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Income Shows 1st Rise Since '89 as Poverty Falls

September 27, 1996|SAM FULWOOD III | TIMES STAFF WRITER

WASHINGTON — Americans pocketed a real increase in their incomes last year for the first time since 1989, reversing a stubborn trend of stagnant household wealth and providing a boost to even the most hard-pressed citizens, the Census Bureau reported Thursday.

The study also recorded the largest rate of decline in the number of the nation's poor since 1984.

Government officials were especially cheered by the sweep of the good news: The rise in inflation-adjusted household income and the decline in poverty were spread relatively evenly across the nation's several demographic subgroups.

Daniel H. Weinberg, head of the Census Bureau's housing and household economic statistics division, said: "The increase in income was broad-based."

Specifically, the report showed:

* Median household income was $34,076 in 1995, up 2.7% from the previous year and the first statistically significant rise in six years.

* The number of poor declined by 1.6 million, to 36.4 million, from 1994 to 1995.

* Correspondingly, the poverty rate among the total U.S. population fell from 14.5% in 1994 to 13.8% in 1995, the largest such drop since the rate fell to 14.4% in 1984, from 15.2% in 1983.

For California, the annual survey reversed a trend of declines as median household income rose almost 1.9% to $37,009 in 1995, up from $36,332 in 1994. An estimated 16.7% of the state's residents lived in poverty in 1995, down from about 17.9% in 1994 and 18.2% in 1993.

Last year, California was one of three states, along with Kansas and New Hampshire, in which median household incomes dropped for the two-year period ending in 1994. The new report thus provides evidence that the state's economy is on the rebound after being hit hard by job losses and sluggish development.

Larry Mishel, research director of the Economic Policy Institute, a liberal policy-analysis organization in Washington, said the Census Bureau report is "good news" but cautioned that the nation's economic recovery is not yet complete.

"Though income inequality is narrowing, the bottom 80% of families have not recovered yet to where they were in 1989," Mishel said. "We will need several more years of good income growth just to get back to that."

Not surprisingly, White House officials displayed the report as a badge of honor on the campaign trail.

"Today it is clear that more and more of our people are sharing in . . . prosperity," President Clinton said. "We are growing--and growing together."

Joe Lockhart, spokesman for Clinton's reelection campaign, released a statement tweaking Republican rival Bob Dole for his claims that the administration's economic policies have hurt American wages. "It might be time for Bob Dole to find a new issue," the statement said.

Dole's campaign retorted that the new report does nothing to alleviate Americans' growing sense of economic anxiety.

"These cold economic statistics may please Bill Clinton, but they do nothing to comfort a homemaker trying to buy groceries or a wage earner worried about the next paycheck," a statement released by Dole spokesman Nelson Warfield said.

Campaigning in Florida, Dole himself chose to focus on that state, where, in contrast to most of the nation, the report found that the poverty rate had increased and household income had declined. "This is really bad news for the state of Florida," the GOP candidate said.

Nationwide, the report found that median income rose for white households by 2.2%, and for black households by 3.6%. But Asian and Pacific Islander households showed no change from last year, and Latino households suffered a 5.1% decline.

"We have no explanation at this time for this change," Weinberg said.

Latinos also had the highest poverty rate, at 30.3%, followed by blacks, 29.3%; Asians, 14.6% and whites, 11.2%.

Robert Greenstein of the Center on Budget and Policy Priorities, a private, Washington-based research organization, said statistics for Latino households could be explained "by the erosion of wages of low-paid work--a very large share of poor Hispanics live in working families--and probably by immigration as well."

Median-income increases were recorded for both households headed by younger and older citizens. For households maintained by people 15 to 24 years old, the rise was 5.5%. Households headed by people 55 to 64 had 5.1% increases, and heads of household ages 65 to 74 had 4.5% increases.

Among the nation's regions, the Midwest showed the best performance, with a 7.2% increase. The change in other regions was less impressive, falling within the report's statistical margin of error.

The 1995 poverty rate for those younger than 18, 20.8%, was down from the 1994 rate of 21.8%. Still, it remained the highest of all age groups.

For the first time, poverty among the elderly fell below that of working-age Americans by a margin the bureau considered statistically significant: 10.5% for the elderly, compared with 11.4% for those of working age.

The government defined the 1995 poverty line, which is updated every year for inflation, as an annual income of $15,569 for a family of four; $12,158 for a family of three.

In Thursday's report, Census Bureau officials included income and poverty estimates for immigrants, a first-time foray into this category. The median income for households headed by native-born individuals rose 3.1% to $34,784, while those headed by foreign-born individuals showed basically no change at $28,352.

The bureau also reported that 40.6 million people, or about 15.4% of the population, lacked health insurance coverage in 1995. Those figures were unchanged from the previous year's report.

The report is based on the bureau's monthly survey of about 50,000 households nationwide for the Bureau of Labor Statistics.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Poverty Drops

The number of poor people in the United States (in millions):

'92: 38.0

'93: 39.3

'94: 38.1

'95: 36.4

Source: Census Bureau

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