Numbers of poor, uninsured rise

Income gap widens, Census data show

Email|Print|Single Page| Text size + By Kimberly Blanton
Globe Staff / August 27, 2004

The US poverty rate rose, incomes stagnated, and more Americans went without health insurance last year, even though economic growth surged, according to Census Bureau data released yesterday.

In Massachusetts, the standard of living also declined by some measures: Household incomes fell, and the numbers of uninsured residents rose, a state-by-state breakdown of the data showed.

Economists said some of the slippage is fallout from the recession, which ended in late 2001. But they also were concerned that the gap between low- and middle-income workers and those in higher-income brackets is widening.

"The average and lower-income person is not doing that well," said Robert Hormats, an economist for Goldman Sachs International.

Last year, the US economy grew 4.4 percent, and corporate profits surged. But, "because employment has lagged so badly and wage growth will lag badly, we're seeing that the return to the average household has been very weak relative to the growth in profits," he said.

The poverty rate also rose for a third consecutive year, to 35.9 million last year from 34.6 million Americans in 2002. Nearly 45 million Americans lacked health insurance in 2003, up from 43.6 million in 2002.

Median household income in 2003 was $43,318, down from $43,381 in 2002, adjusted for inflation. Last year's dip was not meaningful statistically, economists said, although it marked a fourth year of declining incomes. Median incomes had showed steady gains in the period from 1993 to 1998.

The data from the Current Population Survey, the Census Bureau's most comprehensive report on labor trends, is certain to be fodder for debate in the presidential campaign. Economists said yesterday the gloomy report came earlier than usual for the annual update, normally released in late September. Early publication raised speculation of a move by the Bush administration to get the bad news over with, something Census director Louis Kincannon, a Bush appointee, denied.

"There has been no influence or pressure from the [Bush] campaign," he said.

Democratic presidential candidate John F. Kerry used yesterday's data to underscore his campaign theme that President Bush's economic policies have failed. The Massachusetts senator noted that more than 5 million people have lost health insurance and 4 million have fallen into poverty during his opponent's administration. "Under George Bush's watch, America's families are falling further behind," Kerry said.

The Bush administration defended its record, saying 2003 Census data do not reflect job gains and other positive trends that occurred in the first eight months of 2004. Job growth has picked up this year, though the economy produced a disappointing 32,000 jobs in July.

Dan Weinberg, a Census Bureau analyst, said the data are typical of a post-recession period. But an increase in the uninsured population was due to job market uncertainty.

"Certainly the long-term trend is firms offering less generous [benefit] plans, and as people lose jobs they tend to lose health insurance coverage," said Weinberg.

Massachusetts was among 10 states where household incomes dropped. A two-year average of the state's median incomes was $50,976 in 2002 and 2003, down sharply from $52,649, the 2001-2002 average. "Even though Massachusetts has higher median household income, it's losing ground" to the rest of the country, said Randy Albelda, an economics professor at the University of Massachusetts at Boston.

Health insurance coverage in Massachusetts also deteriorated, according to the federal survey: 10.3 percent of the state's population had no health coverage in 2002-2003, up from 9.1 percent in 2001-2002. Albelda noted that much of the rise in uninsured nationwide is due not only to job losses but also to an increase in workers going without health insurance. "We're not recovered, compared to 2002, which was supposed to be a pretty bad year," she said.

Labor and poverty specialists said a widening gap between low- and high-income Americans in the data is also cause for concern. For example, the Census found that high-income Americans earned more -- $118,200 in 2003, versus $116,726 in 2002 -- while those on the lowest rung earned $10,536, or about $300 less than the prior year. Incomes in the top three income quintiles rose while those in the bottom three fell last year, creating similar increases in other ratios provided in the Census report.

Gaps between high and low incomes "are higher than any other year since 1967 when they started doing the CPS," said Heather Boushey, an economist for the Center for Economic and Policy Research in Washington. "This economic recovery has not been good for workers."

Kimberly Blanton can be reached at Material from wire services was used in this report.

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