U.S. Poverty Rate Falls for First Time in 7 Years

Food Stamps Income Inequality
Tamir Kalifa/AP
By Jason Lange and Susan Heavey

WASHINGTON -- The share of Americans living in poverty fell last year for the first time since 2006, a sign an improving economy was finally trickling down to the country's least fortunate households.

Still, the figures from the Census Bureau on Tuesday also showed the average person's income was essentially flat in 2013 when taking into account inflation, and 8 percent lower than in 2007 when the nation fell into recession.

The report offered a mixed bag for President Barack Obama and his Democratic Party ahead of November's congressional elections.

On the one hand, median household income, one of the broadest measures of economic well-being for the average voter, has declined since Obama took office and only edged up $180 last year to $51,939, which the report deemed a statistically insignificant increase.

But the poverty rate did post a meaningful decline, dropping a half percentage point to 14.5 percent. The decrease appeared driven by fewer people relying on part-time work, as the survey found an additional 2.8 million Americans were working full-time during the year.

"That seems to be the main thing" behind the decline, said Charles Nelson, an official at the Census Bureau.

A family of two adults and two children is considered to be living in poverty if they earn less than $23,624 a year, according to the Census Bureau.

Despite the drop in poverty, which was concentrated in the Hispanic population, the rate remains more than 2 percentage points higher than it was in 2006.

Private sector economists think the U.S. economy turned a corner last year as the housing sector rebounded and hiring increased, and more full-time work and less poverty plays into Obama's message ahead of the congressional elections.

"There is reason to believe that this progress has continued into 2014," White House economists Jason Furman and Betsey Stevenson said in a blog post.

The annual findings also suggested the percentage of people who did not have health insurance decreased last year.

The Census said one measure of the uninsured rate fell to 14.5 percent, down two-tenths of a percentage point from 2012.

Under a new gauge based on methodology that will be used going forward, 13.4 percent of the country lacked insurance.

Data from other government agencies has pointed to a further decline in the uninsured rate this year as the healthcare reform law pushed by Obama extends coverage to millions of people.

-With additional reporting by Caroline Humer.

6 Financial Issues to Tackle in the Fall
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U.S. Poverty Rate Falls for First Time in 7 Years
For many employers, open enrollment season for some benefits happens in October. This usually sneaks up on some people, who scramble to decipher benefits and make elections last minute. Although you won't be able to see the options until the enrollment period opens, take time now to review your benefits. Are you taking advantage of any 401(k) matches? Are your fully funding your Flexible Spending Account? What about employer offered life and disability insurance? (A fun infographic from the Council for Disability Awareness shows your risks). Maximize your benefits and don't leave any money on the table.
Back-to-school time can be expensive if you're not prepared. Money is spent on clothes, books, supplies and technology -- and that's before the doors to the classroom have even opened. Before hitting the stores, do these two things:
  • Conduct an online search for "coupon code" along with the name of any store you'll be shopping at. Typically you can find some great online deals.
  • Get a list from you class or teacher of specific type of notebook, calculator, etc. required. If you can't get child's "must haves" from ahead of time, buy just the bare minimums until school starts and the list is available.
It's hard to think about the holidays when we're just making it through summer, but now is the time to build up a financial cushion. Set yourself up with an automatic transfer to a separate savings account and participate in the Holiday Fund Money Challenge to build up a savings of $450. How much do you need for the gifts, travel, parties, entertaining, food and other holiday activities you anticipate? Planning will help to ease the stress that comes around the holidays.
In lieu of scrambling at the end of the year to make contributions to retirement accounts by Dec. 31, double-check your contributions now and determine if there's room in your cash flow to allow for an increase to possibly max out by year end.
Summer is a typically a time of transitions. There are weddings, moves to new homes, possibly a new family addition and more. If summer is the time when these events take place, fall should be the time to take stock of how they're panning out. If you're recently married and haven't already, now is the time to have the money talk with your spouse and make decisions about spending plans, merging (or not merging) accounts, beneficiary updates and more. If you've moved, check out how the new location has affected your cost of living spending in terms of activities, gas costs, groceries and more. Ultimately with any transition, you need to review your spending plan and determine what areas (if any) need to be adjusted.
If you're lucky enough to live in one of the states that actually experiences seasons, fall is the time to prep for energy savings by caulking and weatherstripping doors and windows, turning your thermostat back for a fixed period each day and insulating your attic, basement or outside walls.
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