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Incomes drop; poverty rates climb

WASHINGTON — U.S. household incomes declined for the third year in a row, and nearly 1.7 million people in the country fell into poverty as the economy recovered sluggishly from the 2001 recession, the U.S. Census Bureau reported Friday.

The poverty rate rose, for the second straight year, to 12.1 percent in 2002, from 11.7 percent the year before. Even so, the poverty rate last year remained below the average for the previous two decades. (Utah's rate rose from 9.1 percent in 2001 to 10.2 percent in 2002).

The poverty increases were concentrated among African Americans, suburban residents and Midwesterners. By the end of last year, 34.6 million Americans lived in poverty. Among those, 12.1 million are children, up from 11.7 million in 2001.

The nation's median household cash income, the level at which half of Americans earn more money and half earn less, fell 1.1 percent to $42,409 in 2002 from $42,900 the year before. Annual median household cash income, which excludes non-cash payments such as food stamps or housing subsidies, peaked in 1999 at $43,915 and has dropped since then 3.4 percent. "The reach of the jobless recovery really jumps out at you in these numbers," said Jared Bernstein, a senior economist at the Economic Policy Institute. "We're looking at another protracted weak recovery where the disconnect between economic growth and household income lasts for years."

Daniel Weinberg, chief of the bureau's housing and household economic statistics division, said the decline in income and rise in poverty perfectly mirror statistics from virtually all previous recessions. He suggested the numbers might have been worse had it not been for President Bush's $1.35 trillion tax cut passed in 2001 and a rise in the value of food stamps and housing subsidies.

The figures come at a time when Bush's approval ratings have hit the lowest levels of his term and Democratic presidential candidates have focused their criticism on his economic stewardship. Even the timing of the data's release raised questions. Census Bureau officials acknowledged that the annual income and poverty reports have never before been released on a Friday, the traditional day when bad news is often released in Washington in hopes its impact will dissipate over the weekend. Democrats charged the change was politically motivated, an assertion that Census Bureau spokesman Larry Neal denied.

Poverty levels rose in many of the states that will be closely contested in next year's presidential election: Arkansas, Florida, Illinois and Michigan. Median household income fell in Michigan, Illinois, Ohio, Missouri and Florida.

The other states with statistically significant increases in their poverty rates were Hawaii, Maine, Mississippi, South Carolina and Utah.

Bush administration officials noted that the economic recovery has picked up significantly in recent months, a trend they say will soon create jobs and eventually reduce poverty. The Commerce Department on Friday raised its estimate of second-quarter economic growth to a 3.3 percent annual rate.

Meanwhile, the earnings gap between men and women reached its narrowest level ever. Women earned 77 cents to a man's dollar in 2002, up a penny from the year before and a nickel from 1999.