[Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Green Book)]
[Appendices]
[Appendix H. Data on Poverty]
[From the U.S. Government Printing Office, www.gpo.gov]
APPENDIX H. DATA ON POVERTY
CONTENTS
Measuring Poverty
Trends in the Overall Poverty Rate
Poverty Rates for Individuals in Selected Subgroups of the
Population
Poverty Rates for Families
Poverty Under Alternative Measures of Income and Price
Inflation
Poverty by Metro Area and State
Trends in Family Composition and Income, 1967-98
Definitions and Methods
Income Measure
Income Shares
Trends in Pretax Cash Incomes by Type of Family
Pretax Adjusted Family Income
Average Family Cash Income By Family Type
Antipoverty Effectiveness of Various Cash and Noncash Transfers
References
MEASURING POVERTY
When the Federal Government began measuring poverty in the
early 1960s, the continued existence of poor people in a time
of the ``Affluent Society'' seemed anomalous. Official concern
soon translated into efforts to measure the size of the poverty
population, and the search began for programmatic ways to
alleviate poverty. The first rough estimates of the incidence
of poverty were based on survey data indicating that families
generally spent about one-third of their income on food. A
poverty level income was then calculated by using as a
yardstick the amount of money necessary to purchase the lowest
cost ``nutritionally adequate'' diet calculated by the
Department of Agriculture (roughly equivalent to the current
Thrifty Food Plan). This price tag was multiplied by three to
produce a poverty threshold. The assumption underlying this
procedure is that if a family did not have enough income to buy
the lowest cost nutritionally adequate diet, and twice that
amount to buy other goods and services, it was ``poor.''
Adjustments were made for the size of the family, the sex of
the family head, and for whether the family lived on a farm.
Farm families were assumed to need less cash income because
their needs could be met partially by farm products,
particularly food. The adjustments for sex of the family head
and for farm-nonfarm residence were abolished in 1981. Policy
officials made a major change to the basic approach for
calculating the poverty threshold in 1969. Rather than
multiplying the cost of the Thrifty Food Plan by three to
establish the poverty threshold, officials decided to simply
increase the previous year's threshold by the change in the
Consumer Price Index (CPI).
In addition to this major change, the Census Bureau made
minor revisions in its method of estimating the poverty
threshold four times--in 1966, 1974, 1979, and 1981. These
revisions changed the estimate of the poverty rate. The first
two revisions slightly reduced the estimated number of poor,
while the more recent revisions slightly increased the number.
In 1984, the Census Bureau also revised its method of imputing
missing values for interest income, which slightly lowered the
estimated poverty rate.
Data on income and poverty after 1987 may not be comparable
to data in earlier years because of changes in the methods used
by the Census Bureau to process survey results. This new
processing system was applied to 1987 data so that 1988 and
1987 data are comparable. Revised 1987 data are denoted as
1987R. The new processing system increased aggregate income by
0.9 percent and lowered the poverty rate for 1987 by 0.1
percent.
The tables in this subsection provide poverty data
calculated using the official Census definition of poverty. The
Census definition of poverty has remained fairly standard over
time and is useful for measuring progress against poverty.
Under this definition, poverty is determined by comparing
pretax cash income with the poverty threshold.
Table H-1 shows the population, number of persons in
poverty, and the poverty rate in 1998 by age, race, region and
family type. In 1998, 12.7 percent (34.5 million persons) of
the total U.S. population lived in poverty. Of all demographic
groups shown, poverty was second highest among female-headed
families with children (33.1 percent). Among children under age
18, 18.9 percent, or 13.5 million children, lived in poverty in
1998.
The weighted average poverty thresholds for families of
various sizes for selected years between 1959 and 1998 are
presented in table H-2.
TRENDS IN THE OVERALL POVERTY RATE \1\
---------------------------------------------------------------------------
\1\ All poverty trend information is based upon published Census
Bureau data contained in Current Population Reports, Series P-60, Nos.
124, 140, 145, 149, 154, 157, 161, 166, 168, 174, 180, and 185. These
figures may differ with other parts of this report which provide a more
refined breakdown of this age category. Data for blacks, the aged, and
nonaged population were not available for the years 1961-65.
---------------------------------------------------------------------------
In 1959, the overall poverty rate for individuals in the
United States was 22 percent, representing 39.5 million poor
persons (tables H-3 and H-4). Between 1959 and 1969, the
poverty rate declined dramatically and steadily to 12.1
percent. As a result of a sluggish economy, the rate increased
slightly to 12.5 percent by 1971. In 1972 and 1973, however, it
began to decrease again. The lowest rate over the entire 24-
year period occurred in 1973, when the poverty rate was 11.1
percent. At that time roughly 23 million people were poor, 42
percent less than were poor in 1959.
TABLE H-1.--POVERTY STATUS OF PERSONS BY AGE, ETHNICITY, REGION, AND FAMILY TYPE, 1998
--------------------------------------------------------------------------------------------------------------------------------------------------------
Poverty Percent of Number of Percent of Poverty
Category rate Population total poor poverty difference Percent of
(percent) (thousands) population (thousands) population 1997-98 difference
--------------------------------------------------------------------------------------------------------------------------------------------------------
Age:
Under 18...................................................... 18.9 71,378 26.3 13,467 39.0 -647 -1.0
18-64......................................................... 10.5 167,327 61.7 17,623 51.1 -462 -0.4
65 and older.................................................. 10.5 32,394 12.0 3,386 9.8 10 -0.1
Race/ethnicity:
White......................................................... 10.5 222,837 82.0 23,454 68.0 -942 -0.5
Black......................................................... 26.1 34,877 12.9 9,091 26.4 -25 -0.4
Hispanic \1\.................................................. 25.6 31,515 11.6 8,070 23.4 -238 -1.5
Region:
Northeast..................................................... 12.3 51,472 19.1 6,357 18.4 -117 -0.4
Midwest....................................................... 10.3 63,155 23.3 6,501 18.9 8 -0.1
South......................................................... 13.7 94,640 34.9 12,992 37.7 -757 -0.9
West.......................................................... 14.0 61,522 22.7 8,625 25.0 -233 -0.6
Family type: \2\
Unrelated individuals......................................... 19.9 42,539 15.7 8,478 24.6 -209 -0.9
Female-headed families........................................ 33.1 39,000 14.4 12,907 37.4 -164 -1.6
Married-couple families....................................... 6.2 177,042 65.3 10,982 31.9 58 0.1
Unrelated subfamilies......................................... 48.8 1,288 4.8 628 1.8 -152 2.3
-------------------------------------------------------------------------------------
Total..................................................... 12.7 271,059 26.3 34,476 100.0 -1,098 -0.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Persons of Hispanic origin may be of any race.
\2\ About 1.5 million families are in categories other than the ones listed here.
Source: U.S. Census Bureau (1999).
TABLE H-2.--WEIGHTED AVERAGE POVERTY THRESHOLDS FOR NONFARM FAMILIES OF SPECIFIED SIZE, SELECTED YEARS 1959-98
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unrelated individuals Two persons Families of more than two persons
-------------------------------------------------------------------------------------------------------------
Calendar year Head Head age Seven
All Under Age 65 All ages under 65 or Three Four Five Six persons
ages age 65 or older age 65 older persons persons persons persons or more
--------------------------------------------------------------------------------------------------------------------------------------------------------
1959...................................... $1,467 $1,503 $1,397 $1,894 $1,952 $1,761 $2,324 $2,973 $3,506 $3,944 $4,849
1960...................................... 1,490 1,526 1,418 1,924 1,982 1,788 2,359 3,022 3,560 4,002 4,921
1965...................................... 1,582 1,626 1,512 2,048 2,114 1,906 2,514 3,223 3,797 4,264 5,248
1970...................................... 1,954 2,010 1,861 2,525 2,604 2,348 3,099 3,968 4,680 5,260 6,468
1975...................................... 2,724 2,797 2,581 3,506 3,617 3,257 4,293 5,500 6,499 7,316 9,022
1980...................................... 4,190 4,290 3,949 5,363 5,537 4,983 6,565 8,414 9,966 11,269 \1\ 12,7
61
1983...................................... 5,061 5,180 4,775 6,483 6,697 6,023 7,938 10,178 12,049 13,630 \1\ 15,5
00
1984...................................... 5,278 5,400 4,979 6,762 6,983 6,282 8,277 10,609 12,566 14,207 \1\ 16,0
96
1985...................................... 5,469 5,593 5,156 6,998 7,231 6,503 8,573 10,989 13,007 14,696 \1\ 16,6
56
1986...................................... 5,572 5,701 5,255 7,138 7,372 6,630 8,737 11,203 13,259 14,986 \1\ 17,0
49
1987...................................... 5,778 5,909 5,447 7,397 7,641 6,872 9,056 11,611 13,737 15,509 \1\ 17,6
49
1988...................................... 6,022 6,155 5,674 7,704 7,958 7,157 9,435 12,092 14,304 16,146 \1\ 18,2
32
1989...................................... 6,310 6,451 5,947 8,076 8,343 7,501 9,885 12,674 14,990 16,921 \1\ 19,1
62
1990...................................... 6,652 6,800 6,268 8,509 8,794 7,905 10,419 13,359 15,792 17,839 \1\ 20,2
41
1991...................................... 6,932 7,086 6,532 8,865 9,165 8,241 10,860 13,924 16,456 18,587 \1\ 21,0
58
1992...................................... 7,143 7,299 6,729 9,137 9,443 8,487 11,186 14,335 16,952 19,137 \1\ 21,5
94
1993...................................... 7,363 7,518 6,930 9,414 9,728 8,740 11,522 14,763 17,449 19,718 \1\ 22,3
83
1994...................................... 7,547 7,710 7,108 9,661 9,976 8,967 11,821 15,141 17,900 20,235 \1\ 22,9
23
1995...................................... 7,763 7,929 7,309 9,933 10,259 9,219 12,158 15,569 18,408 20,804 \1\ 23,5
52
1996...................................... 7,995 8,163 7,525 10,145 10,507 9,484 12,273 16,183 19,516 22,447 \1\ 25,8
28
1997...................................... 8,183 8,350 7,698 10,473 10,805 9,712 12,802 16,400 19,380 21,886 \1\ 24,8
02
1998...................................... 8,316 8,480 7,818 10,634 10,972 9,862 13,003 16,660 19,680 22,228 \1\ 25,2
57
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Poverty threshold for seven persons, not seven persons or more.
Source: U.S. Census Bureau, technical papers.
TABLE H-3.--NUMBER OF PERSONS IN POVERTY FOR INDIVIDUALS IN SELECTED DEMOGRAPHIC GROUPS, 1959-98
[Numbers in thousands]
----------------------------------------------------------------------------------------------------------------
Individuals in
Year Overall Aged Children \1\ female-headed Black Hispanic White
families \2\ origin \3\
----------------------------------------------------------------------------------------------------------------
1959............................ 39,490 5,481 17,552 7,014 9,927 NA 28,484
1960............................ 39,851 NA 17,634 7,247 NA NA 28,309
1961............................ 39,628 NA 16,909 7,252 NA NA 27,890
1962............................ 38,625 NA 16,963 7,781 NA NA 26,672
1963............................ 36,436 NA 16,005 7,646 NA NA 25,238
1964............................ 36,055 NA 16,051 7,297 NA NA 24,957
1965............................ 33,185 NA 14,676 7,524 NA NA 22,496
1966............................ 28,510 5,114 12,389 6,861 8,867 NA 19,290
1967............................ 27,769 5,388 11,656 6,898 8,486 NA 18,983
1968............................ 25,389 4,632 10,954 6,990 7,616 NA 17,395
1969............................ 24,147 4,787 9,691 6,879 7,095 NA 16,659
1970............................ 25,420 4,793 10,440 7,503 7,548 NA 17,484
1971............................ 25,559 4,273 10,551 7,797 7,396 NA 17,780
1972............................ 24,460 3,738 10,284 8,114 7,710 2,414 16,203
1973............................ 22,973 3,354 9,642 8,178 7,388 2,366 15,142
1974............................ 23,370 3,085 10,156 8,462 7,182 2,575 15,736
1975............................ 25,877 3,317 11,104 8,846 7,545 2,991 17,770
1976............................ 24,975 3,313 10,273 9,029 7,595 2,783 16,713
1977............................ 24,720 3,177 10,288 9,205 7,726 2,700 16,416
1978............................ 24,497 3,233 9,931 9,269 7,625 2,607 16,259
1979............................ 26,072 3,682 10,377 9,400 8,050 2,921 17,214
1980............................ 29,272 3,871 11,543 10,120 8,579 3,491 19,699
1981............................ 31,822 3,853 12,505 11,051 9,173 3,713 21,553
1982............................ 34,398 3,751 13,647 11,701 9,697 4,301 23,517
1983............................ 35,303 3,625 13,911 12,072 9,882 4,633 23,984
1984............................ 33,700 3,330 13,420 11,831 9,490 4,806 22,955
1985............................ 33,064 3,456 13,010 11,600 8,926 5,236 22,860
1986............................ 32,370 3,477 12,876 11,944 8,983 5,117 22,183
1987............................ 32,221 3,563 12,843 12,148 9,520 5,422 21,195
1988............................ 31,745 3,481 12,455 11,972 9,356 5,357 20,715
1989............................ 31,528 3,363 12,590 11,668 9,302 5,430 20,785
1990............................ 33,585 3,658 13,431 12,578 9,837 6,006 22,326
1991............................ 35,708 3,781 14,341 13,824 10,242 6,339 23,747
1992 \4\........................ 38,014 3,928 15,294 14,205 10,827 7,592 25,259
1993............................ 39,265 3,755 15,727 14,636 10,877 8,126 26,226
1994............................ 38,059 3,663 15,289 14,380 10,196 8,416 25,379
1995............................ 36,425 3,318 14,665 14,205 9,872 8,574 24,423
1996............................ 36,529 3,428 14,463 13,796 9,694 8,697 24,650
1997............................ 35,574 3,376 14,113 13,494 9,116 8,308 24,396
1998............................ 34,476 3,386 13,467 12,907 9,091 8,070 23,454
----------------------------------------------------------------------------------------------------------------
\1\ All children including unrelated children.
\2\ Does not include females living alone.
\3\ Hispanic origin may be of any race; it is an overlapping category.
\4\ For 1992, figures are based on 1990 Census population controls.
NA--Not available.
Source: U.S. Census Bureau (1996, 1999).
TABLE H-4.--POVERTY RATES FOR INDIVIDUALS IN SELECTED DEMOGRAPHIC GROUPS, 1959-98
----------------------------------------------------------------------------------------------------------------
Individuals in
Year Overall Aged Children \1\ female-headed Black Hispanic White
families \2\ origin \3\
----------------------------------------------------------------------------------------------------------------
1959.............................. 22.4 35.2 27.3 49.4 55.1 NA 18.1
1960.............................. 22.2 NA 26.9 48.9 NA NA 17.8
1961.............................. 21.9 NA 25.6 48.1 NA NA 17.4
1962.............................. 21.0 NA 25.0 50.3 NA NA 16.4
1963.............................. 19.5 NA 23.1 47.7 NA NA 15.3
1964.............................. 19.0 NA 23.0 44.4 NA NA 14.9
1965.............................. 17.3 NA 21.0 46.0 NA NA 13.3
1966.............................. 14.7 28.5 17.6 39.8 41.8 NA 11.3
1967.............................. 14.2 29.5 16.6 38.8 39.3 NA 11.0
1968.............................. 12.8 25.0 15.6 38.7 34.7 NA 10.0
1969.............................. 12.1 25.3 14.0 38.2 32.2 NA 9.5
1970.............................. 12.6 24.6 15.1 38.1 33.5 NA 9.9
1971.............................. 12.5 21.6 15.3 38.7 32.5 NA 9.9
1972.............................. 11.9 18.6 15.1 38.2 33.3 22.8 9.0
1973.............................. 11.1 16.3 14.4 37.5 31.4 21.9 8.4
1974.............................. 11.2 14.6 15.4 36.5 30.3 23.0 8.6
1975.............................. 12.3 15.3 17.1 37.5 31.3 26.9 9.7
1976.............................. 11.8 15.0 16.0 37.3 31.1 24.7 9.1
1977.............................. 11.6 14.1 16.2 36.2 31.3 22.4 8.9
1978.............................. 11.4 14.0 15.9 35.6 30.6 21.6 8.7
1979.............................. 11.7 15.2 16.4 34.9 31.0 21.8 9.0
1980.............................. 13.0 15.7 18.3 36.7 32.5 25.7 10.2
1981.............................. 14.0 15.3 20.0 38.7 34.2 26.5 11.1
1982.............................. 15.0 14.6 21.9 40.6 35.6 29.9 12.0
1983.............................. 15.2 13.8 22.3 40.2 35.7 28.0 12.1
1984.............................. 14.4 12.4 21.5 38.4 33.8 28.4 11.5
1985.............................. 14.0 12.6 20.7 37.6 31.3 29.0 11.4
1986.............................. 13.6 12.4 20.5 38.3 31.1 27.3 11.0
1987.............................. 13.4 12.5 20.3 38.1 32.4 28.1 10.4
1988.............................. 13.0 12.0 19.5 37.2 31.3 26.7 10.1
1989.............................. 12.8 11.4 19.6 35.9 30.7 26.2 10.0
1990.............................. 13.5 12.2 20.6 37.2 31.9 28.1 10.7
1991.............................. 14.2 12.4 21.8 39.7 32.7 28.7 11.3
1992 \4\.......................... 14.8 12.9 22.3 39.0 33.4 29.6 11.9
1993.............................. 15.1 12.2 22.7 38.7 33.1 30.6 12.2
1994.............................. 14.5 11.7 21.8 38.6 30.6 30.7 11.7
1995.............................. 13.8 10.5 20.8 36.5 29.3 30.3 11.2
1996.............................. 13.7 10.8 20.5 35.8 28.4 29.4 11.2
1997.............................. 13.3 10.5 19.9 35.1 26.5 27.1 11.0
1998.............................. 12.7 10.5 18.9 33.1 26.1 25.6 10.5
----------------------------------------------------------------------------------------------------------------
\1\ All children including unrelated children.
\2\ Does not include females living alone.
\3\ Hispanic origin may be of any race; it is an overlapping category.
\4\ For 1992, figures are based on 1990 Census population controls.
NA--Not available.
Source: U.S. Census Bureau (1996, 1999).
The poverty rate increased by 1975 to 12.3 percent, and
then oscillated around 11.5 percent through 1979. After 1978,
however, the poverty rate rose steadily, reaching 15.2 percent
in 1983. Between 1983 and 1993, the poverty rate moved up and
down within a narrow range of about 2.5 percentage points,
declining somewhat during economic recoveries and rising
somewhat during economic downturns. However, poverty declined
every year after 1993, reaching 12.7 percent in 1998, the last
year for which data are available. The 1998 rate was the lowest
since 1979. The children's rate of 18.9 percent was the lowest
since 1980.
POVERTY RATES FOR INDIVIDUALS IN SELECTED SUBGROUPS OF THE POPULATION
As table H-4 illustrates, there are substantial differences
between the overall poverty rate and the poverty rates of
individuals in certain demographic subgroups. Most notably,
blacks, individuals in female-headed households, and Hispanics
have poverty rates that greatly exceed the average. The poverty
rates for individuals in female-headed households remained
above 35 percent over the 1959-97 period. However, it declined
every year after 1991 and in 1998 reached its lowest level ever
at 33.1. The poverty rate for blacks and Hispanics has remained
near 30 percent during the 1980s and mid 1990s. However, both
rates declined every year after the early 1990s and for blacks
it reached its lowest level ever in 1998 at 26.1. The poverty
rate for the aged, which exceeded the overall poverty rate in
1959, fell quickly beginning in the 1960s. By 1998 it had
reached the remarkably low level of 10.5, a decline of over 70
percent since 1979. The poverty rate for whites was below the
overall poverty rate throughout the entire 1959-98 period. It
was 10.5 percent in 1998. Unfortunately, the poverty rate for
children exceeded the overall poverty rate every year between
1959 and 1998.
Poverty Rates for Families \2\
---------------------------------------------------------------------------
\2\ Income figures reported in this subsection were from the March
Current Population Survey (CPS) computer data tapes. There is a
tendency in surveys, such as the CPS, for respondents to underreport
their incomes by both source and amount. Reporting of income from
earnings is usually more accurate than reporting of income from other
sources. In general, CPS estimates of amounts or numbers of recipients
of various cash and noncash transfer programs tend to be lower than
administrative program totals. As a result, the data are a better
reflection of general trends and patterns than of absolute numbers with
income from a particular source, or the amount received. Unrelated
subfamilies are included as families in this analysis. The Census
Bureau excludes such families from its poverty counts.
---------------------------------------------------------------------------
Table H-5 shows the composition of the poverty population
for various demographic groups for selected years between 1959
and 1998. Table H-6 presents poverty data for families and
unrelated individuals (individuals living alone). Female-headed
families with children and unrelated individuals are more
likely to be poor than other families with children or families
with aged members. In 1998, 39.2 percent of female-headed
families with children were poor, compared with 7.8 percent of
male-present families. Although only 6.4 percent of all
families with an aged member were poor, 20.4 percent of all
aged unrelated individuals were poor. About 19.8 percent of
nonaged unrelated individuals were poor.
TABLE H-5.--COMPOSITION OF POVERTY POPULATION FOR SELECTED DEMOGRAPHIC GROUPS,\1\ SELECTED YEARS 1959-1997
[Percent of poverty population]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year
Demographic group -------------------------------------------------------------------------------------------------------
1959 1966 1975 1985 1987 1988 1990 1991 1992 1993 1994 1996 1998
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aged............................................ 13.9 17.9 12.8 10.5 10.9 11.0 10.9 10.6 10.3 9.6 9.6 9.4 9.8
Children........................................ 43.6 42.6 42.1 38.8 39.4 38.7 39.5 39.5 39.7 39.5 39.6 38.8 38.3
Nonaged adults.................................. 42.5 39.5 45.1 50.7 49.7 50.3 49.7 49.9 49.9 50.9 50.8 51.8 51.9
Individuals in female-headed families \2\....... 26.3 36.0 47.4 49.5 52.6 52.9 53.4 54.0 52.6 52.4 52.8 53.5 53.5
Individuals in all other families \2\........... 73.7 64.0 52.6 50.5 47.4 47.1 46.6 46.0 47.4 47.6 47.2 46.5 46.5
Blacks.......................................... 25.1 31.1 29.2 27.0 29.8 29.5 29.3 28.7 28.5 27.7 26.8 26.5 26.4
Whites.......................................... 72.1 67.7 68.7 69.1 65.6 65.3 66.5 66.5 66.4 66.8 66.7 67.5 68.0
Other races..................................... 2.8 1.2 2.1 3.9 4.7 5.3 4.2 4.8 5.1 5.5 6.5 6.0 5.6
Hispanic origin \3\............................. NA NA 11.6 15.8 16.9 16.9 17.9 17.8 20.0 20.7 22.1 23.8 23.4
Individuals in families with children \4\....... NA NA NA NA NA NA 68.0 68.4 68.4 68.7 68.0 66.7 65.1
Male present................................ NA NA NA NA NA NA 30.7 30.3 31.4 32.0 31.2 30.1 28.9
Female head................................. NA NA NA NA NA NA 37.2 38.1 37.0 36.7 36.9 36.5 36.2
Individuals in all other families............... NA NA NA NA NA NA 32.0 31.6 31.6 31.3 32.0 33.3 34.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Demographic data are for March of the following year.
\2\ Includes unrelated or single individuals.
\3\ Hispanic origin may be of any race; therefore numbers add to more than 100 percent.
\4\ Family includes related children under 18.
NA--Not available.
Note.--Estimates for 1987-94 are not comparable to prior years due to processing changes in the Current Population Survey.
Source: Table prepared by the Congressional Research Service. 1959-85 estimates based on data from U.S. Census Bureau (1986); 1986-98 data from March
Current Population Survey.
TABLE H-6.--POVERTY RATES BY FAMILY TYPE, SELECTED YEARS 1987-97, AND PERCENTAGE OF FAMILIES AND UNRELATED INDIVIDUALS BY RATIO OF TOTAL INCOME TO POVERTY THRESHOLD, 1997 \1\ \2\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Poverty rate, 1987-98 Ratio of total income to poverty threshold, 1998
-------------------------------------------------------------------------------------------------------------------------------- 1998 total
Family type 3.00 (in
1987 1990 1991 1993 1996 1997 1998 Under 0.50-0.99 1.00-1.24 1.25-1.49 1.50-1.99 2.00-2.99 and thousands)
0.50 over
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total:
Families........................................ 11.0 11.1 11.8 12.7 11.3 10.6 10.3 4.2 6.1 3.6 3.9 8.6 17.1 56.6 72,075
Unrelated individuals........................... 20.4 20.7 21.1 22.1 20.8 20.8 19.9 8.6 11.4 6.6 6.0 10.6 17.9 38.9 42,539
No members age 65 or older:
Families........................................ 11.9 12.2 13.0 14.0 12.4 11.7 11.2 4.8 6.5 3.5 3.7 8.0 15.7 57.9 58,273
Unrelated individuals........................... 19.1 19.1 19.6 21.3 20.7 20.8 19.8 10.2 9.6 4.8 4.3 8.4 18.0 44.7 31,975
Any member age 65 or older:
Families........................................ 7.2 6.4 6.7 7.0 6.4 6.1 6.4 1.8 4.6 3.7 4.8 11.2 22.8 51.1 13,803
Unrelated individuals........................... 23.9 24.7 24.9 24.1 20.9 21.0 20.4 3.5 16.9 12.2 11.2 17.3 17.3 21.6 10,564
Families with children:
Female-headed family, no husband present........ 46.3 45.3 47.6 46.7 42.3 41.5 39.2 18.9 20.3 9.0 6.8 12.4 16.9 15.8 9,342
Male-present families........................... 8.1 8.5 9.0 9.9 8.5 8.0 7.8 2.4 5.4 3.3 4.2 9.4 19.0 56.4 28,414
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Based on Census (``Orshansky'') poverty levels.
\2\ Unrelated subfamilies are treated as separate families. Related subfamilies are not treated as separate families but as members of the family with whom they reside.
Source: Table prepared by the Congressional Research Service based on March Current Population Survey for selected years.
Poverty Under Alternative Measures of Income and Price Inflation
The Census Bureau publishes data that reflect two
adjustments in the official definition of poverty. The first of
these is an alternative inflation adjustment. The official
poverty line is based on a procedure developed in 1965 with
yearly adjustments for inflation using the CPI. The CPI, in
turn, is based on the yearly change in prices of goods used by
most Americans. Prior to 1983, the CPI measured housing prices
using a procedure that included changes in the asset value of
owned homes. Because the asset value of houses was growing so
much faster than the consumption value, the inflation rate that
included asset values was excessive.
In 1983 the Bureau of Labor Statistics began using a rental
equivalence approach to measure the value of housing. The
official CPI-U inflation rate is based on the asset value of
housing prior to 1983 and rental equivalence in 1983 and later.
To provide a consistent time series, the Bureau constructed an
experimental series, the CPI-U-X1, for 1967-82 based on rental
equivalence.
The general effect of using the CPI-U-X1 is to lower
inflation in past years which in turn has the effect of
lowering poverty thresholds for those years. A lower threshold
means that fewer people are poor. As can be seen by comparing
the first two columns in table H-7, adjusting the poverty
threshold using the CPI-U-X1 reduced the official poverty rate
by about 1.4 or 1.5 percentage points in most years between
1979 and 1998. In 1998, the CPI-U-X1 reduced the poverty rate
by 1.4 percentage points (11 percent or 3.8 million persons).
The second adjustment in the official poverty rate made by
the Census Bureau is to expand the definition of income to take
into account some noncash income, including government
benefits. Under the procedures by which the official poverty
rate is calculated, only cash is counted in determining whether
a family is poor; income from cash welfare programs counts, but
benefits from food programs, medical care, social services,
education and training, and housing are not included in the
calculation. Moreover, because government spending on means-
tested noncash benefits has increased more rapidly than
spending on means-tested cash benefits over the years, ignoring
noncash benefits may be an increasingly serious omission if we
want a broad picture of the impact of government programs on
poverty.
The question of how to value noncash benefits raises a
variety of substantive and technical issues. The Census Bureau
has been working on these issues, consulting with academic
experts, sponsoring conferences, and issuing technical reports
for many years. In 1997, the Bureau published a consistent
historical data series, covering the years 1979-91, to trace
the impact of a variety of taxes and noncash benefits on
poverty and income. The measurement of noncash benefits
extended beyond government spending for the poor to include
government spending programs such as Medicare that are not
means tested as well as to employer contributions to employee
health plans.
To examine the impact on income and poverty of various
State and Federal taxes, government noncash programs, employer-
provided benefits, and so forth, the Bureau has adopted a
framework that includes 15 definitions of income. By comparing
income under these multiple definitions, it is possible to
estimate the impact of the various income sources on the
average income and the poverty rates of individuals and
families.
TABLE H-7.--POVERTY UNDER ALTERNATIVE MEASURES OF INCOME AND PRICE INFLATION, 1979-98
----------------------------------------------------------------------------------------------------------------
Poverty rate Percentage reduction in
------------------------------------ official poverty
associated with:
Year CPI-U-X1 ------------------------
Official Using with noncash CPI-U-X1
(CPI-U) CPI-U-X1 benefits \1\ CPI-U-X1 with noncash
benefits \1\
----------------------------------------------------------------------------------------------------------------
1979............................................... 11.7 10.6 7.9 9.4 32.5
1980............................................... 13.0 11.5 8.6 11.5 33.8
1981............................................... 14.0 12.2 9.8 12.9 30.0
1982............................................... 15.0 13.2 10.6 12.0 29.3
1983............................................... 15.2 13.7 11.0 9.9 27.6
1984............................................... 14.4 12.8 10.4 11.1 27.8
1985............................................... 14.0 12.5 10.1 10.7 27.9
1986............................................... 13.6 12.2 9.8 10.3 27.9
1987............................................... 13.4 12.0 9.5 10.4 29.1
1988............................................... 13.0 11.7 9.5 10.0 26.9
1989............................................... 12.8 11.4 8.9 10.9 30.5
1990............................................... 13.5 12.1 9.5 10.4 29.6
1991............................................... 14.2 12.7 9.9 10.6 30.3
1992............................................... 14.8 13.4 10.5 9.5 29.1
1993............................................... 15.1 13.7 10.7 9.3 29.1
1994............................................... 14.5 13.2 9.8 9.0 29.7
1995............................................... 13.8 12.3 9.0 10.9 34.8
1996............................................... 13.7 12.2 8.9 10.9 35.0
1997............................................... 13.3 11.8 8.8 11.3 33.8
1998............................................... 12.7 11.3 8.2 11.0 35.4
Percent change:
1979-89........................................ 9.4 7.5 12.7 NA NA
1979-98........................................ 8.5 6.6 3.8 NA NA
----------------------------------------------------------------------------------------------------------------
\1\ Including income from capital gains, health insurance supplements to wage or salary income, non-means-tested
and means-tested government cash transfers, other means-tested government noncash transfers, the value of
Medicare, the value of regular-price school lunches, the value of Medicaid, the earned income credit (EIC),
less Social Security payroll taxes, less Federal income taxes (excluding the EIC), less State income taxes.
NA--Not available.
Source: U.S. Census Bureau (1998 and various years).
Income definition 14 is of interest to those concerned with
the impact of government means-tested, noncash benefits on
poverty rates. Unlike the official poverty rate, which includes
only cash government benefits, definition 14 includes the
effects of State and Federal taxes, employer-provided benefits,
non-means-tested government benefits, and means-tested noncash
benefits including food stamps, housing, school lunch, and the
fungible value of Medicaid.
By comparing the official poverty rate with the definition
14 poverty rate, we can determine the impact on poverty of
noncash benefits and government taxes. The third column in
table H-7 is the poverty rate for years 1979-98 based on
definition 14 and using the CPI-U-X1 deflator. Compared with
the rate based on CPI-U-X1 (column 2), including taxes and
noncash benefits (and a few other types of income that have
little impact on poverty) in the poverty calculation reduces
the poverty rate in 1998 by 3.1 percentage points. Compared
with the official poverty rate, the reduction is 4.5 percentage
points or 35 percent.
The question of whether to include medical benefits when
measuring poverty has great implications on poverty rates. The
valuation of medical benefits is particularly difficult. Most
poverty experts believe that medical coverage should not by
itself raise poor individuals above the poverty line or
constitute a major portion of the poverty threshold. The
development of the poverty thresholds did not take into account
medical costs. Although poor persons are clearly better off
with medical coverage, such benefits cannot be used by
recipients to meet other needs of daily living. Also, since
health insurance costs are not imputed to the incomes of those
above poverty, it seems inappropriate to count health benefits
as income for those below the poverty line.
Poverty by Metro Area and State
Tables H-8 and H-9 present poverty rates for nonmetro and
metro areas and by race in nonmetro and metro areas
respectively. Table H-8 shows that poverty rates have increased
more in metro than in nonmetro areas (18.3 percent compared to
6.7 percent, respectively, between 1978 and 1998). Moreover,
since 1983 poverty has decreased much more in nonmetro areas
(21.3 percent) than metro areas (10.9 percent). Poverty in
central cities is higher than in either nonmetro areas or metro
areas and progress in reducing poverty over the same 1983-98
period (6.6 percent) is slower. Table H-9 shows that poverty
among blacks and Hispanics is much higher than poverty among
whites in metro areas, nonmetro areas, and inner cities.
Table H-10 presents poverty rates by State for 1988-98,
based on 3-year averages. The data are shown as 3-year averages
due to poor statistical reliability of State poverty rates in a
single year, resulting from small sample sizes.
TRENDS IN FAMILY COMPOSITION AND INCOME, 1967-98
In the past 30 years, the level of and inequality among
family incomes has changed significantly according to all
income measures. Between 1967 and 1973, income increased for
all quintiles, and income inequality went down. As measured by
the Congressional Budget Office, over this time period the
lowest quintile experienced an increase in mean adjusted family
income (AFI; family income divided by the poverty threshold for
the appropriate family size) of 30 percent, while income for
the highest quintile grew by 21 percent. Since, 1973, however,
the trend has been markedly different. Income of the bottom
quintile has declined, while income for the highest quintile
has risen.
TABLE H-8.--POVERTY RATES IN NONMETRO AND METRO AREAS, 1978-98
[Persons in percent]
------------------------------------------------------------------------
Metro
-------------------
Year Nonmetro Central
Total cities
only
------------------------------------------------------------------------
1978...................................... 13.5 10.4 15.4
1979...................................... 13.8 10.7 15.7
1980...................................... 15.4 11.9 17.2
1981...................................... 17.0 12.6 18.0
1982...................................... 17.8 13.7 19.9
1983...................................... 18.3 13.8 19.8
1984...................................... NA NA NA
1985...................................... 18.3 12.7 19.0
1986...................................... 18.1 12.3 18.0
1987...................................... 17.0 12.3 18.3
1988...................................... 16.0 12.2 18.1
1989...................................... 15.7 12.0 18.1
1990...................................... 16.3 12.7 19.0
1991...................................... 16.1 13.7 20.2
1992 \1\.................................. 16.9 14.2 20.9
1993...................................... 17.2 14.6 21.5
1994...................................... 16.0 14.2 20.9
1995...................................... 15.6 13.4 20.6
1996...................................... 15.9 13.2 19.6
1997...................................... 15.9 12.6 18.8
1998...................................... 14.4 12.3 18.5
Percent increase, 1978-98................. 6.7 18.3 20.1
Percent change, 1983-98................... -21.3 -10.9 -6.6
------------------------------------------------------------------------
\1\ For 1992, figures are based on 1990 Census population controls.
NA--Not available.
Source: U.S. Census Bureau (1996 and various years).
TABLE H-9.--PERCENTAGE OF PERSONS IN POVERTY BY RACE, BY METRO AND
NONMETRO RESIDENCE, 1998
------------------------------------------------------------------------
Metro
-------------------
Race Nonmetro Central
Total cities
only
------------------------------------------------------------------------
All races................................. 14.4 12.3 18.5
White..................................... 12.4 10.0 14.9
Black..................................... 29.8 25.5 29.3
Hispanic \1\.............................. 26.9 25.5 29.7
------------------------------------------------------------------------
\1\ Persons of Hispanic origin may be of any race.
Source: U.S. Census Bureau (1999).
TABLE H-10.--STATE POVERTY RATES: 3-YEAR AVERAGES, 1988-90 THROUGH 1996-98
----------------------------------------------------------------------------------------------------------------
State 1988-90 1990-92 1991-93 1992-94 1993-95 1994-96 1996-98
----------------------------------------------------------------------------------------------------------------
Alabama.......................................... 19.1 18.4 17.9 17.0 18.0 16.8 14.7
Alaska........................................... 11.0 11.1 10.4 9.8 8.8 8.5 8.8
Arizona.......................................... 14.0 14.5 15.6 15.7 15.8 17.5 18.1
Arkansas......................................... 19.8 18.1 18.3 17.6 16.7 15.8 17.2
California....................................... 13.3 15.1 17.0 17.5 17.6 17.2 16.3
Colorado......................................... 12.8 11.6 10.4 9.9 9.2 9.5 9.3
Connecticut...................................... 4.3 8.0 9.1 9.7 9.7 10.7 9.9
Delaware........................................ 8.5 7.3 8.6 8.8 9.6 9.1 9.5
District of Columbia............................ 18.1 20.0 21.8 22.6 23.3 22.5 22.7
Florida.......................................... 13.5 15.0 16.4 16.1 16.3 15.1 13.9
Georgia.......................................... 14.9 16.9 16.1 15.1 13.2 13.6 14.3
Hawaii........................................... 11.1 9.9 9.0 9.3 9.0 10.4 12.3
Idaho............................................ 13.3 14.6 14.1 13.4 13.2 12.8 13.2
Illinois......................................... 13.0 14.2 14.3 13.9 12.8 12.3 11.1
Indiana.......................................... 12.3 13.5 13.3 12.6 11.8 10.3 8.6
Iowa............................................. 10.0 10.4 10.5 10.8 11.1 10.8 9.4
Kansas........................................... 9.7 11.2 12.2 13.0 12.9 12.3 10.1
Kentucky......................................... 17.0 18.6 19.6 19.5 17.9 16.7 15.5
Louisiana........................................ 23.2 22.3 23.4 25.5 23.9 22.0 18.6
Maine............................................ 12.2 13.5 14.4 12.8 12.0 10.6 10.6
Maryland......................................... 9.6 10.2 10.3 10.7 10.2 10.4 8.6
Massachusetts.................................... 9.3 10.6 10.8 10.2 10.5 10.3 10.3
Michigan......................................... 13.2 14.0 14.4 14.4 13.9 12.5 10.8
Minnesota........................................ 11.6 12.6 12.6 12.1 10.8 10.2 9.9
Mississippi...................................... 25.0 24.6 24.4 23.1 22.7 21.3 18.3
Missouri......................................... 12.9 14.6 15.6 15.8 13.7 11.5 10.4
Montana.......................................... 15.5 15.1 14.7 13.4 13.9 14.6 16.4
Nebraska......................................... 11.1 10.0 10.2 9.9 9.6 9.5 10.8
Nevada........................................... 9.7 11.9 12.0 11.9 10.7 10.1 9.9
New Hampshire.................................... 6.9 7.4 8.7 8.8 7.6 6.5 8.4
New Jersey....................................... 7.9 9.6 10.4 10.1 9.3 8.7 9.0
New Mexico....................................... 21.1 21.4 20.7 20.0 21.3 24.0 22.4
New York......................................... 13.4 15.0 15.9 16.4 16.6 16.7 16.6
North Carolina................................... 12.6 14.4 14.9 14.8 13.7 13.0 12.5
North Dakota..................................... 12.5 13.4 12.7 11.2 11.2 11.1 13.2
Ohio............................................. 11.5 12.4 13.0 13.2 12.9 12.8 11.6
Oklahoma......................................... 15.9 17.0 18.6 18.5 17.9 16.8 14.8
Oregon........................................... 10.3 11.3 12.3 11.7 11.6 11.6 12.8
Pennsylvania..................................... 10.6 11.2 12.1 12.5 12.6 12.1 11.3
Rhode Island..................................... 8.0 10.0 11.4 11.3 10.7 10.6 11.8
South Carolina................................... 16.2 17.2 18.1 17.2 17.5 15.6 13.3
South Dakota..................................... 13.6 14.0 14.5 14.6 14.4 13.6 13.0
Tennessee........................................ 17.8 16.5 17.4 17.1 16.6 15.3 14.5
Texas............................................ 17.0 17.1 17.9 18.3 18.0 17.7 16.1
Utah............................................. 8.7 10.1 11.0 9.4 9.0 8.0 8.5
Vermont.......................................... 9.0 11.3 11.1 9.4 9.3 10.2 10.6
Virginia......................................... 10.9 10.1 9.7 10.0 10.2 11.1 11.3
Washington....................................... 9.1 9.8 11.0 11.7 12.1 12.0 10.0
West Virginia.................................... 17.2 19.4 20.8 21.0 19.2 17.9 17.6
Wisconsin........................................ 8.5 10.0 11.2 10.8 10.0 8.8 8.6
Wyoming.......................................... 10.5 10.4 11.2 11.0 11.6 11.1 12.0
--------------------------------------------------------------
Total........................................ 13.1 14.1 14.8 14.5 14.5 14.0 13.2
----------------------------------------------------------------------------------------------------------------
Source: U.S. Census Bureau (1999).
While the general trends in families' economic well-being
are similar regardless of how measured, varying results for the
distribution of family incomes are obtained depending on which
income measure is used. Three commonly used income measures
(all adjusted for inflation) are family cash income, family
cash income per capita, and AFI. While no measure perfectly
captures the economic well-being of families, AFI most
accurately accounts for differences in family size by
incorporating the scale implicit in the official Federal
poverty thresholds.
Family composition in the United States has undergone
pronounced changes since 1973 (table H-11). The number of
married couples with children has been almost flat since 1973.
By contrast, the number of families headed by a single mother
grew by 104 percent over the entire 1973-98 period, the number
of nonelderly childless units grew by 94 percent, and the
number of elderly childless units grew by nearly 60 percent.
Changes in family composition are also reflected in the
number of persons and earners per family. The average family
has become smaller, reflecting in part relatively fewer
families with children (and fewer children in those families).
The average family also had fewer earners in 1998 than in 1973.
Definitions and Methods
Analyzing trends in the distribution of family incomes over
time requires making decisions about a number of variables: How
should variation in incomes be measured? What is the
appropriate timeframe over which to examine changes? How should
inflation be taken into account? And, finally, what is the
appropriate measure of income to use?
TABLE H-11.--CHANGES IN POPULATION, FAMILY COMPOSITION, AND NUMBER OF EARNERS PER FAMILY, SELECTED YEARS 1973-98
----------------------------------------------------------------------------------------------------------------
Year Percent change
Family group -------------------------------------------------------------------------
1973 1979 1989 1998 1973-79 1979-89 1989-98
----------------------------------------------------------------------------------------------------------------
Distribution of families by family
type (in thousands):
Families with children............ 31,098 32,166 34,768 37,758 3.4 8.1 8.6
Married couples with children. 24,798 24,166 24,378 24,872 -2.5 0.9 2.0
Single mothers with children.. 4,126 5,650 7,123 8,425 36.9 26.1 18.3
Nonelderly childless units \1\.... 28,183 35,730 46,467 54,780 26.8 30.1 17.9
Elderly childless units \2\....... 13,884 16,331 20,428 22,058 17.6 25.1 8.0
-------------------------------------------------------------------------
Total number of families.. 73,166 84,229 101,663 114,596 15.1 20.7 12.7
=========================================================================
Distribution of persons by family type
(in thousands):
Families with children............ 134,248 130,426 135,381 147,486 -2.8 3.8 8.9
Married couples with children. 108,976 101,318 99,471 102,603 -7.0 -1.8 3.1
Single mothers with children.. 14,240 18,132 21,504 25,657 27.3 18.6 19.3
Nonelderly childless units \1\.... 50,148 60,514 77,025 87,276 20.7 27.3 13.3
Elderly childless units \2\....... 23,129 26,778 33,440 36,279 15.8 24.9 8.5
-------------------------------------------------------------------------
Total number of persons... 207,525 217,718 245,846 271,040 4.9 12.9 10.2
=========================================================================
Average number of persons per family:
Under 18.......................... 0.94 0.75 0.63 0.62 -20.2 -16.1 -1.5
18 to 64.......................... 1.64 1.55 1.50 1.46 -5.5 -3.4 -2.5
65 and older...................... 0.30 0.28 0.29 0.28 -6.7 3.9 -3.7
-------------------------------------------------------------------------
Total......................... 2.87 2.59 2.42 2.37 -9.8 -6.6 -2.0
=========================================================================
Average number of earners per family:
Male earners...................... 0.81 0.75 0.69 0.66 -7.4 -8.5 -4.4
Female earners.................... 0.57 0.59 0.58 0.58 3.5 -1.1 0.0
-------------------------------------------------------------------------
Total......................... 1.39 1.34 1.27 1.24 -3.6 -5.2 -2.4
----------------------------------------------------------------------------------------------------------------
\1\ Families in which both the head and spouse are under age 65 and there are no children under 18, and
unrelated individuals under age 65.
\2\ Families in which either the head or spouse of head is 65 or older and there are no children under 18, and
unrelated individuals 65 and older.
Source: Congressional Budget Office based on data from the March 1974, 1980, 1990 and 1999 Current Population
Surveys.
Measuring variation
Most of the data in this section are presented for income
quintiles, each of which represents one-fifth of the income
distribution (either families or persons, as indicated).
Quintiles are calculated by ordering all relevant family units
from those with the lowest income to those with the highest.
For the analysis of changes in incomes among different types of
families, quintiles are defined separately for each family
type.
The analysis of changes in the distribution of family
incomes over time is done by examining average incomes,
adjusted for inflation, by income quintile for specific types
of families.
Timeframe
Most of the analysis focuses on data for 4 years: 1973,
1979, 1989, and 1998. The first 3 years reflect peaks in the
business cycle, and allow comparisons to be made across time
periods in which general economic conditions were broadly
similar. Information is also presented for 1998, the most
recent year for which data are available.
Income data provided by the Census Bureau to outside
researchers are frequently limited in certain ways both to
protect confidentiality and to reduce the impact of reporting
and coding errors on statistical calculations. Beginning with
information for 1995, the Census Bureau substantially increased
the maximum earnings it reports for individuals on public-use
computer files. As a result, comparisons of incomes for high-
income individuals and families in years before and after 1995
may reflect actual differences in their economic circumstances,
differences in the way their income is coded, or both.
To account for this reporting change, income data for 1998
are presented here in two ways. First, individuals' earnings
for 1998 are limited to (or topcoded at) the same inflation-
adjusted value they were limited to in 1989 ($99,999 in 1989;
$131,450 in 1998.) Second, individuals' earnings in 1998 are
presented the same way they are reported on the Census Bureau's
public-use files ($1 million upper limit).
Adjustment for inflation
To examine changes in family income over time, the dollar
amounts must be adjusted for inflation to compare actual buying
power. Adjustment for inflation is done here using the CPI-U-
X1, a revised version of the official Consumer Price Index that
provides a consistent treatment of the costs of home ownership
over the years examined. The CPI-U-X1 is an index of the cost
of a market basket of goods and services representing the
average consumption of the urban population (table H-7).
Income Measure
The purpose of examining the distribution of family incomes
over time is to analyze changes in family economic well-being.
Two important issues in choosing an appropriate income measure
are how to adjust for differences in family size and what to
include as income.
One measure is real family cash income, which is the sum of
wage, salary, and self-employment earnings, private pension and
retirement income, interest and dividends, and government cash
transfers received by each family member. By this measure,
which takes inflation into account but not changes in family
size, noncash transfers, or taxes, the average income of
families increased throughout the 1973-98 period (table H-12,
top panel). However, the increases were uneven over time and
among families with different levels of income. Regarding the
former, the period from 1973 to 1979 was one of relatively slow
growth in family income while the period from 1979 to 1989 saw
more rapid growth. The decade from 1989 to 1998 saw moderate
growth under one measure and more robust growth under the
income measure that allows more income in the top quintile. It
is notable that for the 60 percent of American families in the
middle- and upper-income quintiles, average income growth over
the decade of the 1980s is stronger than growth during the
preceding period and during the following period when a similar
method of computing income in the upper quintile is used for
both periods.
These figures for mean family growth over the three periods
mask very large differences in the patterns of growth in the
five income quintiles. The table shows clearly that progress in
family income over the entire 1973-98 period was negative for
the bottom two income quintiles. The drop in income was
especially large for the bottom quintile over the period 1989-
98. By contrast, growth was substantial for the upper two
income quintiles, especially after 1979. Examining the income
data by quintiles also shows why the two measures of computing
family income for the 1989 and 1998 period yield such different
estimates of income growth; namely, $43,350-$45,062 or 3.9
percent under one definition versus $43,350-$47,209 or 8.9
percent under the other. Not surprisingly, the decision to
allow more income at the top of the distribution has an impact
only on the top income quintile (see the last two columns of
the top panel). More specifically, income growth in the top
quintile under the more restricted income definition is only
from $102,159 to $109,301 or 7.0 percent, whereas growth under
the broader income definition used by the Congressional Budget
Office starting in 1995 is from $102,159 to $120,037 or 17.5
percent. Thus, the difference in the two measures of average
family income growth over the 1989-98 period is accounted for
entirely by the top quintile.
Family cash income has several shortcomings as a measure of
change in economic well-being. Most notably, it fails to take
into account change in family size and composition: a family of
one with $30,000 in income is treated as being as well off as a
family of four with $30,000 in income. This assumption is
inappropriate, however, as a family of four requires more
income to attain the same standard of living as a single
person.
TABLE H-12.--ALTERNATIVE MEASURES OF FAMILY INCOME BY INCOME QUINTILE AND CHANGE OVER TIME, SELECTED YEARS 1967-98 FOR ALL FAMILIES
[In 1998 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year Percent change
Income measure and quintile --------------------------------------------------------------------------------------------------
1967 1973 1979 1989 1998 \1\ 1998 \2\ 1973-79 1979-89 1989-98 \1\ 1989-98 \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mean family cash income (family weighted):
Lowest........................................... NA $7,967 $7,879 $7,711 $7,247 $7,247 -1.1 -2.1 -6.0 -6.0
Second........................................... NA 20,265 20,120 19,858 19,844 19,844 -0.7 -1.3 -0.1 -0.1
Middle........................................... NA 34,058 33,663 33,945 34,007 34,007 -1.2 0.8 0.2 0.2
Fourth........................................... NA 49,881 50,845 53,072 54,912 54,912 1.9 4.4 3.5 3.5
Highest.......................................... NA 87,237 89,689 102,159 109,301 120,037 2.8 13.9 7.0 17.5
--------------------------------------------------------------------------------------------------
Total........................................ NA 39,884 40,440 43,350 45,062 47,209 1.4 7.2 3.9 8.9
==================================================================================================
Mean adjusted family income (person weighted): \3\
Lowest........................................... 0.69 0.90 0.90 0.86 0.85 0.85 0.0 -4.3 -1.3 -1.3
Second........................................... 1.54 1.94 2.06 2.09 2.12 2.12 6.2 1.3 1.6 1.6
Middle........................................... 2.26 2.82 3.07 3.27 3.38 3.38 8.9 6.7 3.2 3.2
Fourth........................................... 3.16 3.94 4.32 4.77 5.04 5.04 9.6 10.4 5.7 5.7
Highest.......................................... 5.67 6.87 7.39 8.84 9.58 10.63 7.6 19.6 8.4 20.3
--------------------------------------------------------------------------------------------------
Total........................................ 2.66 3.29 3.55 3.97 4.19 4.40 7.9 11.7 5.8 11.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Individual's earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989 topcoded value ($99,999) adjusted for inflation.
\2\ Individual's earnings in 1998 are as reported on Census public-use files (which use a topcode value of $1 million).
\3\ Family income divided by the poverty threshold. Thresholds are based on the 1989 distribution of family sizes, with no adjustment for the age of the
head of household or the number of children.
NA--Not available.
Note.--Income is pretax income.
Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1968, 1974, 1980, 1990, and 1999.
An alternative approach to measuring family economic well-
being is to take advantage of the family size adjustment
implicit in the official Federal poverty thresholds. This scale
assumes, for example, that a family of four needs about twice
as much income as a single person to attain an equivalent
standard of living (table H-13). The equivalence scale implicit
in the poverty thresholds may not perfectly capture the
disparate needs of families of different sizes, but it yields a
better assessment of relative economic well-being than making
no adjustment (mean family cash income) or assuming no
economies of scale (mean family cash income per capita).
TABLE H-13.--POVERTY THRESHOLDS AND EQUIVALENCE VALUES FOR DIFFERENT
FAMILY SIZES, 1998
------------------------------------------------------------------------
Official Adjusted
Family size (persons) poverty poverty Equivalence
threshold threshold value \1\
------------------------------------------------------------------------
1.................................... $8,316 $7,633 1.00
2.................................... 10,634 9,768 1.28
3.................................... 13,003 11,956 1.57
4.................................... 16,660 15,330 2.01
5.................................... 19,680 18,130 2.37
6.................................... 22,228 20,466 2.68
7.................................... 25,257 23,176 3.04
8.................................... 28,166 25,796 3.37
9 or more............................ 33,339 30,818 4.01
------------------------------------------------------------------------
\1\ Equivalence value is calculated based on the official poverty
thresholds. Values would be slightly different using the adjusted
poverty threshold because of different numbers of children in a family
of a given size.
Note.--Poverty thresholds shown for one- and two-person families are a
weighted average of the separate official thresholds for elderly and
nonelderly individuals and families. Adjusted poverty thresholds are
computed using the CPI-U-X1 to adjust for inflation. The official
poverty threshold is adjusted for inflation using the Consumer Price
Index (CPI).
Source: Congressional Budget Office.
The AFI measure shown in the second panel of table H-12
incorporates the equivalence scale underlying the poverty
thresholds. Each family's pretax cash income is divided by its
poverty threshold, yielding family income as a multiple of
poverty. Thus, for example, the average family in the middle
quintile in 1998 had an income of 3.38 times its poverty
threshold. \3\
---------------------------------------------------------------------------
\3\ Poverty thresholds for one- and two-person families in this
section do not vary by the age of the family head. The 1989 weighted
averages are adjusted for inflation using the CPI-U-X1.
---------------------------------------------------------------------------
By taking family size into account, the AFI measure greatly
reduces the income losses in the bottom two quintiles over the
1973-98 period. In fact, it completely eliminates income losses
in the second quintile. It also increases the income gains
experienced by the top three income quintiles. The obvious
conclusion to be drawn from the comparison of the two income
definitions is that taking family size into account
substantially improves the picture of family income changes
over the years since 1973. However, as chart H-1 shows, the
difference in income between the top and bottom quintiles, even
under the AFI measure, grew substantially throughout the 1973-
98 period.
CHART H-1. RATIO OF AVERAGE ADJUSTED FAMILY INCOME OF HIGHEST QUINTILE
TO AVERAGE ADJUSTED FAMILY INCOME OF LOWEST QUINTILE, 1973-98
\1\ Individual's earnings in 1998 are limited to $131,450.
That topcoded value is equal to the 1989 topcoded value
($99,999) adjusted for inflation.
\2\ Individual's earnings in 1998 are as reported on Census
public-use files (which use a topcode value of $1 million).
Source: Congressional Budget Office.
Income Shares
Another way of tracking income trends is to look at changes
in the percentage share of income received by families in each
quintile. Income shares measure whether families have gained or
lost in relative terms. That is, a given quintile may receive a
smaller share of real income even as its average income has
increased.
All three income measures (family cash income, AFI, family
income per capita) show broadly similar trends in the share of
income received by each quintile (table H-14). In general,
between 1973 and 1998, the shares of the lowest four quintiles
fell, and the share of the top quintile rose. The measures show
somewhat different patterns of shares at any point in time,
however. For example, in 1998 the top quintile had 50.9 percent
of income under the family cash income definition, but 48.3
percent under the AFI definition. In that same year, the bottom
quintile had 3.1 percent under the family cash income
definition, but 3.9 percent under the AFI definition and 3.6
percent under the family per capita definition. Even so, the
income shares analysis, like the other analyses in this
section, generally shows that the top quintile had an
increasing percentage of the income pie over the period 1973-
98.
TABLE H-14.--SHARES OF FAMILY INCOME BY INCOME QUINTILE FOR SELECTED YEARS 1967-98 FOR ALL FAMILIES
[In percent]
----------------------------------------------------------------------------------------------------------------
Year
Income measure and quintile -----------------------------------------------------------
1967 1973 1979 1989 1994 1998 \1\ 1998 \2\
----------------------------------------------------------------------------------------------------------------
Family cash income (family weighted):
Lowest.......................................... NA 4.0 3.9 3.6 3.3 3.2 3.1
Second.......................................... NA 10.2 10.0 9.2 8.8 8.8 8.4
Middle.......................................... NA 17.1 16.6 15.7 15.2 15.1 14.4
Fourth.......................................... NA 25.0 25.1 24.5 24.6 24.4 23.3
Highest......................................... NA 43.7 44.4 47.1 48.1 48.5 50.9
Adjusted family income (person weighted): \3\
Lowest.......................................... 5.2 5.5 5.1 4.3 4.0 4.1 3.9
Second.......................................... 11.6 11.8 11.6 10.5 10.2 10.1 9.6
Middle.......................................... 16.9 17.1 17.3 16.5 16.3 16.1 15.3
Fourth.......................................... 23.7 23.9 24.3 24.0 24.3 24.0 22.9
Highest......................................... 42.6 41.7 41.7 44.6 45.2 45.7 48.3
Family cash income per capita (person weighted): \4\
Lowest.......................................... NA 5.2 4.9 4.1 3.8 3.8 3.6
Second.......................................... NA 11.0 11.0 10.0 9.7 9.5 9.1
Middle.......................................... NA 16.1 16.3 15.6 15.5 15.2 14.5
Fourth.......................................... NA 23.1 23.6 23.4 23.5 23.4 22.3
Highest......................................... NA 44.6 44.3 46.9 47.5 48.1 50.5
----------------------------------------------------------------------------------------------------------------
\1\ Individual's earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989 topcoded
value ($99,999) adjusted for inflation.
\2\ Individual's earnings in 1998 are as reported on Census public-use files (which use a topcode value of $1
million).
\3\ Family income divided by the poverty threshold. Thresholds are based on the 1989 distribution of family
sizes, with no adjustment for the age of the head of household or the number of children.
\4\ Total family income divided by the number of persons in the family.
Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1968, 1974,
1980, 1990, 1995, and 1999.
TRENDS IN PRETAX CASH INCOMES BY TYPE OF FAMILY
As we have seen (table H-11), the composition of the
typical family has changed over time. Compared with 1973 and
1979, there were fewer persons in each family in 1998, on
average, and married couples with children made up a smaller
fraction of all families (table H-15). Additional insights can
therefore be gained by looking at changes in incomes for
specific family types. This analysis distinguishes six types of
family units:
1. Married couples with children, which are families composed
of a married couple living only with their own or
related children, at least one of whom is under age 18;
2. Single mothers with children, which are families composed
of unmarried, divorced, separated, or widowed mothers
living only with their own or related children, at
least one of whom is under age 18;
3. Nonelderly childless families, which are families composed
of two or more related people living together, in which
the family head and the spouse of the head are both
under age 65 and there are no children under age 18;
4. Nonelderly unrelated individuals, which are people over age
17 and under age 65 who are not living with relatives;
5. Elderly childless families, which are families composed of
two or more related people living together, in which
either the family head or the spouse of the head is 65
or older and there are no children under age 18; and
6. Elderly unrelated individuals, which are people 65 or older
who are not living with relatives.
TABLE H-15.--AVERAGE FAMILY SIZE AND NUMBER OF FAMILIES, \1\ BY FAMILY
TYPE, WEIGHTED BY FAMILIES, SELECTED YEARS 1973-98
------------------------------------------------------------------------
Number of
Family type and year Persons per families Percent of
family (thousands) families
------------------------------------------------------------------------
All families: \1\
1973......................... 2.87 73,166 100.0
1979......................... 2.59 84,229 100.0
1989......................... 2.42 101,663 100.0
1994......................... 2.41 108,522 100.0
1998......................... 2.37 114,596 100.0
All families with children:
1973......................... 4.35 31,098 42.5
1979......................... 4.09 32,166 38.2
1989......................... 3.89 34,768 34.2
1994......................... 3.90 37,413 34.5
1998......................... 3.91 37,758 32.9
Married couples with children
1973......................... 4.42 24,798 33.9
1979......................... 4.23 24,166 28.7
1989......................... 4.08 24,378 24.0
1994......................... 4.11 25,079 23.1
1998......................... 4.13 24,872 21.7
Single mothers with children:
1973......................... 3.50 4,126 5.6
1979......................... 3.24 5,650 6.7
1989......................... 3.02 7,123 7.0
1994......................... 3.04 8,351 7.7
1998......................... 3.05 8,425 7.4
Nonelderly childless units:
1973......................... 1.76 28,183 38.5
1979......................... 1.68 35,730 42.4
1989......................... 1.66 46,467 45.7
1994......................... 1.62 49,580 45.7
1998......................... 1.59 54,780 47.8
Nonelderly childless families:
1973......................... 2.32 16,363 22.4
1979......................... 2.35 17,931 21.3
1989......................... 2.44 21,257 20.9
1994......................... 2.43 21,473 19.8
1998......................... 2.42 22,823 19.9
Nonelderly unrelated individuals:
1973......................... 1.00 11,820 16.2
1979......................... 1.00 17,799 21.1
1989......................... 1.00 25,210 24.8
1994......................... 1.00 28,106 25.9
1998......................... 1.00 31,956 27.9
Elderly childless units:
1973......................... 1.64 13,884 19.0
1979......................... 1.62 16,331 19.4
1989......................... 1.64 20,428 20.1
1994......................... 1.65 21,530 19.8
1998......................... 1.64 22,058 19.2
Elderly childless families:
1973......................... 2.17 7,590 10.4
1979......................... 2.16 8,676 10.3
1989......................... 2.23 10,600 10.4
1994......................... 2.26 11,100 10.2
1998......................... 2.24 11,494 10.0
Elderly unrelated individuals:
1973......................... 1.00 6,294 8.6
1979......................... 1.00 7,655 9.1
1989......................... 1.00 9,828 9.7
1994......................... 1.00 10,430 9.6
1998......................... 1.00 10,564 9.2
------------------------------------------------------------------------
\1\ Corresponds more closely to Census definition of household. Includes
families of one person.
Source: Congressional Budget Office tabulations of data from the March
Current Population Survey, 1974, 1980, 1990, 1995, and 1999.
In addition, results are also presented for four
aggregates:
1. All families with children, which comprises married
couples, single mothers, and other families with
children;
2. Nonelderly childless units, which comprises nonelderly
childless families and nonelderly unrelated
individuals;
3. Elderly childless units, which comprises elderly childless
families and elderly unrelated individuals; and
4. All families, which comprises all families and unrelated
individuals (i.e., the noninstitutional U.S.
population).
Unless otherwise noted, the analysis of changes in income
for each family type listed above is based on quintiles
computed for that family type. This procedure permits
comparisons within, but not across, family types; the quintile
in which a particular family is found says nothing about its
place among all families, but measures its position in relation
to families of the same type. For example, individuals in the
middle quintile of single mothers with children may be in the
lowest quintile of the all-families grouping.
Comparisons over time show how the incomes of families of a
given type compare with similar families at another time, not
how incomes have changed for a particular type of family.
Families may move among income quintiles as their incomes--or
the incomes of other families--rise or fall; they may also
change types as their members grow older, have children, marry,
or divorce. In addition, the average number of members and
earners within a given type of family may change over time, as
may the characteristics of those persons.
Pretax Adjusted Family Income
Trends in incomes for different family types show more
variation than trends for families overall. Between 1973 and
1979, adjusted family income (AFI) grew 12.2 percent, on
average, for all families with children (table H-16). This
compares with an income gain of only 7.9 percent for all
families. For families with children, average AFI fell 4.5
percent during this period for the lowest quintile, from 88
percent of poverty to 84 percent of poverty. For the highest
quintile, average AFI rose 7.3 percent, compared with 7.6
percent for all families. During the 1979-89 period, the bottom
two quintiles of families with children experienced reduced
income, by 11.7 percent and 4.1 percent respectively for the
lowest and second quintiles; meanwhile, the highest quintile
had an income increase of 17 percent. These losses at the
bottom were greater for families with children than for all
families.
Most of the divergence in incomes among families with
children reflects compositional change, as families of single
mothers with children became increasingly common (table H-11).
The lowest quintile of married couples with children had a 3.0-
percent decline in average AFI between 1979 and 1989; the
lowest quintile of single mothers with children fared much
worse, with a 22.0-percent decline during the same period.
These two family types as a whole, however, showed income gains
over the period: 11.2 percent for married couples with children
and 3.3 percent for single mothers with children. More
recently, during the 1989-98 period, all quintiles of both
family types have experienced rising incomes. Single mothers in
the bottom quintile had a modest increase of 0.2 percent, and
mother-headed families in the second and third quintiles
enjoyed more than twice the percentage increases of the top two
quintiles. These developments in the bottom quintiles are
almost certainly due to increased work by poor and low-income
mothers in general and by mothers leaving welfare in particular
(see Appendix L).
TABLE H-16.--AVERAGE PRETAX ADJUSTED FAMILY INCOME (INCOME AS A MULTIPLE OF POVERTY) BY FAMILY TYPE AND INCOME QUINTILE, WEIGHTED BY PERSONS, SELECTED
YEARS 1967-98
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year Percent change
Family type and quintile ------------------------------------------------------------------------------------------------
1967 1973 1979 1989 1998 \1\ 1998 \2\ 1973-79 1979-89 1989-98 \1\ 1989-98 \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
All families:
Lowest............................................. 0.69 0.90 0.90 0.85 0.85 0.85 0.0 -4.3 -1.3 -1.3
Second............................................. 1.54 1.94 2.06 2.09 2.12 2.12 6.2 1.3 1.6 1.6
Middle............................................. 2.26 2.82 3.07 3.27 3.38 3.38 8.9 6.7 3.2 3.2
Fourth............................................. 3.16 3.94 4.32 4.77 5.04 5.04 9.6 10.4 5.7 5.7
Highest............................................ 5.67 6.87 7.39 8.84 9.58 10.63 7.6 19.6 8.4 20.3
------------------------------------------------------------------------------------------------
Total............................................ 2.66 3.29 3.55 3.97 4.19 4.40 7.9 11.7 5.8 11.1
================================================================================================
All families with children:
Lowest............................................. 0.74 0.88 0.84 0.74 0.76 0.76 -4.5 -11.7 2.5 2.5
Second............................................. 1.54 1.88 1.95 1.87 1.91 1.91 3.7 -4.1 2.2 2.2
Middle............................................. 2.13 2.65 2.84 2.93 3.03 3.03 7.2 3.3 3.3 3.3
Fourth............................................. 2.84 3.54 3.85 4.14 4.45 4.45 8.8 7.5 7.5 7.5
Highest............................................ 4.77 5.73 6.15 7.20 8.00 9.04 7.3 17.0 11.1 25.6
------------------------------------------------------------------------------------------------
Total............................................ 2.40 2.94 3.30 3.38 3.63 3.84 12.2 2.3 7.5 13.7
================================================================================================
Married couples with children:
Lowest............................................. 0.89 1.16 1.18 1.14 1.19 1.19 1.7 -3.0 3.9 3.9
Second............................................. 1.66 2.12 2.29 2.34 2.47 2.47 8.0 2.0 5.7 5.7
Middle............................................. 2.23 .84 3.12 3.34 3.61 3.61 9.9 7.1 8.0 8.0
Fourth............................................. 2.93 3.71 4.11 4.52 5.04 5.04 10.8 10.1 11.4 11.4
Highest............................................ 4.88 5.94 6.41 7.67 8.71 10.12 7.9 19.7 13.5 31.9
------------------------------------------------------------------------------------------------
Total............................................ 2.52 3.15 3.42 3.80 4.20 4.49 8.6 11.2 10.5 17.9
================================================================================================
Single mothers with children:
Lowest............................................. 0.21 0.33 0.32 0.25 0.25 0.25 -3.0 -22.0 0.2 0.2
Second............................................. 0.59 0.71 0.75 0.64 0.74 0.74 5.6 -14.0 14.8 14.8
Middle............................................. 0.91 1.03 1.22 1.14 1.30 1.30 18.4 -6.1 13.5 13.5
Fourth............................................. 1.45 1.67 2.01 2.03 2.16 2.16 20.4 0.9 6.5 6.5
Highest............................................ 2.78 3.29 3.65 4.14 4.34 4.42 10.9 13.6 4.7 6.6
------------------------------------------------------------------------------------------------
Total............................................ 1.19 1.41 1.59 1.64 1.76 1.77 12.8 3.3 7.0 8.0
================================================================================================
Nonelderly childless units:
Lowest............................................. 0.80 1.22 1.24 1.19 1.07 1.07 1.6 -3.7 -10.4 -10.4
Second............................................. 2.19 2.81 2.91 2.94 2.91 2.91 3.6 1.0 -1.0 -1.0
Middle............................................. 3.28 4.09 4.27 4.45 4.48 4.48 4.4 4.3 0.6 0.6
Fourth............................................. 4.47 5.49 5.78 6.29 6.46 6.46 5.3 8.8 2.7 2.7
Highest............................................ 7.42 8.95 9.35 10.94 11.69 13.02 4.5 17.0 6.8 19.0
------------------------------------------------------------------------------------------------
Total............................................ 3.63 4.51 4.71 5.16 5.32 5.59 4.4 9.6 3.1 8.2
================================================================================================
Nonelderly childless families:
Lowest............................................. 1.03 1.74 1.85 1.80 1.83 1.83 6.3 -2.8 1.8 1.8
Second............................................. 2.47 3.31 3.59 3.68 3.80 3.80 8.5 2.4 3.3 3.3
Middle............................................. 3.52 4.53 4.89 5.20 5.40 5.40 7.9 6.4 3.8 3.8
Fourth............................................. 4.70 5.88 6.33 7.03 7.40 7.40 7.7 11.1 5.2 5.2
Highest............................................ 7.65 9.33 9.94 11.72 12.79 14.55 6.5 17.9 9.1 24.1
------------------------------------------------------------------------------------------------
Total............................................ 3.87 4.96 5.32 5.89 6.24 6.60 7.3 10.7 6.1 12.1
================================================================================================
Nonelderly unrelated individuals:
Lowest............................................. 0.32 0.51 0.61 0.61 0.49 0.49 19.6 -0.3 -19.4 -19.4
Second............................................. 1.14 1.49 1.72 1.83 1.74 1.74 15.4 6.6 -5.1 -5.1
Middle............................................. 2.12 2.53 2.78 3.00 3.04 3.04 9.9 7.9 1.3 1.3
Fourth............................................. 3.23 3.82 4.03 4.46 4.51 4.51 5.5 10.7 1.1 1.1
Highest............................................ 5.88 7.00 7.11 8.48 8.89 9.47 1.6 19.3 4.8 11.6
------------------------------------------------------------------------------------------------
Total............................................ 2.54 3.07 3.25 3.68 3.73 3.85 5.9 13.1 1.5 4.7
================================================================================================
Elderly childless units:
Lowest............................................. 0.48 0.76 0.84 0.95 0.97 0.97 10.5 13.4 1.8 1.8
Second............................................. 0.95 1.34 1.50 1.73 1.84 1.84 11.9 15.2 6.5 6.5
Middle............................................. 1.48 1.97 2.26 2.64 2.74 2.74 14.7 16.7 3.9 3.9
Fourth............................................. 2.40 3.02 3.38 4.02 4.14 4.13 11.9 19.0 2.9 2.6
Highest............................................ 5.32 6.54 6.85 8.63 9.27 9.68 4.7 26.0 7.4 12.1
------------------------------------------------------------------------------------------------
Total............................................ 2.13 2.73 2.97 3.59 3.79 3.87 8.8 21.0 5.5 7.7
================================================================================================
Elderly childless families:
Lowest............................................. 0.60 0.96 1.06 1.20 1.24 1.24 10.4 13.1 3.5 3.5
Second............................................. 1.16 1.63 1.86 2.15 2.28 2.28 14.1 15.4 6.2 6.2
Middle............................................. 1.77 2.34 2.67 3.14 3.25 3.25 14.1 17.5 3.6 3.6
Fourth............................................. 2.76 3.50 3.83 4.61 4.75 4.75 9.4 20.5 2.9 2.9
Highest............................................ 5.73 7.12 7.37 9.54 10.12 10.61 3.5 29.5 6.0 11.2
------------------------------------------------------------------------------------------------
Total............................................ 2.40 3.11 3.36 4.13 4.33 4.43 8.0 22.9 4.8 7.2
================================================================================================
Elderly unrelated individuals:
Lowest............................................. 0.35 0.54 0.64 0.73 0.73 0.73 18.5 13.8 0.2 0.2
Second............................................. 0.63 0.93 1.02 1.17 1.23 1.23 9.7 15.1 4.8 4.8
Middle............................................. 0.86 1.23 1.37 1.62 1.71 1.71 11.4 18.6 5.3 5.3
Fourth............................................. 1.29 1.73 2.05 2.46 2.50 2.50 18.5 20.3 1.4 1.4
Highest............................................ 3.44 4.08 4.83 5.58 6.28 6.49 18.4 15.5 12.6 16.3
------------------------------------------------------------------------------------------------
Total............................................ 1.31 1.70 1.98 2.31 2.49 2.53 16.5 16.9 7.6 9.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Individual's earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989 topcoded value ($99,999) adjusted for inflation.
\2\ Individual's earnings in 1998 are as reported on Census public-use files (which use a topcode value of $1 million).
Note.--Poverty thresholds are based on the 1989 distribution of family sizes, with no adjustment for the age of the head of household or the number of
children. Quintiles are based the number of persons.
Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1968, 1974, 1980, 1990, and 1999.
Elderly persons experienced income gains across the board
between 1973 and 1998. For elderly childless units, which
include both single persons and married couples, average AFI
rose 10.5, 13.4, and 1.8 percent respectively for the lowest
quintile across the three periods shown in the last panel of
table H-16 and 4.7, 26.0, and 12.1 percent respectively over
the same periods for the highest quintile (using the new method
of income coding). Despite their gains, the elderly generally
had much lower incomes than the nonelderly. In 1998, for
example, the average income of elderly childless units was
about 3.9 times poverty; the average income of nonelderly
childless units, by comparison, was about 5.6 times poverty
(not shown in table).
Average Family Cash Income By Family Type
For all families, average cash income grew more slowly than
average pretax AFI between 1973 and 1998. This was also
generally true for specific family types. At the same time,
those groups of families whose average cash incomes declined
had more pronounced decreases than occurred in pretax AFI.
Average family cash income grew throughout the 1973-98
period for families with children (table H-17, second panel).
However, families at the bottom of the income distribution lost
ground during the 1973-89 period, with income declines of 11.0
percent during the 1973-79 period and 17.7 percent during the
1979-89 period. The decline stopped between 1989 and 1999 when
the income of families with children in the bottom quintile
actually increased slightly. As was the case with all the
measures we have examined, average family cash income of
families in the top two quintiles improved substantially
throughout the entire period after 1973.
As compared with the cash family income losses in the
bottom quintile for all families, the pattern of losses in the
bottom quintile was even greater for single mothers with
children before 1989 (table H-17, fourth panel). From 1979 to
1989, for example, these mothers lost almost a quarter of their
income. However, between 1989 and 1998 they made up for at
least some of the lost ground because their income increased by
3.9 percent. It is also interesting that during both the 1973-
79 and the 1989-98 periods, income gains in the second, third,
and fourth income quintiles of single mothers with children
were usually greater than income gains in the top quintile.
Because the change in family size among elderly persons was
almost negligible over the period, their trend in average
family cash incomes is almost identical to the trend in average
pretax AFI. Elderly childless units and elderly childless
families experienced income gains in every quintile during
every period between 1973 and 1998.
Table H-18 shows family cash income limits (the income
cutoffs between quintiles) by quintile and family type. Between
1973 and 1998, except for the top quintile, income limits among
families with children have declined or grown slowly while
those for the elderly have increased, in some cases
significantly. Across all family types except elderly childless
units and families, income limits among the higher quintiles
have increased more than among the lower
TABLE H-17.--AVERAGE FAMILY CASH INCOME BY FAMILY TYPE AND INCOME QUINTILE, SELECTED YEARS 1973-98
[In 1998 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year Percent change
Family type and income quintile ------------------------------------------------------------------------------------------------------
1973 1979 1989 1998 \1\ 1998 \2\ 1973-79 1979-89 1989-98 \1\ 1989-98 \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
All families:
Lowest....................................... $7,967 $7,879 $7,711 $7,247 $7,247 -1.1 -2.1 -6.0 -6.0
Second....................................... 20,265 20,120 19,860 19,844 19,844 -0.7 -1.3 -0.1 -0.1
Middle....................................... 34,058 33,663 33,947 34,007 34,007 -1.2 0.8 0.2 0.2
Fourth....................................... 49,881 50,845 53,075 54,912 54,912 1.9 4.4 3.5 3.5
Highest...................................... 87,237 89,689 102,163 109,301 120,037 2.8 13.9 7.0 17.5
------------------------------------------------------------------------------------------------------
Total...................................... 39,881 40,440 43,351 45,062 47,209 1.4 7.2 3.9 8.9
======================================================================================================
All families with children:
Lowest....................................... 13,841 12,316 10,141 10,181 10,181 -11.0 -17.7 0.4 0.4
Second....................................... 30,465 29,399 27,166 27,236 27,236 -3.5 -7.6 0.3 0.3
Middle....................................... 42,874 43,796 43,473 44,782 44,782 2.1 -0.7 3.0 3.0
Fourth....................................... 57,084 59,074 62,077 66,273 66,273 3.5 5.1 6.8 6.8
Highest...................................... 92,568 95,922 107,760 119,729 134,993 3.6 12.3 11.1 25.3
------------------------------------------------------------------------------------------------------
Total...................................... 47,366 48,101 50,124 53,640 56,693 1.6 4.2 7.0 13.1
======================================================================================================
Married couples with children:
Lowest....................................... 20,309 19,912 19,203 20,060 20,060 -2.0 -3.6 4.5 4.5
Second....................................... 35,715 37,193 37,680 40,120 40,120 4.1 1.3 6.5 6.5
Middle....................................... 46,682 49,548 52,171 56,761 56,761 6.1 5.3 8.8 8.8
Fourth....................................... 60,182 63,907 69,815 77,907 77,907 6.2 9.2 11.6 11.6
Highest...................................... 95,752 100,622 115,904 131,859 153,767 5.1 15.2 13.8 32.7
------------------------------------------------------------------------------------------------------
Total...................................... 51,728 54,236 58,955 65,341 69,723 4.8 8.7 10.8 18.3
======================================================================================================
Single mothers with children:
Lowest....................................... 4,607 4,388 3,372 3,502 3,502 -4.8 -23.2 3.9 3.9
Second....................................... 10,425 10,677 8,861 10,077 10,077 2.4 -17.0 13.7 13.7
Middle....................................... 15,672 17,267 15,529 17,028 17,028 10.2 -10.1 9.7 9.7
Fourth....................................... 23,486 26,164 25,563 26,946 26,946 11.4 -2.3 5.4 5.4
Highest...................................... 43,944 46,947 50,503 52,894 53,811 6.8 7.6 4.7 6.6
------------------------------------------------------------------------------------------------------
Total...................................... 19,627 21,089 20,766 22,089 22,273 7.4 -1.5 6.4 7.3
======================================================================================================
Nonelderly childless units:
Lowest....................................... 7,636 7,707 7,529 6,302 6,302 0.9 -2.3 -16.3 -16.3
Second....................................... 20,882 20,780 20,825 20,129 20,129 -0.5 0.2 -3.3 -3.3
Middle....................................... 33,602 33,385 34,382 33,779 33,779 -0.6 3.0 -1.8 -1.8
Fourth....................................... 49,518 50,237 53,306 53,762 53,762 1.5 6.1 0.9 0.9
Highest...................................... 88,251 90,888 104,577 108,118 118,709 3.0 15.1 3.4 13.5
------------------------------------------------------------------------------------------------------
Total...................................... 39,978 40,599 44,124 44,418 46,536 1.6 8.7 0.7 5.5
======================================================================================================
Nonelderly childless families:
Lowest....................................... 17,147 18,247 18,027 18,390 18,390 6.4 -1.2 2.0 2.0
Second....................................... 33,326 36,508 37,970 39,786 39,786 9.5 4.0 4.8 4.8
Middle....................................... 46,345 50,739 54,847 57,099 57,099 9.5 8.1 4.1 4.1
Fourth....................................... 62,044 67,117 75,877 79,714 79,714 8.2 13.1 5.1 5.1
Highest...................................... 101,043 109,139 129,385 138,648 157,815 8.0 18.6 7.2 22.0
------------------------------------------------------------------------------------------------------
Total...................................... 51,981 56,350 63,221 66,727 70,561 8.4 12.2 5.5 11.6
======================================================================================================
Nonelderly unrelated individuals:
Lowest....................................... 3,875 4,606 4,631 3,716 3,716 18.9 0.5 -19.8 -19.8
Second....................................... 11,331 13,089 13,963 13,283 13,283 15.5 6.7 -4.9 -4.9
Middle....................................... 19,229 21,118 22,860 23,182 23,182 9.8 8.2 1.4 1.4
Fourth....................................... 29,057 30,668 33,984 34,428 34,428 5.5 10.8 1.3 1.3
Highest...................................... 53,310 54,178 64,663 67,828 72,295 1.6 19.4 4.9 11.8
------------------------------------------------------------------------------------------------------
Total...................................... 23,361 24,732 28,020 28,487 29,381 5.9 13.3 1.7 4.9
======================================================================================================
Elderly childless units:
Lowest....................................... 5,453 6,089 6,866 6,954 6,954 11.7 12.8 1.3 1.3
Second....................................... 9,932 10,999 12,708 13,453 13,453 10.7 15.5 5.9 5.9
Middle....................................... 15,285 17,516 20,308 21,322 21,322 14.6 15.9 5.0 5.0
Fourth....................................... 24,418 27,870 32,902 34,271 34,271 14.1 18.1 4.2 4.2
Highest...................................... 59,516 62,541 77,626 83,954 87,303 5.1 24.1 8.2 12.5
------------------------------------------------------------------------------------------------------
Total...................................... 22,921 25,003 30,082 31,991 32,661 9.1 20.3 6.3 8.6
======================================================================================================
Elderly childless families:
Lowest....................................... 9,311 10,337 11,758 12,312 12,312 11.0 13.7 4.7 4.7
Second....................................... 15,871 18,194 21,000 22,420 22,420 14.6 15.4 6.8 6.8
Middle....................................... 22,610 25,962 30,751 32,034 32,034 14.8 18.4 4.2 4.2
Fourth....................................... 34,340 37,975 45,862 47,887 47,887 10.6 20.8 4.4 4.4
Highest...................................... 73,792 76,193 98,755 104,899 109,889 3.3 29.6 6.2 11.3
------------------------------------------------------------------------------------------------------
Total...................................... 31,185 33,732 41,625 43,910 44,908 8.2 23.4 5.5 7.9
======================================================================================================
Elderly unrelated individuals:
Lowest....................................... 4,086 4,886 5,549 5,550 5,550 19.6 13.6 0.0 0.0
Second....................................... 7,089 7,798 8,948 9,411 9,411 10.0 14.8 5.2 5.2
Middle....................................... 9,351 10,467 12,378 13,087 13,087 11.9 18.3 5.7 5.7
Fourth....................................... 13,206 15,618 18,786 19,124 19,124 18.3 20.3 1.8 1.8
Highest...................................... 31,057 36,785 42,512 47,984 49,550 18.4 15.6 12.9 16.6
------------------------------------------------------------------------------------------------------
Total...................................... 12,958 15,111 17,635 19,031 19,344 16.6 16.7 7.9 9.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Individual's earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989 topcoded value ($99,999) adjusted for inflation.
\2\ Individual's earnings in 1998 are as reported on Census public-use files (which use a topcode value of $1 million).
Note.--Quintiles are based on the number of families.
Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1974, 1980, 1990, and 1999.
TABLE H-18.--FAMILY CASH INCOME LIMITS BY QUINTILE AND FAMILY TYPE
[In 1998 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year Percent change
Family type ----------------------------------------------------------------------------------------------------
1973 1979 1989 1998 \1\ 1998 \2\ 1973-79 1979-89 1989-98 \1\ 1989-98 \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
All families:
Lowest......................................... $13,883 $13,939 $13,739 $13,600 $13,600 0.4 -1.4 -1.0 -1.0
Second......................................... 27,072 26,420 26,297 26,271 26,271 -2.4 -0.5 -0.1 -0.1
Middle......................................... 41,460 41,643 42,130 42,862 42,862 0.4 1.2 1.7 1.7
Fourth......................................... 60,151 61,718 66,145 69,883 69,883 2.6 7.2 5.7 5.7
All families with children:
Lowest......................................... 23,369 22,017 19,024 19,000 19,000 -5.8 -13.6 -0.1 -0.1
Second......................................... 36,871 36,889 35,418 35,483 35,483 0.0 -4.0 0.2 0.2
Middle......................................... 49,101 50,718 51,792 54,060 54,060 3.3 2.1 4.4 4.4
Fourth......................................... 66,705 68,862 74,158 81,000 81,000 3.2 7.7 9.2 9.2
Married couples with children:
Lowest......................................... 29,716 30,163 29,811 31,200 31,200 1.5 -1.2 4.7 4.7
Second......................................... 41,460 43,681 44,838 48,219 48,219 5.4 2.6 7.5 7.5
Middle......................................... 52,494 55,670 59,842 65,500 65,500 6.0 7.5 9.5 9.5
Fourth......................................... 69,587 73,756 81,763 93,000 93,000 6.0 10.9 13.7 13.7
Single mothers with children:
Lowest......................................... 8,084 7,992 6,270 6,850 6,850 -1.1 -21.5 9.2 9.2
Second......................................... 13,026 13,659 11,831 13,224 13,224 4.9 -13.4 11.8 11.8
Middle......................................... 19,003 21,449 19,718 21,320 21,320 12.9 -8.1 8.1 8.1
Fourth......................................... 28,831 31,924 32,777 34,000 34,000 10.7 2.7 3.7 3.7
Nonelderly childless unit:
Lowest......................................... 14,511 14,752 14,529 13,310 13,310 1.7 -1.5 -8.4 -8.4
Second......................................... 27,259 26,470 27,015 26,520 26,520 -2.9 2.1 -1.8 -1.8
Middle......................................... 40,989 40,764 42,196 42,000 42,000 -0.5 3.5 -0.5 -0.5
Fourth......................................... 60,444 61,665 66,621 68,300 68,300 2.0 8.0 2.5 2.5
Nonelderly childless families:
Lowest......................................... 26,565 28,996 29,577 30,500 30,500 9.1 2.0 3.1 3.1
Second......................................... 39,773 43,875 46,021 48,557 48,557 10.3 4.9 5.5 5.5
Middle......................................... 53,455 58,124 64,280 66,909 66,909 8.7 10.6 4.1 4.1
Fourth......................................... 72,553 78,395 90,359 95,885 95,885 8.1 15.3 6.1 6.1
Nonelderly unrelated individuals:
Lowest......................................... 7,463 8,915 9,465 8,661 8,661 19.5 6.2 -8.5 -8.5
Second......................................... 15,271 17,173 18,403 18,030 18,030 12.5 7.2 -2.0 -2.0
Middle......................................... 24,166 25,350 27,631 28,300 28,300 4.9 9.0 2.4 2.4
Fourth......................................... 34,954 37,319 41,585 42,026 42,026 6.8 11.4 1.1 1.1
Elderly childless units:
Lowest......................................... 7,978 8,648 9,814 10,317 10,317 8.4 13.5 5.1 5.1
Second......................................... 12,264 13,884 16,057 16,932 16,932 13.2 15.7 5.5 5.5
Middle......................................... 18,706 21,654 25,303 26,505 26,505 15.8 16.9 4.7 4.7
Fourth......................................... 32,131 35,815 42,552 45,050 45,050 11.5 18.8 5.9 5.9
Elderly childless families:
Lowest......................................... 13,102 14,833 16,782 18,272 18,272 13.2 13.1 8.9 8.9
Second......................................... 18,799 21,821 25,573 26,776 26,776 16.1 17.2 4.7 4.7
Middle......................................... 27,225 30,427 36,806 38,250 38,250 11.8 21.0 3.9 3.9
Fourth......................................... 43,843 47,864 57,050 61,902 61,902 9.2 19.2 8.5 8.5
Elderly unrelated individuals:
Lowest......................................... 5,852 6,574 7,477 7,773 7,773 12.3 13.7 4.0 4.0
Second......................................... 8,247 9,018 10,390 10,986 10,986 9.3 15.2 5.7 5.7
Middle......................................... 10,686 12,479 14,943 15,325 15,325 16.8 19.8 2.6 2.6
Fourth......................................... 16,418 19,815 23,741 24,525 24,525 20.7 19.8 3.3 3.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Individual's earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989 topcoded value ($99,999) adjusted for inflation.
\2\ Individual's earnings in 1998 are as reported on Census public-use files (which use a topcode value of $1 million).
Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1974, 1980, 1990, and 1999.
quintiles. In fact, income limits for the lower quintiles have
decreased for several family types during several periods.
ANTIPOVERTY EFFECTIVENESS OF VARIOUS CASH AND NONCASH TRANSFERS
Tables H-19 through H-21 provide estimates of the number
and percentage of individuals removed from poverty by market
income and by social insurance programs (Social Security,
unemployment compensation, and workers' compensation), means-
tested cash programs (Aid to Families with Dependent Children,
Supplemental Security Income, and general assistance), means-
tested noncash programs (food stamps, housing benefits, and
school lunch), and Federal payroll and income taxes and the
earned income credit (EIC). Tables are provided separately for
elderly persons, for children, and for persons in units with an
unmarried head and children under age 18, for selected years
between 1979 and 1998.
The tables present alternative measures of poverty to the
official measure. They include counts of the number of people
below the poverty line before any government benefits are taken
into account, after each type of benefit is added to income,
and after the government cash and noncash benefits and Federal
taxes and the EIC are added to (or subtracted from) income.
The tables also measure the effect of these government
programs on the ``poverty gap''--the gap between a poor
family's income and the poverty line. The poverty gap
represents the degree of poverty by showing the amount of money
that would be needed to lift every poor person exactly to the
poverty line.
Table H-19 shows the antipoverty effectiveness of market
income and government programs for the elderly. Based both on
cash income before transfers and on posttransfer income, the
poverty rates among the elderly in 1998 were among the lowest
on record. As compared with 1979, when over 54 percent of the
elderly were poor before transfers, by 1998 only a little over
48 percent of the elderly were poor before transfers. The
comparable figures for the percentage of the elderly in poverty
after transfers were 13.5 in 1979 and 8.8 in 1998. The impact
of Social Security transfers is by the far the greatest reason
so many of the poor are removed from poverty by government
transfers. In 1979 the poverty rate was dropped from 54.2 to
17.4 by Social Security payments; in 1998 the comparable
figures were 48.2 to 8.8 percent. In 1979, a total of 8.9
million elderly persons were removed from poverty by Social
Security; in 1998, the number had jumped to 11.8 million. The
figures for the poverty gap for the elderly are not quite as
impressive as the overall figures. Both the total number of
dollars required to close the poverty gap and the size of the
poverty gap per person in poverty have been almost stagnant in
recent years. Even so, in 1998 the poverty gap is only $6.4
billion or $2,234 per person in poverty. As we will see, no
other government program has as huge an impact on poverty among
any group as does Social Security among the elderly.
The impact of market income and the safety net on
children's poverty are shown in table H-20. The poverty rate
among children before transfers was 21.5 percent in 1998, its
lowest level since 1979 and nearly 5 percentage points lower
than in 1993. Similarly, the child poverty rate after transfers
in 1998 was 14.3, its lowest level since 1979 and 5.7
percentage points or nearly 30 percent below its level in 1993.
These figures show substantial progress against children's
poverty, both before and after government transfers. That the
pretransfer level is so low suggests that the substantial
increase in work by former welfare mothers after the 1996
welfare reform legislation (see Appendix L) may be playing an
important role in poverty reduction among children.
The important role of work by single mothers in reducing
child poverty is also shown by the data on percentage of
children removed from poverty due to Federal taxes. The row of
figures for taxes in all the panels of table H-20 show that
Federal tax policy is having a major and growing effect in
reducing child poverty. In 1983, Federal taxes actually
increased the poverty level among children by 5.1 percent.
However, as the Federal Government reduced taxes and increased
the EIC for low-income families with children by enacting
reform legislation in 1986, 1990, and 1993, the impact of taxes
actually became positive. By 1998, EIC payments to families
reduced the child poverty rate from 16.5 percent to 14.3
percent. It seems reasonable to conclude that the effectiveness
of the EIC in fighting poverty can be attributed to two
factors--the increasing generosity of EIC policy itself and the
increase in work by low-income families with children,
especially families headed by mothers.
Data on the poverty gap for children are somewhat mixed.
Data on the pretransfer poverty gap is uniformly positive.
Despite the fact that the number of children grew by over 9
million or nearly 15 percent between 1983 and 1998, the poverty
gap before transfers nonetheless fell from $44 billion to about
$38 billion, a decline of over 13 percent. Similarly, the
pretransfer poverty gap per poor child in 1998 reached its
lowest level since 1979. However, perhaps because there were
fewer children to remove from poverty, social insurance, means-
tested cash transfers, and means-tested noncash transfers were
generally less effective in removing children from poverty. As
shown in the last panel of table H-20, taken together these
policies reduced the poverty gap by only 50.6 percent in 1998
as compared with 62.4 percent in 1979, 58.1 percent in 1989,
58.5 percent in 1995, and 53.7 percent in 1997. The effect of
the EIC in reducing the poverty gap, however, remained potent;
in fact, at 6.4 percent it was greater than in any previous
year. Despite the effectiveness of the EIC, the overall impact
of government programs reduced the poverty gap less than in any
previous year except 1983. The major reason for the reduced
effectiveness of government programs in reducing the poverty
gap seems to be a decline in the impact of means-tested cash
benefits. In 1979 these benefits reduced the poverty gap by
28.8 percent. By contrast, in 1998 they reduced the poverty gap
by only 16.2 percent. Undoubtedly, the decline in the welfare
rolls and in cash benefits from the Temporary Assistance for
Needy Families Program play an important role here.
Poverty data for persons in units headed by single parents
is generally consistent with the data for children. The first
point to emphasize with these data (see the top row of table H-
21), which simply reinforces the conclusion from the data on
single mothers in
TABLE H-19.--IMPACT OF MARKET INCOME AND SAFETY NET PROGRAMS ON POVERTY; ELDERLY PERSONS, SELECTED YEARS 1979-98
----------------------------------------------------------------------------------------------------------------
Year
Number of elderly and poverty --------------------------------------------------------------------------------
measure 1979 1983 1989 1993 1994 1995 1996 1997 1998
----------------------------------------------------------------------------------------------------------------
Total population (in thousands) 24,194 26,313 29,094 30,779 31,267 31,658 31,877 32,082 32,394
Number of poor persons (in
thousands):
Cash income before 13,120 13,253 13,853 15,640 16,256 15,810 15,977 15,754 15,604
transfers.................
Plus social insurance...... 4,202 4,095 3,934 4,270 4,114 3,722 3,905 3,831 3,768
Plus means-tested cash 3,682 3,625 3,312 3,755 3,663 3,318 3,428 3,376 3,386
benefits (official
measure)..................
Plus means-tested noncash 3,261 3,158 2,793 3,123 3,048 2,839 2,936 2,872 2,861
benefits..................
Less Federal taxes 3,276 3,177 2,841 3,159 3,062 2,838 2,943 2,876 2,865
(including EIC)...........
Poverty rate (in percent):
Cash income before 54.2 50.4 47.6 50.8 52.0 49.9 50.1 49.1 48.2
transfers.................
Plus social insurance...... 17.4 15.6 13.5 13.9 13.2 11.8 12.3 11.9 11.6
Plus means-tested cash 15.2 13.8 11.4 12.2 11.7 10.5 10.8 10.5 10.5
benefits..................
Plus means-tested noncash 13.5 12.0 9.6 10.1 9.7 9.0 9.2 9.0 8.8
benefits..................
Less Federal taxes 13.5 12.1 9.8 10.3 9.8 9.0 9.2 9.0 8.8
(including EIC)...........
Number (in thousands) removed
from poverty due to:
Social insurance........... 8,918 9,158 9,919 11,370 12,142 12,088 12,072 11,923 11,836
Means-tested cash benefits. 520 470 622 515 451 404 477 455 382
Means-tested noncash 421 467 519 632 615 479 492 504 525
benefits..................
Federal taxes (including -15 -19 -48 -36 -14 1 -7 -4 -4
EIC)......................
--------------------------------------------------------------------------------
Total.................. 9,844 10,076 11,012 12,481 13,194 12,972 13,034 12,878 12,739
================================================================================
Percent removed from poverty
due to:
Social insurance........... 68.0 69.1 71.6 72.7 74.7 76.5 75.6 75.7 75.9
Means-tested cash benefits. 4.0 3.5 4.5 3.3 2.8 2.6 3.0 2.9 2.4
Means-tested noncash 3.2 3.5 3.7 4.0 3.8 3.0 3.1 3.2 3.4
benefits..................
Federal taxes (including -0.1 -0.1 -0.3 -0.2 -0.1 0.0 -0.0 -0.0 -0.0
EIC)......................
--------------------------------------------------------------------------------
Total.................. 75.0 76.0 79.5 79.8 81.2 82.0 81.6 81.7 81.6
================================================================================
Poverty gap (in billions of
1998 dollars):
Cash income before 59.0 60.4 62.8 70.6 75.2 73.6 74.5 74.5 72.7
transfers.................
Plus social insurance...... 10.3 10.0 9.5 10.8 11.0 9.4 10.3 10.0 9.8
Plus means-tested cash 7.0 6.6 6.3 8.0 8.0 6.8 7.2 7.1 7.3
benefits (official
measure)..................
Plus means-tested noncash 5.8 5.7 5.2 6.7 6.8 5.8 6.2 6.2 6.4
benefits..................
Less Federal taxes 5.8 5.7 5.2 6.7 6.8 5.8 6.2 6.2 6.4
(including EIC)...........
Poverty gap per poor person (in
1998 dollars):
Cash income before 4,501 4,557 4,536 4,515 4,628 4,654 4,662 4,732 4,660
transfers.................
Plus social insurance...... 2,458 2,450 2,422 2,528 2,673 2,529 2,634 2,598 2,6043
Plus means-tested cash 1,890 1,826 1,905 2,124 2,174 2,063 2,091 2,106 2,148
benefits (official
measure)..................
Plus means-tested noncash 1,790 1,803 1,845 2,149 2,223 2,047 2,123 2,157 2,228
benefits..................
Less Federal taxes 1,782 1,803 1,825 2,132 2,216 2,052 2,118 2,154 2,234
(including EIC)...........
Percent reduction in the
poverty gap due to:
Social insurance........... 82.5 83.4 84.8 84.7 85.4 87.2 86.2 86.6 86.5
Means-tested cash benefits. 5.7 5.7 5.1 4.0 4.0 3.5 4.2 3.8 3.5
Means-tested noncash 1.9 1.5 1.8 1.8 1.6 1.4 1.3 1.2 1.2
benefits..................
Federal taxes (including 0.0 -0.1 -0.1 -0.0 -0.0 -0.0 0.0 0.0 -0.0
EIC)......................
--------------------------------------------------------------------------------
Total.................. 90.1 90.5 91.7 90.5 91.0 92.1 91.6 91.7 91.2
----------------------------------------------------------------------------------------------------------------
Source: Table prepared by the U.S. Department of Health and Human Services and the Congressional Budget Office
based on Current Population Survey data. Poverty gaps are based on calculations by the U.S. Census Bureau.
TABLE H-20.--IMPACT OF MARKET INCOME AND SAFETY NET PROGRAMS ON POVERTY; CHILDREN, SELECTED YEARS 1979-98
----------------------------------------------------------------------------------------------------------------
Year
Number of children and poverty --------------------------------------------------------------------------------
measure 1979 1983 1989 1993 1994 1995 1996 1997 1998
----------------------------------------------------------------------------------------------------------------
Total population (in thousands) 63,375 62,333 65,602 69,292 70,020 70,566 70,650 71,069 71,338
Number of poor children (in
thousands):
Cash income before 12,761 16,146 14,954 18,198 17,828 17,098 16,642 16,294 15,365
transfers.................
Plus social insurance...... 11,364 14,405 13,846 16,685 16,324 15,717 15,426 14,890 14,131
Plus means-tested cash 10,377 13,911 13,154 15,727 15,289 14,665 14,463 14,113 13,467
benefits..................
Plus means-tested noncash 8,421 12,464 11,409 13,874 13,212 12,476 12,576 12,511 11,749
benefits..................
Less Federal taxes 8,620 13,293 11,811 13,853 12,613 11,443 11,341 11,080 10,230
(including EIC)...........
Poverty rate (in percent):
Cash income before 20.1 25.9 22.8 26.3 25.5 24.2 23.6 22.9 21.5
transfers.................
Plus social insurance...... 17.9 23.1 21.1 24.1 23.3 22.3 21.8 21.0 19.8
Plus means-tested cash 16.4 22.3 20.1 22.7 21.8 20.8 20.5 19.9 18.9
benefits..................
Plus means-tested noncash 13.3 20.0 17.0 20.0 18.9 17.7 17.8 17.6 16.5
benefits..................
Less Federal taxes 13.6 21.3 18.0 20.0 18.0 16.2 16.1 15.6 14.3
(including EIC)...........
Number (in thousands) removed
from poverty due to:
Social insurance........... 1,397 1,741 1,108 1,513 1,504 1,381 1,216 1,404 1,234
Means-tested cash benefits. 987 494 692 958 1,035 1,052 963 777 664
Means-tested noncash 1,956 1,447 1,745 1,853 2,077 2,189 1,887 1,602 1,718
benefits..................
Federal taxes (including -199 -829 -402 21 599 1,033 1,235 1,431 1,519
EIC)......................
--------------------------------------------------------------------------------
Total.................. 4,141 2,853 3,143 4,345 5,215 5,655 5,301 5,214 5,135
================================================================================
Percent removed from poverty
due to:
Social insurance........... 10.9 10.8 7.4 8.3 8.4 8.1 7.3 8.6 8.0
Means-tested cash benefits. 7.7 3.1 4.6 5.3 5.8 6.2 5.8 4.8 4.3
Means-tested noncash 15.3 9.0 11.7 10.2 11.7 12.8 11.3 9.8 11.2
benefits..................
Federal taxes (including -1.6 -5.1 -2.7 0.1 3.4 6.0 7.4 8.8 9.9
EIC)......................
--------------------------------------------------------------------------------
Total.................. 32.5 17.7 21.0 23.9 29.3 33.1 31.9 32.0 33.4
================================================================================
Poverty gap (in billions of
1998 dollars):
Cash income before 33.2 44.0 40.3 50.6 48.1 45.1 43.8 42.6 38.2
transfers.................
Plus social insurance...... 27.81 37.0 35.1 43.7 41.7 39.0 37.9 35.9 32.7
Plus means-tested cash 18.3 26.5 25.1 31.4 30.2 28.2 28.4 28.2 26.5
benefits..................
Plus means-tested noncash 12.5 18.4 16.8 20.9 19.9 18.7 19.1 19.7 18.9
benefits..................
Less Federal taxes 12.5 18.9 16.8 20.3 18.3 16.8 16.7 17.4 16.4
(including EIC)...........
Poverty gap per poor child (in
1998 dollars) due to:
Cash income before 2,602 2,725 2,698 2,779 2,696 2,638 2,630 2,613 2,489
transfers.................
Plus social insurance...... 2,450 2,572 2,532 2,620 2,554 2,482 2,456 2,412 2,312
Plus means-tested cash 1,763 1,904 1,905 1,999 1,977 1,921 1,965 1,997 1,965
benefits..................
Plus means-tested noncash 1,481 1,477 1,472 1,505 1,503 1,497 1,516 1,576 1,605
benefits..................
Less Federal taxes 1,447 1,425 1,422 1,468 1,455 1,471 1,476 1,569 1,604
(including EIC)...........
Percent reduction in the
poverty gap due to:
Social insurance........... 16.1 15.8 13.1 13.6 13.3 13.5 13.4 15.7 14.5
Plus means-tested cash 28.8 24.0 24.8 24.3 23.9 24.0 21.6 18.1 16.2
benefits..................
Plus means-tested noncash 17.5 18.4 20.5 20.9 21.6 21.0 21.4 19.9 19.9
benefits..................
Federal taxes (including -0.0 -1.2 -0.0 1.1 3.1 4.1 5.3 5.5 6.4
EIC)......................
--------------------------------------------------------------------------------
Total.................. 62.4 56.9 58.4 59.8 61.8 62.7 61.8 59.2 57.1
----------------------------------------------------------------------------------------------------------------
Source: Table prepared by the U.S. Department of Health and Human Services and the Congressional Budget Office
based on Current Population Survey data. Poverty gaps are based on calculations by the U.S. Census Bureau.
TABLE H-21.--IMPACT OF MARKET INCOME AND SAFETY NET PROGRAMS ON POVERTY; PERSONS IN UNITS WITH UNMARRIED HEAD
AND RELATED CHILDREN, SELECTED YEARS 1979-98
----------------------------------------------------------------------------------------------------------------
Year
Number of persons and poverty --------------------------------------------------------------------------------
measure 1979 1983 1989 1993 1994 1995 1996 1997 1998
----------------------------------------------------------------------------------------------------------------
Total population (in thousands) 23,547 25,559 29,255 34,611 35,091 36,428 36,515 36,702 36,826
Number of poor persons (in
thousands):
Cash income before 11,786 13,751 14,074 17,965 17,971 17,199 16,851 16,757 15,724
transfers.................
Plus social insurance 11,568 13,501 13,820 17,509 17,628 16,882 16,589 16,459 15,411
(other than Social
Security).................
Plus Social Security....... 10,645 12,611 13,040 16,570 16,619 16,058 15,706 15,377 14,511
Plus means-tested cash 9,491 12,063 12,388 15,550 15,401 14,930 14,692 14,463 13,698
benefits..................
Plus means-tested noncash 7,115 10,531 10,636 13,705 13,014 12,381 12,682 12,655 11,813
benefits..................
Plus EIC and less Federal 7,141 10,800 10,648 13,378 12,257 11,338 11,540 11,103 10,268
payroll and income taxes..
Poverty rate (in percent):
Cash income before 50.1 53.8 48.1 51.9 51.2 47.2 46.1 45.7 42.7
transfers.................
Plus social insurance 49.1 52.8 47.2 50.6 50.2 46.3 45.4 44.8 41.8
(other than Social
Security).................
Plus Social Security....... 45.2 49.3 44.6 47.9 47.4 44.1 43.0 41.9 39.4
Plus means-tested cash 40.3 47.2 42.3 44.9 43.9 41.0 40.2 39.4 37.2
benefits..................
Plus means-tested noncash 30.2 41.2 36.4 39.6 37.1 34.0 34.7 34.5 32.1
benefits..................
Plus EIC and less Federal 30.3 42.3 36.4 38.7 34.9 31.1 31.6 30.3 27.9
payroll and income taxes..
--------------------------------------------------------------------------------
Total reduction in 19.7 11.5 11.7 13.3 16.3 16.1 14.5 15.4 14.8
poverty rate..........
================================================================================
Number (in thousands) removed
from poverty due to:
Social insurance (other 218 250 254 456 343 317 262 298 313
than Social Security).....
Social Security............ 923 890 780 939 1,009 824 883 1,082 900
Means-tested cash benefits. 1,154 548 652 1,020 1,218 1,128 1,014 914 813
Means-tested noncash 2,376 1,532 1,752 1,845 2,387 2,549 2,010 1,808 1,885
benefits..................
EIC and Federal payroll and -26 -269 -12 327 757 1,043 1,142 1,552 1,545
income taxes..............
--------------------------------------------------------------------------------
Total.................. 4,645 2,951 3,426 4,587 5,714 5,861 5,311 5,654 5,456
================================================================================
Percent removed from poverty
due to:
Social insurance (other 1.8 1.8 1.8 2.5 1.9 1.8 1.6 1.8 2.0
than Social Security).....
Social Security............ 7.8 6.5 5.5 5.2 5.6 4.8 5.2 6.5 5.7
Means-tested cash benefits. 9.8 4.0 4.6 5.7 6.8 6.6 6.0 5.5 5.2
Means-tested noncash 20.2 11.1 12.4 10.3 13.3 14.8 11.9 10.8 12.0
benefits..................
EIC and Federal payroll and -0.2 -2.0 -0.1 1.8 4.2 6.1 6.8 9.3 9.8
income taxes..............
--------------------------------------------------------------------------------
Total.................. 39.4 21.5 24.3 25.5 31.8 34.1 31.5 33.7 34.7
================================================================================
Poverty gap (in millions of
1998 dollars):
Cash income before 35,907 45,244 44,507 57,506 54,744 49,498 49,760 47,900 42,896
transfers.................
Plus social insurance 34,890 43,578 43,546 55,860 53,257 48,317 48,545 46,746 41,715
(other than Social
Security).................
Plus Social Security....... 30,813 39,275 39,506 51,194 48,032 43,683 43,597 41,188 37,195
Plus means-tested cash 17,780 25,803 27,038 35,132 32,642 30,076 31,179 31,101 28,836
benefits..................
Plus means-tested noncash 11,033 16,770 17,223 21,567 19,754 18,404 19,437 20,366 19,314
benefits..................
Plus EIC and less Federal 10,954 16,876 17,019 20,929 18,350 16,771 17,333 18,216 17,094
payroll and income taxes..
Reduction in poverty gap (in
millions) due to:
Social insurance (other 1,017 1,666 961 1,646 1,487 1,181 1,215 1,154 1,181
than Social Security).....
Social Security............ 4,077 4,302 4,040 4,666 5,224 4,634 4,948 5,558 4,520
Means-tested cash benefits. 13,033 13,472 12,468 16,062 15,390 13,607 12,418 10,087 8,359
Plus means-tested noncash 6,747 9,034 9,815 13,566 12,888 11,672 11,741 10,735 9,522
benefits..................
EIC and Federal payroll and 79 -106 204 637 1,403 1,633 2,105 2,150 2,220
income taxes..............
--------------------------------------------------------------------------------
Total.................. 24,953 28,368 27,488 36,576 36,393 32,727 32,428 29,683 25,802
================================================================================
Percent reduction in the
poverty gap due to:
Social insurance (other 2.8 3.7 2.2 2.9 2.7 2.4 2.4 2.4 2.8
than Social Security).....
Social Security............ 11.4 9.5 9.1 8.1 9.5 9.4 9.9 11.6 10.5
Means-tested cash benefits. 36.3 29.8 28.0 27.9 28.1 27.5 25.0 21.1 19.5
Plus means-tested noncash 18.8 20.0 22.1 23.6 23.5 23.6 23.6 22.4 22.2
benefits..................
EIC and Federal payroll and 0.2 -0.2 0.5 1.1 2.6 3.3 4.2 4.5 5.2
income taxes..............
--------------------------------------------------------------------------------
Total.................. 69.5 62.7 61.8 63.6 66.5 66.1 65.2 62.0 60.2
----------------------------------------------------------------------------------------------------------------
Note.--Poverty gap dollars for each year adjusted to 1998 dollars.
Source: Table prepared by the U.S. Department of Health and Human Services and the Congressional Budget Office
based on Current Population Survey data.
table H-15, is that there has been a very large increase in the
number of persons in families with unmarried heads. The number
jumped from 23.5 million in 1979 to 36.8 million in 1998, an
increase of nearly 60 percent. By contrast, the number of
persons in married couple families increased from 102.2 million
to only 102.7 million, an increase of less than 1 percent.
Thus, the family type with the highest poverty rate has been
increasing more than 40 times as fast as the family type with
the lowest poverty rate. These demographic developments make
progress against poverty somewhat difficult.
Even so, the pretransfer poverty rate among persons in
families with an unmarried head reached its lowest level ever
in 1998 at 42.7 percent. Compared with the 53.8 percent
pretransfer rate in 1983, that's a drop of over 20 percent.
Progress against pretransfer poverty among these families has
also been continuous and rapid during the current economic
expansion, with a drop of 18 percent from 51.9 percent to 42.7
percent since 1993. Again, as we saw in the case of children,
progress against pretransfer poverty has been substantial in
recent years, in all likelihood due to the increase in work by
single mothers.
On the other hand, again as was the case with children,
progress against poverty as measured by the poverty gap has
been uneven. Although the pretransfer poverty gap at $42.9
billion for these families is smaller than at any time since
1979, and although the gap has fallen 25 percent just since
1993, means-tested cash and noncash programs have been
increasingly less effective in reducing the poverty gap. By
contrast, as with children, Federal tax policy has been
increasingly more effective at reducing the poverty gap. Even
so, the combination of the reduced pretransfer poverty gap and
the increased effectiveness of the EIC in reducing the poverty
gap failed to outweigh the declining effectiveness of means-
tested cash and noncash transfers in reducing the poverty gap.
As a result, the reduction in the posttax, posttransfer poverty
gap for these families was lower than in the past as measured
either by dollars or percentage reduction.
REFERENCES
U.S. Census Bureau. (1986). Money income and poverty status of
families and persons in the United States: 1985.
Current Population Reports (Series P-60, No. 154).
Washington, DC: U.S. Government Printing Office.
U.S. Census Bureau. (1993). Money income of households,
families, and persons in the United States: 1991.
Current Population Reports (Series P-60, No. 180).
Washington, DC: U.S. Government Printing Office.
U.S. Census Bureau. (1996 and various years). Income, poverty,
and valuation of noncash benefits, 1994. Current
Population Reports (Series P-60, No. 189). Washington,
DC: U.S. Government Printing Office. [Several
publications from the P-60 Series were used in
preparing the tables for this chapter. These include
numbers 124, 140, 145, 149, 154, 157, 161, 166, 168,
174, and 180.]