Cat announces more layoffs, restructuring as sales continue to fall
- Details
- Published on 24 September 2015
- Written by Paul Gordon
Caterpillar Inc.’s dim, yet realistic expectations of the near term, including a projected fourth consecutive year of lower sales, is driving its need to restructure now and cut its workforce by 10,000 in the next few years, the company announced on Thursday.
By the time business cycles turn positive again, the company said, the reduction in annual costs of about $1.5 billion will put it that much further ahead in its plan to see sales and profits begin to rise again.
In the meantime, work on Caterpillar’s new headquarters won’t begin anytime soon, but the company remains committed to Peoria and to Illinois, Chairman Doug Oberhelman said in an opinion piece he wrote in the Peoria Journal Star.
“As individuals and as a company, we will continue to contribute resources to support the health, welfare and sustainability of communities around the world and where we work and live,” Oberhelman said.
Caterpillar rocked the region Thursday morning when it announced restructuring plans that will reduce the workforce by more than 10,000 people by the end of 2018, including nearly half of that before the end of this year. The company hopes much of that will be accomplished through a voluntary retirement program for qualifying employees it will offer through the end of 2015.
Also in the restructuring plan is the contemplated consolidation and/or closing of manufacturing facilities through 2018.
These plans result from the expectation that 2015 sales and revenues will be about $48 billion, or $1 billion lower than previously thought, and the projection that sales and revenues will be down another 5 percent in 2016. That would mark the fourth consecutive year of dropping sales, which the company said has never happened in its 90-year history.
Sales and revenues were $55.2 billion, but continued economic woes throughout the world in countries where Caterpillar does businesses and in industries that are going through down cycles has brought sales down.
Thursday's announcement is in addition to cost reduction actions already taken in the past two-plus years. Since 2013, Caterpillar has closed or announced plans to close or consolidate more than 20 facilities, affecting 8 million square feet of manufacturing space. The company has also reduced its total workforce by more than 31,000 since mid-2012.
Wall Street did not take the news well, particularly with the company announcing that sales were going to be off more than earlier believed.
Caterpillar stock fell $4.40 on Thursday to $65.80 (6.27 percent) as more than 21.5 million shares – more than triple the normal daily volume – were traded. At one point Thursday morning the stock reached a new 52-week low at $64.65.
In its announcement the company outlined its restructuring plans:
- An expected permanent reduction in Caterpillar's salaried and management workforce, including agency, of 4,000 – 5,000 people between now and the end of 2016, with most occurring in 2015, and with a total possible workforce reduction of more than 10,000 people, including the contemplated consolidation and closures of manufacturing facilities occurring through 2018.
- The company will offer a voluntary retirement enhancement program for qualifying employees, which will be completed by the end of 2015.
- Slightly less than half of the $1.5 billion of cost reduction is expected to be from lower Selling, General and Administrative (SG&A) costs. The reduction in SG&A will largely be in place and effective in 2016 and occur across the company.
- The remaining cost reductions are expected to come from lower period manufacturing costs, including savings from additional contemplated facility consolidations and closures, which could impact more than 20 facilities and slightly more than 10 percent of our manufacturing square footage. A portion of these cost reductions are expected to be effective in 2016, with more savings anticipated in 2017 and 2018.
"We are facing a convergence of challenging marketplace conditions in key regions and industry sectors – namely in mining and energy," said Oberhelman in the company’s announcementWhile we've already made substantial adjustments as these market conditions have emerged, we are taking even more decisive actions now. We don't make these decisions lightly, but I'm confident these additional steps will better position Caterpillar to deliver solid results when demand improves.
"Our strategy is to deliver superior total shareholder returns through the business cycle, and growth is a key element of that strategy. However, several of the key industries we serve – including mining, oil and gas, construction and rail – have a long history of substantial cyclicality. While they are the right businesses to be in for the long term, we have to manage through what can be considerable and sometimes prolonged downturns.
"We recognize today's news and actions taken in recent years are difficult for our employees, their families and the communities where we're located. We have a talented and dedicated workforce, and we know this will be hard for them," said Oberhelman.
The company noted how past changes have resulted in many positive effects, including:
- Market share has improved in products across much of the company.
- The company has delivered on decremental profit pull through targets as Lean manufacturing has driven its 2015 gross margin rate higher, and it is right in line with its highest level in 20 years.
- Product quality is as good as it has been in Caterpillar's history.
- Today, Caterpillar safety levels are among the best for heavy manufacturers.
"Operational improvements have contributed to our strong balance sheet and cash flow. In fact, three of our four best years of Machinery, Energy & Transportation (ME&T) operating cash flow have occurred since 2011 – at the same time sales and revenues have been under pressure. That's driven substantial improvement in our quarterly dividend. Our dividend increased 15 percent in 2013, 17 percent in 2014 and 10 percent in 2015. That's enabled $8.2 billion of share repurchases over the past three years," said Oberhelman.
Pre-tax costs associated with these actions are expected to be about $2 billion for employee-related severance and other termination benefits, and other exit-related costs associated with the consolidation of manufacturing facilities. Those costs will affect short-term profits. Caterpillar said it will update its 2015 profit outlook in its third-quarter financial report next month.
Caterpillar did not identify any of its manufacturing facilities that may be targeted for consolidation or closure. “We are contemplating restructuring actions that could impact more than 20 facilities around the world and across our three large segments – Construction Industries, Resource Industries and Energy & Transportation. There are many factors that impact these contemplated decisions and the subsequent timing of when each would be announced and implemented. Employees will be notified as decisions are made for each facility,” the company said.
Despite the fact those industries are struggling now, the company said it believes they will make a comeback as the world economy improves. “With the actions we've taken over the past few years, along with the restructuring announced today (Thursday), we believe Caterpillar will be well positioned to deliver solid results when these industries recover and demand improves,” the company said.
Among the restructuring announced Thursday are changes in Caterpillar’s mining division and its dealer and support divisions.
In the case of the former, the Mining Sales and Support Division will be integrated into the Global Mining division. The move will bringing product, operations, sales and marketing organizations together in both the surface and underground mining applications, which will “enable a more effective cost structure in a challenging mining environment,” the company said.
The underground mining sales and support teams will join the Material Handling and Underground Division, led by Caterpillar Vice President Denise Johnson. The surface mining sales and support teams will join the Hauling & Extraction Division, which will be renamed the Surface Mining & Technology Division, led by Caterpillar Vice President Tom Bluth.
Also, the company is reorganizing divisions across the company into a new structure that will improve efficiency and reduce complexity. This new organizational structure will enable the company to more quickly deliver on its goals.
The Distribution Services Divisions, which is the company’s primary interface with its dealers, will be reduced from three to two, one covering dealers in Asia-Pacific, CIS, Africa and the Middle Eas and the other covering dealers in North and South America and Europe.
New divisions will be:
- Global Aftermarket Solutions Division,created to accelerate the growth of aftermarket sales and service solutions.
- Wear Components & Aftermarket Distribution Division,which merges the design and manufacturing of components and aftermarket distribution to enhance focus on components availability and inventory improvements.
- Marketing and Digital Division,created to build on the current Analytics & Innovation Division.
- Sustainable, Work Tools & Industry Solutions Division,created to bring together the sustainable businesses of Cat Reman and Caterpillar Safety Services with the company's machine attachment business – Cat Work Tools (design and manufacture). The new division also includes two external sales groups, Cat OEM Solutions and Defense and Federal Products.
Also, the company said, the Global Construction & Infrastructure Division has added responsibilities. As part of the company's move to improve its dealer and customer coverage model, the division will also assume sales responsibilities for work tools, industrial and waste, paving and forestry products, as well as responsibility for heavy rentals.
The above moves will be effective November 1, 2015.
Lemmon calls on community to preserve its history
- Details
- Published on 23 September 2015
- Written by Paul Gordon
Chris Lemmon has never lost track of his past. It’s one he embraces, even the bumps and bruises that go along with being the son of famous parents. And part of his past is part of Peoria’s past, as well. He hopes the community is ready to embrace it.
“My message to the community would be to not let this grand old dame go to seed. We really don’t want to lose this kind of history,” said Lemmon while standing inside the Pettingill-Morron Historical House Museum on Moss Avenue in Peoria.
Lemmon said that while standing just outside the parlor where a wedding took place in May 1950 that had it been just a few years later would have made headlines in Hollywood. It was the wedding of his father, Academy Award-winning actor Jack Lemmon, to his mother Cynthia Stone in the home that at the time was the Stone family home. She was the daughter of John Boyd and Dorothy Stone of Peoria and was raised in the house that is now owned and maintained by the Peoria Historical Society.
The wedding took place before Jack Lemmon became a big star and before he and Stone would appear together on television during what was a brief acting career for Stone.
The house, built in 1868, is for the most part in good shape, particularly inside. But it needs some things done to shore it up, including a paint job and work on the roof and eaves to plug a hole that has allowed a raccoon to take up residence in the attic.
The Historical Society needs money to get those things done and Lemmon, in Peoria to perform his one-man theatrical tribute to his father, called “A Twist of Lemmon,” pledged on Wednesday to get the ball rolling.
“This is a personal thing, of course, but this house is truly one of the jewels of Peoria and it needs some attention so it can stay that way,” he said.
The Historical Society hosted a small gathering for Lemmon and some of its supporters on the porch of the house on a warm, perfect day. He took the occasion to talk about his memories of Peoria, where he spent much time during the summers while growing up. By the time he was a child his grandfather had sold the Moss Avenue house to Jean McLean Morron and had moved to a house on Grandview Drive.
“I spent a lot of summers here. I have a lot of memories of Grandview Drive. I knocked out my teeth while in Peoria jumping on a trampoline one summer. It’s been fun while here for the show to catch up with a lot of the people I knew then,” he said.
His parents divorced when he was only two years old, around the time Jack Lemmon started to hit it big. Cynthia Stone later married actor Cliff Robertson, who went on to gain fame himself, including one Academy Award. Lemmon said even after his mother and Robertson divorced he maintained a strong relationship with his step-father. “He was a good man. We stayed friends until he died. He was always respectful of my relationship with Pop, but we had a wonderful relationship,” he said.
Stone’s third husband was Robert McDougal, who also happened to be a native of Peoria. What is strange about it, however, is that Stone and McDougal met after she left Hollywood and moved to Miami, Florida after her divorce from Robertson. “She said, that’s it, I’m finished with Hollywood and she moved to Florida. She married a Culligan Water salesman and was happy as a clam the rest of her life,” he said.
Her life, however, was cut short by cancer when she was only 62. She is buried in the Stone family plot at Springdale Cemetery. “Mother was an angel on Earth; just an incredible woman. A lot of her generation had strength and dignity. An example of that was that she was diagnosed with cancer and told she only had a few months to live. But she said she was going to live long enough to spend one more Christmas with her family. And she did. She died the day after Christmas (in 1988). Even in death she was teaching us blessings,” he said.
Lemmon made another trip to Springdale Cemetery nearly three years ago, his last time in Peoria before now. It was to bury his Uncle Henry Dayton Stone, his mother’s brother. Uncle Dayton, as he called him, went to live with Lemmon and his family in central Connecticut shortly after being diagnosed with melanoma and being given only months to live.
Dayton expected to die quickly after arriving. “I told him he was going to make it until Thanksgiving. He didn’t think so but on Thanksgiving morning he thanked me for telling him he was going to make it to Thanksgiving. So I told him he was going to make it to Christmas,” Lemmon said.
He then showed those gathered a photo he took of his Uncle Dayton on Christmas morning, 2012. “About 20 minutes after that picture was taken he fell asleep and never woke up. He died a few days later (on Dec. 28, 2012),” Lemmon said.
He told of stumbling while leaving Springdale the day Uncle Dayton was buried, but not falling, as if somebody caught his arm and held him up. “I think Pop was right there. He grabbed my arm and held me up. It’s just like now, I feel like he’s with me during the 90 minutes I’m on stage,” Lemmon said of his show, “A Twist of Lemmon.” The show is being performed nightly through Sunday at 7:30 p.m. and also at 2 p.m. Saturday and Sunday at the Apollo Theatre. Tickets are $42 and can be purchased by visiting www.jaytv.com.
During the show Lemmon speaks in his father’s voice and in reciting some of the dialogue on the Pettingill-Morron porch on Wednesday, he sounds just like the man people came to know from the silver screen. With a certain expression or twist of his head, he looked just like him, as well.
“A Twist of Lemmon,” which is based on Chris Lemmon’s book by the same title, tells the story of the relationship between Chris and Jack Lemmon, including a rough patch when they didn’t see each other and how they came back together to become best friends before Jack Lemmon died in June 2001 at the age of 76.
He loves to tell stories of that friendship, especially the later years when they went on annual fishing trips to Alaska or playing golf together.
Besides learning the movie business and getting to know a lot of famous people because of his father, Lemmon said he learned many life lessons from Jack Lemmon. One of them is the motto of the show and his own life: “Go to the people you love and tell them you love them, because you don’t know what you’ve got until it’s gone.”
For more information about the Pettingill-Morron Historical House Museum, including touring hours, visit the Peoria Historical Society website at www.peoriahistoricalsociety.org or call (309) 674-1921.
Peoria Symphony opens new season on Saturday
- Details
- Published on 18 September 2015
- Written by The Peorian
The dynamic violinist Charles Yang returns to Peoria this weekend as guest artist for the Peoria Symphony Orchestra’s season-opening concert, “Carnival!” It will be the symphony’s 118th season.
The concert is scheduled for 8 p.m. in the Peoria Civic Center Theatre.
George Stelluto, music director for the symphony, has titled the season as “A Season of Inspiring Programs.” The title of the season opener, “Carnival,” was inspired by the ancient spring festival celebrated around the world, the symphony said in a news release.
Edward Joseph Collins’ “Mardi Gras” will open the show, followed by the Oscar-winning music from “The Red Violin,” featuring Yang as the solo performer. Yang, critics claim, “plays violin with the charisma of a rock star.”
Other music in the show includes Igor Stravinsky’s “Petrushka.”
This is the second appearance with the Peoria symphony for Yang, a Juilliard graduate who is a frequent guest on the Emmy Award-winning PBS program “From the Top.”
Tickets for the concert start at $29; student tickets are $10.
Tickets are available by calling the PSO box office at (309) 671-1096, or online at www.peoriasymphony.org. They also will be available at the Civic Center box office at 7 p.m. Saturday, one hour before the concert.
Season tickets, Pick Four packages and single tickets are available. New season ticket subscribers are available for 50 percent off.
A pre-concert lecture will be conducted in the theatre lobby beginning at 7 p.m.
Study shows women are no closer to equal pay
- Details
- Published on 21 September 2015
- Written by The Peorian
Women will not achieve equal pay until the year 2059 if current trends are projected forward, according to a study from the Institute for Women’s Policy Research. That would one year further out than what was projected last year.
Afact sheetby theIWPR uses updated data released by the U.S. Census Bureau to chart the gender earnings ratio since 1960 and analyzes changes in earnings during the last year by gender, race, and ethnicity. The gender wage ratio improved slightly from 77.6 percent in 2013 to 78.6 percent in 2014, which the Census Bureau reported was not statistically significant.
“With this insignificant improvement in the gender wage ratio, an IWPR analysis finds that, if current trends are projected forward, women will not receive equal payuntil 2059. This date is one year further out from last year, indicating that the slow progress in closing the gender wage gap over the last decade may have long-term effects on women's economic gains,” the institute said in a news release.
In 2014, median annual earnings for women working full-time, year-round were$39,621, compared with $50,383for men; neither women nor men saw a significant increase in inflation-adjusted earnings compared with 2013. Hispanic women's inflation-adjusted earnings declined by 2.8 percent in 2014, compared with 2013, Asian women's earnings increased by 2.2 percent, and the earnings of white and black women changed by less than 1 percent.
"For decades, women have been increasing their level of educational attainment and gaining job experience, which economists would call increasing their human capital," saidIWPR President and economistHeidi Hartmann, Ph.D."Yet, their earnings have not kept pace with these increases. Although the labor market has steadily improved since the Great Recession, and both men and women are gaining jobs, a lack of progress in earnings reflects remaining weakness in the labor market."
Persistent earnings inequality for working women translates into lower lifetime earnings, less family income, and more poverty in families with a working woman. According to a recent IWPR estimate, thetypical working woman loses $530,000over the course of her working life due to the gender wage gap; for women with a college education, the losses amount to$800,000. IWPR has also found that the poverty rate for working women would becut in halfif women were paid the same as comparable men.
"It's obvious that more needs to be done to speed up progress on closing the gender wage gap—not just because women deserve to be paid equally for their work, but because it is hurting families and the economy overall," Dr. Hartmann, a MacArthur Fellow, said. "Strengthening current policies, such as modernizing the regulations for overtime pay and ending retaliation against workers for sharing pay information, and enacting new policies that ensure greater access to affordable child care, paid family leave, and paid sick days will go a long way to shortening the amount of time women—and all of us—must wait to see equal pay."
The Institute for Women's Policy Research (IWPR) is a 501(c)(3) tax-exempt organization that conducts rigorous research and disseminates its findings to address the needs of women and their families, promote public dialogue, and strengthen communities and societies.
Census Bureau: Median incomes aren’t growing; number of uninsured decreasing
- Details
- Published on 16 September 2015
- Written by The Peorian
The U.S. Census Bureau announced Wednesday that in 2014, there was no statistically significant change from 2013 in either real median household income or the official poverty rate. At the same time, the percentage of people without health insurance coverage declined.
Unless otherwise noted, the following results for the nation were compiled from information collected in the 2015 Current Population Survey Annual Social and Economic Supplement.
The nation's official poverty rate in 2014 was 14.8 percent, which means there were 46.7 million people in poverty. Neither the poverty rate nor the number of people in poverty were statistically different from 2013 estimates. This marks the fourth consecutive year in which the number of people in poverty was not statistically different from the previous year's estimate.
Median household income in the United States in 2014 was $53,657, not statistically different in real terms from the 2013 median income. This is the third consecutive year that the annual change was not statistically significant, following two consecutive annual declines.
The percentage of people without health insurance coverage for the entire 2014 calendar year was 10.4 percent, down from 13.3 percent in 2013. The number of people without health insurance declined to 33.0 million from 41.8 million over the period.
These findings are contained in two reports: Income and Poverty in the United States: 2014 and Health Insurance Coverage in the United States: 2014. The Current Population Survey Annual Social and Economic Supplement was conducted between February and April 2015 and collected information about income and health insurance coverage during the 2014 calendar year. The Current Population Survey, sponsored jointly by the U.S. Census Bureau and U.S. Bureau of Labor Statistics, is conducted every month and is the primary source of labor force statistics for the U.S. population; it is used to calculate the monthly unemployment rate estimates. Supplements are added in most months; the Annual Social and Economic Supplement questionnaire is designed to give annual, calendar-year, national estimates of income, poverty and health insurance numbers and rates.
Another Census Bureau report, The Supplemental Poverty Measure: 2014, was also released Wednesday. With support from the Bureau of Labor Statistics, it describes research showing a different way of measuring poverty in the United States. The supplemental poverty measure serves as an additional indicator of economic well-being and provides a deeper understanding of economic conditions. The Census Bureau has published poverty estimates using this supplemental measure annually since 2011. Today marks the first time the official poverty measure and the supplemental poverty measure have been released simultaneously.
The Current Population Survey-based income and poverty report includes comparisons with one year earlier and to 2007 (before the last recession); historical tables in the report contain statistics back to 1959. The health insurance report is based on both the Current Population Survey and the American Community Survey and includes comparisons with one year earlier.
Income
- Real median incomes in 2014 for family households ($68,426) and nonfamily households ($32,047) did not experience statistically significant changes from the levels in 2013.
- A comparison of real median household income over the past seven years shows that income is 6.5 percent lower than in 2007, the year before the nation entered the most recent economic recession.
Race and Hispanic Origin
(Race data refer to people reporting a single race only; Hispanics can be of any race)
- The real median income of non-Hispanic white households declined by 1.7 percent between 2013 and 2014. Changes were not statistically significant for any of the other race groups or for Hispanics.
Regions
- Households in the West experienced a 4.6 percent decline in real median income between 2013 and 2014, whereas the apparent changes in household income were not statistically significant in the other three regions.
Earnings
- The changes in the real median earnings of men and women who worked full time, year-round between 2013 and 2014 were not statistically significant. In 2014, the median earnings of women who worked full time, year-round ($39,621) was 79 percent of that for men working full time, year-round ($50,383) ─ not statistically different from the 2013 ratio. The female-to-male earnings ratio has not shown a statistically significant annual increase since 2007.
- The number of men and women working full time, year-round with earnings increased by 1.2 million and 1.6 million, respectively, between 2013 and 2014. Taken in combination with an increase of about 800,000 in the number of women with earnings, regardless of work experience, and no statistically significant change for their male counterparts, this suggests a shift of workers moving from part-year, part-time work status to full-time, year-round work status. The respective increases in the number of men and women working full time, year-round with earnings were not statistically different from one another, nor were they statistically different from the increase in the number of women with earnings, regardless of work experience.
Income Inequality
- The Gini index was 0.480 in 2014; the change from 2013 was not statistically significant. Since 1993, the earliest year available for comparable measures of income inequality, the Gini index has increased 5.9 percent. (Developed more than a century ago, the Gini index is the most common measure of household income inequality used by economists, with 0.0 representing total income equality and 1.0 equivalent to total inequality.)
- Changes in income inequality between 2013 and 2014 were not statistically significant as measured by the shares of aggregate household income by quintiles.
Poverty
- The poverty rate for families and the number of families in poverty were 11.6 percent and 9.5 million in 2014, neither statistically different from the 2013 estimates.
- In 2014, 6.2 percent of married-couple families, 30.6 percent of families with a female householder and 15.7 percent of families with a male householder lived in poverty. For married-couple families, both the poverty rate and the number in poverty increased. For families with a female householder, the poverty rate was not statistically different from 2013, while the number in poverty declined. Neither the poverty rates nor the estimate of the number of families in poverty showed any statistically significant change between 2013 and 2014 for families with a male householder.
Thresholds
- As defined by the Office of Management and Budget and updated for inflation using the consumer price index, the weighted average poverty threshold for a family of four in 2014 was $24,230.
(See http://www.census.gov/hhes/www/poverty/data/threshld/index.html for the complete set of dollar value thresholds that vary by family size and composition.)
Sex
- Between 2013 and 2014, changes in poverty rates for males (13.4 percent) and females (16.1 percent) were not statistically significant.
Race and Hispanic Origin
(Race data refer to people reporting a single race only; Hispanics can be of any race)
- None of the major race and ethnic groups experienced a statistically significant change in their poverty rates nor in the number of people in poverty. Table B details 2014 poverty rates and numbers in poverty, as well as changes since 2013 in these measures, for race groups and Hispanics.
Age
- In 2014, 13.5 percent of people 18 to 64 (26.5 million) were in poverty compared with 10.0 percent of people 65 and older (4.6 million) and 21.1 percent of children under 18 (15.5 million). None of these age groups experienced a statistically significant change in the number or rates of people in poverty between 2013 and 2014.
Regions
- None of the four regions experienced a significant change in the poverty rate or the number in poverty between 2013 and 2014.
Shared Households
Shared households are defined as households that include at least one "additional" adult: a person 18 or older who is not enrolled in school and is not the householder, spouse or cohabiting partner of the householder. The information on shared households covers adults living in the household at the time of the survey.
- In spring 2007, prior to the recession, there were 19.7 million shared households, representing 17.0 percent of all households. By spring 2015, the number had increased to 23.9 million and represented 19.2 percent of all households. Between 2014 and 2015, however, the changes in the number and percentage of shared households were not statistically significant.
- In spring 2015, 6.5 million young adults age 25 to 34 (15.1 percent) lived with their parents. Neither the number nor percentage of young adults living with their parents experienced a statistically significant change from 2014.
- It is difficult to precisely assess the impact of household sharing on overall poverty rates. In 2014, young adults age 25 to 34, living with their parents, had an official poverty rate of 7.2 percent, but if their poverty status were determined using only their own income, 39.4 percent had an income below the poverty threshold for a single person under age 65.
Supplemental Poverty Measure
The supplemental poverty measure is an effort to take into account many of the government programs designed to assist low-income families and individuals that were not included in the current official poverty measure. While the nation's official poverty rate, presented in the Income and Poverty in the United States: 2014 report, was 14.8 percent in 2014, the universe for the supplemental poverty measure is different because it includes children younger than 15 who are not related to anyone in the household, such as foster children. Therefore, the official poverty rate presented in the Supplemental Poverty Measure: 2014 report was 14.9 percent.
The supplemental poverty measure also released Wednesday shows:
- The supplemental poverty rate was 15.3 percent, not a statistically significant change from 2013.
- There were 48.4 million poor in 2014 using the supplemental measure, higher than the 47.0 million using the official poverty definition with the supplemental poverty measure universe.
- The number of poor in 2014 according to the supplemental measure was not statistically different from the 2013 number.
- Including tax credits and noncash benefits results in lower poverty rates for some groups. For instance, the supplemental poverty rate was lower for children than the official rate: 16.7 percent compared with 21.5 percent.
While the official poverty measure includes only pre-tax money income, the supplemental measure adds the value of in-kind benefits, such as the Supplemental Nutrition Assistance Program, school lunches, housing assistance and refundable tax credits. Additionally, the supplemental poverty measure deducts necessary expenses for critical goods and services from income. Expenses that are deducted include taxes, child care and commuting expenses, out-of-pocket medical expenses and child support paid to another household. The supplemental poverty measure permits the examination of the effects of government transfers on poverty estimates. For example, not including refundable tax credits (the Earned Income Tax Credit and the refundable portion of the child tax credit) in resources, the poverty rate for all people would have been 18.4 percent rather than 15.3 percent.
The measure does not replace the official poverty measure and will not be used to determine eligibility for government programs.
Health Insurance Coverage
- The Current Population Survey shows that the percentage of people with health insurance for all or part of 2014 was 89.6 percent, higher than the rate in 2013 (86.7 percent).
- After several years of a relatively stable uninsured rate between 2008 and 2013 as measured by the American Community Survey, the percentage of the population who were uninsured dropped in 2014. This represents the largest percentage point decline in the uninsured rate during this period. Over time, changes in the rate of health insurance coverage and the distribution of coverage types may reflect economic trends, shifts in the demographic composition of the population, and policy changes that impact access to health care. Several such policy changes occurred in 2014, when many provisions of the Patient Protection and Affordable Care Act went into effect.
- Between 2013 and 2014, the increase in the percentage of the population covered by health insurance was due to an increase in the rates of both private and government coverage. The rate of private coverage increased by 1.8 percentage points to 66.0 percent in 2014, and the government coverage rate increased by 2.0 percentage points to 36.5 percent, changes which were not significantly different from each other.
- Of the subtypes of health insurance, employment-based insurance covered the most people (55.4 percent of the population), followed by Medicaid (19.5 percent), Medicare (16.0 percent), direct-purchase (14.6 percent) and military health care (4.5 percent).
- Between 2013 and 2014, the greatest changes in coverage rates were the increases in direct-purchase health insurance and Medicaid. The largest percentage-point change in coverage was for direct-purchase, which increased by 3.2 percentage points to cover 14.6 percent of people for some or all of 2014. The percentage of people with Medicaid coverage during all or part of the year increased by 2.0 percentage points to 19.5 percent in 2014.
- In 2014, the uninsured rate for children younger than 19 was 6.2 percent, down from 7.5 percent in 2013.
- In 2014, the uninsured rate for children younger than 19 in poverty (8.6 percent) was higher than the uninsured rate for children not in poverty (5.6 percent).
Race and Hispanic Origin
(Race data refer to people reporting a single race only; Hispanics can be of any race)
- Between 2013 and 2014, the overall rate of health insurance coverage increased for all race and Hispanic origin groups. The increase was comparable for blacks, Asians and Hispanics (just over 4.0 percentage points) and lower for non-Hispanic whites (2.1 percentage points).
- In 2014, non-Hispanic whites had a higher rate of health insurance coverage (92.4 percent) compared with blacks and Asians (88.2 percent and 90.7 percent, respectively). Hispanics had the lowest rate of health insurance coverage, at 80.1 percent.
Nativity
- Between 2013 and 2014, health insurance coverage rates increased for all nativity groups. The foreign-born population, including both naturalized citizens and noncitizens, experienced a larger increase in health insurance coverage than did the native-born population.
- In 2014, the uninsured rate of noncitizens was over three times that of the native-born population (31.2 percent for noncitizens compared with 8.7 percent for the native-born population).
States
- According to the American Community Survey, during 2014, the state with the lowest percentage of people without health insurance at the time of the interview was Massachusetts (3.3 percent), while the highest uninsured rate was for Texas (19.1 percent).
- The American Community Survey also showed that between 2013 and 2014, all 50 states and the District of Columbia showed a decrease in the percentage of people without health insurance coverage at the time of the interview. The declines for the states ranged from 0.4 percentage points to 5.8 percentage points.