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First Impressions of the 2012 Poverty, Income, and Health Insurance Data

The good news from today's 2012 income and poverty results is that for the first year since the great recession hit, things aren't getting worse. The bad news is that three years into an economic recovery, they're not getting better either.
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[The following are some initial impressions from the income, poverty, and health insurance data released by the Census Bureau this morning. NOTE: these data refer to 2012, so yearly differences, unless otherwise noted, are between 2011 and 2012. Also, visit for CBPP's updates and analyses.]

The poverty rate held steady at 15 percent, the same rate as 2011; the real median household income was also unchanged, at about $51,000.

Thus, the good news from today's 2012 income and poverty results is that for the first year since the great recession hit, things aren't getting worse. The bad news is that three years into an economic recovery, they're not getting better either. Yes, the economy has expanded over these past few years, but to use a seasonal analogy, today's report is yet another piece of evidence that this growth has once again done an end run around middle and lower income households on its way to the top of the scale.

Inequality and Its Impact on Poverty and Income: GDP grew almost 3 percent last year, yet today's report shows that the economic recovery has yet to lift the living standards of middle and low income families. Certainly, arresting the drop in middle-incomes and the rise in poverty that had been the pattern since the downturn took hold in 2008 is a plus and the first step to reversing those unfavorable trends.

But the lack of income gains in the middle and bottom of the scale amidst an economic expansion that's three years old is an important and notable finding from the report. Surely, many American households can reasonably ask, "what recovery?"

Of course, the growth that's occurred since the expansion began in 2009 had to go somewhere, and other datasources clearly reveal that destination: the top of income scale. Including gains from the sale of capital assets, a main source of income for the wealthy and a prime driver of inequality, the top 10 percent of households now holds over half of the nation's income, their highest share on record dating back to the early 1900s.

Though the Census income data do not capture the effects of capital income, they too show that inequality is tied with 2011 for an all-time high in their data series. The share of income held by the top 5 percent -- 22.3 percent -- is the same as 2011, and the highest on record going back to the mid-1960s when this series begins. Note that this share is up one percentage point from 2007 -- the last cyclical peak (in 2001 the share was 22.4 percent but this is statistically indistinguishable from last year's high).

Note also that these gains in income share at the top have come at the expense of the bottom 80 percent, all of whom have lost ground by this measure.

Simply put, inequality is working like a wedge in our economy, diverting growth from middle and lower-income families such that the growth that has occurred has been insufficient to improve their conditions.

Some positive findings from today' report:

-- As noted, the fact that middle-income were flat in real terms and poverty did not go up is a positive development relative to the past five years. Still, "things aren't getting worse" is not a huge selling point, particularly given the outsized gains at the top of the income and wealth scales.

-- One positive finding from today's report is how effective safety net programs have been in offsetting some of the economic damage to lower income households. Though the value of SNAP (formerly Food Stamps) is not counted in the official poverty rate--a notable shortcoming of that measure--the Census reported that the market value of SNAP benefits lifted 4 million people, including 1.7 million children above the poverty line last year.

-- Unemployment Insurance (which is counted in the official rate) lifted 1.7 million people out of poverty (though that's down from 2011-2.3 million-and 2010-3.2 million).

-- The Earned Income Tax Credit, a valuable, pro-work wage subsidy to low-income working families (also not counted in the official rate) lifted 5.5 million out of poverty, including 2.9 million children of working parents.

-- Health coverage continues to expand for some groups, particularly children. The share of total uninsured fell last year from 15.7 percent in 2011 to 15.4 percent in 2012. For kids, the uninsured share went down from 9.4 to 8.9 percent, an historic low.

The SNAP finding is especially noteworthy given current efforts in the House to severely cut the program. Today's data show that were such deep cuts in place last year, millions of economically vulnerable families would have suffered deeper poverty.

This post originally appeared at Jared Bernstein's On The Economy blog.

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