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Rich get Richer

Incomes Fall, Poverty and Uninsured Rise Four Years in Row
by Adam Price |
September 1, 2005
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On Aug. 30 the federal government reported that average household income fell and the poverty rate rose for the fourth year in a row. The same report also showed that the percentage of people who went without health insurance for the entire year increased; their numbers rose to almost 46 million. While, on average, the bottom 80% of the population lost income in 2004, the top 20% of the population increased both their average incomes (to $151,000), as well as their share of income - to more than half, at 50.1%.

While the well-to-do were gaining, more than a million more people joined the ranks of the ‘officially’ poor, as the poverty rate rose to 12.7%. The official poverty rate understates the real level of poverty, since a family of three has to have less than $15,219 to be counted as poor. At the same time, almost a million more people were without health insurance for all of 2004, bringing the uninsured rate to 15.7%.

Oppressed nationality communities (African, Asian and Latino Americans) and indigenous peoples (Native Americans, Alaskan Natives, Native Hawaiians and other Pacific Islanders) had the highest rates of poverty, lack of health insurance and the lowest average incomes. African Americans had the highest rate of poverty at 24.7%, almost three times that of whites, while Latinos had the highest rate of people without health insurance, at 32.7%, also three times the rate of whites. Native American and Alaskan Native households saw the greatest fall in income (3.7%), to $33,000, only slightly higher than African Americans. In 2004 the average household income of African Americans was only 61% of what an average white household earned.

The income gap between men and women who work full-time and year around did fall slightly from 2003 to 2004, but women still only earned 76.5% as much as men. Even what seems to be good news was really bad - this fall in the ‘gender gap’ was not because women’s incomes rose, but because men’s income fell more than women’s income fell. In addition, this measure of inequality understates the actual income differences between men and women, since women are much more likely to work part-time or temporary jobs.

The trend of businesses cutting health care benefits for their workers was behind the rise in uninsured, since there was sharp drop in the number of people who received health insurance from their employers. This was offset in part by a rise in the number of people who received health insurance from the government. In addition to the greater numbers of uninsured, there were also many more under-insured not counted in this report, as people pay higher co-payments and have a harder time finding a doctor who takes Medicaid (the government health insurance for the poor).

What is so unusual about the fall in average income and rise in the numbers of poor and uninsured is that the economy has been growing for the last three years. While working people labor longer, harder and produce more, the rewards from economic growth go to the well-to-do and the rich.