published Wednesday, September 7th, 2011

Working-age adults make up record share of U.S. poor

By HOPE YEN

Associated Press

WASHINGTON — Working-age America is the new face of poverty.

Counting adults 18-64 who were laid off in the recent recession as well as single twenty-somethings still looking for jobs, the new working-age poor represent nearly 3 out of 5 poor people — a switch from the early 1970s when children made up the main impoverished group.

While much of the shift in poverty is due to demographic changes — Americans are having fewer children than before — the now-weakened economy and limited government safety net for workers are heightening the effect.

Currently, the ranks of the working-age poor are at the highest level since the 1960s when the war on poverty was launched. When new census figures for 2010 are released next week, analysts expect a continued increase in the overall poverty rate due to persistently high unemployment last year.

If that holds true, it will mark the fourth year in a row of increases in the U.S. poverty rate, which now stands at 14.3 percent, or 43.6 million people.

“There is a lot of discussion about what the aging of the baby boom should mean for spending on Social Security and Medicare. But there is not much discussion about how the wages of workers, especially those with no more than a high school degree, are not rising,” said Sheldon Danziger, a University of Michigan public policy professor who specializes in poverty.

Census numbers show that out of 8.8 million families who are currently poor, about 60 percent had at least one person who was working.

“The reality is there are going to be a lot of working poor for the foreseeable future,” Danziger said, citing high unemployment and congressional resistance to raising the minimum wage.

The newest poor include Richard Bowden, 53, of southeast Washington, who has been on food stamps off and on the last few years. A maintenance worker, Bowden says he was unable to save much money before losing his job months ago. He no longer works due to hip and back problems and now gets by on about $1,000 a month in disability and other aid.

“At my work, we hadn’t gotten a raise in two years, even while the prices of food and clothing kept going up, so I had little left over,” Bowden said. “Now, after rent, the utility bill, transportation and other costs, my money is pretty much down to nothing.”

“I pray and hope that things get better, but you just don’t know,” he said.

The poverty figures come at a politically sensitive time for President Barack Obama, after a Labor Department report last Friday showed zero job growth in August. The White House now acknowledges that the unemployment rate, currently at 9.1 percent, will likely average 9 percent through 2012.

Obama is preparing to outline a new plan for creating jobs and stimulating the economy in a prime-time address to Congress on Thursday. The Republican-controlled House has been adamant about requiring spending cuts in return for an increase in the federal debt limit. Suggested cuts have included proposals to raise the eligibility age for future Medicare recipients or to reduce other domestic programs in a way that would disproportionately affect the poor.

According to the latest census data, the share of poor who are ages 18-64 now stands at 56.7 percent, compared to 35.5 percent who are children and 7.9 percent who are 65 and older. The working-age share surpasses a previous high of 55.5 percent first reached in 2004.

Lower-skilled adults ages 18 to 34, in particular, have had the largest jumps in poverty as employers keep or hire older workers for the dwindling jobs available. The declining economic fortunes have caused many unemployed young Americans to double up in housing with parents, friends and loved ones.

In 1966, when the Census Bureau first began tracking the age distribution of the poor, children made up the biggest share of those in poverty, at 43.5 percent. Working-age adults comprised a 38.6 percent share, and Americans 65 and older represented nearly 18 percent.

Douglas Besharov, a University of Maryland public policy professor and former scholar at the conservative American Enterprise Institute, says that expansions of the federal safety net including Social Security retirement and disability payments have been important in reducing poverty.

In 2009, for instance, the Census Bureau estimated that new unemployment benefits — which gave workers up to 99 weeks of payments after a layoff — helped keep 3.3 million people out of poverty. For 2010, Besharov said demographers on average expect an increase in poverty of roughly half a percentage point to nearly 15 percent, depending partly on the impact of unemployment insurance, which did not run out for many people until this year.

The current poverty level was set at $10,956 for one person and $21,954 for a family of four, based on an official government calculation that includes only cash income, before taxes. It excludes capital gains or accumulated wealth, such as home ownership, as well as noncash aid such as food stamps.

Taking noncash aid into account shifts the poverty numbers notably. Next month, the government will release new supplemental poverty numbers for the first time that will factor in food stamps and tax credits — which often benefit out-of-work families with children — but also everyday costs such as commuting that tend to have a bigger impact on working Americans.

Preliminary census estimates released this summer show a decline in child poverty based on the new measure and a jump in the shares of poor who are working age — from 56.7 percent to nearly 60 percent. In all, the child poverty rate decreases from 20.7 percent under the official poverty measure to 17.9 percent, according to estimates. But the senior poverty rate jumps from 8.9 percent to 15.6 percent after including out-of-pocket medical costs, and working-age adults see an increase in poverty from 12.9 percent to 14.9 percent.

Food banks say they see a shift to a new working poor.

“Americans from all walks of life are now finding themselves in need of help for the first time in their lives,” said Vicki Escarra, president of Feeding America, a national network of food banks that is based in Chicago. She noted that demand has increased by 46 percent since the recession began in late 2007, with more than 1 in 3 families who get their assistance having one or more adults working.

“The reality is we all know someone who has lost a job or a crisis that has caused financial concern. In fact, some people who used to be donors to our Feeding America food banks are themselves now turning to us for help,” she said.

Demographers expect next week’s poverty report to show:

—A rise in working families who are low income, to nearly 1 in 3. “Low income” is defined as those making less than 200 percent of the poverty threshold, or about $43,000 for a family of four.

—Larger numbers of people who are uninsured, due to slightly higher rates of unemployment on average in 2010. Most provisions of the new health care law, which in part expands Medicaid to pick up millions more low-income people, don’t take effect until 2014.

—Blacks and Hispanics disproportionately hit, based on their higher rates of unemployment.

—A possible widening of the income gap between rich and poor, at least by some measures, due partly to last year’s stock market rebound while the job market languished.

Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in income inequality, called the outlook for younger adults in the U.S. especially troubling. He pointed to youth discontent in other parts of the world, such as England, where he says high unemployment and widening inequality contributed to recent rioting.

“We risk a new underclass who are not able to support their children, form stable families, buy houses and reach the middle class,” Smeeding said.

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