Income falls and official poverty rate rises in US

Washington — Inflation-adjusted income fell and a key poverty measure rose sharply last year as the US economy continued its rocky emergence from the Covid-19 pandemic, the US Census Bureau reported on Tuesday.

The income and poverty data released by the authority showed how deeply the country’s recent economic outcomes were influenced by the Covid-19 health crisis and the government response to it — with a measure of child poverty more than doubling following the expiry of pandemic-era child tax credits last year, and the worst inflation in 40 years undercutting household spending power.

The child poverty rate, based on a supplemental measure that adjusts for government benefits and household expenses, jumped to 12.4% in 2022 from 5.2% in 2021.

Overall the supplemental poverty rate rose to 12.4% in 2022 from 7.8% in 2021, a change Census officials said was also driven largely by the expiration of pandemic-era programs.

Compared to 2019, before the pandemic, the overall supplemental rate was slightly higher than the 11.8% seen in 2019. The so-called official poverty rate was largely unchanged from 2021 at 11.5%.

Family incomes, meanwhile, largely failed to keep up with a 7.8% jump in consumer prices that was the largest since 1981.

Real median household income fell by 2.3% to $76,330, which Census officials said was about 4.7% below 2019.

The changes in U.S. job patterns during the pandemic did benefit lower-income workers. On a pre-tax basis, the U.S. last year registered a 1.2% decline in income inequality as lower- income workers, including those without a high school degree, registered stronger wage increases than those with higher incomes. It was the first statistically significant drop in income inequality since 2007.

The expiry of pandemic era refundable tax credits offset that, however, with income inequality on an after-tax basis rising more than 3%.

Reuters