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Statement from Acting U.S. Commerce Secretary Rebecca Blank on the 2011 Income, Poverty and Health Insurance Coverage Report

Wednesday, September 12, 2012

As we continue to fight back from the worst economic crisis since the Great Depression, the Income, Poverty and Health Insurance Coverage report released today provides further evidence of how critical it is that we implement policies that benefit and create security for struggling families and our middle class—and not just the wealthiest Americans. 

Today’s report shows that while too many American families are still struggling, the nation’s poverty rate fell and the percentage of Americans with health insurance coverage rose in 2011. It is clear that had President Obama not taken swift and aggressive action to grow our economy and create jobs, today’s report would have shown much higher poverty rates, lower incomes, and a greater share of the population without health insurance. 

Though our poverty rate remains unacceptably high, this report shows that the poverty rate ticked down in 2011 after rising for several years in the wake of the Great Recession. Poverty fell for all age groups, including children, elderly, and non-elderly adults. A key reason for this decline was that 2.2 million more people had full-time jobs last year, in part because unemployment fell by 0.9 percentage points from December 2010 to December 2011. Government programs also continued to provide a vital safety net. 

This report also provides information on household income and its distribution. Americans are continuing to recover from the economic crisis, and while average (inflation-adjusted) household income rose last year, median household income fell by 1.5 percent. It is clear that more work remains to rebuild economic security for our middle class, but it is important to note several factors that contributed to the decline in median income. First, inflation increased 3.1 percent in 2011, more than erasing the 1.6 percent increase in nominal median household income. Inflation in 2011 was boosted significantly by spikes in energy prices. Also, median household incomes have been, and will continue to be, pulled down as the baby boom ages into the retirement years. Household incomes among those over 65, most of whom are retired, are 41 percent less than income among those aged 54-64. So as the number of citizens reaching age 65 increases, median household income will, correspondingly, decrease.

The report also demonstrates that income inequality grew last year. For instance, though real median household income fell, income levels rose for those in the top 10 percent of the distribution. The fact that our wealthiest continue to see economic gains while the middle class continues to struggle to recover from the Great Recession underscores the fact we must enact policies that help rebuild our economy not from the top down, but from the middle out. 

The fraction of people with health insurance coverage rose in 2011, and many age, race, ethnic, and income groups had fewer uninsured. The president has taken a number of steps since 2009 that were critical to these higher levels of health insurance coverage, including increasing the Children’s Health Insurance Program (CHIP) and passage of the Affordable Care Act.

The Obama administration has also proposed a host of remedies that would help spur additional economic growth and job creation, but which are still awaiting congressional approval. This includes a jobs bill covering veterans, teachers, first responders, and construction workers who’ll refurbish our infrastructure, and a variety of tax incentives for small businesses and manufacturers. The president has also asked Congress to extend for another year the tax cuts for the 98 percent of Americans making less than $250,000. Without that extension, the typical middle class family of four will see its taxes go up by $2,200 on January 1st—a big blow to 114 million middle class families and a major drag on our entire economy.

Enacting these new measures, while continuing the policies that are already spurring growth, will create more jobs, provide greater economic security for the middle class and give a vital financial lift to struggling families.