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Poverty Increases in 2001
Census Bureau reports increase in poverty and income inequality.

The following is from the Center on Budget and Policy Priorities based on a Census Bureau study:

The number of people living in poverty rose by 1.3 million in 2001, to 32.9 million. Median household income the income of the household in the middle of the income spectrum fell by $900 to $42,200. In addition, the share of the national household income going to the top five percent of the population reached an all-time high (these data go back to 1967), while the shares going to the bottom, the next-to-bottom, and the middle fifths of the population fell to all-time lows.

The poor also became poorer. The average amount by which people who were poor and children who were poor fell below the poverty line reached their highest levels on record. These data go back to 1979.

Both the increase in poverty and the reduction in median income primarily reflect the effects of recession. Most analysts expect poverty to increase further - and income to decline more in 2002. Poverty rates generally rise and incomes fall when unemployment increases significantly, and unemployment is much higher in 2002 than it was in 2001. The unemployment rate averaged 4.8 percent in 2001. During the first eight months of 2002, it averaged 5.9 percent, and the Congressional Budget Office forecasts that it will remain at about six percent until the second half of 2003.

Furthermore, the number of unemployed workers who have run out of unemployment benefits before finding work is much larger in 2002 than it was in 2001. More than one million workers exhausted all of their unemployment benefits before finding work during the first eight months of 2002, and this number is expected to top two million by the end of the year. Some states also instituted cuts in programs for low-income households in 2002 as part of effort to close swelling budget deficits.

"The increase in poverty is likely to be larger in 2002 than the increase of 1.3 million people that occurred in 2001," stated Robert Greenstein, executive director of the Center on Budget and Policy Priorities.


For more information go to the Center on Budget and Policy Priorities.


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Date Added: 10/2/2002 Date Revised: 10/2/2002

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