Marcio Jose Sanchez  /  AP file
Cristian Valencia, left, Juan Alvarado, middle, and Giovanni Medina play in the backyard of a dilapidated house in Woodville, Calif. last June. The nation's poverty rate rose for the third consecutive year in 2003, according to a Census Bureau report released Thursday.
By Martin Wolk Executive business editor
updated 8/26/2004 6:04:01 PM ET 2004-08-26T22:04:01

The nation’s poverty rate rose for a third straight year in 2003 and the ranks of the uninsured swelled, the Census Bureau said Thursday in a report sure to fuel election-season debate over President Bush’s handling of the economy.

Although the economy completed a second full year of expansion in 2003 after a recession that ended in November 2001, median household income just barely kept up with inflation and was statistically unchanged at about $43,300, the bureau said.

The number of people living in poverty rose by 1.3 million to 35.9 million people, or 12.5 percent of the population, up from 12.1 percent in 2002.

The rise was more dramatic for children. There were 12.9 million living in poverty last year, or 17.6 percent of the under-18 population. That was an increase of about 800,000 from 2002, when 16.7 percent of all children were in poverty.

Democratic presidential nominee Sen. John Kerry pounced on the figures, saying the report “confirms the failure of President Bush’s policies for all Americans.”

Based on the census numbers, real income has fallen by about $1,500 per household over the past three years, and the ranks of the uninsured have risen by more than 5 million, Kerry said. “While George Bush tries to convince America’s families that we’re turning the corner, slogans and empty rhetoric can’t hide the real story,” Kerry said in a statement. “Today’s census numbers are more evidence of just how much is at stake.”

The poverty rate has risen from a recent low of 11.3 percent in 2000, meaning an additional 4.3 million people are living in poverty as defined by the government.

The poverty threshold varies depending on age and family size. On average a family of four is considered to be living in poverty if its annual cash income is below $18,810, according to government guidelines. The threshold falls to about $14,680 for a family of three, $12,015 for a couple and $9,393 for an individual.

The results were not completely unexpected given the slow pace of job growth in current recovery. Although the economy has added 1.5 million jobs over the past year, the economy was still shedding jobs as recently as the summer of 2003, and job growth has been slower than previous expansion periods.

Still, Kerry economic adviser Gene Sperling called the report a "triple disappointment," citing the increase in poverty, the growing ranks of the uninsured and the trend of declining real income.

President Bush did not mention the census figures at a campaign rally in Las Cruces, N.M., but administration officials noted that the data did not reflect this year's economic gains.

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Health and Human Services Secretary Tommy Thompson said Bush was focusing on proposals that would reduce the costs of health insurance for businesses, and he blamed Congress for failing to act.

“The big failure is not what is happening in the administration," he said, according to The Associated Press. "Individuals in the Senate have failed to adopt the president’s health care plan."

Poverty Thresholds, 2003The poverty rate, originally defined in the early 1960s to measure success in the War on Poverty, is a politically important figure, although the government’s methodology has been criticized for failing to account for increased living standards. Nicholas Eberstadt, an economist with the conservative American Enterprise Institute, points out that the poverty rate today is nearly identical with the rate in 1970, when a far higher percentage of people were living without such comforts as hot running water, telephones and clothes dryers.

The Census Bureau normally publishes about a dozen alternative poverty measures to account for tax effects and non-cash income such as food stamps. But those figures were not available in time for Thursday's release. The Census Bureau noted that the current poverty rate is below the average 13.8 percent of the 1980s and 1990s.

In another sign of a growing economic problem that is a key issue in the presidential election, the Census Bureau said the number of Americans without health insurance coverage rose to 45 million or 15.6 percent of the population, up 1.4 million from 2002, when 15.2 percent of the population was uninsured.

The increase, which mainly affected working-age adults across income brackets, was caused by a drop in the percentage of people covered by  private, employment-based health insurance. The government Medicare and Medicaid programs expanded to cover an additional 3 million people.

Robert Greenstein, executive director of the Center on Budget and Policy Priorities, said he expects the poverty rate to decline and incomes to rise as the economy continues to expand and add jobs. "But we could see a continued increase in the number of uninsured," he said, citing the rapidly rising cost of private health insurance.

Greenstein said the rising poverty rate largely is a reflection of a weak economy, but he also blamed the "unwise policy choices" of the Bush administration in engineering tax cuts that primarily benefited the wealthy.

"Had we instead focused on smaller, better-targeted tax cuts, … I believe what we would have seen is better job creation and less of an increase in poverty," he said.

The center's analysis of the census figures found that the number of people living in extreme poverty, with incomes of less than half the poverty threshold, jumped by by 1.2 million to 15.3 million people. And the group said the share of national income going to the bottom 20 percent of the population fell to the lowest level since the government began collecting the data in 1967.

The Census Bureau also released an extensive collection of data from the American Community Survey, a comprehensive study that eventually will replace the national survey conducted as part of the decennial census. For now, the bureau is releasing population, demographic and economic information on 116 metropolitan areas, 233 counties and 68 cities, all with populations of 250,000 or more.

Of those areas, Somerset County, N.J., was considered the nation’s richest with median household income of $89,289, while Hidalgo County, Texas, was the poorest at $24,926.

Other nuggets from the survey:

  • Seattle was the best-educated city, with 51.6 percent of adults holding college degrees, and 93.4 percent having at least graduated high school.
  • Residents of New York City had the longest commute at an average 38 minutes each way.
  • In Dade County, Fla., home to Miami, half the population was born outside the United States, compared with 0.8 percent in Westmoreland County, Pa., which ranked last in the category.
  • The most expensive housing is in California, which has 13 of the top 15 counties in the nation by median home value. At the top is San Mateo County, near San Francisco, with a median home value of $664,000.

Even before release of the data, some Democrats claimed the Bush administration was trying to play down bad news by releasing the reports about a month earlier than usual. They normally are released separately in late September — one report on poverty and income, the other on insurance.

Putting out the numbers at the same time and not so close to Election Day “invite charges of spinning the data for political purposes,” said Rep. Carolyn Maloney, D-N.Y.

Census Director Louis Kincannon — a Bush appointee — denied politics played any role in moving up the release date. The move, announced earlier this year, was done to coordinate the numbers with the release of other data.

“There has been no influence or pressure from the (Bush) campaign,” Kincannon said Wednesday.

The Associated Press contributed to this report.

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