More recession woe: poverty levels soar

From the New York Times today comes the news that, along with unemployment, poverty has risen over the last couple of years as the recession has taken hold. As the graph below shows (copied from the Times website), the percentage of the US population living in poverty in 2008 rose to 13.2 percent—the highest rate since 1997, and one that "portends even larger increases this year, which has registered far higher unemployment than in 2008," according to economists interviewed for the accompanying article.

I have to confess a level of complete ignorance: I had no idea that more than 10 percent of the population were living in poverty even in boom years. And, while the reasons for people living in poverty are manifold (and definitions of poverty in the US differ significantly from, say, a country in the third world), the accompanying chart on median household incomes tells its own story: it clearly shows that, despite the inflation of one of the biggest bubbles in history, median incomes hadn't even recovered to pre-dot.com bust levels before the current recession got underway. And, if the pattern from '99 to '07 is anything to go by, we could easily be in for a few more years of pain—and yet more people slipping below the poverty line—before salaries start creeping north again.

Seen in that light, the years through the middle of this first decade of the century begin to look ever more like an illusion. Not only was wealth being "created" out of nowhere thanks to the housing bubble, the average family in the country was pulling down less than they had been at the end of previous decade. And, at the same time that people were supposedly getting wealthier, they were buying less health insurance (presumably on the grounds that it was unaffordable), and watching the number of their fellow citizens sliding into poverty rise steadily. The miracle, it seems, is that the bubble lasted as long as it did without anyone noticing those counter-signals.

With unemployment currently running more than 50 percent higher than in 2008 (an average of 9 percent this year compared to 5.8 percent last), it's anyone's guess what each of these charts is going to look like next year. One thing is for sure, though: they're going to be much harder to ignore than in recent years.

--Posted by Phil Stott, Vault Staff Writer