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Poverty Rate Rises To 14.3 Percent In 2009

Poverty

First Posted: 09/16/10 12:04 PM ET Updated: 05/25/11 06:40 PM ET

The poverty rate rose to 14.3 percent during 2009 from 13.2 percent the previous year as household income stayed flat and the number of people without health insurance reached its highest level since such data has been collected, the government announced Thursday.

The first year of Barack Obama's presidency started with 700,000 people losing their jobs each month and sensational reports of formerly middle-class families crowding tent cities across the country. The tent cities, it turned out, were there before the recession started, but the rise in poverty was real: For working age people between 18 and 64, 2009 saw the highest poverty rate -- 12.9 percent -- since 1965.

The overall rate is the highest since 1994. Some poverty watchers had expected the poverty rate to jump as high as 15 percent.

"Today's news is sobering, showing that 2009 was a year with increased poverty and rising numbers of uninsured Americans," said Rebecca Blank, the Commerce Department's undersecretary for economic affairs. "There is one primary reason for the fact that poverty did not rise and median income did not fall as much as the rise in the unemployment rate would suggest: government assistance that moderated the effect of the recession on American families. Among the elderly, poverty actually fell, largely because of increased Social Security payments. Among working adults, expanded receipt of unemployment insurance helped cushion the affects of lost hours and jobs."

Without the stimulus bill, says Blank, the poverty rate would have been 14.5 percent.

In 2009, 43.6 million people lived in poverty, up from 39.8 million in 2008, according to to the Census Bureau's annual Income, Poverty and Health Insurance Coverage report. The poverty threshold for a family of four is an annual household income of $21,954. Household incomes, surprisingly, did not see a statistically significant change last year, but have declined 4.2 percent since the start of the recession.

Government safety net programs prevented more people from falling into poverty. Social Security kept 14 million people afloat, and unemployment insurance did the same for more than two million people, according to the report.

Government health insurance programs like Medicaid and Medicare covered more people than ever before, but the increase was not enough to pick up the slack from the crumbling employment-based and private insurance markets. About 16.7 percent of Americans were uninsured -- 50.7 million people -- in 2009, the highest number of uninsured since the Census started collected the data in 1987.

"The steady erosion of employer-sponsored insurance in the 2000s became a landslide in 2009 when the unemployment rate took its largest one-year jump on record," said Elise Gould, an economist with the progressive Economic Policy Institute, in a statement. "6.6 million fewer Americans had job-based health insurance last year than in 2008. Public insurance and critical provisions in the Recovery Act mitigated the damage, to an extent -- the number of uninsured Americans rose by only about two thirds that amount, or 4.3 million."

In 2008, the poverty rate climbed from 12.5 to 13.2 percent, median household income fell 3.6 percent and the number of uninsured grew from 45.7 to 46.3 million.

On Wednesday, congressional Democrats, facing losses in November because of the dismal economic situation, launched a preemptive strike calling the new poverty numbers "fresh evidence of the human cost of the Bush economic policies."

"Democrats have controlled both chambers of Congress for four years and Obama has been in the White House almost two," countered Doug Heye from the Republican National Committee. "At some point, Democrats need to acknowledge that they are in control because their Bart Simpson-esque 'I didn't do it' claims don't hold water with voters."

Click HERE to download a PDF of the report.

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