LSNJ Press Releases - Census Data Show No Decrease in Poverty in 2007 Raising Concerns for Plight of Poor in Face of Recession

August 26, 2008 - Census Data Show No Decrease in Poverty in 2007 Raising Concerns for Plight of Poor in Face of Recession

EDISON— “New data reveal that poverty in New Jersey in 2007, as measured by the U.S. Census Bureau’s largest annual survey, remained close to its 2006 rate,” said Serena Rice, managing director of the Legal Services of New Jersey Poverty Research Institute (PRI). According to data from the American Community Survey released today by the U.S. Census Bureau, approximately 730,000 people in New Jersey (8.6%) had incomes below the poverty level in 2007. Also statistically unchanged from last year, child poverty in New Jersey remains much higher than overall poverty, at 11.3 percent. “Although lower than the national rates, the persistence of poverty in one of the wealthiest states in the nation even during a relatively strong economic year is disturbing,” continued Rice. At $67,035 median household income in New Jersey in 2007 was second highest in the nation.

“These data fail to reflect the recent economic downturn in the state because they report respondents’ income in the 12 months before they were surveyed,” noted Anjali Srivastava, PRI research director. “Since the data were all collected in 2007, they show how New Jerseyans were faring at the peak of the most recent economic cycle. In order to place these numbers in context, we need to look at other economic indicators for 2008. Unemployment rates provide one important reference point, since poverty rates tend to move with unemployment rates, and unfortunately these rates have been moving significantly up in the last year – from 4.2 percent in July 2007 to 5.4 percent in July 2008. At the same time,” Srivastava continued, “prices have been going up, so that New Jerseyans in poverty have a harder time covering basic expenses. In the first six months of 2008, the New Jersey area experienced inflation of just over 4 percent, compared to just 2.6 percent for all of 2007. Costs for some basic necessities have been rising even faster, with motor fuel prices up almost 34 percent and utilities up almost 14 percent since June 2007.”

“The high cost of living in New Jersey, even aside from recent inflation, also provides an important caution in interpreting the new poverty data,” according to Rice. “Research on the real cost of living in New Jersey shows that, in order to cover expenses for basic needs such as housing, childcare, health care and food, most family types across the state need between two and three times the federal poverty threshold income. Single parents face the greatest challenge. On average, a single adult with two young children (one preschooler and one school age child) needs 329 percent of the 2007 federal poverty threshold income just to make ends meet. This means that, while the poverty rate dropped somewhat to 26.7 percent for single-mother households – typically the population with the highest poverty rate – this data does not really capture all the families struggling to meet basic needs.”

“Part of the struggle faced by low-income New Jerseyans is the high level of income inequality in our state,” explained PRI senior researcher and policy analyst Allan Lichtenstein. “The standard measure of income inequality, the gini coefficient, increased from .458 to .464 between 2006 and 2007, reflecting a widening of the divide between rich and poor. What is more, the highest income New Jerseyans – those making more than $128,772 a year – were the only income group to see their share of the income pie increase in 2007. Twenty percent of New Jersey’s population had nearly half (49.9%) of the total income in the state – up from 49.3 percent in 2006 – while the poorest twenty percent had only 3.3% of the total income.” Both income and poverty are also unequally distributed across New Jersey’s counties. Poverty rates ranged from 18.5 percent in Cumberland County to 2.6 percent in Somerset. “Median income also shows significant geographic disparities, with a high of over $100,000 in Hunterdon County, compared to a low of less than $48,000 in Cumberland County, which is below the national median of $50,740” explained Lichtenstein.

“The new data also reveal that employment and poverty often coexist,” said Srivastava. “There was at least one adult worker in 57 percent of households in poverty, demonstrating the importance of additional supports for the working poor. Among these vital supports is affordable health care, especially considering that the rate of New Jerseyans without health insurance increased while the national rate dropped.” Fifteen point six percent of New Jerseyans lack health insurance, according to a 2006-07 two-year average estimate with Current Population Data. This figure represents a statistically significant increase of 1.4% over the 2004-05 average.

Melville D. Miller, Jr., Legal Services of New Jersey president, stressed that “New Jersey’s state programs need to respond to the reality experienced by the hundreds of thousands of families and individuals who lack the resources to meet their basic needs. While poverty thresholds are adjusted for inflation every year, New Jersey has not changed welfare grant amounts in twenty-one years. Cash assistance for our poorest neighbors now provide less than one-third of the official poverty level income for a family of three.”

Legal Services of New Jersey, located in Edison, is the coordinating office for the state’s system of Legal Services programs, which provide essential legal aid in civil matters to low-income people in all twenty-one counties in New Jersey. The Poverty Research Institute conducts systemic research on the incidence, effects and other aspects of poverty in the state, and the relationships among poverty, work and public policy—and makes its findings available to the public.