Here are five key things you should know about the 2011 poverty data:
- This is the second time on record that our economy grew, yet low and middle-income families did not share in the gains.
- Social insurance programs keep millions of people out of poverty.
- The poverty data don’t register the importance of tax credits for working families and nutrition assistance programs.
- We need to focus on jobs, jobs, jobs.
- Child poverty today will cripple our long-term economic competitiveness.
This is the second time our economy grew, yet low and middle-income families did not share in the gains
The last economic cycle between the brief recession of 2000-2001 and before the beginning of the Great Recession of 2007-2009 was the first time on record when profits and productivity went up but poverty increased, meaning that struggling families had already been left out of the gains of economic growth before the Great Recession even hit. In fact, through two recessions and two recoveries, the poverty rate continued to climb significantly in 7 out of the past 11 years.
Even though the Great Recession ended three years ago, the gains of this recovery remain unshared. While incomes in the top 5 percent grew, the poverty rate did not budge since last year and middle-class incomes declined. (see Figure 1)
Social insurance programs keep millions out of poverty
The poverty rate is too high, but we cannot forget that it would have been significantly higher without social insurance programs such as Social Security and unemployment insurance. In 2011 Social Security kept 21.4 million people out of poverty, including 14.5 million seniors. Without it the senior poverty rate would have been five times as high. (see Figure 2)
Unemployment insurance played a similar role in helping families whose breadwinner lost a job through no fault of his or her own to keep their heads above water. In 2011 unemployment insurance kept more than 2.3 million people out of poverty, fewer than in 2010 when 3 million people were lifted above the poverty line. Unfortunately, a premature pullback in unemployment insurance likely dampened the powerful antipoverty effects of this program. According to the Center on Budget and Policy Priorities, there was a $36 billion inflation-adjusted decline (approximately 25 percent) in unemployment insurance payments from 2010 to 2011, some of which is due to people finding jobs or timing-off benefits. More than a quarter of the decline, however, resulted from the expiration at the end of 2010 of Federal Additional Compensation, an initiative that was part of the American Recovery and Reinvestment Act of 2009 that provided an additional $25 a week in unemployment benefits.