The latest numbers from the Census Bureau show growing poverty and third-world-style income inequality as the middle class disintegrates under the economic pressures of globalization and technological change.
The nation's poverty rate rose in 2010 to 15.1 percent, up from 14.3 percent in 2009. “There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009, the fourth consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published.” The Census Bureau reported. Median household income has declined by $3,800 (in 2010 dollars) since 1999, a drop of 7.1 percent. Among households headed by someone under 65, the decline in median income was even more dramatic, having plummeted to the 1980s levels, a drop of $6,300.
The census report also shows that federal programs for the poor have played a key role in preventing many more Americans from slipping into poverty. According to the Center on Budget and Policy Priorities,
The Census figures show, for example, that unemployment benefits — including federal benefits scheduled to expire at the end of this year and state unemployment benefits that a number of states have recently chosen to pare back — kept 3.2 million people above the poverty line in 2010. In addition, while the official poverty measure does not count SNAP (food stamps) or EITC benefits as income, the Census Bureau reported that if they were counted, SNAP benefits would lift 3.9 million people out of poverty while the EITC would lift 5.4 million people out of poverty.
Poverty may climb even higher if such programs are cut in order to reduce the deficit and balance the budget while the economy remains weak.
Structural Changes Behind Job Losses
These numbers reveal a more serious problem with the economy: jobs have not been there since well before 2007, the beginning of the great recession, a sign that the labor needs of the economy have shrunk.
Scott Winship, a fellow at the Brookings Institution, wrote: “We have had a slack labor market for a decade.” (In the graph below, the blue line starting at point A approximates the job openings and new jobs created; it has been comparatively low and flat in the last ten years). The 2007 recession “just dumped a lot more people into an already weak labor market.” The result was levels of unemployment unprecedented in the lifetime of anyone alive today. “Competition for jobs among the unemployed remains greater than any time before the financial crisis, stretching back to the Great Depression.”