Too Little, Too Late?
My colleagues and I wrote a piece yesterday analyzing the new findings from the Census Bureau regarding household income, poverty, and health insurance in 2006.
These results are important in that they give us the first close look at how different types families fared last year. Every five minutes, we’re updated on the latest squiggle in the stock market, but it’s only once a year that the Census Bureau tells us how the typical family is getting along or how many kids are poor in America (btw, see section “Trust the Trend” in the EPI report re poverty measurement).Our piece takes you through the details of the Census report. It’s also well described in this NYT editorial.
I would only add the concern, stressed in Times piece, that unless the economy shakes off the fallout from the bursting housing bubble/subprime slime/credit crunch and picks up some speed, this could be the first recovery wherein median household income fails to regain its peak and poverty rates remain above their 2000 trough. That’s quite an indictment, and a stark example of just how little growth has trickled down to middle-income households.
A few highlights:
--Median household income, after inflation, ticked up less than one percent. However, median earnings for both men and women fell, for the third year in a row. Together, these results suggest that family income growth is being driven by more work at lower wages. That’s one recipe for income growth, but not a particularly good one.
--Poverty fell from 12.6% in 2005 to 12.3% last year, the first significant decline since 2000 (the previous cyclical peak). Yet it comes five years into an economic recovery that’s been highly touted on all sorts of macro-measures, and poverty remains one point above its 2000 level, while the income of the typical household is about $1,000 below (-2%) its level that year.
--For African Americans, median household income was flat last year and is down a whopping 8%, about $2,800, since 2000. Again, lack of adequate job opportunities are a key factor.
--Health insurance coverage stumbled again, driven down by employers continued shedding of this role.
One spin alert: Many of us view this continued erosion of employer-provided health coverage as a glaring signal to policy makers to get serious about health care reform. But some conservatives are suggesting that the increase in the uninsured is driven exclusively by immigrants.
I haven’t seen evidence to support this claim. The fact is that immigrants and natives alike have been losing coverage: Census data show that coverage rates for both groups are down about two percentage points since 2000. If you hold the immigrant share of the population constant at its 2000 level, you find that the share of the total population without health coverage would have gone up two-tenths of a percent less (up 1.8 percentage points instead of 2). In other words, increasing immigration is not driving the slow bleed of health care coverage in America.
Comments (22)
I think we can trust the Bush Administration to take bold, decisive action.
Next summer, they simply won't report the median earnings of men and women, or the median household income of African Americans.
August 30, 2007 12:23 AM | Reply | Permalink
Figure 2 in your piece highlights what I consider to be one of the most important stories. Wealth is being systematically redistributed from 4/5 of the population to 1/5 of the population. I would bet that if you used 10ths instead of 5th it would show 9/10 losing and 1/10 gaining. Worse yet, the poorer you are, the higher the redistribution.
Because the data indicates that lower income households are proportionately contributing more, it would be useful to see a breakdown showing how much of the decline in African American household incomes is due to income level as opposed to race. The raw data does not provide sufficient information as to the source of the problem. If there is a significant difference by race at each income level,we have two problems to address. In order to know the extent of each, we need to know whether income level is driving the results.
August 30, 2007 6:48 AM | Reply | Permalink
"Median household income, after inflation, ticked up less than one percent. However, median earnings for both men and women fell, for the third year in a row. Together, these results suggest that family income growth is being driven by more work at lower wages."
Could be. I think it has more to do with "earnings" being something you get for going out and working, and "income" can include cap gains & dividends. Seems to me that those who have nothing to invest are at best stagnant, while those with money making enough more to raise the average 1%
August 30, 2007 9:49 AM | Reply | Permalink
That or they'll attack Iran so that wages fall over there instead of following us back to fall over here.
thosethingswesay.blogspot.com
August 30, 2007 9:56 AM | Reply | Permalink
Grim news. Unchecked the kind of redistribution suggested by all the numbers should result in a permanent downward economic spiral that won't stop until the United States mirrors some second world country. Even the millionaires will suffer.
Somehow I can't shake the feeling that we are missing something fundamental in all these numbers. What about our aging population? Isn't it true that more and more boomers are retiring early? As they leave high paying end of career jobs their incomes naturally drop.
Ron Byers
August 30, 2007 10:05 AM | Reply | Permalink
Two thoughts: First, it's somewhat heartening to know that the conservative think tanks still hate immigrants more than the middle class, although their prescription to deport the immigrants and do nothing about the economy kills two birds with one stone. Second, the remark about how we know what's happening in the markets by the minute, but only do a census study once a year led me to a creepy solution--bracelets that measure your net worth all the time. This way, likes stock prices, we would always know how the individual impact of the economy is going, plus the NSA can track you better.
/c
In the blogosphere every one is an expert, so no one is an expert.
August 30, 2007 10:50 AM | Reply | Permalink
I can't wait to start enjoying that extra $360 a year. It's like a dream come true.
August 30, 2007 12:00 PM | Reply | Permalink
It also suggests that there are more new entrants to the workforce. Entry level jobs typically don't pay as much. It may also suggest that the share of household income that is not earnings is rising. Given that the baby boomers are now in their peak earning and peak savings years this should not be too suprising.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
August 30, 2007 12:22 PM | Reply | Permalink
That was a good column Jared. I have a question for you. Somewhere on a website (it may have been the census bureau), I saw a set of graphics that portrayed, in color on a map of the USA, whether each state was average, below average, or above average in income growth, uninsured population and one other metric, I forget which that was. I swas struck that the three maps essentially looked the same, essentially the Sun Belt was above average in both income growth and uninsured population. I wonder if you have any thoughts on that. It tends to match my anecdotal experience - I have a friend who runs a small business, employing about 40-50 people. He offers each new employee the choice between health coverage or additional salary equal to the premium he would pay for their coverage. They must decide at the time of hiring. Over 80% of the new employees pick the additional salary, choosing to be uninsured. I recognize that this is just an anecdote and that there are many other reasons why people wind up being uninsured when they would choose to be insured. Still, the correlation that the graphic brought out made we wonder and, since you are undoubtedly more knowledgeable than I on this, I would appreciate your thoughts.
August 30, 2007 12:49 PM | Reply | Permalink
I saw a similar figure and had the same response...in the NYT I think. It was counterintuitive: income up, poverty down, hth coverage down in many of the same states.
It will take a little research to answer this one. It's possible money went into salaries instead of health care, but it could also be that states where insurance coverage were states where hth care costs rose most quickly.
I'll post something if I learn anything more about this.
August 30, 2007 5:25 PM | Reply | Permalink
Of course, income levels themselves are highly correlated with race, so it's tricky to untangle. Two things are true, as I read the racial data:
Minorities are disproportionately in the bottom half of income scale and thus trends that have hurt low income persons hurt them more.
But it's also the case that African-American income, eg, have fanned out too, though not as much as white incomes.
August 30, 2007 5:32 PM | Reply | Permalink
There is general population growth, too, which complicates things. Retirees move there in large numbers, and if they're on Medicare do they get counted as insured? Does the pop. increase create more service jobs than manufacture (likely) and thus increase average income per capita without increasing health coverage?
My daughter recently took a job with benefits that paid less than her previous job. One thing that decided it is her previous experience needing medical coverage for allergies and asthma.
When I was young I didn't think about this stuff, I knew I was immortal. I also resented the Social Security tax. I feel differently now. Even if I could have earned more investing, I simply wouldn;t have done so, and would have likely spent the extra income.
August 30, 2007 7:26 PM | Reply | Permalink
This is from the Washington Post report on the report, and it accurately reports this issue.
"The drop in the poverty rate from 12.6 percent in 2005 to 12.3 percent in 2006, meanwhile, was almost entirely driven by a decrease in poverty for those over 65. There was no change in the rate for children or adults aged 18 to 24, and the overall number of individuals in poverty remained the same at about 36.5 million."
So, the number of people in poverty remained the same, but the drop in the rate of poverty then must have been due to increased population. ? Correct?
If it was "driven by a decrease in poverty for those over 65", how can that be explained?
August 30, 2007 7:31 PM | Reply | Permalink
The elderly are almost all insured through Medicare and are counted as insured by the Census. Which leads me to say....
Medicare for All!
August 31, 2007 4:36 AM | Reply | Permalink
Well, according to Census there were about half-a-million fewer poor people in 2006 than 2005, but, unlike the rate change from 12.6% to 12.3%, the change in the number of poor people is not statistically significant. I suspect though, that there are truly fewer poor people in '06 vs '05.
Similarly, the poverty rate for nonelderly people did fall, from 12.9% to 12.7%, again, too small a change to be statistically significant, I think.
You're right the growing population played a role too. It shaved about one-tenth of a point off of the poverty rate and the other two-tenths were from declines in poor people.
August 31, 2007 6:16 AM | Reply | Permalink
Progressives benefit from emphasizing "It's the unfair economy, stupid." I must have missed notation of the SCHIP program, which covers the children of the working poor.
August 31, 2007 9:02 AM | Reply | Permalink
Thanks for following up. It also could be that whatever income gains occurred were just unevenly distributed, or it could be a combination of things.
August 31, 2007 9:21 AM | Reply | Permalink
One of the main reasons that markets for health care "fail" is that many "healthy" individuals prefer not to buy insurance...driving up the cost for rest...leading more "healthy" people to prefer not to buy insurance...driving up the cost for the rest...until the market unravels and private insurance, for an individual, is not available at any price. Your friend is probably hiring healthy (and younger) employees who prefer to not have health insurance. When catastrophe does strike, we have another uninsured patient in the ER.
August 31, 2007 9:56 AM | Reply | Permalink
Just a quick question:
This data is based on household and not individual earners, correct?
August 31, 2007 2:10 PM | Reply | Permalink
That is an interesting program...
In Florida the program starts when incomes rise above the medicaid level. The coverage then stops at about $40K for a family of four.
The coverage between the two marks requires an increasing premium based on income and it isn't cheap.
In addition, the program has very restrictive coverage benefits.
I have worked through the party distributing coverage applications at various free public events (free school supply distributions, etc).
The people that we have helped with the applications generally state that they can not afford the premiums and that they are better off just using the emergency room.
Just another example of a program that the conservatives use as evidence of their compassion when in reality the program is broken.
Universal health care is so critical. We need ensure to cover dental and vision services as well.
August 31, 2007 2:23 PM | Reply | Permalink
Re: The coverage between the two marks requires an increasing premium based on income and it isn't cheap.
I used to be involved (on the administrative and IT end) with the Florida program too. It may not be cheap, but it's a real bargain compared to buying on the open market, or even what many people have to be pay for health insurance now at work. And I knew people who covered their kids through the program during times when they were making ends meet by free-lancing and real estate (before that market tanked) and had no workplace coverage. Whatever their defects the various CHIP prohram serve a vital need and we shoudl be looking to expand them (and Bush be damned) not trasd them for not being perfect.
August 31, 2007 3:01 PM | Reply | Permalink
The Census collects earnings and non-labor income (interest income, welfare benefits, etc) from family members and sums them for family incomes and poverty calculations.
For individual earnings tables, they just use individuals with earnings.
August 31, 2007 4:37 PM | Reply | Permalink