Income and poverty figures show not everybody did better a year after GOP Tax Scam

Last week, the US Census Bureau told us that despite a supposedly growing economy, household incomes grew very little in 2018.

Following 3 consecutive years of annual increases in the real median income of all households in the United States, the 2018 median income ($63,179) was not statistically different in real terms from the 2017 median of $62,626.

Whoo! A whole $553 in the year after the GOP Tax Scam took effect. Hope you didn’t spend it all in one place!

There was also an interesting age disparity for income growth last year, where householders under age 35 had very good income growth, but people between the ages of 35 and 65 (a much larger group of people with higher incomes) didn’t gain much at all. In fact, people age 55 to 64 lost ground in 2018.

An already-large regional gap in income got larger in 2018, as the Northeast outpaced the rest of the nation for income growth, while incomes in the South stagnated.

These regional differences also played out on the lower end of the income scale. The Census Bureau said poverty declined in the country by 1.4 million people in 2018, and the rate fell from 12.3% to 11.8%, as might be expected in a year stimulated with tax cuts and 2.9% GDP growth. But that was varied throughout the 4 regions of the country, as the Northeast had the largest drop in poverty, while the South didn’t drop at all.

From 2017 to 2018, the South was the only region not to experience a decline in its poverty rate. The 2018 poverty rate for those in the South was 13.6 percent, representing 16.8 million individuals in poverty, with neither estimate statistically different from 2017. The South had the highest poverty rate in 2018 relative to the other three regions. The 2018 poverty rate and number in poverty for the Northeast was 10.3 percent and 5.7 million, down from 11.3 percent and 6.3 million in 2017. The 2018 poverty rate and number in poverty for the Midwest was 10.4 percent and 7.0 million, down from 11.2 percent and 7.6 million in 2017. Comparing 2017 and 2018, poverty rates declined in the West, while the number in poverty did not. The poverty rate for the West in 2018 was 11.2 percent, down from 11.9 percent in 2017 while the number in poverty was 8.7 million.

Also remarkably, the Census Bureau said the poverty rate in large cities was lower in 2018 than in rural America.

Inside metropolitan statistical areas, the poverty rate and the number of people in poverty in 2018 were 11.3 percent and 31.9 million, down from 11.8 percent and 33.1 million in 2017. Among those living outside metropolitan statistical areas, 14.7 percent, or 6.2 million, were in poverty in 2018, with neither estimate statistically different from 2017.

The 2018 poverty rate for those in principal cities was 14.6 percent, with 15.3 million in poverty, a decline from 15.8 percent and 16.4 million in 2017. Among those living inside metropolitan areas, but not in principal cities, the poverty rate in 2018 was 9.4 percent and the number in poverty was 16.6 million. Neither the poverty rate nor the number in poverty within this group were statistically different from the 2017 estimate.

Higher poverty in the sticks than the big cities? I bet you won’t hear Trump or Faux News stations mention that reality.

But another Census report indicated that perhaps there wasn’t a cut in poverty after all – depending on how you define “poverty.” That’s in the Supplemental Poverty Measure, which accounts for a few other variables beyond income and family size.

Income used for estimating the official poverty measure includes cash benefits from the government (e.g., Social Security, unemployment insurance benefits, public assistance benefits, and workers’ compensation benefits), but does not take account of taxes or noncash benefits aimed at improving the economic situation of the poor (often food stamps and related aids). The SPM incorporates all of these elements, adding in cash benefits and noncash transfers, while subtracting necessary expenses such as taxes, medical expenses, and expenses related to work. An important contribution of the SPM is that it allows us to gauge the potential magnitude of the effect of tax credits and transfers in alleviating poverty. We can also examine the effects of nondiscretionary expenses such as work and medical expenses.

And when you take those items into account, the Census Bureau said poverty slightly increased in 2018.

In 2018, the percentage of poor using the SPM was 13.1 percent compared to 13.0 percent in 2017, not a statistically significant change. The poverty rate changed by a statistically significant amount for only two groups in Figure 2, individuals with no high school diploma who experienced a 1.9 percentage point increase in poverty from 2017 to 2018, and individuals with a bachelor’s degree or higher, who experienced a 0.5 percentage point increase in poverty from 2017 to 2018.

So a lot of lower-income people are still struggling quite a bit when you bring up what they have to pay out of pocket and in taxes. This seems especially true in states that have either a high cost of living or a lack of medical care for lower income individuals

As you can see, Wisconsin fares well under the Supplemental Poverty Measure, dropping its poverty rate from 9.5% to 7.9%, with only Iowa (6.8%) and Minnesota (7.3%) having lower rates. And it’d likely be even lower if we had people near the traditional poverty level getting the Feds to pay for 90% of their Medicaid expenses instead of being forced to have their insurance left up to the private sector and/or choose to be uninsured.

I think these figures help to explain why despite Coastal elites claiming the economy was "great" in 2018, it didn't feel that way in much of the country. Despite higher GDP growth, income growth stagnated, and higher everyday expenses made poorer people no better off then they were the year before.