Urging our nation's leaders to end hunger
 

7.8% Unemployment – Why We Care at Bread

 

(Source: The Washington Post)

By Kyle Dechant

Last Friday, the U.S. Bureau of Labor Statistics revealed that the national unemployment rate fell below 8 percent for the first time in more than 43 months. To the relief of many policy makers, September’s seasonally adjusted rate came in at 7.8 percent.

 Why We Care at Bread

 

(Sources: U.S. Bureau of Labor Statistics, U.S. Census Bureau)

Poverty in its most basic form is a measurement of income. As such, it’s not surprising to find that as unemployment falls in the United States the rate of poverty also decreases. The graph above charts U.S. unemployment and poverty over the past 31 years and shows how, generally speaking, unemployment and poverty tend to rise and fall together.

An unemployment rate of 7.8 percent is high by any historic measure. However, given that unemployment has been above 8 percent for almost four years and that the unemployment rate has historically been an accurate barometer of longer-term trends in poverty, this drop seems to indicate that poverty may decrease by more in the near future.

 

What’s the Bigger Picture?

The 7.8 percent unemployment rate is more than 50 percent higher than at the start of the Great Recession in December 2007, when unemployment was at 5 percent. Unemployment had been at or below that rate for the 30 previous months leading up to the recession.

While falling below the 8 percent threshold seems to indicate a trend in decreasing poverty, other factors are worth consideration. The data released by the Bureau of Labor Statistics is a monthly estimate, so unless we see a dramatic decrease in unemployment in the final three months of 2012, the yearly national rate will still likely be above 8 percent. Also, as Bread noted last month, the national poverty rate for 2011 was 15 percent (with 46.2 million people, including one in five children, living below the poverty line). So although unemployment has fallen, both unemployment and poverty in the United States remain high. 

What’s on the Horizon?

After the Nov. 6 elections, Congress will enter the lame duck session. Its main priorities will be averting sequestration and deciding whether to extend all or some of the 2001 and 2003 tax cuts (including improvements that were made to the Earned Income Tax Credit and the Child Tax Credit). Bread will also be watching to see if Congress takes up a farm bill (especially given that the 2008 farm bill expired on Sept. 30).

If our country goes over the so-called “fiscal cliff” or if there is further uncertainty in the Euro-zone crisis, the modest job growth gains we’ve made in the past several years could easily be undone.

Meanwhile, a 7.8 percent unemployment rate probably has little immediate impact on the one in five children in the United States who are currently living below the poverty line. Their access to SNAP, WIC, and the level of their parents’ income are more important than that slight drop in the jobless number.

As Congress gears up for a lame duck session focused on reducing the deficit and averting financial crisis, remind them to maintain a circle of protection around programs vital to those experiencing hunger and poverty in the United States and abroad.

Kyle Dechant is a fellow in Bread for the World's government relations department.

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