September 2010, Week 4


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Thu, 23 Sep 2010 00:04:15 -0400
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Prolonged Economic Downturn Pushes More People Into Poverty

Economic Policy Institute (EPI)

September 21, 2010


In a new indication of the severe impact of the Great
Recession and prolonged unemployment crisis, the U.S. Census
Bureau reported on September 16 that 43.6 million people-or
one in seven Americans-were living in poverty last year. The
picture was even worse for children, one of five of whom
were living in poverty in 2009.

Erosion of income, health insurance "After nearly a decade
of neglect that ended with the most severe recession since
the Great Depression, it is no surprise that poverty hit its
highest rate since 1994," Elise Gould, EPI's director of
Health Policy Research, said in response to the new data.
The Census Bureau showed the overall poverty rate rose to
14.3% in 2009 from 13.2% in 2008, an increase that added 3.7
million people to the ranks of the poor. One-third of those
people were children. Among working-age people, the poverty
rate reached an all-time high of 12.9%.

The official poverty threshold for a family of four in 2009
was an annual income of $21,954. However, the Census report
also showed that a record 6.3% of Americans were living in
"deep poverty" with an income of less than half the poverty
threshold. The Census Bureau also reported that incomes have
fallen since the start of the recession and fewer Americans
have employer-sponsored health insurance. Between 2008 and
2009, real median income declined 0.7% from $50,112 to
$49,777. The real median income of working-age households
fell 1.3% from $56,575 to $55,821. Some 6.6 million fewer
Americans had employer-based health insurance last year than
in 2008.

Despite the gloomy report, there were some pieces of
positive news. Poverty among seniors reached an all-time
low, reflecting the benefits of Social Security to insulate
seniors against severe economic downturns. Likewise, public
health insurance provided coverage to many people who did
not have employer-sponsored coverage. While the total number
of uninsured Americans under age 65 rose from 45.7 million
in 2008 to 50 million in 2009, it would have risen further
had not 4.9 million people obtained public health insurance
under Medicaid and the State Children's Health Insurance
Program (SCHIP).

In a detailed analysis, Gould and Economist Heidi Shierholz
said the new poverty data were "yet another reminder of the
severity of the Great Recession."
Gould's analysis of the new data onhealth insurance, as well
as a taped conference call of EPIeconomists discussing the
data, are also available on http://www.epi.org/

Setting the record straight on public employee salaries

As more and more state and local governments face budget
shortfalls, the salaries of public employees have come under
increased attack. On September 14, EPI published Debunking
the Myth of the Overcompensated Public Employee, a detailed
analysis of the salaries of state and local public
employees. It found that public employees are actually paid
less than their private-sector counterparts, when
controlling for education, experience, and other variables.
The findings are important because some of the popular
proposals for closing budget deficits include freezing pay
and reducing benefits for public employees.

The Washington Post cited the findings in a blog post, which
also noted that debating public employees' salaries was a
"counterproductive conversation" since the government, like
any employer, wanted to hire talented workers and pay them

Retirement USA launches Wake Up, Washington campaign

On September 15, EPI Vice President Ross Eisenbrey spoke at
the launch of Retirement USA's Wake Up, Washington campaign,
designed to urge lawmakers not to cut Social Security, while
at the same time calling attention to problems with the
private retirement system. Retirement USA, a broad coalition
that includes EPI, the AFL-CIO, the National Committee to
Preserve Social Security and Medicare, the Pension Rights
Center and the Service Employees International Union, also
announced a "retirement income deficit" of $6.6 trillion,
which is the gap between what people age 32 to 64 have
accumulated for retirement, and what they need to have
accumulated at that stage in their lives in order to
maintain their standard of living in retirement.

Eisenbrey also outlined the problems with raising the
retirement age in op-eds in USA Today and U.S. News and
World Report, where he stated that raising the retirement
age cuts benefits for all retirees, no matter when they
retire. "The fact of the matter is that benefits are already
less than modest," Eisenbrey wrote in the U.S. News piece.
He stressed that, even with Social Security, 3.5 million
seniors are already living below the poverty threshold.

The Huffington Post also quoted Eisenbrey at the event
describing how "the key sources of income retirees are
relying on are either under attack, in the case of Social
Security, or disappearing, in the case of traditional
pensions." "The early Boomers are better off than the late
Boomers, and God help the poor Gen Xers. Seventy percent of
them are on a track that leads to a fallen standard of
living in retirement," said Eisenbrey.


The Mission of EPI To inform and empower people to seek
solutions that will ensure broadly shared prosperity and

Economic Policy Institute
1333 H Street, NW
Suite 300, East Tower
Washington, D.C. 20005


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