For Immediate Release: September 12, 2012

Growing Income Inequality, Continued High Poverty Point to Need for Sustained Support for Workers, Families

(Washington, D.C. ) -- Today's U.S. Census Bureau report, Income, Poverty, and Health Insurance Coverage in the United States: 2011, chronicles the country's struggle to emerge from the Great Recession. In 2011, poverty remained high at 15 percent - with more than 46 million people living below the poverty threshold. While this number alone is unacceptable, income inequality grew, a worrisome sign for families and our economy. The economy is slowly recovering, but families - including millions of working poor - are struggling to meet basic needs like housing, food and child care.  This report is a clear sign that there's tremendous need for government action to promote job growth, modernize jobs, help poor children get off to a solid start, and strengthen the safety net for families in hard times.  The report provides some key insights:

  • Median earnings fell.  Median household income fell 1.5 percent - the second consecutive year household income has fallen -- and median earnings for full-time, year-round workers fell a full 2.5 percent.  This earnings decline is consistent with recent research showing that job growth in the recovery has been mostly in low-wage jobs. 
  • Income inequality rose. Based on the Gini index, income inequality increased 1.6 percent between 2010 and 2011. While overall poverty did not increase, the gap is greater today between those at the very top and everyone else than it was a year ago. More needs to be done to solidify the middle class and -- critically -- to help more families reach the middle class.
  • Out of all age groups, children experience the highest poverty, especially infants and toddlers. The poverty rate for young children under 6 remained nearly unchanged at 24.5 percent. In 2011, there were 5.8 million children under age 6 living in poor families. Of them, 2.8 million children live in what's considered deep poverty-in households living under 50 percent of the federal poverty level.
  • Government makes a positive difference. A glimmer of good news in the report is that health insurance coverage increased, and for the first time in a decade, private coverage increased - most likely due to the Affordable Care Act provisions allowing young adults to stay on their parents' coverage. In addition, Medicaid and the State Children's Health Insurance Program (SCHIP) provide coverage for 45 percent of young children, resulting in many fewer uninsured children today.

The Census report underscores the very real extent of poverty, and CLASP (the Center for Law and Social Policy) knows all too well the impact this has on families and communities. Safety-net programs, such as unemployment insurance, the Supplemental Nutrition Assistance Program (SNAP), and the Earned Income Tax Credit (EITC), can continue to play a critical role in limiting the rise in poverty and hardship. High-quality child care, comprehensive Head Start and Early Head Start services, and home visiting for vulnerable families can all improve the odds for poor children, who are most at risk for a host of negative effects from poverty - including poor performance in school, health deficiencies, and reduced earnings as adults. Unfortunately, some of the provisions that lifted people from poverty are now expiring, while others are under political threat.  It is critical that these programs be protected

  • Policymakers must preserve and expand funding for children who need the support of early care and education, particularly as their families continue to face economic uncertainty. However, in the last decade, only one in six federally eligible children received child care assistance, and even fewer eligible children may receive assistance today.  Fewer than half of eligible preschoolers receive Head Start and fewer than four percent of eligible infants and toddlers receive Early Head Start.
  • To address our income inequality, we need robust job creation strategies, including subsidized employment, that facilitate equitable employment access for all populations.  As the economy recovers, we need to make sure that no groups are left out of the recovery.  In particular, youth employment is at the lowest level in more than 60 years. This extended period of joblessness and idleness during these years that youth should be learning, earning, and developing their work skills and work ethic should be a cause for concern, not just because it fuels the inter-generational cycle of poverty, but because the nation's future economic competitiveness cannot afford the loss of such a substantial proportion of its young talent.
  • Our jobs need to be modernized to match the realities of today in which parents are typically in the workforce and in which the care of elders often falls to adult children.  Workers need earned sick leave for the days when they or their family members are ill, along with the opportunity to earn paid family leave, adequate hours of work and the flexibility to balance work and family obligations. A quarter of U.S. jobs pay less than $22,000, the poverty line for a family of four. The nation won't be able to fully tackle poverty unless policymakers address poor quality jobs.

As our country charts its course back to more broad-based prosperity, we must strengthen the middle class by helping more people reach it, which requires paying real attention to addressing poverty.   

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