Census: Income fell sharply last year

Updated 35m ago
By Dennis Cauchon and Richard Wolf, USA TODAY

WASHINGTON — Household income fell sharply and poverty rates rose in 2008 as the severe effects of the recession took their toll on Americans' finances, the Census Bureau reported Thursday.

Median household income dropped 3.6% to $50,303 in 2008, the bureau reported. That was the sharpest drop since at least 1967 and sent income to its lowest point since 1997.

The new Census report paints a mixed picture of how Americans have fared with health insurance coverage during the recession.

The percentage of people without health coverage was unchanged last year at 15.4%, although the number increased to 46.3 million from 45.7 million in 2007. How people got health insurance, however, shifted significantly during the year as the burden fell increasingly on government.

The number of Americans covered by private health insurance declined by 1 million in 2008. But that loss was more than offset by a 4.4 million increase in the number of people getting health insurance from government programs such as Medicare for the elderly and Medicaid for the poor.

Overall, the Census report showed the recession has taken a big bite out of the financial health of American households, softened somewhat by the safety net of government programs. The income and poverty numbers are the first to reflect the effect of the recession, which began in December 2007 and has erased 6.9 million jobs.

Speaking at the White House, Obama acknowledged that the number of those without coverage may be higher than the Census figures.

"We know from more up-to-date surveys that since the recession intensified last September, the situation has grown worse," he said. "It's estimated that the ranks of the uninsured have swelled by nearly 6 million people — that's 17,000 men and women every single day."

As bad as things were in 2008, things will be far worse in the second year of the recession because of much higher unemployment, said Sheldon Danziger of the Population Studies Center at the University of Michigan. He predicts household income will drop 5% or more: "2009 is going to be dreadful."

Key findings of the report:

•Poverty rates jump. The portion of Americans living in poverty rose to 13.2% in 2008 from 12.5% in 2007. That's the highest poverty rate since 1997. Poverty rates closely track declines in income, said David Johnson, chief of the Census Bureau's economic statistics branch.

•Hispanics fare worst. Median household incomes for Hispanics plunged 5.6% to $37,913 in 2008. That was the biggest percentage point decline of any race or ethnic group. Median household incomes fell 2.6% for whites, 2.8% for blacks and 4.4% for Asians.

•Women don't gain ground. Women who worked full-time earned 77% of what men made in 2008, statistically unchanged from a year earlier. However, the median income of women declined 1.9% in 2008, slightly more than the 1% decline in incomes for men working full time.

•Immigrants struggle. Income fell 5.3% for households headed by people born outside the United States, higher than the 3.5% income decline for native-born Americans. Also, 44.7% of non-citizens had no health insurance at any time during 2008, compared with 12.9% of native-born Americans without health coverage.

Much of the initial reaction to the report focused on Obama's attempt to pass health care reform.

"We are at a unique moment when lawmakers have the chance to help millions of Americans better access stable, affordable health insurance," said Risa Lavizzo-Mourey, president and CEO of the the Robert Wood Johnson Foundation, which focuses on health care issues facing the country. "When it comes to reducing the number of uninsured, the consequences of inaction are far too serious for the health of our citizens and the health of our nation."

"Nobody should have to worry about whether they have quality, affordable health insurance if they or a loved one get sick," said a statement issued by Scott P. Serota, president and CEO of Blue Cross and Blue Shield Association. "We should enact bipartisan healthcare reform this year that expands coverage to everyone, reins in costs and improves quality through initiatives to encourage research on what works, revise payment systems to reward the best possible care instead of paying for volume, and focus on healthy lifestyles and wellness to prevent and manage chronic conditions."

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