Poverty Rate Climbs in Recession, One in Seven Now Poor

The federal poverty rate rose from 13.2 percent to 14.3 percent in 2009.

September 16, 2010, 9:28 AM

WASHINGTON, Sept. 16, 2010— -- One in seven Americans are living in poverty, the U.S. Census Bureau reported today -- the highest level since 1994.

But the increase in the federal poverty rate, to 14.3 percent last year from 13.2 percent in 2008, was notably smaller than the 15 percent many experts had been predicting as the country has struggled to emerge from a painful recession.

"The bad news is that poverty is high and it's going up, but not as dramatically as we had feared," said Sheldon Danizger, director of the National Poverty Center at the University of Michigan.

An estimated 43.6 million Americans in 2009 were living off incomes below the federal poverty line, or around $11,000 for an individual under 65 or $22,000 for a family of four.

The total number, an increase of 3.7 million over 2008, is the largest in 51 years, since the government first started tracking poverty data.

President Obama said today in a statement that the numbers show "just how tough 2009 was," but added the data "also remind us that a historic recession does not have to translate into historic increases in family economic insecurity."

Median household income did not fall this year, but remained stagnant at approximately $49,800 in 2009.

Many analysts noted that the current poverty rate, while sobering, is much lower than five decades ago when 22.4 percent of Americans were poor and in the mid-1960s when President Lyndon B. Johnson launched a war on poverty and expansion of government aid programs.

Still, the latest uptick in the poverty rate -- the second in six years -- is a grim reminder of the impact of the recession that began in 2008. The federal poverty rate is now 1.8 percent higher than in 2007.

"The deterioration in the labor market from 2008 to 2009 was the worst we've ever seen," said economist Heidi Shierholz of the Economic Policy Institute. "When you see a big deterioration in the labor market, poverty rises. The vast majority of people in this country depend on the labor market for their income."

Danzinger said the government's data shows the stimulus package, which expanded benefits for laidoff workers, has helped to keep millions of Americans out of poverty.

"Unemployment insurance took more than 3 million people out of poverty last year… Social Security payments also helped… so much so that poverty among the elderly went down," he said. "The stimulus package gets credit."

Still the report comes as potentially more bad news for Democrats and the Obama administration who have been trying to persuade voters that their economic policies are working to turn the economy around.

Poverty Among Working-Age Americans Highest Since 1960s

At a White House press conference last week, President Obama said he believes the administration's focus on economic recovery will include reducing poverty.

"The most important anti-poverty effort is growing the economy and making sure there are enough jobs out there -- single most important thing we can do," Obama said. "It's more important than any program we could set up. It's more important than any transfer payment that we could have. If we can grow the economy faster and create more jobs, then everybody is swept up into that virtuous cycle."

The national unemployment rate in August was 9.6 percent, according to the Bureau of Labor Statistics, up from 4.6 percent three years earlier.

Among the working-age population, ages 18 to 65, poverty rose to 12.9 percent up from 11.7 percent in 2008 -- the highest rate among the working-age since the 1960s.

Other findings released today show one in five American children now live in poverty, and one in four blacks and Hispanics live in poverty.

Experts say the report is unlikely to spur immediate policy changes or new government initiatives to help the poor and won't carry much sway with voters in November.

"Poverty is not as big an issue right now as middle-class unemployment. That's a lot more salient politically right now," said Lawrence M. Mead, a New York University political science professor.

"I'd say poverty is not on the agenda of the nation as a whole and there's a lot more discussion right now on whether we should be raising taxes or not," said Danzinger.

ABC News' Maya Srikrishnan and the Associated Press contributed to this report.