Income Poverty: One in Three Americans Lacks the Income Needed to “Make Ends Meet”
Young Adults Among Hardest Hit
by Shawn Fremstad
September 18, 2010
Today the Census Bureau released a report on trends in income, including median income, income inequality and income poverty, and health insurance coverage between 2008 and 2009. As expected given the increase in unemployment—which grew from 7.4 percent in December 2008 to 10 percent in December 2009—the report shows a substantial deterioration in Americans’ economic security between 2008 and 2009.
The Census figures show that in 2009 one out of every three Americans had incomes that fell below the amount (roughly $45,000 for a family of four) that most Americans and various budget estimates show is needed to “make ends meet” at a basic level. Also, of particular note, the report shows substantial increases in the poverty rate and the rate of people without health insurance, as well as declines in median income for various demographic groups.
Income Poverty and “Making Ends Meet”
In 2009, some 43.6 million people had incomes below the federal poverty line. The income-poverty rate increased both overall—from 13.2 percent in 2008 to 14.3 percent in 2009—and for all racial and ethnic groups, except Asians (for whom the increase was not statistically significant). The number of persons living below the poverty line has now increased for three consecutive years. The largest percentage increases in poverty were experienced by families headed by a single man (3.1 percent) and children under age 6 (2.6 percent).
There is broad recognition that the current poverty line ($21,756 for a family of four in 2009) falls far below the amount of income needed to “make ends meet” at a basic level.1 When established in the early 1960s, the poverty line was equal to nearly 50 percent of median income. Because it has only been adjusted for inflation since then, and not for increases in mainstream living standards, the poverty line has fallen to just under 30 percent of median income. As a result, to be counted as officially “poor,” you have to be much poorer today, compared to a typical family, than you would have in the 1960s.
Both public opinion research conducted by Gallup and other pollsters, and basic budget analyses conducted by the Department of Commerce and various non-governmental research organizations, suggest that the minimum amount needed to “make ends meet” at a basic level is around $45,000 to $50,000 for a family of four. While the Census report does not report data for such a standard, it does provide data on the number of people with incomes below 200 percent of the federal poverty line, which is a roughly equivalent income level. These figures show that one out of every three Americans in 2009 had income below 200 percent of the poverty line, and that the percentage of such people increased by 1.1 percentage points between 2008 and 2009, and by nearly 4 percentage points since its lowest recorded level (29.3 percent) in 2000.2