More Progress in Tackling Poverty, but Meager Gains for the Middle Class
Social Security

More Progress in Tackling Poverty, but Meager Gains for the Middle Class

The Fiscal Times/iStockphoto

The poverty rate fell for the fourth straight year in 2018, dropping to 11.8%, the lowest level since 2001, the Census Bureau reported Tuesday. In all, some 38 million people were living in poverty in the U.S., a decrease of 1.4 million people from 2017. And incomes grew more among poorer households last year.

“Employment is the best way out of poverty,” said Tomas Philipson, acting head of Trump’s Council of Economic Advisers. “President Trump’s critics wrongly assert that government programs and handouts are the only way to lift people out of poverty, but today’s data tells a different story.”

At the same time, government programs did lift millions of people out of poverty in 2018, the new Census data show. The chart below from the liberal Center on Budget and Policy Priorities breaks down the impact of key safety net programs using the government’s Supplemental Poverty Measure (SPM), an alternative measure of poverty that accounts for taxes and non-cash benefits. Under that measure, the poverty rate was 13.1 percent in 2018, little changed from the year before.

The Census report also showed that middle-class incomes reached an all-time high in nominal terms as median household income rose above $63,000 for the first time. The number of full-time year-round workers rose by 2.3 million, and median earnings for full-time year-round workers increased by more than 3% for both men and women, after factoring in inflation.

Still, in inflation-adjusted terms, median income was little changed after three years of growth — a surprising and puzzling stall, suggesting that middle-class households saw little in the way of income gains even as the overall economy was strong, Harry Holzer, a public policy professor at Georgetown University, told the Los Angeles Times. And median income remains roughly the same as it was 20 years ago. “Median household income today is right where it was in 1999. Two decades with no progress for the middle class,” economist Justin Wolfers tweeted.