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US poverty rates set to rise to highest level since 1960s

Demographers predict latest Census figures will show rise in the official poverty rate as more people across the US have difficulty making ends meet.

Image: Eleanor Crooks/PA Archive/Press Association Images

US POVERTY LEVELS are on track to reach their highest level since the 1960s, erasing decades of progress in tackling poverty.

Census data gathered last year is due to be released in the coming weeks – not long before the US presidential election in November.

The Associated Press surveyed more than a dozen economists, think tanks and academics, both nonpartisan and those with known liberal or conservative leanings, and found a broad consensus: the official poverty rate will rise from 15.1 per cent in 2010, climbing as high as 15.7 per cent for 2011.

Several of the experts interviewed by the AP predicted a more modest gain, but even a 0.1 percentage point increase would put poverty at the highest level since 1965.

Poverty is spreading at record levels across many groups in the US, such as underemployed workers and suburban families.

More discouraged workers are giving up on the job market, leaving them vulnerable as unemployment aid begins to run out. Suburbs are seeing increases in poverty, including in such political battlegrounds as Colorado, Florida and Nevada, where voters are coping with a new norm of living hand to mouth.

“The issues aren’t just with public benefits. We have some deep problems in the economy,” said Peter Edelman, director of the Georgetown Center on Poverty, Inequality and Public Policy.

He pointed to the recent recession but also longer-term changes in the economy such as globalisation, automation, outsourcing, immigration, and less unionisation that have pushed median household income lower. Even after strong economic growth in the 1990s, poverty never fell below a 1973 low of 11.1 per cent. That low point came after President Lyndon Johnson’s war on poverty, launched in 1964, that created Medicaid, Medicare and other social welfare programs.

“I’m reluctant to say that we’ve gone back to where we were in the 1960s. The programs we enacted make a big difference. The problem is that the tidal wave of low-wage jobs is dragging us down and the wage problem is not going to go away anytime soon,” Edelman said.

Stacey Mazer of the National Association of State Budget Officers said states will be watching for poverty increases when figures are released in September as they make decisions about the Medicaid expansion. Most states generally assume poverty levels will hold mostly steady and they will hesitate if the findings show otherwise. “It’s a constant tension in the budget,” she said.

The predictions for 2011 are based on separate AP interviews, supplemented with research on suburban poverty from Alan Berube of the Brookings Institution and an analysis of federal spending by the Congressional Research Service and Elise Gould of the Economic Policy Institute.

The analysts’ estimates suggest that some 47 million people in the U.S., or 1 in 6, were poor last year. An increase of one-tenth of a percentage point to 15.2 per cent would tie the 1983 rate, the highest since 1965. The highest level on record was 22.4 per cent in 1959, when the government began calculating poverty figures.

Poverty is closely tied to joblessness. While the unemployment rate improved from 9.6 per cent in 2010 to 8.9 per cent in 2011, the employment-population ratio remained largely unchanged, meaning many discouraged workers simply stopped looking for work. Food stamp rolls, another indicator of poverty, also grew.

Demographers also said that they expect poverty to remain above the pre-recession level of 12.5 per cent for many more years.

Several predicted that peak poverty levels — 15 per cent to 16 per cent — will last at least until 2014, due to expiring unemployment benefits, a jobless rate persistently above 6 per cent and weak wage growth.

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Associated Press

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