U.S. poverty rate declines to lowest level since 1974

WASHINGTON -- The U.S. poverty rate dipped last year to its lowest level in over a quarter-century, driven down by a healthy economy that helped a broad range of workers. Incomes leveled off after years of increase.

Overall, many analysts said the Census Bureau report released Tuesday offered a positive picture of the American economy -- at least before the financial unrest from the terrorist attacks.

The year 2000 could prove to be the high-water mark of the economic expansion that began in the early 1990s, said Tim Smeeding, professor of economics and public policy at Syracuse University.

"The economy continued to do good things in 2000," Smeeding said. Speaking of the poverty rate, he added, "Unfortunately, I'm afraid that what goes down will come back up, particularly after" the terror attacks.

Troubling trends

Several advocacy groups said the report highlighted troubling trends that existed even before the suicide hijackings of Sept. 11. For instance, poverty disparities narrowed -- but still existed -- between whites and minority groups and between men and women.

Nationally, the poverty rate declined from 11.8 percent in 1999 to 11.3 percent in 2000, its lowest point since 11.2 percent in 1974.

Poverty rates also reached record lows in a number of key groups, including children, households headed by a woman living without a husband at home, and African-Americans.

The poverty threshold differs by the size of the household. For instance, in 2000, a family of four lived in poverty if the household earned $17,603 or less a year.

Meanwhile, median household income declined slightly from an inflation-adjusted record high of $42,187 in 1999 to $42,148 last year. Though not considered significant, it was still the first decrease in median income since 1992-93 -- the tail-end of the last recession.

Many economists have predicted a recession given the financial unrest in the aftermath of the terrorist attacks.

Households surveyed

The latest figures come from a survey of 50,000 households taken in March and relate to questions about income and poverty status for 2000. As a result, the survey does not reflect the recent economic turmoil.

Nationwide, 31.1 million Americans lived in poverty, down from 32.3 million, or 11.8 percent of the population in 1999.

"The drop in the poverty rate belongs to a larger story of economic recovery since the last recession," said Daniel Weinberg, chief of the bureau's housing and household economics statistics division.

The record low poverty rate was 11.1 percent, set in 1973.

Welfare reform also played a key role in nosing incomes of many families above the poverty line, said Robert Rector, a senior researcher at the conservative Heritage Foundation.

The landmark 1996 welfare reform legislation must be renewed next year, and the Bush administration has said it is studying how it could be changed.

Since 1994, when welfare rolls peaked, the number of people on government assistance has fallen by 58 percent, much further than anyone had predicted. Every state has seen caseloads drop.

Still, those living in poverty got poorer because of a reduction in benefits, said Robert Greenstein, director of the liberal Center on Budget and Policy Priorities. Greenstein said a Congressional Budget Office study earlier this year showed income disparities widened significantly in the 1990s, in contrast to the Census Bureau report.