Improvements in Poverty and Income in 1995 Tempered by Troubling Long-Term Trends

Abstract

Census data on poverty and income show short-term improvements in 1995, but the trends were not as positive over the longer term. Poverty rates remained higher than they were at comparable points in previous economic cycles. The incomes of lower- and middle-income households grew in 1995, but only the wealthiest fifth of the population completely recovered from the recession of the early 1990s. Although poverty rates fell and incomes rose for most groups in 1995, Hispanic households did not share in the overall economic gains. In addition, economic improvements were not shared by all geographic areas—the reduction in poverty was concentrated in suburban areas. The current poverty measure does not show the full impact of government benefit programs on poverty, as it does not take into account the effect of non-cash benefits or taxes. An alternative poverty measure gives a much better picture of the effectiveness of government benefit programs in reducing poverty.