New Census Data Show Working People Worse off Than in 2000

by James Parks, Aug 26, 2008

Even though the nation’s economy has grown over the past few years, more of America’s workers are living in poverty and household incomes are lower now than in 2000, the year before the 2001 recession.

The U.S. Census Bureau reported today that 816,000 more people—including 500,000 children—slipped into poverty between 2006 and 2007, raising the number of the poor to 37.3 million. The poverty rates for adults and children were both higher in 2007 than in 2000, when 31.6 million were poor.  

Sen. Barack Obama says the Census report “confirms what America’s struggling families already know”:

Over the past seven years, our economy has moved backwards. We have now lived through the first so-called economic “expansion” on record where typical families saw their incomes fall, and working-age households lost more than $2,000 from their paychecks.  

This is the failed record of George Bush’s economic policies that Sen. [John] McCain has called “great progress.” While Sen. McCain is promising four more years of the failed Bush economic policies, my economic plan will restore bottom up economic growth that benefits all Americans by cutting taxes for working Americans, providing affordable, accessible health care for all, and investing in new energy, education and infrastructure so we can create millions of good jobs here in America.

Analyses of the Census report by the AFL-CIO, Center on Budget and Policy Priorities (CBPP) and the Economic Policy Institute (EPI) show that working people are worse off now than they were in 2000, the year before the 2001 recession. For example, the median household income rose slightly to $50,233 last year, up from $49,568 in 2006. This is still $324 lower than in 2000, when median household income was $50,557, after adjusting for inflation.

EPI’s analysis shows that median family income remained unchanged over the 2001–2007 cycle. This varies from household income, which also includes single persons. Men who worked full-time lost ground during the past seven years as well. The median earnings of these workers closely connected to the job market were 3.1 percent lower in 2007 than their level in 2000.  

For households that did not include retirees, according to the CBPP, the median household income in 2007 was 1.9 percent lower than in 2001. This is the first time median working-age household income is lower at the end of an economic expansion than it was at the bottom of the previous recession.

Robert Greenstein, executive director of the CBPP, says the numbers show the real story behind the economic expansion—the rich got richer and everyone else barely made it.

Never before on record has poverty been higher and median income for working-age households lower at the end of a multi-year economic expansion than at the beginning. The new data add to the mounting evidence that the gains from the 2001–2007 expansion were concentrated among high-income Americans.  

Jared Bernstein, senior economist with EPI, says the numbers don’t add up for working families:  

Despite a slight gain of $665 last year, middle-income households are no better off now than they were at the prior economic peak of 2000. In other words, the economic recovery of the 2000s, which ended last year, has done very little to boost their living standards. They’ve done their part, contributing to strong productivity growth, but they’ve far too little to show for it.

There was some good news in the report, but even that was mixed. The number of people without health insurance dropped to 45.7 million in 2007, down from 47 million in 2006—but it was public health programs like Medicaid and Medicare that saved the day. CBPP says:  

all of the improvement in health care coverage in 2007 was due to more Americans obtaining coverage through government health insurance programs, principally Medicare and Medicaid.

For example, 1.3 million more people were insured by Medicaid in 2007 than in 2006. This is the first year during the seven years of the Bush administration that the number of uninsured has fallen. 

But the bad news is that the percentage of people with employer-provided health insurance continued to drop between 2006 and 2007, falling from 59.7 percent to 59.3 percent. The share of employees with employer-provided coverage has dropped each year since 2000, when the share was 64.2 percent.

EPI economist Elise Gould says the recent economic downturn suggests that health insurance coverage has only worsened in 2008.

As the percent of uninsured is expected to rise in conjunction with a slumping economy and the cost of health care continues to grow faster than inflation, the health care problem has reached a critical level for American families. Bold new solutions need to be considered to address the growing health care crisis.

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