US poverty hit a record low even before the Covid-19 recession

A record-low share of Americans were living in poverty, incomes were climbing, and health insurance coverage was little changed in 2019, a government report released Tuesday showed — although the circumstances of many have deteriorated as pandemic lockdowns and industry disruptions have thrown millions out of work.

The share of Americans living in poverty fell to 10.5 per cent in 2019, the Census Bureau reported, down 1.3 percentage points from 2018. That rate is the lowest since estimates were first published in 1959.

Household incomes increased to their highest level on record dating to 1967, at $68,700 in inflation-adjusted terms. That change came as individual workers saw their earnings climb and as the total number of people working increased.

Methodology changes made after 2013 make comparing data across time tricky. But even adjusting for those differences, the 2019 income figures appeared to be the highest on record, based on Census Bureau estimates.

The data may also have been somewhat skewed by the pandemic. Interviews for this year’s income and poverty report were disrupted by the virus, the Census Bureau said. Some economists warned that the disruptions could have made the data look too rosy: The people who responded to surveys were more likely to have high education and income levels. Analysts at the Census Bureau estimated that poverty would have been slightly higher, at 11.1 per cent, without the resulting data quirks.

“It doesn’t change the overall picture — we had a tight labor market that was pulling people in and reducing poverty,” said Heidi Shierholz, director of policy at the Economic Policy Institute. But it underscores that “there was still a lot of room for improvement.”

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Despite the record-long expansion, about 26 million Americans — 8 per cent of the population — still lacked health coverage for all of 2019. That was a slight decrease from the 27.5 million who were not covered in 2018. While that change is small, it is notable because 2019 was the first year in which the Affordable Care Act’s mandate to purchase coverage was no longer in effect.

A second health insurance survey, which asks Americans if they had coverage at the moment they were interviewed, did show a slight increase in the uninsured rate, from 8.9 per cent in 2018 to 9.2 per cent in 2019.

The data suggests that the individual mandate, which the law’s drafters saw as crucial to increasing insurance sign-ups among healthy Americans, may not have been that effective. The mandate regularly polled as the health law’s least popular feature before congressional Republicans repealed the fines in late 2017.

“The initial consensus when the law passed was the mandate was a critical feature,” said Benjamin Sommers, an assistant professor of health policy and economics at Harvard University. “Over the years of implementation, the studies that have come out have been less convincing in terms of its importance.”

The census figures showed a slight increase in Americans receiving health coverage at work and a decrease in those buying their own policies, suggesting that a stronger labor market could be driving the better coverage numbers. Enrollment in Medicaid, the program that covers low-income Americans, declined slightly. That could reflect more Americans gaining coverage at work and many states tightening their eligibility rules.

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The report highlights how strong the job market and economy were before the pandemic, following a record-long expansion that began in 2009. Yet it underscores how, despite those gains, many families remained vulnerable to such a major shock.

Unemployment was hovering at around 3.5 per cent before the crisis took hold, the lowest in 50 years, and wages were steadily rising. Yet at the end of 2019, 3 in 10 adults said they could not cover three months’ worth of expenses with savings or borrowing in the case of a job loss, according to a Federal Reserve survey.

Minority groups experienced bigger declines in poverty in 2019, the census report showed, but also have much higher poverty rates. The poverty rate for whites dropped 1 percentage point to 9.1 per cent; for Asians it was down 2.8 percentage points to 7.3 per cent. Black poverty dropped 2 points to 18.8 per cent, and Hispanic poverty decreased by 1.8 percentage points to 15.7 per cent.

“The very groups who need a stronger economy to pull them back are the ones getting disproportionately hit by the downturn we’re in now,” Shierholz said.

The figures suggest that many families were still on edge as state and local lockdowns prompted the sharpest job losses on record, pushing the unemployment rate up to 14.7 per cent in April. While unemployment has declined to 8.4 per cent as employers call back their temporarily furloughed workers, that left about 10 million fewer people employed in August than in February.

Members of minority groups have been hard-hit by those job losses, as have workers with lower education levels. Economists warn that many layoffs in the service sector could turn permanent as casinos, concert venues and hotels struggle to fully reopen as the coronavirus continues to spread.

President Donald Trump, who has been highlighting the bright spots in the 2019 economy, is likely to embrace the positive news in the income and poverty report. Trump’s campaign pitch focuses on the idea that his administration “built the strongest economy in the history of the world.” Some figures argue against that statement: Growth rates below historical records and high inequality prevailed before the crisis, and fewer people participated in the labor market than in the late 1990s.

But it is true that a record-long expansion and strong labor market were helping workers to make meaningful gains before the pandemic.

Median incomes for white, Black, Asian and Hispanic households all increased in 2019, adjusting for inflation, the census report released Tuesday showed.

Even as incomes rose, census officials said that the measure of income inequality was statistically unchanged last year. That suggests that despite higher levels of employment and pay, different policy measures would need to be used to narrow the gap between the rich and poor.

The 2020 recession is most likely worsening such gaps — between rich and poor, between racial groups, and in terms of both economic and health outcomes.

“The populations who are hit the hardest by the coronavirus are also those with the least stable access” to insurance coverage, said Katherine Baicker, the dean of the Harris School of Public Policy at the University of Chicago.

Minority and disadvantaged groups are often more likely to have underlying health conditions, and are also more likely to work in jobs that cannot be performed from the safety of their homes — meaning that many were either laid off or left exposed on the front lines.

“All of those things are lining up to tragically exacerbate disparities,” she said.