Whose economy are you talking about? Economist Predicts Poverty Rate Increase

From [HERE] Jared Bernstein, who is a senior fellow at the Center on Budget and Policy Priorities in Washington and a former chief economist to Vice President Joseph R. Biden Jr., predicts that the poverty rate has increased. He wrote the following: 

On Tuesday, the Census Bureau will tell us whether the share of population that’s officially in poverty went up, down or stayed the same in 2013. There’s tons of other data in the release, like the change in the real income for the median household and information on health insurance coverage.

Because the data is a year old, financial markets ignore it. But political markets pay a lot of attention, as do policy analysts and advocates who work on poverty and middle-class economics. And, of course, these being the early days of the Affordable Care Act, the health coverage data will doubtless also get a close look. My own interest is that of the policy wonk who focuses on the nexus between the overall, or macro, economy and living standards of middle- and low-income families.

It’s an important set of numbers. Although one must always be careful not to read too much into one year’s data, 2013 represents the fourth full year of an economic recovery that officially began in the second half of 2009. Yet this recovery has been uniquely unforthcoming for the poor, the unemployed and even many people in the middle class.

Poverty, as officially measured, has held steady at about 15 percent of the population since 2010, and unfortunately, I expect it to do so again this year. I expect the real median household income to do a little better, up by maybe 1 percent.

Why, if I’m right, should the poor and middle class have gained so little by Year 4 of the recovery? That relates to the answer I tend to give when someone asks me how the economy is doing: Whose economy are you talking about?

Yes, various indicators improved in 2013. Real G.D.P. was up, but no faster than the year before (a bit above 2 percent); same with payrolls. And while the unemployment rate fell seven-tenths of a percentage point in 2013, from 8.1 percent to 7.4 percent, more than half of that was from people dropping out of the labor force. That’s not exactly a sign of strength. In fact, the share of the working-age population with a job barely budged last year.

The real wages of low-wage workers were generally as torpid in 2013. For example, if we look at the hourly wage of those in the bottom third of the pay scale, it averaged a bit above $10 per hour over both 2012 and 2013. However, a stagnant low wage is actually an improvement, because real low wages fell sharply earlier in the recovery. And the real median hourly wage went up 1 percent last year, providing a slight bump to the middle class.

Government policy didn’t help much in 2013, though the official poverty rate captures only some of the antipoverty spending by federal and state governments. For example, unemployment insurance benefits are counted, but the value of nutritional support or the earned- income tax credit (a wage subsidy for low-wage earners) is not. [MORE]