Economic Focus:
The Economy's Hot, But So Is Poverty
Wall Street Journal 1nov00

The New England economy is sizzling, with low unemployment and high job growth. So why did the region's poverty rate rise in 1999 to 9.9% from 9.4% the previous year?

Answers vary. David Ingram, senior economist at West Chester, Pa., economic-research firm Economy.com, says the rise, though slight, may reflect "some of the people who are being left behind" in the New Economy. New England is still transitioning from a defense-industry base to a more high-tech base, Mr. Ingram says.

Marc Ryan, Connecticut's state budget director, says the numbers are simply "skewed." Although "New England is facing a serious issue of the `haves' and the `have-nots,'" Mr. Ryan says, changes in welfare reform make the poverty level hard to measure.

For example, the U.S. Census Bureau counts government cash payments to welfare recipients as income. When welfare reform in the mid-'90s put time limits on cash payments, recipients' income would show a decrease, reflected in New England's increase in poverty levels in 1995 through 1997. Instead of cash, federal and state government began offering other kinds of aid, such as child-care subsidies and health-care services, but those government aids aren't counted as income. "Traditional measures of poverty are not that good any more," Mr. Ryan says.

New England's poverty rate remains well below the national poverty rate, 11.8%, and the region shows a general decline since the rate peaked in 1997 at 10.76%.

But the poverty rate in Massachusetts, the highest in New England, climbed to 11.7% in 1999 from 8.7% in 1998. Mr. Ryan rejects the 1998 number, saying that it "must have been a sampling error."