The Census Bureau just reported a large increase in poverty in the United States. Driven by job loss and long-term unemployment, the poverty rate rose from 13.2% to 14.3%, as 3.7 million more Americans found themselves with incomes below the poverty threshold. Individuals aged 55-64 followed the national trend as they shared in job losses.
But, according to a new issue brief from the Center for Retirement Research at Boston College, those 65 and over saw a decline in their poverty rate. This outcome was the result of the timing of two different adjustments to reflect changes in consumer prices – an extraordinarily large cost-of-living adjust-ment (COLA) awarded to Social Security beneficiaries in 2009 and a decline in the index used to adjust the poverty threshold for 2009.
This pattern is likely to be reversed in the future as Social Security beneficiaries receive no COLAs in 2010 and 2011 and the poverty threshold increases.
“One could ask many questions about the measure-ment of poverty and the nature of inflation adjust-ments. But those questions go beyond the point of this brief,” Alicia Munnell, April Wu and Josh Hurwitz, the authors, write in the brief. “The goal here is simply to explain why, in the face of an enormous upsurge in poverty, poverty declined among those 65 and over. The answer is an unusual confluence of events in 2009, which will un-wind in 2010 and 2011, causing poverty rates to rise.”