Poverty rate drops to 12.3 percent

WASHINGTON -- Five years into a national economic recovery, the share of Americans living in poverty finally dropped.

The nation's poverty rate was 12.3 percent in 2006, down from 12.6 percent a year before, the Census Bureau reported Tuesday. Median household income increased slightly, to $48,200.

The numbers provided some good economic news at a time when financial markets have been rattled by a slumping housing market. But they were tempered by an increase in the number of Americans without health insurance, from 44.8 million in 2005 to 47 million last year.

Some advocates said the numbers were evidence of an uneven economy that is leaving many Americans behind.

"Too many Americans find themselves still stuck in the deep hole dug by economic policies favoring the wealthy," said Rep. Charles B. Rangel, D-N.Y., chairman of the House Ways and Means Committee. "Income remains lower than it was six years ago, poverty is higher, and the number of Americans without health insurance continues to grow."

But Douglas Besharov, a resident scholar at the conservative American Enterprise Institute, said there is a lot of good news in the numbers.

"We're looking at a situation where unemployment was down, and it was down for single mothers, who make up a substantial portion of the people in poverty," Besharov said. "We need a good economy. That's not all we need, but we should not complain when it helps lower poverty."

The last significant decline in the poverty rate came in 2000, during the Clinton administration, when it went from 11.9 percent to 11.3 percent.

The poverty rate increased every year for the next four years, peaking at 12.7 percent in 2004. It was 12.6 percent in 2005, but Census officials said that change was statistically insignificant.

The poverty level is the official measure used to decide eligibility for federal health, housing, nutrition and child care benefits. It differs by family size and makeup. For a family of four with two children, for example, the poverty level is $20,444.

The poverty rate -- the percentage of people living below poverty -- helps shape the debate on the health of the nation's economy.

Democrats on Capitol Hill said the insurance numbers justify spending more money for a popular government health insurance program for children.

Both chambers of Congress recently passed bills that would dramatically increase funding for the Children's Health Insurance Program, known as SCHIP. The Bush administration, however, opposes both measures saying they would result in people abandoning private coverage for public coverage for children.

The share of Americans without health insurance hit 15.8 percent last year, the highest percentage since 1998. In 2005, 15.3 percent were without insurance.

The annual increase was fueled mainly by a decline in the share of workers covered by employer-provided health insurance, said David Johnson, chief of the Census Bureau's Housing and Household Economic Statistics Division.

Two Democrats running for president said the insurance numbers point to weaknesses in the nation's health care system.

"These statistics show what most Americans know: tens of millions of our fellow citizens are completely left out of the economic progress enjoyed by the individuals and corporations on the very top," said Democrat John Edwards, who has made eradicating poverty a centerpiece of his campaign. "We need truly universal health care and a national effort to eliminate poverty."

Sen. Hillary Rodham Clinton noted that there were a lot fewer people without health insurance when she first addressed the issue as first lady. In 1993, there were 39.7 million Americans without health insurance, according to the Census Bureau.

"It is an even deeper outrage today," she said.

The Census Bureau on Tuesday released 2006 income and poverty figures for all the states and every city and county with a population of 65,000 or more.

Among the findings:

• Maryland led the country with a median household income of $65,144. It was followed by New Jersey, Connecticut, Hawaii and Massachusetts.
• Mississippi had the lowest median income, at $34,473. It was followed by West Virginia, Arkansas, Oklahoma and Alabama.
• Mississippi had the highest poverty rate, at 21.1 percent. It was followed by Louisiana, New Mexico, Arkansas and West Virginia.
• Maryland had the lowest poverty rate, at 7.8 percent. It was followed by New Hampshire, Connecticut, New Jersey and Hawaii.