Income for poorest Americans fell faster than previously thought: study

The poorest Americans saw their income decline 7 percent over the past 15 years, while everyone else gained financially, according to a new study.

Real income for low-income Americans fell more than 7 percent between 2004 and 2018, in part because of rising costs for items and services purchased by those Americans, according to the report published by the Groundwork Collaborative and the Center on Poverty and Social Policy (CPSP) at Columbia University.

{mosads}“Given strong evidence that low-income families in America are paying higher prices and living in poverty in higher numbers than official metrics account for, this is a major problem,” said co-authors Christopher Wimer, co-director of CPSP; Sophie Collyer, a policy analyst at the center; and Xavier Jaravel, an assistant professor at the London School of Economics.

The report focused on how rising prices can affect different income groups. The study found higher price increases for products typically purchased by low-income households.

As a result, the authors argue, buying power for the country’s poorest residents has dropped further than the 1 percent suggested by official statistics.

“The issue of income inequality in the U.S. isn’t really a revelation, but our analysis shows that when you factor in inflation inequality, income inequality has grown even more rapidly than we originally thought,” Collyer said Tuesday on a call with reporters.

“[The] results show that our traditional approach to evaluating the widening gap between the top and the bottom might not be capturing the full size of this gap, and that the problem of income inequality might be greater than we originally thought,” she added.

Using their inflation measure, the paper’s authors estimate that 3.2 million more people would fall below the poverty line, bringing the nation’s total to 41.4 million. The U.S. population in 2018 was about 327 million.

“This paper confirms what we’ve been saying, that skyrocketing inequality has undermined the strength of our economy and finds that working families are literally paying the price for government inaction,” said Sapna Mehta, associate director of policy and research at the Groundwork Collaborative.

Democrats have been pushing for government agencies to take a broader look at inequality. Commerce Secretary Wilbur Ross said in October that his department was developing a methodology for compiling inequality data.

Cameron Hill contributed.

Updated at 3:38 p.m.