Document date: September 16, 2010
Released online: September 16, 2010
The U.S. Census Bureau has announced that the poverty rate jumped to 14.3 percent in 2009, up from 13.2 percent in 2008. This 15-year high still understates the dire straits of many Americans today.
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The U.S. Census Bureau has announced that the poverty rate jumped to 14.3 percent in 2009, up from 13.2 percent in 2008. This 15-year high still understates the dire straits of many Americans today. The current recession began in December 2007, and the unemployment rate doubled (from 5 to 10 percent) between December 2007 and December 2009. The Census poverty estimates are based on family income received during the 2009 calendar year. Since the unemployment rate rose during the year, the 2009 poverty rate understates deprivation at the end of the year.
Historical experience shows that unemployment and poverty rates keep rising after a recession ends. This was more apparent in the recessions of 1990 and 2001 than in those of 1973, 1980, and 1981. So poverty rates are likely to continue to rise in 2010, even though by some measures the economy and the job market are beginning to strengthen.
Even more worrisome, many workers are exhausting their temporary benefits, most prominently those who reach the 26-week limit on regular unemployment benefits, or the 99-week limit on extended unemployment benefits. Between August 2009 and August 2010, the proportion of unemployed persons who had gone more than 26 weeks unemployed jumped from 34 to 43 percent. The median duration of unemployment peaked in June 2010 at 25.5 weeks.
Unfortunately, unemployment benefits do not ensure that unemployed workers will avoid poverty, partly because many low-income workers aren’t eligible for benefits. Also, some better-off workers whose benefits are expiring may compete in lower-wage job markets, further depressing the prospects of the lower-wage unemployed workers. Still, the availability of unemployment insurance did mitigate the impact of the recession somewhat. In 2009, 43.6 million people were in poverty, up from 39.8 million in 2008; if unemployment insurance benefits were not counted in income, an additional 3.3 million people would have been counted as poor.
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