Poverty in New York Fails to Decline Despite Four Years of Economic "Growth." New Data Suggests Need to Reinvigorate Efforts to Combat Poverty

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August 29, 2006 - Census Bureau data released today show that although 2005 marked the fourth full year of growth in the national economy since the end of the 2001 recession, poverty in New York did not decline. The Census Bureau reported a statistically insignificant increase in New York State’s Poverty Rate (the percent of New Yorkers living in poverty) from 14.6% in 2003-04 to 14.7% in 2004-05. New York State’s Poverty rate was 13.9% in 2000 before the beginning of the recession.

According to the new Census Bureau data, 2.76 million New Yorkers, including 923,000 children lived in households with incomes below the official poverty thresholds in 2005. The number of New Yorkers in poverty has grown by 96,000 since 2001, the year the economic recovery technically began.

“When it comes to poverty, today’s ‘no improvement’ news is definitely bad news. These disappointing figures are further evidence that the recovery isn’t helping the people who most need it,” noted Frank Mauro, Executive Director of the Fiscal Policy Institute. “With almost 37 million Americans — and 2.76 million New Yorkers — living in poverty, it’s clear that fighting poverty needs to become a higher priority for our elected officials. Unfortunately, as Congress reconvenes next week, they plan to work on legislation that would give more tax cuts to the wealthiest Americans, including a dramatic reduction in the tax paid on multi-million dollar estates.”

According to FPI Senior Economist Trudi Renwick, “Far too many Americans are living in poverty today, and despite the economic recovery, the situation isn’t improving. The new data provides further evidence that the current economic recovery has not been a strong one, particularly for American workers. Wage and salary growth has been slower in the current recovery than in any other comparable recovery period since the end of World War II. While the pace of job growth did pick up in 2005, even the more recent pace compares unfavorably with historical norms.”

The Census Bureau also released data on median income by state. When compared to data on per capita income released by the Bureau of Economic Analysis earlier this year, the trend towards growing income inequality is clear. While New York ranks 5th among the 50 states in terms of per capita income (i.e., all the income divided by all the people), it ranks only 19th among the states in terms of median household income (the income of a household right in the middle of the income distribution). In addition, while New York experienced the 7th greatest rate of increase in per capita income last year, in terms of growth in median household income it ranked 15th but it was not one of the eight states that the Census characterized as having statistically significant increases in median household income.

While New York is a high income state in terms of per capita income (5th among the 50 states and 17% above the national average, it has the 11th highest poverty rate of the 50 states. In fact, New York is the only Northeastern state and the only high income state in the entire nation which is also a high poverty state. This combination of high income and high poverty creates unique fiscal challenges. For example, the federal government’s matching rate for state Medicaid expenditures is based solely on per capita income. The result is that New York has a 50% Federal Medicaid Assistance Percentage (FMAP) – the statutory minimum. New Jersey, for example, is also a high average income state and it also has a 50% FMAP but New Jersey’s poverty rate is virtually half New York’s – 7.4% vs. 14.7%.

Other data released by the Census Bureau today included health insurance data from the Current Population Survey. While the percent of New Yorkers without health insurance went down, this was not because of a significant increase in employer-provided health insurance. Rather, it was due in large part to the continued implementation of efforts to provide publicly-supported health insurance to low income families through state programs such as Family Health Plus.

The Census Bureau also released new data from Amercan Community Survey (ACS) on the poverty rate, the extreme poverty rate (the percent of households with incomes below 50% of the poverty level), and the near poverty rates (the percent of households with incomes below 200% of the poverty level) for 38 counties and 19 cities and towns in New York State. This data showed, for example, that:

- - New York City was home to 54% of the New Yorkers who lived in poverty last year, even though it is home to only 42% of the state’s overall population.

- - New York City’s poverty rate was 19.1% down slightly from 20.3% in 2004 but still higher than the 17.9% poverty rate in 2000, the first year for which ACS poverty estimates for NYC are available.

- - Over half the residents of Syracuse, Rochester and Buffalo had incomes below 200% of the poverty threshold last year. And more than 10% of the residents of those three cities and Albany lived in households classified as extremely poor – with incomes less than half the poverty threshold.

In at least one part of New York State, official attention is being paid to high poverty rates. Earlier this year, New York City Mayor Michael Bloomberg appointed a commission of civic and business leaders to develop ways for the city to reduce its high poverty rate. Appropriately, one of the main areas that the NYC Commission is reportedly focusing on is the growing problem of the “working poor” - households that have a wage earner but not enough income to lift the household above the poverty line. The new Census Bureau data indicate there are 177,000 poor families in New York City with one or more workers.

This New York City commission is scheduled to release its recommendations soon after Labor Day. FPI’s Chief Economist and Deputy Director James Parrott, notes that the City has the potential to reduce the ranks of the working poor in connection with several large economic development projects underway or planned around the city. According to Parrott: “New York City has a golden opportunity to raise wages and reduce poverty by linking the substantial subsidies it is providing for these projects to the creation of jobs paying wages that keep a family above the poverty line. The City is providing hundreds of millions of dollars in infrastructure investments and tax breaks for projects from the Hudson Yards area on Manhattan’s Far West Side, to the Atlantic Yards in Brooklyn, the World Trade Center site in Lower Manhattan, and new stadiums for the Yankees and the Mets in the Bronx and Queens. While the City is making these taxpayer investments to capture more high-end job growth, it should require that workers providing support services to the high-end economy, like janitors and food service workers, be paid sufficiently to afford a decent living in New York City. The last thing the City should be doing is subsidizing poverty-wage jobs.”