US Incomes reach record levels

Wednesday, September 27th 2000, 12:00 am
By: News On 6

WASHINGTON – Bolstered by a strong economic expansion, the median U.S. household income reached a record level in 1999, and the country's poverty rate fell to a 20-year low, the Census Bureau reported Tuesday.

The median household income was $40,816 last year, up 2.7 percent from the year before. It marked the fifth consecutive increase in household income. The median income is the middle point, meaning that half of American households earned more than that amount, the other half less.

At the same time, the poverty rate dropped to 11.8 percent last year from 12.7 percent in 1998, meaning that 2.2 million fewer people were classified as poor.

The census report also showed positive results for Texas, which until recently has struggled to overcome the economic collapse of its real-estate, oil and banking industries more than a decade ago.

The state's 1998-99 median household income, $37,776, finally surpassed the level achieved in 1984-85, before the bust. And the state's poverty rate, 15 percent, is a record low.

But Texas has not gained ground relative to other states. It has the eighth-highest level of residents living in poverty, the same spot it occupied in 1990. And it ranks 31st in household income, one notch higher than in 1990.

President Clinton praised the national figures Tuesday and credited his economic policies for the improvements.

"The rising tide of the economy is lifting all boats," he said. "Every income group is seeing economic growth, with the greatest gains, in percentage terms, being made by the hardest-pressed Americans."

In 1999, he noted, black and Hispanic households recorded their largest income increase.

"Today, the most important thing we can say about our economy is that it works for working families, and its success belongs to all the American people," Mr. Clinton said.

Sen. Phil Gramm, R-Texas, credited the Republican-controlled Congress for pressuring the president to balance the budget and to sign legislation forcing welfare recipients to work. Mr. Gramm also praised Federal Reserve Chairman Alan Greenspan for a stable monetary policy that has led to the longest economic expansion in the nation's history.

"I'm sure Mr. Clinton is tooting his horn," said Mr. Gramm, chairman of the Senate Banking Committee. "But if there had been no Republican Congress, there would be no balanced budget. If Republicans had not rejected the Clinton health-care plan, we would not have the economic expansion that we have.

"If you want to give Clinton a little credit, do it," he added. "But I think you need to give the Congress and you need to give Alan Greenspan a lot more."

The improvements cited in Tuesday's report reflect success stories such as Judy Timmons of Dallas, who decided late last year to find a job and stop depending on government assistance.

The 28-year-old single mother of three had stayed home for seven years taking care of her daughter, who has sickle-cell anemia. Now she works as a front-desk clerk and trainer at the Renaissance Dallas Hotel, owned by Marriott International.

"It does wonders when you have a job," Ms. Timmons said. "Now I don't have to just sit around and wait for the first of the month before I get a check to take care of my bills."

Her story has been cited by WorkSource for Dallas County, which provides welfare-to-work assistance.

One of the report's most significant findings is that the number of poor children nationwide fell to 12.1 million last year, down 1.4 million from 1998. The rate of children in poverty dropped to 16.9 percent, from 22.7 percent in 1993.

Still, a greater percentage of children are poor, compared with all other age groups.

"Until now, we were measuring progress in inches," said Gregory Acs, a senior research associate at the Urban Institute research group in Washington. "This is a big drop. At the same time, there's still work to be done."

The census figures came from a sample survey of about 50,000 U.S. households, conducted each month for the Bureau of Labor Statistics. The data do not come from the 2000 census, which is not complete.

Among the report's highlights:

All racial and ethnic groups experienced increases in real median household income and lower poverty rates. The 1999 income was the highest ever for whites, blacks and Hispanics. Asians and Pacific Islanders matched their previous high.

The poverty rate for people 65 and older hit at an all-time low (9.7 percent).

A single person was considered poor if he or she earned less than $8,501. That amount increased to $10,869 for two people and $17,029 for a family of four.

The bottom 20 percent of wage earners posted the highest percentage increase in household income, 5.2 percent, to $9,940. The top one-fifth of households increased their income by 3.9 percent, to $135,401.

Poverty rates among inner-city residents dropped, from 18.5 percent to 16.4 percent. Poverty rates for people living in the suburbs remained relatively unchanged, at 8.3 percent.

The gap between the salaries of men and women grew. Women earned 72 cents on average last year for every $1 earned by men, down from 74 cents in 1996.

The Texas gains mask problems that have not been solved, experts say. For instance, four of the nation's 10 poorest counties can be found along the state's border with Mexico. And, unlike urban residents, rural Texans have not benefited from the economic and high-tech boom.

"We are still, by most measures, a low-income state," said Bernard Weinstein, director of the Center for Economic Development and Research at the University of North Texas. "That belies a lot of the perceptions of Texas – that we're a high flier, that we're rich."

The Texas economy won't complete its economic recovery until the state's household income catches up to the national median, he said.

In 1982, before the bust, Texas household incomes were 2 percent higher than the U.S. median. Within six years, the state fell to 12 percent below the national median. Texas has cut that gap in half today, but lags about $3,000 behind the national median.

"We've got a long way to go before we get there," Dr. Weinstein said. "That's the benchmark we should be looking at."

The census figures present "both a case of a half-empty and a half-full glass," said Steve Murdock, chief demographer of the Texas State Data Center at Texas A&M University.

"When you look at it in an absolute sense, certainly it's positive, both the reduction in poverty and the increase in income," he said.

"In a relative sense, we've kind of risen with the rest of the country. It still indicates that we have a good deal of work left in terms of addressing socioeconomic issues in Texas."

Advocates for the poor suggest a host of programs that they say would bridge the gap, including an increase in the state minimum wage, improved health-care access and more child-care services for working parents.

"If things are this good now, and we still have this incredible poverty problem, what are things going to be like when the economy starts going south?" asked Chris Pieper, a spokesman for the Center for Public Policy Priorities in Austin.