Are You Worse Off Than You Were 10 Years Ago?

The release this morning of income and poverty data from the Census Bureau was not pretty: “There were 43.6 million people in poverty in 2009, up from 39.8 million in 2008—the third consecutive annual increase.” The poverty rate itself in 2009 was 14.3 percent, up from 13.2 percent in 2008. I recognize that this provides zero comfort to actual poor people, but many folks who watch these things closely had expected the rate to go higher. These two economists , for example, had expected a rise of between 1.5 and 3 percentage points. Of course, the chances are good that poverty will rise again in 2010, so they’ll get another shot at this grisly guessing game.


There’s all sorts of criticisms of the poverty rate, mostly about the things it doesn’t measure (plus this oddity : “It accounts for family size in an odd way, so that, for example, the second child in a two parent family raises the thresholds much more than either the first child or the third.”). Starting next year, the government is going to begin issuing a “supplemental” measure that’s supposed to provide a fuller picture of how poverty really affects people. (Some details are in this PDF .) The number that stuck out for me, though, was a much less-contested figure, median household income; at $49,777, it’s down slightly from 2008, which itself was down from 2007. The New York Times got the money quote from Harvard’s Lawrence Katz :

“The decline in incomes in 2008 had been greater than expected and when the two recession years are considered together, the fall since 2007 is 4.2 percent, said Lawrence Katz, an economist at Harvard University . Gains achieved earlier in the decade were wiped out, and median family incomes in 2009 were 5 percent lower than in 1999.

‘This is the first time in memory that an entire decade has produced essentially no economic growth for the typical American household,’ Mr. Katz said.”