September 27, 1996

Number of Poor People Diminishes as Household Income Rises, Census Bureau Says

By STEVEN A. HOLMES

WASHINGTON -- Household income rose in 1995 for the first time in six years, the Census Bureau reported on Thursday, as the number of poor people in the United States dropped by more than 1.6 million, reaching historic lows for blacks and the elderly.

The bureau said half the households in the country had incomes of at least $34,074, an increase of 2.7 percent over the previous year. The inflation-adjusted increase of $898 was the first rise in median household income since 1989, the year before the nation's last recession, and it was the largest increase in household earnings since 1986.

At the same time, the percentage of the nation's poor people dropped to 13.8, from 14.5 in 1994. It was the second consecutive year of a decline in the poverty rate.

The report said that 29.3 percent of blacks in the United States lived below the poverty line in 1995. For the first time since 1959, when the Census Bureau started keeping such statistics -- and probably the first time in the nation's history -- the poverty rate for African-Americans dipped below 30 percent.

Also for the first time, the poverty rate for the nation's elderly last year dropped below that of working-age people, making those 65 years of age and older the group with the lowest percentage of poor people.

The Clinton administration seized on the relatively rosy news contained in the report to praise its economic record. "Today it is clear that more and more of our people are sharing in that prosperity," President Clinton said. "We are growing -- and growing together."

Much of the rise in household incomes was in the Midwest, a crucial region in the presidential campaign.

But Bob Dole, Clinton's Republican challenger, seized on some less encouraging news in the report: its finding that while household income has increased, earnings for both male and female full-time workers declined. This indicated that more people are working in a household or that wage earners are working at more than one job.

Dole said the bureau figures did not reflect the economic anxiety of Americans. He maintained that the rise in household incomes stemmed primarily from more people working per household, rather than an increase in individual wages for full-time workers.

John Mueller, an economist and former aide to Jack Kemp, Dole's running mate, said: "President Clinton obviously is going to make the most he can with these figures in comparison with other administrations. But if you compare the number of people who have gotten employment and the number of jobs created, there are four new jobs for every three additional workers employed."

And Nelson Warfield, the Dole campaign spokesman, said, "These cold economic statistics may please Bill Clinton, but they do nothing to comfort a homemaker trying to buy groceries or a wage earner worried about the next paycheck."

The improvements in household income and poverty rates were concentrated in the Midwest, a region that underwent a wrenching economic downturn in the early 1980s as such industries as steel and automobile manufacturing were downsized. Median household income increased by 7.2 percent in the Midwest, but it rose only slightly in the Northeast, the South and the West.

"The industrial Midwest has been particularly helpful in bringing up household incomes," said Labor Secretary Robert Reich. "Unemployment there has been so low that even in the low-wage service sector many people are getting jobs they otherwise would not."

In a reversal of what has been a long-term trend toward greater income inequality, the Census Bureau report said the poor, the working class and the middle class increased their share of the nation's aggregate income, while the percent of total household income earned by the top 20 percent declined slightly, to 48.7 percent from 49.1 percent.

Overall, the three separate reports issued on Thursday by the Census Bureau -- one on incomes, another on poverty and a third on health insurance coverage -- painted a rosy picture of the nation's economic well-being.

Incomes increased across the board, and rose sharply for some groups, including households headed by blacks and women, where they have historically lagged.

But the report also noted a steep decline of 5.1 percent in income for Hispanic households. The drop in Hispanic earnings contrasted sharply with the 2.2 percent rise in incomes for non-Hispanic whites and the 3.6 percent increase in earnings for African-American households.

Indeed, the Census Bureau noted that 1995 marked the first time the Hispanic poverty rate was greater than that for blacks. And with the loss of benefits to legal immigrants who are not yet citizens, some economists expect the Hispanic poverty rate to worsen.

"We just enacted a welfare bill that has very deep cuts in all basic forms of assistance to legal immigrants, not a insignificant number of whom are Hispanics," said Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a liberal research group. "I would think that in the years ahead we will reach all-time highs in Hispanic poverty."

Perhaps the most eye-catching aspect of the reports, however, are the economic journeys they trace for blacks and the elderly.

In 1959, according to the Census Bureau, 35.2 percent of the elderly were poor, the highest percentage of any age group in the country, and about double the rate of working-age people, 18 to 64. Primarily as the result of Social Security and increases in private pensions, the poverty rate among the elderly was 10.5 percent last year, for the first time dropping below that of working-age people.

While the gains were not as dramatic as those for the elderly, blacks have also shown a steady decrease in their poverty rate, to 29.3 percent last year from 55.1 percent in 1959.