NC Budget and Tax Center, Poverty and Income Data 2013

Recoveries are increasingly slow to bring down poverty rates

The connection between economic recoveries and declining economic hardship is often assumed and yet it is no longer necessarily the case in reality. While poverty rates have traditionally moved in tandem with economic variables that often signal an economic recovery—job creation, declines in unemployment rates and adequate investments in anti-poverty strategies—the recoveries from the most recent downturns have not reduced poverty quickly and significantly.

Data from the country as a whole analyzed by the Center on Budget and Policy Priorities provides even greater historical context for the national picture showing that poverty rates fell within one to two years from the start of official national economic recoveries in the 1960s and 1970s. In more recent recoveries, it has taken four to five years for the poverty rate to fall. The data released last week showed the first statistically significant decline in the poverty rate for the country four years into the current recovery.

At Prosperity Watch this week, we documented the trends in North Carolina regarding recoveries and poverty rates. In the 2000s, the poverty rate failed to fall despite the official recovery that began in 2001 before the onset of the Great Recession. The recovery that began in 2009 has yet to significantly bring down the state’s poverty rate which last week we learned remained at 17.9 percent.

The disconnect between economic expansions and declining poverty is further evidence of a broken economic model in which the benefits of growth are not broadly shared. It is a clarion call for public policies to bind together once again improved economic performance and greater economic security.

This is the fifth post in a series that takes a detailed look at the 2013 US Census Bureau poverty data released on September 18th. The first post looked at how North Carolina is faring overall. The second post looked at how poverty varies by race, and the third post compared poverty by counties in North Carolina. The fourth post looked at child poverty. Read the entire series here.

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