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Looking Ahead to Next Week’s Poverty Figures

We won’t know the official poverty figures for 2011 until next Wednesday, but the most current Census data available show that a decline in unemployment insurance (UI) payments and large public-sector layoffs put upward pressure on poverty last year — maybe enough by themselves to raise the poverty rate above its 2010 level.

For the first 11 months of 2011, the average share of people with monthly cash income below the official poverty line rose by about half a percentage point, the data show.  They also show that a decline in UI payments added half a percentage point to the monthly poverty rate, compared to what it otherwise would have been.  UI benefits kept 1.3 million fewer people out of poverty in the first 11 months of 2011 than in the same months of 2010 (see graph).


Falling income from public-sector employment added another 0.2 percentage points to the poverty rate, the data show, as public-sector jobs kept roughly 600,000 fewer people above the poverty line in 2011 than in 2010.  Taken together, income from UI and public-sector jobs kept 25.0 million people above the monthly poverty line in 2011, down from 26.9 million in 2010.

These preliminary estimates will likely differ somewhat from the official figures, which will come from a different Census survey and will be based on annual data.  But the finding that falling UI benefits and public-sector employment pushed poverty rates upward is solid.

That finding is also consistent with Labor Department data showing sizable declines in UI payments and reductions in public-sector payrolls in 2011:

  • Total UI payments fell by 25 percent in 2011, after adjusting for inflation.  This happened because the 2009 Recovery Act’s $25-a-week increase in UI benefits expired in late 2010, large numbers of workers exhausted their long-term UI benefits before finding a job, and the number of new cases entering the UI system fell.
  • The number of government jobs fell by 386,000 (1.7 percent) in 2011, primarily in state and local government.  The number of state and local education jobs fell by 110,000, for example.

Some other leading determinants of poverty showed improvement in 2011; the number of private-sector jobs grew by 1.7 percent, for example, the second-largest increase in more than a decade.  But that may not have been enough to offset the impact of UI declines and public-sector layoffs.