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Poverty Rate Lowest Since Before Recession, But Income Isn’t Growing

Poverty Rate Lowest Since Before Recession, But Income Isn’t Growing
Stateline Sept10
A man panhandles in the manufacturing town of Lawrence, Massachusetts. New data from the U.S. Census Bureau shows poverty fell to its lowest level since before the recession, but household incomes haven’t grown.
Spencer Platt/Getty Images

New poverty and income figures give a mixed picture of economic changes in 2018, with poverty dropping to its lowest rate since before the recession for the college-educated, but household income stagnating and eroded by inflation.

Announced Tuesday by the U.S. Census Bureau, the new statistics show median household income at $63,179, not significantly different from 2017 at $62,626. But poverty dipped to 11.8% from 12.3%, dropping below the 2007 rate for the first time.

Despite the stagnation in household income, median earnings grew 3.4% after inflation to $40,247.

“It’s a puzzle, how labor earnings went up and overall household income doesn’t. We’re trying to figure out the puzzle,” said Douglas Holtz-Eakin, an economist and president of the conservative American Action Forum who has written about Republican methods to reduce poverty.

"2018 was the year when economic growth strongly accelerated, and all the measures of labor income are up significantly,” Holtz-Eakin said.

The only growth in poverty was among young people without a college degree, growing 1.4 percentage points to 25.9%. Holtz-Eakin said employment improved for members of that group in 2019, so next year’s figures may improve for them.

The South was the only region where poverty did not drop, increasingly slightly to 13.6% from 13.1%.

The biggest regional drop was in the Northeast, where poverty fell from 11.3% to 10.3%.

Urban areas saw the biggest drop in poverty, from 15.8% to 14.6%; suburban and rural areas saw the smallest effect but still saw small decreases.

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