Monday, October 6, 2008

Poverty in America

August 29th, 2008 by Dr. Amy K. Glasmeier

The annual release of federal statistics on poverty rates and the number of Americans without medical insurance occurs like clock work. Today’s release of the 2007 statistics highlights two short term developments: the poverty rate is essentially unchanged and the number of individuals without health care has modestly declined. At this particular moment, timing is everything. These statistics do not capture the last 12 months of economic turmoil felt by millions of Americans. The decline in the housing market and the rise in the price of oil are impacting America’s low wealth families in powerful ways. Statistics from the Center for American Progress, portend a dark near term future for America’s families:

Foreclosures are up: 1.2 million Number of foreclosure filings in 2006. This number is up 42 percent from 2005.

The percentage change in foreclosures is up: 700 Percentage increase in foreclosures from 2005 to 2006.

Sub prime loans are a large percentage of outstanding mortgages: 13: Percentage of outstanding mortgages accounted for by subprime loans.

Predatory loan practices impact as a large number of home owners of low and middle income.

20: Percentage of borrowers surveyed who face foreclosure due to predatory loan terms and multiple refinances.

All but ten metropolitan areas in the country experienced price decreases on recently sold homes.

While the housing crisis is looming in the background, the rapid rise in the price of oil is having an immediate impact on the budget of families regardless of income. From 2006-June of 2008, the proportion of American family disposable income spent on transportation-related fuel increased from two to four percent of income. In early March of this year, Senator Christopher Dodd held hearings on the impact of rising fuel prices on American families. Out of this discussion the following statistics emerge:

The U.S. Energy Information Agency estimates that this year, it will cost $1,962 to heat a home with oil, a 33% increase from last year and 117% increase since 2004. The cost of heating a home with natural gas has gone up 30% since 2004. The cost of heating with propane, which heats homes in many rural areas across the nation, has increased 23% in the last year and 73% since 2004.

Perhaps the biggest disconnect between the recently released statistics on poverty and current economic conditions is the recent rise in unemployment and the stagnation in family incomes.

Over the years of 2000-2006, median family income did not change appreciably. In 2006, median family income was two percent below 2000. During the same period, earnings for men declined 3 percent while women experienced a 2.3 percent decline in their incomes. According to the Center for American Progress, even with the reported increase of 1.7 percent in median household income from 2006 to 2007, incomes are still .6 percent below the level of 2000.

Underlying all of these statistics is the continuing pattern of uneven distribution in income, its distribution among our citizens, and the resulting lived experience of our children and the economically vulnerable of our nation. We are still a nation where large differences exist between members in our society and among geographic areas, both at a regional and a rural urban scale.

A few key statistics highlight this continuing differences. In non-metro areas, Real Median Household Income remains 25 percent below that of families in metro areas. Poverty rates for children rose over the last two years from 17.8 to 18 percent. Finally, ten states saw an increase in the number of citizens without insurance coverage. Most of these states are found in the South and many are rural in character.

Read it all here.

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