CFK reports from: The Brookings Institution
Event: Poverty and Income in 2004: A Look at the New Census Data and What the Numbers Mean for Children and Families
Organized by: The Brookings Welfare Reform and Beyond Initiative
Where/When: Washington, D.C., August 30, 2005

Report by: Cecilia Garcia

As has been widely reported, the U.S. Census Bureau released 2004 poverty and family income data on Wednesday, August 31, 2005, showing that 1.1 million more people lived in poverty in 2004 than in the previous year. The Brookings Institution’s Initiative on Welfare Reform and Beyond hosted a panel discussion moderated by Ron Haskins, senior fellow for Economic Studies at Brookings. Panelists included Doug Besharov, scholar in Social Welfare Studies at the American Enterprise Institute; Gary Burtless, senior fellow, Economic Studies, Brookings; Kathleen Cooper, former Under Secretary for Economic Affairs, U.S. Department of Commerce; and Joe Jones, president of the Center for Fathers, Families and Workforce Development.

Haskins began the discussion with a brief presentation of key findings in the Census data. The percentage of children in poverty rose by .2 percent from 2003 to 2004 (from 17.6 percent to 17.8 percent). Likewise, the percent of female heads of household in poverty increased, from 30 percent in 2003 to 30.5 percent in 2004. Haskins pointed out that although the amount of the increase in poverty rates for children and female heads of households seems slight, it is troubling that the upward trend in poverty rates continues for both groups during a period of economic growth. After a steady decline from 1993 through 2000, poverty rates have increased from 2001 through 2004.

The Census data indicated that the percentage of children with health insurance increased slightly, from 88.6 percent in 2003 to 88.8 percent in 2004. Haskins noted that this was due to a growth in health coverage by government health insurance programs, which offset the decline in the percentage of people covered by employment-based health insurance (60.4 percent in 2003 to 59.8 percent in 2004).

Doug Besharov of the American Enterprise Institute made four basic points. First, the poverty measurement used by the Census Bureau leaves a lot to be desired, mainly for the number of things it does not take into account, like non-cash income. Second, the increase in poverty rates appears to be coming from the Midwest region of the nation. He pointed to the fact that the unemployment rates for Ohio and Illinois have been running slightly higher than the national average during 2003 and 2004. Besharov said that the good news for both states is that the unemployment rates for the first seven months of 2005 are decreasing and suggested that next year the Census Bureau may well be reporting decreases in the poverty rates for those states as well. His third point was that the percentage of Hispanics in poverty continues to decline, even while the number of Hispanic immigrants increases. And Besharov’s last point was that the percentage of female-headed households in poverty increased very slightly (from 28 percent in 2003 to 28.4 percent in 2004).

Kathleen B. Cooper, former Under Secretary for Economic Affairs, U.S. Department of Commerce, said that the slow growth in the economy is the reason for the slight increase in the poverty rates. Cooper said that over the course of the business cycle, the poverty rate tends to lag the unemployment rate by a year or more.

Cooper went to describe the "face of poverty" in the U.S.:

• Single moms
• Minorities
• Young people just starting out
• The less-educated
• Recent immigrants

Despite the fact that the U.S. economy has been struggling since 2000, Cooper pointed to a few bright spots. For example, 57 percent of families with incomes below the poverty line experienced a 10 percent increase in their income between 2001 and 2002. She said that naturalized citizens earn 40 percent more than non-citizens. Cooper predicted that strong economic growth and job creation is on the horizon and will result in a decrease in the poverty rate in the next few years.

Gary Burtless, Brookings Senior Fellow for Economic Studies, began his comments with the observation that he wouldn’t use the word “encouraging” at all in reference to the 2004 Census poverty and income data. Burtless pointed out that the incomes of Americans fell .2 percent from 2003 to 2004, and that per capita income fell for the fourth consecutive year.

Burtless said that the 2004 poverty and income data also indicate that income inequality got worse. The only income increases shown in the current data are occurring with the top five percent of the income brackets. Meanwhile, Burtless points out, there have been no changes in the tax structure that would have helped those with the lowest incomes—there have been significant increases in the Earned Income Credit Tax and no reduction in payroll taxes.

Joe Jones, president and chief executive officer for the Center for fathers, Families and Workforce Development, noted that the richest country in the world should not be satisfied with a 12.7 percent poverty rate. He described structural flaws in how we help families in poverty that lead to greater poverty among children. Legislation, like welfare reform, does not address the issue of what Jones called “fatherlessness.” He said that men must be included in the formula of family services and that our social welfare system has no points of entry for men.

Jones said that we have to get past the point where the only social welfare supports available to men of color come from the criminal justice system.