living in female-headed families actually decreased from 38 percent in 1978 to 37 percent in 1987.

According to the Center, the poverty rate for whites dropped from 11 percent to 10.5 percent.

The Census also found that poverty rates among children of all races remained far above the levels of the 1970s. Some 13 million children (under 18) were poor in 1987 compared to 6.9 million in 1978. That’s 20.6 percent of all children in 1987 and 15.4 percent in 1978.

The poverty rate for black children rose from 43.1 percent to 45.8 percent while the poverty rate for Hispanic children climbed from 37.7 percent to 39.8 percent. One of every two black children under age six were poor in 1987.

An increase in the number of very poor children occurred among both black and white children. In both races the number of children falling below half of the poverty line in 1987 ($4,528 for a family of three) was more than 50 percent greater than in 1978. An interesting note in 1987 was the increase of white children falling below the poverty line at 69 percent while 54 percent of black children fell below the poverty line. The “poorest of the poor” children totaled 5.4 million in 1987, some 2.2 million more than in 1978.

The poverty rate for the elderly edged downward in 1987 compared to 1986 for the elderly as a whole, but rose for the black (31 percent to 33.9) and Hispanic (22.5 percent to 27.4 percent) elderly.

In addition to showing that the poor have grown poorer, the new Census data show that in 1987 the gap between rich and poor families hit its widest point in at least forty years.

The Census data shows that in 1987 the wealthiest 40 percent of American families received 67.8 percent of the national family income, the highest percentage ever recorded, while the poorest 40 percent of families received 15.4 percent of the national family income, which was one of the lowest percentages ever recorded.

The 20 percent of American families in the middle of the income spectrum received 16.9 percent of the national family income, another of the lowest percentages ever recorded.

In 1987 income gains were much larger for upper-income families than for low- and moderate-income families. The income of the typical family in the bottom 40 percent of all families rose just $57 from 1986 to 1987, after adjusting for inflation. By contrast, the income of the typical family in the top 40 percent of the population rose $699 last year, while the income of the typical family in the richest 10 percent of the population grew $1,021.

The income of the typical family in the poorest 40 percent of families was $741 lower in 1987 than in 1978, after adjusting for inflation. By contrast, the income of the typical family in the top 40 percent was $3,031 above 1978 levels, while the income of the typical family in the top 10 percent was $8,119 above 1978 levels.

The Center on Budget and Policy Priorities says that some who have tried to downplay the gravity of the new poverty data have cited non-cash poverty measures, which’ yield lower poverty rates.