US Poverty Rate Hits 11-Year High as Recession Bites

WASHINGTON - The U.S. poverty rate hit its highest level in 11 years in 2008 as the worst recession since the Great Depression threw millions of Americans out of work, a government report showed on Thursday.

Food aid is unloaded by the Care and Share food bank as local residents await their share in August 2009 in the rural town of Hugo, in eastern Colorado. Nearly 40 million people lived in poverty in the United States last year as the recession forced the first significant rise in the US poverty rate in five years, the US Census Bureau said in a report Thursday. (AFP/Getty Images/File/John Moore)

The Census Bureau said the poverty rate rose to 13.2 percent in 2008, the highest level since 1997, from 12.5 percent in 2007. About 39.8 million Americans were living in poverty, up from 37.3 million in 2007.

The government defines poverty as an annual income of $22,025 for a family of four, $17,163 for a family of three and $14,051 for a family of two.

Real median household income fell 3.6 percent, the biggest annual drop since 1991, to $50,303 in 2008.

"This breaks a string of three years of annual income increases and coincides with the recession that started in December 2007," said David Johnson, head of Housing and Household Economic Statistics Division.

The longest and deepest recession in 70 years has been marked by rising unemployment as companies aggressively cut payrolls to cope with slumping demand.

As of August, the unemployment rate was at 9.7 percent, the highest in 26 years, and almost 7 million people had lost their jobs since the start of the recession.

Analysts said the poverty and income figures underscored the depth of the strain on households.

"This recession is whacking almost everyone," said Ron Haskins, a senior fellow at the Brookings Institution in Washington.

The Census Bureau also said 46.3 million Americans were without health insurance last year compared to 45.7 million in 2007. The numbers could feature in arguments over President Barack Obama's plans to overhaul the U.S. healthcare system and dramatically expand medical insurance coverage.

The family poverty rate rose to 10.3 percent last year and 8.1 million families were in poverty, the Bureau said. This compares to 9.8 percent and 7.6 million respectively in 2007.

Poverty was higher among blacks and Hispanics, the report showed. About 14.1 million children under the age of 18 lived in poverty last year, up from 13.3 million in 2007.

"We project that with the continuing deterioration in the labor market, by 2009 a quarter of all children in this country will be living in poverty," said Heidi Shierholz, a labor market economist at the Economic Policy Institute in Washington.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

© 2009 Reuters