August 30, 2005
Tuesday

Despite robust economic growth and record corporate profits, the average American household's income held steady at $44,400 for the third straight year in 2004, the government reported Tuesday.

Another 1.1 million Americans fell into poverty last year, bringing the total to 37 million people living below the poverty line, defined as $19,307 for a family of four, the Census Bureau said in its 2004 income and poverty report. The poverty rate was 12.7 percent last year, up from 11.3 percent in 2000 before the beginning of the last recession.

Real median earnings for fulltime year-round workers fell in 2004. Men working full-time saw their earnings decline 2.3 percent, to $40.789, while women's wages fell 1 percent, to $31,223. Reflecting the larger drop in men's earnings, women workers' pay rose to 77 cents for every $1 a man earns, up from 76 cents in 2003.

Charles Nelson - assistant division chief for Census income, poverty and health statistics - said both trends echo previous recessions: The poverty rate rose for four years following the 1991 recession, for instance, while wage falloffs typically reflect laid-off workers and first-time hires finding employment at lower pay as a recovery adds jobs.

Economist Lawrence Michel, head of the Economic Policy Institute, a liberal Washington think tank, noted that average household income last year was $1,700 less than its recent peak in 1999 when inflation is taken into account.

"The main factor explaining this significant ongoing decline in household income appears to be ongoing weakness in the job market," he said. "The real income of the typical household has fallen five years in a row, despite the fact that the last three of those years - 2002, 2003 and 2004 - have been years of economic expansion."

In 2004, the economy grew at a hefty 4.2 percent pace, while after-tax profits represented 7.7 percent of national income, their highest level since 1965, private forecaster Mark Zandi of Economy.com reported. He attributed lackluster hiring and overall lack of interest in expansion to corporate reluctance to part with record profits.

Separately, the Census Bureau said that 45.8 million Americans lacked health insurance in 2004, essentially unchanged since 2003 but up from 39.8 million in 2000. However, the percentage of people with employer-based health insurance coverage fell below 60 percent - to 59.8 percent - for the first time since 1993.

As it did last year, the Census Bureau unveiled the reports a month earlier than usual to bring them out at the same time as the American Community Survey's last trial run. The community survey is a statistical revolution for the Census, providing timely recent information on counties and communities based on interviews with 250,000 households.

The community survey for 2004 covered only households in areas with populations of 250,000 or more, but surveys will cover areas with as few as 65,000 people this year, making it possible for communities to follow road, school and other construction needs year by year along with housing price trends, commuter time and other issues where recent data would help local decision-making.

"With a natural disaster going on right now, consider the last local data we have on New Orleans and other Gulf Coast communities came from the 2000 Census," said Jay Waite, associate director for the Decennial Census. "The American Community Survey will let us know, year by year, how the Katrina recovery is progressing."

Other findings include:

- Those most responsible for the rising poverty rate were working-age people 18 to 64 years old; their poverty rate jumped 0.5 percent to 11.3 percent last year. Poverty among the elderly declined from 10.2 percent in 2003 to 9.8 percent in 2004.

- Children under 18 remained the poorest group, with a 17.8 percent poverty rate that held steady. Ron Haskins of the Brookings Institution, a Washington think tank, said that even as the Census Bureau reported that private health coverage fell, coverage expanded for youngsters in low-income families through Medicaid last year. Yet Congress and the states plan to pare billions from Medicaid this fall.

- Poverty fell from 2003 to 2004 from 11.8 percent to 9.8 percent for Asian-American households, remained unchanged at 21.9 percent for Hispanic families and 24.7 percent for black households, and rose from 8.2 percent to 8.6 percent for white households.

- Black households had the lowest median income last year at $30,134, followed by $34,241 for Hispanics, $48,977 for whites and $57,518 for Asians.

- The richest counties with population of 250,000 or more are Washington and New York suburbs with Fairfax County, Va., topping the list at $88,100 median income, followed by Somerset County, N.J., at $84,900, Morris County, N.J., at $83,600, Montgomery County, Md., at $83,000 and Howard County, Md., at $82, 100. Three of the poorest counties are on the Texas-Mexico border: Hidalgo at $24,800, Cameron at $26,300 and El Paso at $28,900.

- Men earned most last year in management jobs at $77,754, the community survey also found. For women, median earnings were $40,000 or more in management, mining, technical and professional services, utilities and information. In each of 20 categories men earned more than women, with the gap widest in management at 54 cents for women for every $1 a man earns.

Alternate measures of income and poverty that consider food stamps and other transfer payments will be available later this year. Income figures do not include capital gains, bonuses and other lump-sum payments that will be reflected in alternatives, too.

On the Net:

www.census.gov

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