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TWO STEPS BACK

The US’s record low poverty in 2019 is too good to be true

Several women mill around a job fair near a bright blue sign that says "Now Hiring". The two women in the foreground wear red dresses and cardigans; the blond woman in the back with a ponytail is wearing black.
REUTERS/Rick Wilking
Covid-19 will erase last year’s economic gains.
  • Karen Ho
By Karen Ho

Global finance and economics reporter

The US Census bureau today reported a slew of economic improvements for Americans in 2019.

Last year’s strong economy led to the lowest poverty rate since 1959—10.5% compared to 11.8% in 2018. Real median household income, meanwhile, grew by 6.8% to $68,700. The increases were even higher for foreign-born households (8.5%), women (7.8%), and Asian workers (10.6%).

But those figures, which are based on a nationwide survey, are likely too good to be true. The agency said Covid 19-related lockdowns across the US, along with a switch to telephone interviews, lowered the survey’s response rate to 73% in March, compared to more than 80% in the same period last year. Taking that into account, two US Census economists estimated real median household income was $66,800, 2.8% lower than the official figure, and that the poverty rate was 11.1% vs. the official 10.5%.

Although income inequality went down slightly, disparities between the rich and the poor remained large. In 2019, the wealthiest Americans still accounted for more than half of aggregate household income—51.9%—and there were 34 million poor people. And although the income gap between white Americans and other groups shrank somewhat, it remained huge. The median income for Black Americans was $45,400 compared to $76,000 for white, non-Hispanic Americans in 2019. Black Americans were also two and a half times more likely to be poor than their white counterparts.

Even as the economy grew, the number of uninsured Americans rose in 2019.

But the biggest damper on the good news from last year is this year’s pandemic, which Census experts acknowledge will erase some of the gains. The poorest Americans will bear the brunt of that, according to Valerie Wilson, an economist at the Economic Policy Institute, a Washington DC-based left-leaning think tank.

“The impact that we’re seeing now from the pandemic and the recession really reflect why recessions have such disparate impact on [Black and Latino] communities because of these underlying inequalities,” she said in a video call with reporters.

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