September 20, 2018 under Policy, Advocacy & Research
The U.S. poverty rate fell from 12.7% to 12.3%, and U.S. household incomes increased, according to data released by the Census Bureau. While incomes and poverty rates have improved for three consecutive years — a testament to the strong economic growth of the last several years — income growth slowed in comparison to the last two years, and the number of Americans in poverty (nearly 40 million) remains unchanged.
In New York City, economic growth and recent changes to public policies — such as an increased minimum wage and universal pre-k — have led to reductions in poverty. However, median household income didn’t budge, and the improvements that did occur were not evenly distributed by borough or race, worsening existing disparities.
Poverty in the City declined to pre-recession levels, falling from 18.9% in 2016 to 18% in 2017. Child poverty fell from 26.6% in 2016 to 25.2% in 2017 (a rate that returned to pre-recession levels in 2016).
Any reduction in poverty is good news, but as one of the wealthiest cities on the planet, there’s little excuse for the fact that a quarter of the City’s children are impoverished.
Beyond the Official Definition of Poverty – Basic Living Standards
Created more than a half-century ago, the Federal Poverty Level (FPL), which sets a threshold for poverty for a single adult at a paltry $12,140 a year, is an inadequate measure of well-being. Instead, in a high-cost city such as New York, three times the federal poverty level (300% FPL or $36,420 annually) is a more realistic and quantifiably accurate threshold for measuring basic living standards. Such standards would provide for safe and secure housing, a quality education from cradle to college, access to nutritious food, and quality healthcare.
Applying this more sensible yardstick, the data reveal that the share of individuals living above 300% FPL increased for the fourth straight year. Nevertheless, nearly half of New York City residents cannot afford a basic standard of living.
Median Household Income
The low (1.3%) growth in real household income — from $60,122 in 2016 to $60,879 in 2017 — indicates that earnings have stagnated. Similar to the national slowdown, last year’s growth is less impressive than the 5% and 4.2% growth of 2015 and 2016, respectively.
Like poverty, the gains were lopsided by borough and race. Across boroughs, only Queens experienced meaningful income growth. Viewed together, across boroughs and race, the disparities are especially stark. For example, Whites in Manhattan ($126,173) earn nearly quadruple that of Latinx in the Bronx ($32,911). Moreover, Whites, Asians, and Latinx have all returned to pre-recession income levels, while incomes for Blacks ($45,049 in 2017) remain below 2008 levels.
A recent report using IRS data found that New York State was among five U.S. states where the top one percent captured a larger share of income than they did in 1928 at the height of the Gilded Age. New York State also has the dubious distinction of having the largest gap among all states — in 2015 the top 1 percent earned 44 times the income of the bottom 99 percent on average. As the report notes, “this reflects in part the relative concentration of the financial sector in the greater New York City metropolitan area”, where the top one percent earned 39.4 times more than the bottom 99 percent. Similarly, inequality, as reported by the Census Bureau’s “Gini Index”, did not budge in both the U.S. and New York City. Across boroughs, the Bronx saw a slight increase and Queens saw a slight decrease in income inequality.
Federal anti-poverty programs, as the new data also reveal, lifted millions of children and families out of poverty, including refundable tax credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit, SNAP (food stamps), and rental subsidies. While the City shares the burden to ensure all boats rise with a growing economy, these and other critical programs have been and continue to be threatened at the federal level with cuts and policies that would undermine their reach and effectiveness. That is why in the coming months, we at FPWA will introduce a tool to provide accessible, interactive, up-to-date, and actionable information on the impact of federal budget proposals on New York City’s human-services budget. This tool will support advocates and human-services providers stave off dangerous proposals to cut the social safety net and help enable support for future proposals aimed at strengthening these critical programs.