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Cencus Bureau Reports Income Rose, Poverty Rate Fell During Past Year

By Barbara Vobejda and Steven Pearlstein
The Washington Post
WASHINGTON

Household income rose for the first time in six years while the proportion of Americans living below the poverty line fell last year, the Census Bureau reported Thursday. Among African Americans and the elderly, poverty rates were the lowest on record.

Median household income rose 2.7 percent last year, to $34,076, after being adjusted for inflation. Over the same period, the poverty rate declined from 14.5 percent to 13.8 percent and the number of poor fell by 1.6 million, the largest decrease in 27 years.

By the government's calculation, the poverty level for a family of four was $15,569.

"The news is remarkably good," said President Clinton, who quickly claimed the numbers as proof of the nation's economic health. "It is clear that we are moving on the right track."

Although the U.S. economy emerged from recession more than four years ago, the benefits from the economic recovery had largely eluded not only the poor but even the average family - with most of the gains concentrated in the upper-income brackets.

But in 1995, the benefits of economic growth were spread widely through the economy - in nearly all occupations, education levels and income categories.

In fact, according to the government's official measures, the gap between rich and poor actually narrowed slightly last year for the first time since 1990. Although the amount was statistically insignificant, it is one with plenty of political saliency at a time when public opinion polls show voters unusually anxious about their living standards and the inequality of incomes.

Last year, the share of national income earned by households in the bottom 60 percent rose by half a percentage point, while the share of national income declined for the richest 40 percent - those with household incomes above $65,124.

And after a decade in which it appeared that the size of the middle class was shrinking, the government found it actually grew slightly - the proportion of households with incomes between $25,000 and $75,000 rose by 1 percent.

At the same time, household income adjusted for inflation still remains below its 1989 pre-recession peak.

Also, despite increases in household and family income, median earnings for full-time, year-round workers did not improve. The figure for men showed no significant change, while median earnings for full-time working women fell $337 to $22,497.

But overall household income improved for two reasons. First, more household members were working more hours. In addition, other kinds of income might have been rising, such things as Social Security, pensions, and interest and dividend income.