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Poverty in America Tops 39 Million, The Most Since 1961 With PM-Poverty-Rate,

October 7, 1994

Poverty in America Tops 39 Million, The Most Since 1961 With PM-Poverty-Rate, PM-Poverty-States

WASHINGTON (AP) _ That old saying really is true: The rich are getting richer and the poor are getting poorer.

″The long-term trend in the U.S. has been toward increasing income inequality,″ Daniel H. Weinberg of the Census Bureau said Thursday, releasing an economic report that showed 39 million Americans in poverty, the most since 1961.

The study disclosed that the richest 20 percent of Americans earn 48.2 percent of all household income, a share that has grown from 42.8 percent over the last 25 years.

During the same quarter-century, the share earned by the poorest 20 percent slipped from 4.2 percent of all household income to 3.6 percent, the study said.

House Budget Committee Chairman Martin Olav Sabo, D-Minn., called for a ″substantial″ increase in the minimum wage ″to address the continuing and shocking inequality of incomes in this country.″

Labor Secretary Robert Reich termed the growing division between rich and poor a ″very important and troubling trend.″

″We have the most unequal distribution of income of any industrialized nation,″ said Reich. ″The long-term solution is to give all Americans the education and skills they need to prosper.″

″The new data indicate that in this decade, as in the 1980s, the gains of economic growth are not being broadly shared and are going mainly to the affluent,″ said Isaac Shapiro of the private Center on Budget and Policy Priorities.

The addition of 1.3 million people to the poverty rolls last year came as an unpleasant surprise to politicians who had expected a growing economy to help improve the lot of the poor.

″Clearly the poverty rate is a long-term problem in the economy that wasn’t created overnight and can’t be fixed overnight,″ said Gene Sperling, President Clinton’s deputy assistant for economic policy.

One Democratic official, speaking on condition of anonymity, termed it ″devastating,″ adding, ″1993 was supposed to be the first year of the recovery, but it doesn’t show.″

Normally, the poverty rate peaks in the year after the end of a recession, then begins to decline, said Weinberg, chief of the Census Bureau’s Housing and Household Economic Statistics Division.

″This recession ended in 1991. One could expect a higher poverty rate in 1992. This (1993 rate) is unusual,″ he said.

David Payne of the Commerce Department’s Office of Economic Conditions added: ″This is a bit unusual in that the unemployment rate kept rising after the recession ended.″ He noted that the beginning and end of recessions are determined by the gross domestic product, not employment rates.

″It appears that some long-term trends, such as declining wages, overrode the positives, such as economic growth,″ explained Shapiro, acting co- director of the Washington public-issues group.

Fulltime workers experienced a significant drop in income last year, a pattern similar to that of the 1980s, when economic progress was not spread evenly through the population, he said.

The median income of U.S. households in 1993 was $31,241, down 1 percent from 1992, Weinberg noted. Median income means half were making more than that amount and half were earning less.

The number of people living in poverty last year - 39.3 million - was the highest since 39.6 million in 1961. That was nearly 22 percent of the nation’s smaller population at the time.

Poverty in 1993 was defined as an income of $14,763 for a family of four.

The growing number of poor pushed the 1993 poverty rate to 15.1 percent of all Americans, a share that officials termed ″not statistically different″ from 1992, when 38.0 million, or 14.8 percent, were poor.

The 1992 poverty rate was previously reported as 14.5 percent. The adjustment to 14.8 percent was made to compensate for people previously undercounted and some problems in collecting the information.

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