Off the Charts Blog | Center on Budget and Policy Priorities

Following up on its September 16 release of national data on poverty in 2009 (which we analyzed here), the Census Bureau today released poverty data for the state and local levels showing that poverty rose in 31 states and fell in none. We analyzed the new data and found that the percentage of people in deep poverty — that is, with incomes below half the poverty line — rose by a statistically significant amount in 28 states in 2009. (See table.) It dipped in one state, Wyoming. Between 2000 and 2009, the share of the population living in deep poverty increased in 36 states.

Half of the poverty line corresponds to an income of $5,478 for an individual and $10,977 for a family of four.

The states with the highest rates of deep poverty in 2009 were Mississippi and Kentucky, where the shares of residents below half the poverty line were 9.3 percent and 8 percent, respectively. The state with the largest increase in deep poverty in 2009 was Colorado, where the deep poverty rate rose from 4.7 percent to 5.9 percent — an increase of more than one-fourth in a single year.

The earlier, nationwide Census figures showed that the number of people in deep poverty hit a record high in 2009, in data going back to 1975. Nineteen million people, or 6.3 percent of the population, were below half the poverty line in 2009, up 2 million from 2008. And 43.7 percent of poor people were below half the poverty line in 2009, also the highest on record.

Since the start of the recession in 2007, the number of people in deep poverty has risen 22 percent, even faster than the increase in regular poverty (17 percent).

Studies have found that deep poverty has a particularly strong effect on the education and development of young children. Even relatively small changes in incomes among low-income young children are associated with significant changes in school achievement.

As a Center report explained last week, the new Census data for 2009 reflect the harsh impact of the recession, as poverty and the ranks of the uninsured grew considerably while median incomes among working-age households fell.

What’s gotten less attention is that these trends were not new. The recession followed an economic expansion in which the nation actually lost ground in all three areas.

The poverty rate was higher — and median income for working-age households lower — at the end of the 2001-2007 expansion than during the 2001 recession, as the table shows. Similarly, the number and share of Americans who are uninsured grew over the 2001-2007 period.

On some indicators, such as the child poverty rate and the percentage of Americans without health insurance, the adverse changes during the so-called recovery period of 2001-2007 were more than half as large as those in 2007-2009, during the worst recession since the Great Depression.

Such a dismal record during an expansion has never occurred since the federal government began collecting these figures, which in the case of the poverty data go back five decades.

In short, millions of Americans have suffered a one-two punch over the past decade, with the 2001-2007 recovery dragging people down even before the recession.

Last week, we highlighted our analysis of the Census Bureau’s new poverty data, in which we found that unemployment benefits kept many Americans out of poverty and economic hardship in 2009. Food stamps helped, too. In fact, the increase in the number of Americans with income below the poverty line is nearly three times as great if you don’t count unemployment benefits and food stamps as if you do.

• If you count only people’s cash income minus their unemployment benefits, the number of people with incomes below the poverty line rose by 6.2 million, from 40.7 million in 2008 to 46.9 million in 2009.
• If you count people’s cash income including their unemployment benefits, as the Census Bureau’s official poverty measure does, the number of poor Americans rose by 3.7 million, from 39.8 million in 2008 to 43.6 million in 2009.
• If you count people’s cash income including unemployment benefits and add food stamp benefits, the number of poor Americans rose by 2.3 million, from 37.6 million in 2008 to 40 million in 2009.

Why did these programs have such a large impact? For one thing, the 2009 Recovery temporarily expanded food stamp benefits and unemployment insurance. For another, the sharp increase in unemployment during the recession made many more people eligible for these programs.

I’m not suggesting that merely adding food stamps to the current poverty definition would produce the ideal measure of poverty. For instance, child care costs and other work expenses also affect families’ ability to meet basic needs. But these figures do give you a sense of how hard government was pushing back against a rising wave of economic hardship in 2009. As it happens, it was pushing back pretty hard.

As our analysis of the new poverty data for 2009 points out, poverty may be even higher in 2010 and 2011 than in 2009.

The main reason is that forecasters are predicting continued weakness in the employment market, with the annual unemployment rate rising from 9.3 percent in 2009 to at least 9.5 percent in 2010 and declining only slightly to 9.0 percent or higher in 2011. Moreover, in the last three recessions, the poverty rate didn’t begin falling until a year after the annual unemployment rate started to fall — which means poverty remained elevated for several years, as the graph shows.

Also, while unemployment insurance kept millions of Americans out of poverty in 2009 (and presumably will do so in 2010 as well), it will be less effective against poverty in 2011 if Congress allows the extra weeks of benefits for the long-term unemployed to expire this November.

The headline story in today’s Census Bureau report is the large jump in the poverty rate in 2009. But an exclusive Center on Budget and Policy Priorities analysis of the new survey data shows that unemployment insurance benefits — which expanded substantially last year in response to the increased need — kept 3.3 million people out of poverty in 2009.

In other words, there were 43.6 million Americans whose families were below the poverty line in 2009, according to the official poverty statistics, which count jobless benefits as part of families’ income. But if you don’t count jobless benefits, 46.9 million Americans were poor.

Unemployment insurance benefits usually keep more people out of poverty during recessions than during expansions, partly because recessions swell the ranks of jobless workers seeking help and because the government typically offers extra weeks of help in a recession. But they had a much bigger poverty-fighting impact in this recession than in the previous three recessions:

• From 2007 to 2009, the number of people that unemployment insurance kept out of poverty rose by 2.8 million or 581 percent.
• In the previous two recessions (in 2001 and the early 1990s), the number protected from poverty never rose more than 1 million or 209 percent.

Why? Total unemployment benefit payments increased by fully $78 billion (154 percent) in 2009, reflecting both a massive influx of laid-off workers qualifying for help and temporary changes made to the program in the 2009 Recovery Act and other legislation. The Recovery Act raised jobless benefits by $25 per week (the increase expired June 2) and, together with other legislation, gave additional weeks of benefits to long-term jobless workers.

We’ll have more soon on the Census Bureau’s new health insurance data.