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Growing Income Inequality Points to Need for Sustained Support for Workers and Families
By CLASP, the Center for Law and Social Policy
The U.S. Census Bureau report, Income, Poverty, and Health Insurance Coverage in the United States: 2011, chronicles the country’s struggle to emerge from the great recession. In 2011, poverty remained high at 15 percent—with more than 46 million people living below the poverty threshold. While this number alone is unacceptable, income inequality grew, a worrisome sign for families and our economy. The economy is slowly recovering, but families—including millions of working poor—are struggling to meet basic needs like housing, food, and child care. This report is a clear sign that there’s tremendous need for government action to promote job growth, modernize jobs, help poor children get off to a solid start, and strengthen the safety net for families in hard times. The report provides some key insights:
• Median earnings fell. Median household income fell 1.5 percent—the second consecutive year household income has fallen—and median earnings for full-time, year-round workers fell a full 2.5 percent. This earnings decline is consistent with recent research showing that job growth in the recovery has been mostly in low-wage jobs.
• Income inequality rose. Based on the Gini index, income inequality increased 1.6 percent between 2010 and 2011. While overall poverty did not increase, the gap is greater today between those at the very top and everyone else than it was a year ago. More needs to be done to solidify the middle class and—critically—to help more families reach the middle class.
• Out of all age groups, children experience the highest poverty, especially infants and toddlers. The poverty rate for young children under six remained nearly unchanged at 24.5 percent. In 2011, there were 5.8 million children under age six living in poor families. Of them, 2.8 million children live in what’s considered deep poverty—in households living under 50 percent of the federal poverty level.
• Government makes a positive difference. A glimmer of good news in the report is that health insurance coverage increased, and for the first time in a decade, private coverage increased—most likely due to the Affordable Care Act provisions allowing young adults to stay on their parents’ coverage. In addition, Medicaid and the State Children’s Health Insurance Program (SCHIP) provide coverage for 45 percent of young children, resulting in many fewer uninsured children today.
The Census report underscores the very real extent of poverty, and the impact this has on families and communities. Safety-net programs, such as unemployment insurance, the Supplemental Nutrition Assistance Program (SNAP), and the Earned Income Tax Credit (EITC), can continue to play a critical role in limiting the rise in poverty and hardship. High-quality child care, comprehensive Head Start and Early Head Start services, and home visiting for vulnerable families can all improve the odds for poor children, who are most at risk for a host of negative effects from poverty—including poor performance in school, health deficiencies, and reduced earnings as adults. Unfortunately, some of the provisions that lifted people from poverty are now expiring, while others are under political threat. It is critical that these programs be protected.
As our country charts its course back to more broad-based prosperity, we must strengthen the middle class by helping more people reach it, which requires paying real attention to addressing poverty.