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Child Poverty Rate Doubled in 2022
The Poverty Report
The 'Income and Poverty in the United States' report is released annually and is based on data from the Current Population Survey (CPS) and the American Community Survey (ACS), among other sources. It provides detailed statistics on income, poverty rates, and related demographic characteristics for the population in the United States.
On September 12th, the Census Bureau released the '2022 Income, Poverty, and Health Insurance Coverage in the United States' report. There is a wealth of information in this report that we need to break down. Today, we are delving into the poverty report and sharing our key takeaways.
The real median household income in 2022 was $74,580, marking a 2.3% decrease from the 2021 estimate of $76,330.
The Gini index, a measure of income inequality, decreased by 1.2% between 2021 and 2022 (from 0.494 to 0.488). This represents the first annual decrease in the Gini index since 2007.
Pre-tax income for the top 90th and 50th percentiles declined by 5.5% and 2.3%, respectively, while income at the lowest 10th percentile increased by 1.2%.
Post-tax income for the 90th, 50th, and 10th percentiles dropped by 7%, 8.8%, and 14%, respectively, leading to a 3.2% increase in the Gini index. Post-tax and transfer income inequality increased.
The official poverty rate in 2022 was 11.5%, with 37.9 million people in poverty. Neither the rate nor the number in poverty significantly differed from 2021.
The official poverty rate for Black individuals decreased between 2021 and 2022, reaching its lowest recorded level in 2022.
Supplemental Poverty Measure:
The Supplemental Poverty Measure (SPM) extends the official poverty measure by accounting for several government programs designed to assist low-income families, which are not included in official poverty calculations. The SPM also factors in geographic variations in housing expenses when determining poverty thresholds, along with federal and state taxes, work expenses, and medical expenses.
In 2022, significant changes in federal tax policy, including the expiration of temporary expansions to the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC), as well as the end of pandemic-era stimulus payments, contributed to increases in SPM poverty.
The SPM rate in 2022 was 12.4%, marking a 4.6 percentage point increase from 2021. This represents the first overall increase in the SPM poverty rate since 2010.
The SPM child poverty rate more than doubled, rising from 5.2% in 2021 to 12.4% in 2022.
Social Security continued to be the most important antipoverty program in 2022, lifting 28.9 million people out of SPM poverty. Meanwhile, refundable tax credits moved 6.4 million people out of SPM poverty, a decrease from the 9.6 million people in 2021.
Post tax income and poverty rates have been supported by generous tax policy. Programs like Social Security, Child Tax Credit, and Earned Income Tax Credit help many Americans avoid poverty.