New Census Estimates Reveal a Reversal of Fortunes for American Families

Today, the United States Census Bureau released updated income, poverty, and health insurance estimates for data collected during calendar year 2018. The new data reveals a reversal in the fortunes of many American families as millions have lost access to health insurance following two years of consistent assault on the Affordable Care Act under the Trump Administration. And while fewer people now live in poverty per the traditional poverty rate, household incomes remain stagnant for all but those in the uppermost income bracket and restrictions on transfer programs have canceled out any additional poverty reduction benefits these programs might offer. 

The poverty rate fell 0.5 percentage points to 11.8% in 2018, the fourth consecutive year of decline and the lowest rate since 2006, the year before the onset of the Great Recession. This year-to-year decline was driven by a significant drop in the rate of White, non-Hispanic people living in poverty. Of the racial and ethnic groups presented by the Census Bureau’s report, only White, non-Hispanic individuals experienced a decline in their poverty rate—Asian, Black, and Hispanic/Latino residents all saw their poverty rates increase. Poverty also declined in every U.S. region other than the South, which saw its poverty rate remain static at 13.6%. 

While the decline in the traditional poverty rate belies an unstable core, the trends in the Supplemental Poverty Measure (SPM) don’t even offer a surface-level reason for celebration. The SPM, which accounts for the effects of policy and government transfer programs like Social Security and Medicaid on the poverty rate, was 13.1% in 2018, relatively unchanged from 2017. The value of the SPM lies in its ability to demonstrate both the efficacy and the inadequacy of government transfer programs and our policymakers’ efforts to mitigate the effects of stagnating household incomes on family financial well-being. Per Census estimates, refundable tax credits like the federal earned income tax credit (EITC) kept 7.9 million people out of poverty in 2018, the bulk of which were children. Even with this positive output, however, the SPM shows that 14.5% of children lived in poverty, a rate 1.4 percentage points higher than the general SPM and 2.7 percentage points higher than the traditional poverty rate. Further, the SPM shows that 8 million people were pushed into poverty as a result of medical expenses, offsetting the macro poverty reduction benefit of the EITC. 

As a result of the machinations of the presidential administration and congressional leadership, 27.5 million people (8.5%) were uninsured in 2018, an increase in 1.9 million people (0.5 percentage points) from 2017. This increase was entirely attributable to declines in Medicaid coverage: Medicaid coverage for the general population declined by 0.7 percentage points, including a 0.6 percentage point decrease among children under the age of 18. Overall, the uninsured rate for children increased in 2018, driven by increases among Hispanic or Latino and White, non-Hispanic, children. With federal and state government restricting access to affordable health insurance, expect to see the SPM increase in coming years as medical expenses push more families into financial ruin. 

While the headlines on poverty offer marginal room for optimism, stagnating incomes and restricted access to health insurance portend disaster for millions of American families. These figures demonstrate above all the powerful effect of policy and innovative programmatic interventions on the lives and outcomes of U.S. residents. Over the past year, Prosperity Now has directly addressed these challenges by fighting for families’ access to refundable tax creditsfree tax-time services and a strong, comprehensive safety net. Moving forward, the work of the organization will continue to center the effects that a person’s health has on their financial outcomes.  Sign up for the new Health and Wealth Network for updates on the policies and programs that can help close the health gaps in your community. Support the Taxpayer Opportunity Network and Prosperity Now’s efforts to strengthen the federal EITC and build a more progressive tax structure throughout the United States. Head to the Prosperity Now Scorecard to find health, income and poverty data for your community and state-level policy to pursue. And stay connected through the Prosperity Now Community as we prepare to release the 2020 state-level Scorecard update early next year. 

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