EPI News

Prolonged recession pushes more people into poverty

In a new indication of the severe impact of the Great Recession and prolonged unemployment crisis, the U.S. Census Bureau reported on September 16 that 43.6 million people—or one in seven Americans—were living in poverty last year. The picture was even worse for children, one of five whom were living in poverty in 2009.

Steep erosion of income, health insurance
“After nearly a decade of neglect that ended with the most severe recession since the Great Depression, it is no surprise that poverty hit its highest rate since 1994,” Elise Gould, EPI’s director of Health Policy Research, said in response to the new data.
The Census Bureau showed the overall poverty rate rose to 14.3% in 2009 from 13.2% in 2008, an increase that added 3.7 million people to the ranks of the poor. One-third of those people were children. Among working-age people, the poverty rate reached an all-time high of 12.9%.

The official poverty threshold for a family of four in 2009 was an annual income of $21,954. However, the Census report also showed that a record 6.3% of Americans were living in “deep poverty” with an income of less than half the poverty threshold.
The Census Bureau also reported that incomes have fallen since the start of the recession and fewer Americans have employer-sponsored health insurance. Between 2008 and 2009, real median income declined 0.7% from $50,112 to $49,777. The real median income of working-age households fell 1.3% from $56,575 to $55,821. Some 6.6 million fewer Americans had employer-based health insurance last year than in 2008.

Despite the gloomy report, there were some pieces of positive news. Poverty among seniors reached an all-time low, reflecting the benefits of Social Security to insulate seniors against severe economic downturns. Likewise, public health insurance provided coverage to many people who did not have employer-sponsored coverage. While the total number of uninsured Americans under age 65 rose from 45.7 million in 2008 to 50 million in 2009, it would have risen further had not 4.9 million people obtained public health insurance under Medicaid and the State Children’s Health Insurance Program (SCHIP).

In a detailed analysis, Gould and Economist Heidi Shierholz said the new poverty data were “yet another reminder of the severity of the Great Recession.” Gould’s analysis of the new data on health insurance, as well as a taped conference call of EPI economists discussing the data, are also available on EPI.org.

Setting the record straight on public employee salaries
As more and more state and local governments face budget shortfalls, the salaries of public employees have come under increased attack. On September 14, EPI published Debunking the Myth of the Overcompensated Public Employee, a detailed analysis of the salaries of state and local public employees. It found that public employees are actually paid less than their private-sector counterparts, when controlling for education, experience, and other variables. The findings are important because some of the popular proposals for closing budget deficits include freezing pay and reducing benefits for public employees.

The Washington Post cited the findings in a blog post, which also noted that debating public employees’ salaries was a “counterproductive conversation” since the government, like any employer, wanted to hire talented workers and pay them fairly.

Retirement USA launches Wake Up, Washington campaign
On September 15, EPI Vice President Ross Eisenbrey spoke at the launch of Retirement USA’s Wake Up, Washington campaign, designed to urge lawmakers not to cut Social Security, while at the same time calling attention to problems with the private retirement system. Retirement USA, a broad coalition that includes EPI, the AFL-CIO, the National Committee to Preserve Social Security and Medicare, the Pension Rights Center and the Service Employees International Union, also announced a “retirement income deficit” of $6.6 trillion, which is the gap between what people age 32 to 64 have accumulated for retirement, and what they need to have accumulated at that stage in their lives in order to maintain their standard of living in retirement.

Eisenbrey also outlined the problems with raising the retirement age in an op-ed in U.S. News and World Report, where he stated that raising the retirement age cuts benefits for all retirees, no matter when they retire. “The fact of the matter is that benefits are already less than modest,” said Eisenbrey, who stressed that, even with Social Security, 3.5 million seniors are already living below the poverty threshold.

The Huffington Post also quoted Eisenbrey at the event describing how “the key sources of income retirees are relying on are either under attack, in the case of Social Security, or disappearing, in the case of traditional pensions.”
“The early Boomers are better off than the late Boomers, and God help the poor Gen Xers. Seventy percent of them are on a track that leads to a fallen standard of living in retirement,” said Eisenbrey.

Bad decisions on school reform
EPI Education Policy Analyst Mark Simon published an op-ed in The Washington Post, stating why the defeat last week of Washington D.C. Mayor Adrian Fenty in the Democratic primary election was largely a result of bad decisions, “particularly on school reform.” Simon outlined how the education policies of Fenty and Schools Chancellor Michelle Rhee “over-emphasized standardized student testing and scores as the be-all and end-all of school and teacher quality.” Last month, EPI published the paper, Problems with the Use of Student Test Scores to Evaluate Teachers, which showed broad consensus among academics and policy makers that standardized tests do not provide an accurate measure of student and teacher performance.

Jobs for Hispanic workers
While the nationwide unemployment rate stood at 9.6% in August, unemployment among Hispanic workers was 12%. On September 13, immigration policy analyst Daniel Costa took part in a panel discussion, Latinos and the Jobs Crisis: Putting People Back to Work, at the Congressional Hispanic Caucus Institute’s annual policy conference.

EPI in the news
EPI’s analysis of the Census Bureau’s new data on income, poverty, and health insurance, was widely cited by The Nation, The Miami Herald, The New York Daily News, and many other media outlets. The Kansas City Star cited EPI’s research on the gap between worker pay and worker productivity. A Reutersspecial report quoted EPI President Lawrence Mishel describing how even workers who have managed to keep their jobs have seen their wages suffer. The Hill published a piece by Daniel Costa discussing the controversy surrounding new fees on the H-1B and L-1 temporary worker visas.

Upcoming events
On Wednesday, September 29, EPI and the National Education Policy Center will host Education Policy: Separating the Junk from the Science, a discussion of the lessons learned from 30 years of think tank research into education policy. The event, at EPI’s offices, will run from 9:30 a.m. to 11:30 a.m.