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 Incomes, 1967-94
Definitions and Methods
Income Measure
Adjusting for Noncash Income and Taxes
Income Shares
Trends in Pretax Cash Incomes by Type of Family
Pretax AFI
Average Family Cash Income
Income Trends Year by Year
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. This procedure assumed, then, 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 one change to the
basic approach for calculating the poverty threshold in 1969.
The current poverty threshold is established each year simply
by increasing the previous year's threshold by the change in
the Consumer Price Index (CPI), rather than multiplying the
cost of the Thrifty Food Plan by three.
Note that 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.
It should be noted that the Census Bureau revised 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.
Table H-1 shows the population, number of persons in
poverty and the poverty rate in 1996 by age, race, region and
family type. In 1996, 13.7 percent (36.5 million persons) of
the total U.S. population lived in poverty. Of all demographic
groups shown, poverty was highest among female-headed families
with children (44.3 percent). Among children under age 18,
nearly 20.5 percent, or 14.5 million children, lived in poverty
in 1994.
The weighted average poverty thresholds for families of
various sizes for selected years between 1959 and 1996 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 the late 1950s, 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, 1996
--------------------------------------------------------------------------------------------------------------------------------------------------------
Poverty Percent of Number of Percent of Poverty
Category rate Population total poor poverty difference Percent of
(percent) (thousands) population (thousands) population 1996-95 difference
--------------------------------------------------------------------------------------------------------------------------------------------------------
Age:
Under 18................................................... 20.5 70,650 26.5 14,463 39.6 -202 -194.2
18-64...................................................... 11.4 163,691 61.5 18,638 51.0 196 188.5
65 and over................................................ 10.8 31,877 12.0 3,428 9.4 110 105.8
----------------------------------------------------------------------------------------
Total.................................................. 13.7 266,218 100.0 36,529 100.0 104 100.0
========================================================================================
Race/ethnicity:
White...................................................... 11.2 219,656 82.5 24,650 67.5 227 218.3
Black...................................................... 28.4 34,110 12.8 9,694 26.5 -178 -171.2
Hispanic \1\............................................... 29.4 29,614 11.1 8,697 23.8 123 118.3
----------------------------------------------------------------------------------------
Total.................................................. 13.7 266,218 100.0 36,529 100.0 104 100.0
========================================================================================
Region:
Northeast.................................................. 10.9 51,455 19.3 6,558 18.0 113 108.7
Midwest.................................................... 10.7 61,940 23.3 6,654 18.2 -131 -126.0
South...................................................... 15.1 93,123 35.0 14,098 38.6 -360 -346.2
West....................................................... 15.4 59,700 22.4 9,219 25.2 483 464.4
----------------------------------------------------------------------------------------
Total.................................................. 13.7 266,218 100.0 36,529 100.0 104 100.0
========================================================================================
Family type:
Unrelated individuals...................................... 20.8 40,727 15.3 8,452 23.1 205 197.1
Female-headed families with children....................... 44.3 26,798 10.1 12,750 34.9 -346 -332.7
Married-couple families.................................... 8.7 110,179 41.4 9,617 26.3 61 58.7
Other families with children............................... 15.6 8,326 3.1 1,297 3.6 98 94.2
All other families......................................... 5.5 80,188 30.1 4,413 12.1 86 82.7
----------------------------------------------------------------------------------------
Total.................................................. 13.7 266,218 100.0 36,529 100.0 104 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Persons of Hispanic origin may be of any race.
Source: U.S. Bureau of the Census (1996).
TABLE H-2.--WEIGHTED AVERAGE POVERTY THRESHOLDS FOR NONFARM FAMILIES OF SPECIFIED SIZE, SELECTED YEARS 1959-96
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unrelated individuals Families of two persons or more
------------------------------ ---------------------------------------------------------------------
Calendar year All ages Head Head Seven
All Under Aged 65 under aged 65 Three Four Five Six persons
ages age 65 or older age 65 or 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
1981...................................... 4,620 4,729 4,359 5,917 6,111 5,498 7,250 9,287 11,007 12,449 \1\ 14,1
10
1982...................................... 4,901 5,019 4,626 6,281 6,487 5,836 7,693 9,862 11,684 13,207 \1\ 15,0
36
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
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Poverty threshold for seven persons, not seven persons or more.
Source: U.S. Bureau of the Census, technical papers.
TABLE H-3.--NUMBER OF PERSONS IN POVERTY FOR INDIVIDUALS IN SELECTED DEMOGRAPHIC GROUPS, 1959-96
----------------------------------------------------------------------------------------------------------------
Individuals
in female- Hispanic
Year Overall Aged Children \1\ headed Black origin \3\ White
families \2\
----------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------
\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. Bureau of the Census (1996).
TABLE H-4.--POVERTY RATES FOR INDIVIDUALS IN SELECTED DEMOGRAPHIC GROUPS, 1959-96
----------------------------------------------------------------------------------------------------------------
Individuals
in female- Hispanic
Year Overall Aged Children \1\ headed Black origin \3\ White
families \2\
----------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------
\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. Bureau of the Census (1996).
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. In 1996, the last year for which data are available,
the poverty rate was 13.7 percent and 36.5 million people were
poor.
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 1959-96 period. The poverty rate for
all blacks and Hispanics has remained near 30 percent during
the 1980s and mid 1990s. The poverty rate for the aged, which
exceeded the overall poverty rate in 1959, fell below the
overall poverty rate beginning in 1982. It was 10.8 percent in
1996. The poverty rate for whites was below the overall poverty
rate throughout the entire 1959-96 period. It was 11.2 percent
in 1996. The poverty rate for children exceeds the average
rate; it was 20.5 percent in 1996 (see chart H-1).
CHART H-1. POVERTY RATES BY AGE: 1959-96
Source: U.S. Bureau of the Census.
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 1996. 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 1996, 42.3 percent of female-headed
families with children were poor, compared with 8.5 percent of
male-present families. Although only 6.4 percent of all
families with an aged member were poor, 20.9 percent of all
aged unrelated individuals were poor. About 20.7 percent of
nonaged unrelated individuals were poor.
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 Consumer Price Index
(CPI). The Consumer Price Index, 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 1.5 percentage points (11 percent or 4.0 million
persons) in 1996.
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, including government benefits,
is counted in determining whether a family is poor; income from
cash welfare programs counts, but benefits from food programs,
medical care, social
TABLE H-5.--COMPOSITION OF POVERTY POPULATION FOR SELECTED DEMOGRAPHIC GROUPS,\1\ SELECTED YEARS 1959-1996
[Percent of poverty population]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year
Demographic group -------------------------------------------------------------------------------------------------------
1959 1966 1975 1985 1987 1988 1989 1990 1991 1992 1993 1994 1996
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aged............................................ 13.9 17.9 12.8 10.5 10.9 11.0 10.7 10.9 10.6 10.3 9.6 9.6 9.4
Children........................................ 43.6 42.6 42.1 38.8 39.4 38.7 39.4 39.5 39.5 39.7 39.5 39.6 38.8
Nonaged adults.................................. 42.5 39.5 45.1 50.7 49.7 50.3 49.9 49.7 49.9 49.9 50.9 50.8 51.8
Individuals in female-headed families \2\....... 26.3 36.0 47.4 49.5 52.6 52.9 52.4 53.4 54.0 52.6 52.4 52.8 53.5
Individuals in all other families \2\........... 73.7 64.0 52.6 50.5 47.4 47.1 47.6 46.6 46.0 47.4 47.6 47.2 46.5
Blacks.......................................... 25.1 31.1 29.2 27.0 29.8 29.5 29.5 29.3 28.7 28.5 27.7 26.8 26.5
Whites.......................................... 72.1 67.7 68.7 69.1 65.6 65.3 65.9 66.5 66.5 66.4 66.8 66.7 67.5
Other races..................................... 2.8 1.2 2.1 3.9 4.7 5.3 4.6 4.2 4.8 5.1 5.5 6.5 6.0
Hispanic origin \3\............................. NA NA 11.6 15.8 16.9 16.9 17.2 17.9 17.8 20.0 20.7 22.1 23.8
Individuals in families with children \4\....... NA NA NA NA NA NA 67.9 68.0 68.4 68.4 68.7 68.0 66.7
Male present................................ NA NA NA NA NA NA 31.3 30.7 30.3 31.4 32.0 31.2 30.1
Female head................................. NA NA NA NA NA NA 36.6 37.2 38.1 37.0 36.7 36.9 36.5
Individuals in all other families............... NA NA NA NA NA NA 32.1 32.0 31.6 31.6 31.3 32.0 33.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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: Prepared by Congressional Research Service based on data from March Current Population Survey and U.S. Bureau of the Census (1996 and various
years).
TABLE H-6.--POVERTY RATES BY FAMILY TYPE, SELECTED YEARS 1987-96, AND PERCENTAGE OF FAMILIES AND UNRELATED INDIVIDUALS BY RATIO OF TOTAL INCOME TO POVERTY THRESHOLD, 1996 \1\ \2\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Poverty rate, 1987-96 Ratio of total income to poverty threshold, 1996
-------------------------------------------------------------------------------------------------------------------------------- 1996 total
Family type 3.00 (in
1987R 1988 1990 1991 1993 1994 1996 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 10.8 11.1 11.8 12.7 12.0 11.3 4.5 6.8 4.0 4.3 9.2 17.8 53.4 70,855
Unrelated individuals........................... 20.4 20.6 20.7 21.1 22.1 21.5 20.8 8.3 12.4 7.5 6.5 12.1 17.3 35.9 40,727
No members age 65 or over:
Families........................................ 11.9 11.6 12.2 13.0 14.0 13.1 12.4 5.2 7.2 3.9 4.1 8.3 16.9 54.4 57,470
Unrelated individuals........................... 19.1 19.3 19.1 19.6 21.3 20.9 20.7 10.0 10.7 5.1 5.2 10.0 17.2 41.8 30,017
Any member age 65 or over:
Families........................................ 7.2 6.9 6.4 6.7 7.0 6.9 6.4 1.4 5.0 4.4 5.1 13.1 22.0 49.1 13,385
Unrelated individuals........................... 23.9 24.1 24.7 24.9 24.1 23.1 20.9 3.7 17.2 14.4 10.2 17.8 17.6 19.2 10,709
Families with children:
Female headed family, no husband present........ 46.3 45.5 45.3 47.6 46.7 44.6 42.3 20.8 21.5 8.6 7.5 12.6 15.7 13.3 9,444
Male present families........................... 8.1 7.7 8.5 9.0 9.9 9.3 8.5 2.5 6.0 3.9 4.5 9.9 20.8 52.5 28,354
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Based on Census 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: Prepared by Congressional Research Service based on March Current Population Survey for selected years.
TABLE H-7.--POVERTY UNDER ALTERNATIVE MEASURES OF INCOME AND PRICE INFLATION, 1979-96
----------------------------------------------------------------------------------------------------------------
Poverty rate Percentage reduction in
------------------------------------ official poverty
associated with:
Year CPI-U-X1 w/ ------------------------
Official Using CPI- noncash CPI-U-X1 w/
(CPI-U) U-X1 benefits \1\ CPI-U-X1 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
Percent change:
1979-89........................................ 9.4 7.5 12.7 NA NA
1979-96........................................ 17.1 15.1 12.7 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. Bureau of the Census (1996 and various years).
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.
In 1992, the Bureau published a consistent historical data
series, covering the years 1979-91, to trace the impact of
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.
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 1979-96 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 1996 by 3.3 percentage points.
The combined impact of using the CPI-U-X1 and including
noncash benefits can be determined by comparing the poverty
rate in column 3 with the official rate in column 1. On
average, the two Census Bureau adjustments reduced the poverty
rate by 4.8 percentage points or nearly 35 percent (12.8
million persons) in 1996.
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.
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.
Table H-7 illustrates that regardless of what measure of
income or which price inflator is used, the trend is the same:
poverty has increased substantially over the last 15 years.
Using the official CPI-U definition, the poverty rate increased
by 17.1 percent between 1979 and 1996. Using the CPI-U-X1
inflator and factoring in all noncash benefits (including
health benefits), poverty has increased by 12.7 percent but at
a lesser rate than the official measure.
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
in metro than in nonmetro areas (27.3 percent compared to 17.8
percent, respectively, between 1978 and 1996). Table H-9 shows
that poverty among blacks and Hispanics is much higher than
rates among whites in metro areas, nonmetro areas, and inner
cities. Table H-10 presents poverty rates by State for 1988-96,
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.
TABLE H-8.--POVERTY RATES IN NONMETRO AND METRO AREAS, 1978-96
[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
Percent increase, 1978-96................. 17.8 26.9 27.3
------------------------------------------------------------------------
\1\ For 1992, figures are based on 1990 Census population controls.
NA--Not available.
Source: U.S. Bureau of the Census (1996 and various years).
TABLE H-9.--PERCENTAGE OF PERSONS IN POVERTY BY RACE, BY METRO AND
NONMETRO RESIDENCE, 1996
------------------------------------------------------------------------
Metro
-------------------
Race Nonmetro Central
Total cities
only
------------------------------------------------------------------------
All races................................. 15.9 13.2 19.6
White..................................... 13.5 10.6 15.7
Black..................................... 35.2 27.3 31.0
Hispanic \1\.............................. 33.6 28.9 32.9
------------------------------------------------------------------------
\1\ Persons of Hispanic origin may be of any race.
Source: U.S. Bureau of the Census (1996).
TABLE H-10.--STATE POVERTY RATES: 3-YEAR AVERAGES, 1988-90 THROUGH 1994-96
----------------------------------------------------------------------------------------------------------------
State 1988-90 1989-91 1990-92 1991-93 1992-94 1993-95 1994-96
----------------------------------------------------------------------------------------------------------------
Alabama.......................................... 19.1 19.0 18.4 17.9 17.0 18.0 16.8
Alaska........................................... 11.0 11.2 11.1 10.4 9.8 8.8 8.5
Arizona.......................................... 14.0 14.2 14.5 15.6 15.7 15.8 17.5
Arkansas......................................... 19.8 18.4 18.1 18.3 17.6 16.7 15.8
California....................................... 13.3 14.2 15.1 17.0 17.5 17.6 17.2
Colorado......................................... 12.8 12.1 11.6 10.4 9.9 9.2 9.5
Connecticut...................................... 4.3 5.8 8.0 9.1 9.7 9.7 10.7
Delaware........................................ 8.5 8.1 7.3 8.6 8.8 9.6 9.1
District of Columbia............................ 18.1 19.2 20.0 21.8 22.6 23.3 22.5
Florida.......................................... 13.5 14.1 15.0 16.4 16.1 16.3 15.1
Georgia.......................................... 14.9 16.0 16.9 16.1 15.1 13.2 13.6
Hawaii........................................... 11.1 10.0 9.9 9.0 9.3 9.0 10.4
Idaho............................................ 13.3 13.7 14.6 14.1 13.4 13.2 12.8
Illinois......................................... 13.0 13.3 14.2 14.3 13.9 12.8 12.3
Indiana.......................................... 12.3 14.1 13.5 13.3 12.6 11.8 10.3
Iowa............................................. 10.0 10.1 10.4 10.5 10.8 11.1 10.8
Kansas........................................... 9.7 11.1 11.2 12.2 13.0 12.9 12.3
Kentucky......................................... 17.0 17.4 18.6 19.6 19.5 17.9 16.7
Louisiana........................................ 23.2 22.0 22.3 23.4 25.5 23.9 22.0
Maine............................................ 12.2 12.5 13.5 14.4 12.8 12.0 10.6
Maryland......................................... 9.6 9.3 10.2 10.3 10.7 10.2 10.4
Massachusetts.................................... 9.3 10.2 10.6 10.8 10.2 10.5 10.3
Michigan......................................... 13.2 13.9 14.0 14.4 14.4 13.9 12.5
Minnesota........................................ 11.6 12.0 12.6 12.6 12.1 10.8 10.2
Mississippi...................................... 25.0 23.8 24.6 24.4 23.1 22.7 21.3
Missouri......................................... 12.9 13.6 14.6 15.6 15.8 13.7 11.5
Montana.......................................... 15.5 15.8 15.1 14.7 13.4 13.9 14.6
Nebraska......................................... 11.1 10.9 10.0 10.2 9.9 9.6 9.5
Nevada........................................... 9.7 10.7 11.9 12.0 11.9 10.7 10.1
New Hampshire.................................... 6.9 7.1 7.4 8.7 8.8 7.6 6.5
New Jersey....................................... 7.9 9.0 9.6 10.4 10.1 9.3 8.7
New Mexico....................................... 21.1 20.9 21.4 20.7 20.0 21.3 24.0
New York......................................... 13.4 14.1 15.0 15.9 16.4 16.6 16.7
North Carolina................................... 12.6 13.2 14.4 14.9 14.8 13.7 13.0
North Dakota..................................... 12.5 13.5 13.4 12.7 11.2 11.2 11.1
Ohio............................................. 11.5 11.8 12.4 13.0 13.2 12.9 12.8
Oklahoma......................................... 15.9 15.8 17.0 18.6 18.5 17.9 16.8
Oregon........................................... 10.3 11.3 11.3 12.3 11.7 11.6 11.6
Pennsylvania..................................... 10.6 10.8 11.2 12.1 12.5 12.6 12.1
Rhode Island..................................... 8.0 8.2 10.0 11.4 11.3 10.7 10.6
South Carolina................................... 16.2 16.5 17.2 18.1 17.2 17.5 15.6
South Dakota..................................... 13.6 13.5 14.0 14.5 14.6 14.4 13.6
Tennessee........................................ 17.8 16.9 16.5 17.4 17.1 16.6 15.3
Texas............................................ 17.0 16.8 17.1 17.9 18.3 18.0 17.7
Utah............................................. 8.7 9.8 10.1 11.0 9.4 9.0 8.0
Vermont.......................................... 9.0 10.5 11.3 11.1 9.4 9.3 10.2
Virginia......................................... 10.9 10.6 10.1 9.7 10.0 10.2 11.1
Washington....................................... 9.1 9.3 9.8 11.0 11.7 12.1 12.0
West Virginia.................................... 17.2 17.2 19.4 20.8 21.0 19.2 17.9
Wisconsin........................................ 8.5 9.2 10.0 11.2 10.8 10.0 8.8
Wyoming.......................................... 10.5 10.6 10.4 11.2 11.0 11.6 11.1
--------------------------------------------------------------
U.S. total................................... 13.1 13.5 14.1 14.8 14.5 14.5 14.0
----------------------------------------------------------------------------------------------------------------
Source: U.S. Bureau of the Census (1996).
TRENDS IN FAMILY INCOMES, 1967-94
In the past 25 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 (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 the income for the highest
quintile has risen.
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 adjusted family income. While no
measure perfectly captures the economic well-being of families,
adjusted family income 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 over the past two decades, as the number of
families grew almost twice as fast as the population between
1973 and 1994. \3\ The growth in families reflects very
different trends among particular types of families (see table
H-11). The number of married couples with children, for
example, fell almost 2 percent between 1973 and 1989 before
rising by 3 percent between 1989 and 1994. In contrast, the
number of families headed by a single mother grew by 102
percent over the entire 1973-94 period.
---------------------------------------------------------------------------
\3\ In contrast to some measures of income from the Bureau of the
Census, this analysis treats unrelated individuals as one-person
families. Family types are defined in detail below.
---------------------------------------------------------------------------
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 1994 than in 1973.
Total family cash income grew over 50 percent in real terms
between 1973 and 1989, before falling slightly as the recession
that began in 1990 took hold. The real income of the average
family rose during this period as well, but the magnitude and
timing of the increase depends on the income measure used. For
example, family cash income rose about 9 percent between 1973
and 1989, on average, with virtually all of the increase taking
place between 1979 and 1989. In contrast, average pretax
adjusted family income (AFI)--which takes into account changes
in family size--rose about 20 percent, with the annual increase
about equally divided between the two time periods shown. The
larger increase in AFI reflects in part a decrease in average
family size.
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 look at changes? How should
inflation be taken into account? And, finally, what is the
appropriate measure of income to use?
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 that with the lowest income to that 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 looking at average incomes,
adjusted for inflation, by income quintile for specific types
of families.
Timeframe
Most of the analysis focuses on data for 4 years: 1967,
1973, 1979, and 1989. Those years reflect peaks in the business
cycle, and allow comparisons to be made across time periods in
which general economic conditions were similar. Information is
also presented for 1994.
TABLE H-11.--CHANGES IN POPULATION, FAMILY COMPOSITION, AND INCOME, SELECTED YEARS 1973-94
----------------------------------------------------------------------------------------------------------------
Year Percent change
Family group -------------------------------------------------------------------------
1973 1979 1989 1994 1973-89 1979-89 1989-94
----------------------------------------------------------------------------------------------------------------
A. Distribution of families and
persons by family type
Number of families (in thousands)..... 73,166 84,229 101,663 108,522 38.9 20.7 6.7
-------------------------------------------------------------------------
Families with children............ 31,098 32,166 34,768 37,413 11.8 8.1 7.6
Married couples with children. 24,798 24,166 24,378 25,079 -1.7 0.9 2.9
Single mothers with children.. 4,126 5,650 7,123 8,351 72.6 26.1 17.2
Nonelderly childless units \1\.... 28,183 35,730 46,467 49,580 64.9 30.1 6.7
Elderly childless units \2\....... 13,884 16,331 20,428 21,530 47.1 25.1 5.4
=========================================================================
Number of persons in different family
types (in thousands)................. 207,525 217,718 245,846 261,614 18.5 12.9 6.4
-------------------------------------------------------------------------
Families with children............ 134,248 130,426 135,381 145,814 0.8 3.8 7.7
Married couples with children. 108,976 101,318 99,471 103,043 -8.7 -1.8 3.6
Single mothers with children.. 14,240 18,132 21,504 25,372 51.0 18.6 18.0
Nonelderly childless units \1\.... 50,148 60,514 77,025 80,323 53.6 27.3 4.3
Elderly childless units \2\....... 23,129 26,778 33,440 35,477 44.6 24.9 6.1
=========================================================================
B. Size, age composition, and number
of earners for all families
Average number of persons per family:
Total........................... 2.87 2.59 2.42 2.41 -16.4 -6.6 -0.3
-------------------------------------------------------------------------
Under 18.......................... 0.94 0.75 0.63 0.65 -31.9 -16.1 2.5
18 to 64.......................... 1.64 1.55 1.50 1.48 -10.1 -3.4 -1.4
65 and older...................... 0.30 0.28 0.29 0.29 -1.9 3.9 -0.9
=========================================================================
Average number of earners per family:
Total........................... 1.39 1.34 1.27 1.24 -6.9 -5.2 -2.0
-------------------------------------------------------------------------
Male earners...................... 0.81 0.75 0.69 0.67 -15.3 -8.5 -3.0
Female earners.................... 0.57 0.59 0.58 0.58 5.2 -1.1 -0.7
=========================================================================
C. Income trends for all families, by
income measure
Income measure (in 1989 dollars):
Total family cash income
(billions)....................... 2,220 2,591 3,353 3,402 51.0 29.4 1.5
Mean family cash income........... 30,341 30,764 32,978 31,346 8.7 7.2 -5.0
Mean family cash income per capita
\3\.............................. 10,718 11,922 13,743 13,003 28.2 15.3 -4.7
Adjusted pretax income \4\........ 19,096 20,592 23,025 22,004 20.6 11.8 -4.3
Adjusted posttax income \5\....... NA 17,404 19,424 18,707 NA 11.6 -3.5
High adult male earner........ NA 12,044 12,189 11,253 NA 1.2 -7.6
High adult female earner...... NA 4,111 5,633 5,896 NA 37.0 4.8
Other earners in family....... NA 923 894 710 NA -3.1 -19.2
Other private income.......... NA 2,021 2,700 2,388 NA 33.6 -13.0
Cash transfer income (non-
means tested)................ NA 1,190 1,429 1,548 NA 20.0 12.5
Cash transfer income (means
tested)...................... NA 302 180 208 NA -40.4 15.4
Noncash transfer income....... NA 145 139 179 NA -4.0 26.2
Taxes......................... NA -3,333 -3,740 -3,475 NA 12.2 -7.0
----------------------------------------------------------------------------------------------------------------
\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.
\3\ Family cash income divided by the number of persons in the family.
\4\ Pretax AFl (adjusted family income) is pretax 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. In this table only, pretax AFl is expressed in dollars by multiplying adjusted family
income by the one-person poverty threshold.
\5\ Posttax AFl (adjusted family income) is posttax family income, plus the cash value of noncash food and
housing benefits, 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. In this table only,
posttax AFl is expressed is expressed in dollars by multiplying adjusted family income by the one-person
poverty threshold.
NA--Not available.
Source: Congressional Budget Office based on Current Population Survey data.
Data for more recent years are not presented here because
they are not fully comparable with those for earlier years.
Income data provided by the Census Bureau to researchers
outside that agency frequently are limited in certain areas
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, for some
survey respondents, changes in income between 1995 or 1996 and
earlier years can be due to actual changes in economic
resources, to changes in the way their income is coded, or
both. While alternative ways of presenting data for various
years are explored, this section limits the comparisons to
1994, the last year for which the former coding technique was
used.
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, \4\ 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.
---------------------------------------------------------------------------
\4\ The official CPI is viewed by many analysts as having
overstated the growth in housing costs during the late 1970s. Prior to
1983, the housing component of the CPI reflected both the flow of
services and the investment aspects of home ownership; only the former
is appropriate in an index measuring consumption costs. Since 1983, the
Bureau of Labor Statistics (BLS) has used a rental-equivalence measure
incorporating the consumption aspects of owning a home, not the
investment aspects. The CPI-U-X1 series is used to calculate what the
CPI would be had the rental-equivalence measure been in place since
1967. The BLS recommends using the CPI-U-X1 when a consistent treatment
of homeowner costs is desired. See U.S. Bureau of the Census (1993,
Appendixes A and B).
---------------------------------------------------------------------------
Income Measure
The purpose of looking at 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 8.7 percent between 1973 and 1989, with most
of the growth occurring between 1979 and 1989 (see panel A of
table H-12). Family cash income also shows different trends
among income quintiles: the average income of the lowest
quintile fell 3.2 percent between 1973 and 1989, whereas the
average income of the highest quintile rose 17.1 percent.
Similarly, the decline in family income after 1989 was greater
for families in the bottom quintiles.
TABLE H-12.--ALTERNATIVE MEASURES OF FAMILY INCOME BY INCOME QUINTILE AND CHANGE OVER TIME, SELECTED YEARS 1967-
94 FOR ALL FAMILIES
[In 1989 dollars]
----------------------------------------------------------------------------------------------------------------
Year Percent change
Income measure and quintile ----------------------------------------------------------------------
1967 1973 1979 1989 1994 1973-89 1979-89 1989-94
----------------------------------------------------------------------------------------------------------------
I. Pretax cash income
A. Mean family cash income (family
weighted):
Lowest............................... NA $6,061 $5,994 $5,866 $5,194 -3.2 -2.1 -11.5
Second............................... NA 15,416 15,306 15,107 13,729 -2.0 -1.3 -9.1
Middle............................... NA 25,909 25,609 25,823 23,886 -0.3 0.8 -7.5
Fourth............................... NA 37,946 38,680 40,374 38,493 6.4 4.4 -4.7
Highest.............................. NA 66,364 68,230 77,716 75,434 17.1 13.9 -2.9
----------------------------------------------------------------------
Total.............................. NA 30,341 30,764 32,978 31,347 8.7 7.2 -4.9
======================================================================
B. Mean adjusted family income (person
weighted): \1\
Lowest............................... $0.69 0.90 0.90 0.86 0.77 -4.3 -4.3 -11.0
Second............................... 1.54 1.94 2.06 2.09 1.93 7.7 1.3 -7.3
Middle............................... 2.26 2.82 3.07 3.27 3.10 16.0 6.7 -5.4
Fourth............................... 3.16 3.94 4.32 4.77 4.61 20.9 10.5 -3.3
Highest.............................. 5.67 6.87 7.39 8.84 8.57 28.7 19.6 -3.0
----------------------------------------------------------------------
Total.............................. 2.66 3.29 3.55 3.97 3.80 20.4 11.8 -4.3
======================================================================
C. Mean family income per capita (person
weighted): \2\
Lowest............................... NA 2,795 2,912 2,822 2,443 1.0 -3.1 -12.7
Second............................... NA 5,906 6,535 6,872 6,319 16.4 5.2 -7.3
Middle............................... NA 8,628 9,713 10,723 10,083 24.3 10.4 -5.1
Fourth............................... NA 12,386 14,046 16,058 15,262 29.6 14.3 -4.1
Highest.............................. NA 23,875 26,405 32,237 30,907 35.0 22.1 -3.5
----------------------------------------------------------------------
Total.............................. NA 10,718 11,922 13,743 13,003 28.2 15.3 -4.7
======================================================================
II. Posttax income plus food and housing
benefits
D. Mean adjusted family income \3\
(person weighted): \1\
Lowest............................... NA NA 0.96 0.93 0.89 NA -2.1 -4.7
Second............................... NA NA 1.89 1.90 1.81 NA 0.5 -4.8
Middle............................... NA NA 2.67 2.84 2.72 NA 6.4 -4.5
Fourth............................... NA NA 3.63 4.01 3.90 NA 10.6 -2.8
Highest.............................. NA NA 5.85 7.04 6.82 NA 20.4 -3.1
----------------------------------------------------------------------
Total.............................. NA NA 3.00 3.35 3.23 NA 11.6 -3.5
----------------------------------------------------------------------------------------------------------------
\1\ 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.
\2\ Total family income divided by the number of persons in the family.
\3\ Posttax income plus food and housing benefits.
NA--Not available.
Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1968, 1974,
1980, 1990, and 1995.
Family cash income has several shortcomings as a measure of
changes in economic well-being. Most notably, it fails to take
into account changes in family size and composition: a family
of one; i.e., a person living alone, 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.
An alternative approach is to measure income on a per
capita basis, by dividing total family income by the number of
persons in the family. Using family cash income per capita
yields quite different results (see panel C of table H-12). The
growth in average per capita income between 1973 and 1989 is
much larger than the growth in average family cash income: 28.2
percent, compared with 8.7 percent. Moreover, average cash
income per capita rose for each quintile between 1973 and 1989,
whereas average family cash income rose only for the top two
quintiles. Both measures, however, show a decline in family
income between 1989 and 1994.
In contrast to family cash income, which completely ignores
differences in family size, using per capita family income as a
measure of well-being assumes that a family of four requires
exactly four times as much as a single person to attain the
same standard of living. But four persons living together would
generally require less than four times as much income because
of the economies of scale reaped from increased family size.
(For example, families with more children might require more
bedrooms, but not more kitchens.) A measure that reflects such
economies of scale would therefore provide a better method of
taking family size into account.
Analysts disagree over the best method of making incomes
comparable for families of different size, but one readily
available candidate is the scale 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 (see
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 probably 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).
The adjusted family income (AFI) measure shown in panel B
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 1994 had an income of 3.10 times its poverty
threshold. \5\
---------------------------------------------------------------------------
\5\ 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.
---------------------------------------------------------------------------
Adjusting for family size yields results that are generally
intermediate to those obtained for the family cash income and
family cash income per capita measures. Between 1967 and 1973,
income increased significantly for all quintiles, by 23 percent
for the lowest quintile. On average, pretax AFI increased 20.4
percent between 1973 and 1989, with a 4.3 percent decline for
the lowest quintile and a 28.7-percent increase for the highest
quintile. AFI decreased for all quintiles between 1989 and 1994
(see chart H-2).
TABLE H-13.--POVERTY THRESHOLDS AND EQUIVALENCE VALUES FOR DIFFERENT
FAMILY SIZES, 1994
------------------------------------------------------------------------
Equivalence
Official Adjusted value (one
Family size (persons) poverty poverty person =
threshold threshold 1.00)
------------------------------------------------------------------------
1.................................... $7,547 $6,928 1.00
2.................................... 9,661 8,867 1.28
3.................................... 11,812 10,853 1.57
4.................................... 15,141 13,916 2.01
5.................................... 17,900 16,457 2.37
6.................................... 20,235 18,587 2.68
7.................................... 22,923 21,038 3.04
8.................................... 25,427 23,416 3.37
9 or more............................ 30,300 27,975 4.01
------------------------------------------------------------------------
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 CPI.
Source: Congressional Budget Office.
CHART H-2. RATIO OF AVERAGE ADJUSTED FAMILY INCOME OF HIGHEST QUINTILE
TO AVERAGE INCOME OF LOWEST QUINTILE, 1967-94
Source: Congressional Budget Office.
It must be remembered that there is no adjustment in these
analyses for labor inputs. For example, if mean income
increases by 10 percent over a given time period while family
work hours also increase by 10 percent, the family's overall
economic well-being may be qualitatively different than a 10-
percent increase in income would suggest. Work expenses may
have increased by an even larger amount, particularly if more
family members are working, and leisure time would have
decreased.
Adjusting for Noncash Income and Taxes
A family's economic well-being is determined not only by
its pretax cash income, but also by the amount of any noncash
income it receives. Analyses that ignore noncash benefits--
whether received from employers in the form of fringe benefits
or through social welfare transfer programs--understate how
well-off families are. The understatement has grown over time,
moreover, because in-kind income has increased as a share of
personal income. Employer-provided benefits increased from
about 7 percent of wages and salaries in 1973 to 10 percent in
1989. Adjusted for inflation and population growth, spending on
the major government noncash transfer programs--food stamps,
public housing, Medicare, and Medicaid--almost tripled over the
same period.
Whereas the omission of noncash income understates economic
well-being for most families, pretax measures of income
overstate it. Both income and payroll taxes reduce disposable
income, so that posttax income provides a better measure of the
resources available to families at any point in time. Taking
taxes into account is especially important for assessing income
trends over time because Social Security tax rates increased by
almost 30 percent, and the amount of annual earnings subject to
the tax increased by nearly 70 percent in real terms between
1973 and 1989. And although individual income taxes as a share
of income have been relatively constant, the share varies
widely across income quintiles.
The income measure shown in panel D of table H-12 shows
posttax AFI, plus the estimated cash value of food and housing
benefits, for 1979, 1989, and 1994. \6\ Food benefits reflect
the value of food stamps and school lunches; housing benefits
reflect subsidized public housing; and taxes include Federal
income and payroll taxes, but not State income taxes. Being
more comprehensive, posttax AFI is a better indicator of
economic well-being than pretax AFI, and is used extensively in
this study. \7\
---------------------------------------------------------------------------
\6\ Data on noncash transfers are available only for 1979 and later
years, as the Bureau of the Census did not collect this information
until then. Similar information about the value of Medicaid and
Medicare is also available, but the family-level data needed to
allocate employer-provided health insurance benefits are not. The value
of Medicaid and Medicare benefits is therefore excluded to avoid
skewing the distribution of income toward low-income families.
\7\ Unless stated otherwise, posttax AFI always includes the cash
value of noncash food and housing benefits.
---------------------------------------------------------------------------
There are interesting differences in the measurement of
family income provided by pretax AFI (panel B) as compared with
posttax AFI (panel D). The most notable difference between the
two measures is in their levels: average posttax AFI (0.89) was
about 16 percent higher than average pretax AFI (0.77) for the
lowest quintile in 1994, but about 20 percent lower for the
highest quintile (6.82 versus 8.57). The difference in the two
measures reflects the addition of food and housing benefits to
the incomes of families in the lowest quintile and the
subtraction of taxes from incomes of families in the highest
quintile.
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 four income measures show broadly similar trends in the
share of income received by each quintile (see table H-14). In
general, between 1973 and 1994, the shares of the lowest three
quintiles fell, and the share of the top quintile rose.
However, pretax family cash income (family weighted) of the
fourth quintile declined slightly over the period, and the
posttax adjusted family income of the fourth quintile remained
constant over the 1979-94 period for which data is available.
The measures show different patterns of shares at any point in
time, however. In 1994, for example, the share of the top
quintile was 48.1 percent when measured as family cash income,
compared with 42.3 percent when measured as posttax AFI.
TRENDS IN PRETAX CASH INCOMES BY TYPE OF FAMILY
The composition of the typical family has changed over
time. Compared with 1973 and 1979, there were fewer persons in
each family in 1994, on average, and married couples with
children made up a smaller fraction of all families (see 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-14.--SHARES OF FAMILY INCOME BY INCOME QUINTILE FOR SELECTED
YEARS 1967-94 FOR ALL FAMILIES
[In percent]
------------------------------------------------------------------------
Year
Income measure and quintile ---------------------------------------
1967 1973 1979 1989 1994
------------------------------------------------------------------------
I. Pretax cash income
A. Family cash income (family
weighted):
Lowest...................... NA 4.0 3.9 3.6 3.3
Second...................... NA 10.2 10.0 9.2 8.8
Middle...................... NA 17.1 16.6 15.7 15.2
Fourth...................... NA 25.0 25.1 24.5 24.6
Highest..................... NA 43.7 44.4 47.1 48.1
B. Adjusted family income (AFI)
(person weighted): \1\
Lowest...................... 5.2 5.5 5.1 4.3 4.0
Second...................... 11.6 11.8 11.6 10.5 10.2
Middle...................... 16.9 17.1 17.3 16.5 16.3
Fourth...................... 23.7 23.9 24.3 24.0 24.3
Highest..................... 42.6 41.7 41.7 44.6 45.2
C. Family cash income per capita
(person weighted): \2\
Lowest...................... NA 5.2 4.9 4.1 3.8
Second...................... NA 11.0 11.0 10.0 9.7
Middle...................... NA 16.1 16.3 15.6 15.5
Fourth...................... NA 23.1 23.6 23.4 23.5
Highest..................... NA 44.6 44.3 46.9 47.5
II. Posttax income plus food and
housing benefits
D. Adjusted family income (AFI)
(person weighted): \1\
Lowest...................... NA NA 6.4 5.6 5.5
Second...................... NA NA 12.6 11.4 11.2
Middle...................... NA NA 17.8 17.0 16.8
Fourth...................... NA NA 24.2 24.0 24.2
Highest..................... NA NA 39.0 42.1 42.3
------------------------------------------------------------------------
\1\ 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.
\2\ 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, and 1995.
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
childlessfamilies 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).
TABLE H-15.--AVERAGE FAMILY SIZE AND NUMBER OF FAMILIES, \1\ BY FAMILY
TYPE, WEIGHTED BY FAMILIES, SELECTED YEARS 1973-94
------------------------------------------------------------------------
Number of
Family type and year Persons per families Percent of
family (thousands) families
------------------------------------------------------------------------
All families: \1\
1973......................... 2.84 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
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
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
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
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
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
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
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
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
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
------------------------------------------------------------------------
\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 and 1995.
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 AFI
Trends in incomes for different family types show more
variation than trends for families overall. Between 1973 and
1989, adjusted family income grew 14.9 percent, on average, for
families with children (see table H-16). This compares with an
income gain of 20.4 percent for all families. For families with
children, average AFI fell 16.1 percent during this period for
the lowest quintile, from 88 percent of poverty to 74 percent
of poverty. For the highest quintile, average AFI rose 25.6
percent, compared with 28.7 percent for all families. With few
exceptions, the 1989-94 period saw declines in income across
family types and income quintiles. The exceptions were married
couples with children in the higher income quintiles and single
mothers with children in the lowest income quintile.
TABLE H-16.--AVERAGE PRETAX AFI (INCOME AS A MULTIPLE OF POVERTY) BY FAMILY TYPE AND INCOME QUINTILE, WEIGHTED
BY PERSONS, SELECTED YEARS 1967-94
----------------------------------------------------------------------------------------------------------------
Year Percent change
Family type and quintile --------------------------------------------------------------------------------
1967 1973 1979 1989 1994 1967-89 1973-89 1979-89 1989-94
----------------------------------------------------------------------------------------------------------------
All families:
Lowest..................... 0.69 0.90 0.90 0.85 0.77 25.1 -4.3 -4.3 -11.0
Second..................... 1.54 1.94 2.06 2.09 1.93 35.5 7.7 1.3 -7.3
Middle..................... 2.26 2.82 3.07 3.27 3.10 45.2 16.0 6.7 -5.4
Fourth..................... 3.16 3.94 4.32 4.77 4.61 50.8 20.9 10.5 -3.3
Highest.................... 5.67 6.87 7.39 8.84 8.57 56.0 28.7 19.6 -3.0
--------------------------------------------------------------------------------
Total.................... 2.66 3.29 3.55 3.97 3.80 49.0 20.4 11.8 -4.3
================================================================================
All families with children:
Lowest..................... 0.74 0.88 0.84 0.74 0.66 0.1 -16.1 -11.9 -11.1
Second..................... 1.54 1.88 1.95 1.87 1.73 21.6 -0.7 -4.2 -7.5
Middle..................... 2.13 2.65 2.84 2.93 2.79 37.4 10.8 3.3 -5.0
Fourth..................... 2.84 3.54 3.85 4.14 4.09 45.5 16.9 7.6 -1.3
Highest.................... 4.77 5.73 6.15 7.20 7.14 50.9 25.6 17.1 -0.9
--------------------------------------------------------------------------------
Total.................... 2.40 2.94 3.3 3.38 3.28 40.4 14.9 8.0 -2.9
================================================================================
Married couples with children:
Lowest..................... 0.89 1.16 1.18 1.14 1.06 27.9 -1.1 -2.9 -7.3
Second..................... 1.66 2.12 2.29 2.34 2.26 40.9 10.1 2.2 -3.4
Middle..................... 2.23 2.84 3.12 3.34 3.31 49.9 17.8 7.1 -0.9
Fourth..................... 2.93 3.71 4.11 4.52 4.58 54.2 21.9 10.2 1.2
Highest.................... 4.88 5.94 6.41 7.67 7.68 57.3 29.2 19.8 0.1
--------------------------------------------------------------------------------
Total.................... 2.52 3.15 3.42 3.80 3.78 51.1 20.6 11.2 -0.7
================================================================================
Single mothers with children:
Lowest..................... 0.21 0.33 0.32 0.25 0.25 18.6 -23.4 -22.9 1.0
Second..................... 0.59 0.71 0.75 0.64 0.62 9.3 -9.2 -13.8 -3.7
Middle..................... 0.91 1.03 1.22 1.14 1.11 26.0 10.7 -6.1 -2.7
Fourth..................... 1.45 1.67 2.01 2.03 1.94 39.9 21.5 0.6 -4.3
Highest.................... 2.78 3.29 3.65 4.14 4.02 49.2 26.0 13.5 -2.9
--------------------------------------------------------------------------------
Total.................... 1.19 1.41 1.59 1.64 1.59 38.5 16.9 3.2 -3.2
================================================================================
Nonelderly childless units:
Lowest..................... 0.80 1.22 1.24 1.19 1.00 49.3 -1.8 -3.9 -16.2
Second..................... 2.19 2.81 2.91 2.94 2.68 34.0 4.5 0.9 -8.8
Middle..................... 3.28 4.09 4.27 4.45 4.20 35.6 8.9 4.2 -5.7
Fourth..................... 4.47 5.49 5.78 6.29 6.04 40.8 14.5 8.8 -3.9
Highest.................... 7.42 8.95 9.35 10.94 10.66 47.4 22.3 17.1 -2.6
--------------------------------------------------------------------------------
Total.................... 3.63 4.51 4.71 5.16 4.92 42.1 14.4 9.6 -4.8
================================================================================
Nonelderly childless families:
Lowest..................... 1.03 1.74 1.85 1.80 1.68 74.2 3.5 -2.8 -6.8
Second..................... 2.47 3.31 3.59 3.68 3.52 49.1 11.1 2.5 -4.2
Middle..................... 3.52 4.53 4.89 5.20 5.05 48.0 15.0 6.3 -2.9
Fourth..................... 4.70 5.88 6.33 7.03 6.90 49.6 19.5 11.1 -1.9
Highest.................... 7.65 9.33 9.94 11.72 11.53 53.3 25.7 17.9 -1.7
--------------------------------------------------------------------------------
Total.................... 3.87 4.96 5.32 5.89 5.74 52.0 18.8 10.7 -2.6
================================================================================
Nonelderly unrelated
individuals:
Lowest..................... 0.32 0.51 0.61 0.61 0.47 90.4 19.4 -0.4 -23.1
Second..................... 1.14 1.49 1.72 1.83 1.57 61.1 23.1 6.4 -14.2
Middle..................... 2.12 2.53 2.78 3.00 2.70 41.5 18.8 8.0 -10.0
Fourth..................... 3.23 3.82 4.03 4.46 4.14 37.9 16.9 10.6 -7.2
Highest.................... 5.88 7.00 7.11 8.48 8.08 44.3 21.2 19.3 -4.8
--------------------------------------------------------------------------------
Total.................... 2.54 3.07 3.25 3.68 3.39 44.9 19.9 13.1 -7.8
================================================================================
Elderly childless units:
Lowest..................... 0.48 0.76 0.84 0.95 0.93 96.8 24.7 13.4 -2.5
Second..................... 0.95 1.34 1.50 1.73 1.73 82.6 28.6 14.8 0.3
Middle..................... 1.48 1.97 2.26 2.64 2.52 78.1 34.1 16.9 -4.6
Fourth..................... 2.40 3.02 3.38 4.02 3.74 67.3 33.2 19.1 -7.1
Highest.................... 5.32 6.54 6.85 8.63 8.00 62.1 32.0 26.0 -7.3
--------------------------------------------------------------------------------
Total.................... 2.13 2.73 2.97 3.59 3.38 68.9 31.8 21.2 -5.9
================================================================================
Elderly childless families:
Lowest..................... 0.60 0.96 1.06 1.20 1.20 100.2 25.3 13.5 0.5
Second..................... 1.16 1.63 1.86 2.15 2.11 85.9 31.5 15.2 -1.7
Middle..................... 1.77 2.34 2.67 3.14 2.97 77.6 34.0 17.4 -5.5
Fourth..................... 2.76 3.50 3.83 4.61 4.26 67.2 31.8 20.3 -7.8
Highest.................... 5.73 7.12 7.37 9.54 8.69 66.7 34.0 29.4 -8.9
--------------------------------------------------------------------------------
Total.................... 2.40 3.11 3.36 4.13 3.85 72.0 32.7 22.9 -6.8
================================================================================
Elderly unrelated individuals:
Lowest..................... 0.35 0.54 0.64 0.73 0.67 109.0 35.7 13.6 -7.4
Second..................... 0.63 0.93 1.02 1.17 1.17 86.1 26.1 14.7 -0.8
Middle..................... 0.86 1.23 1.37 1.62 1.62 88.9 32.2 18.2 0.0
Fourth..................... 1.29 1.73 2.05 2.46 2.34 91.2 42.1 20.2 -5.3
Highest.................... 3.44 4.08 4.83 5.58 5.57 62.3 36.8 15.5 -0.2
--------------------------------------------------------------------------------
Total.................... 1.31 1.70 1.98 2.31 2.27 76.3 36.0 16.7 -1.8
----------------------------------------------------------------------------------------------------------------
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 1995.
Most of the divergence in incomes among families with
children reflects compositional change, as families of single
mothers with children became increasingly common. The lowest
quintile of married couples with children has a 1.1-percent
decline in average AFI between 1973 and 1989; the lowest
quintile of single mothers with children fared much worse, with
a 23.4-percent decline during the same period. These two family
types as a whole, however, showed income gains over the period:
20.6 percent for married couples with children and 16.9 percent
for single mothers with children.
Elderly persons experienced income gains across the board
between 1973 and 1989. For elderly childless units, which
include both single persons and married couples, average AFI
rose 24.7 percent for the lowest quintile and 32.0 percent for
the highest quintile. Despite their gains, the elderly
generally had much lower incomes than the nonelderly. In 1989,
for example, the average income of elderly childless units was
about 3.6 times poverty; the average income of nonelderly
childless units, by comparison, was about 5.2 times poverty.
Like the other family types, the income of most elderly units
fell between 1989 and 1994.
The effects of differences in rates of growth in incomes by
quintile show up directly in data on income shares. The share
of total family income received by families in the lowest
quintile declined, while the share received by the highest
quintile increased between 1973 and 1994 (see table H-17).
TABLE H-17.--SHARES OF PRETAX ADJUSTED FAMILY INCOME (AFI) BY FAMILY
TYPE AND INCOME QUINTILE, SELECTED YEARS 1967-94
------------------------------------------------------------------------
Year
Family type and quintile ---------------------------------------
1967 1973 1979 1989 1994
------------------------------------------------------------------------
All families:
Lowest...................... 5.2 5.5 5.1 4.3 4.0
Second...................... 11.6 11.8 11.6 10.5 10.2
Middle...................... 16.9 17.1 17.3 16.5 16.3
Fourth...................... 23.7 23.9 24.3 24.0 24.3
Highest..................... 42.6 41.7 41.7 44.6 45.2
All families with children:
Lowest...................... 6.2 6.0 5.4 4.4 4.0
Second...................... 12.8 12.8 12.5 11.1 10.5
Middle...................... 17.8 18.0 18.2 17.4 17.0
Fourth...................... 23.7 24.1 24.6 24.5 24.9
Highest..................... 39.7 39.0 39.3 42.6 43.5
Married couples with children:
Lowest...................... 7.1 7.3 6.9 6.0 5.6
Second...................... 13.2 13.5 13.4 12.3 12.0
Middle...................... 17.7 18.0 18.2 17.6 17.5
Fourth...................... 23.3 23.5 24.0 23.8 24.2
Highest..................... 38.7 37.7 37.5 40.3 40.7
Single mothers with children:
Lowest...................... 3.5 4.6 4.1 3.0 3.2
Second...................... 9.9 10.1 9.4 7.9 7.8
Middle...................... 15.3 14.7 15.3 13.9 14.0
Fourth...................... 24.4 23.7 25.3 24.7 24.4
Highest..................... 46.8 46.8 45.9 50.5 50.6
Nonelderly childless units:
Lowest...................... 4.4 5.4 5.3 4.6 4.1
Second...................... 12.1 12.5 12.4 11.4 10.9
Middle...................... 18.1 18.1 18.1 17.2 17.1
Fourth...................... 24.6 24.4 24.5 24.4 24.6
Highest..................... 40.9 39.7 39.7 42.4 43.4
Nonelderly childless families:
Lowest...................... 5.3 7.0 7.0 6.1 5.8
Second...................... 12.7 13.4 13.5 12.5 12.3
Middle...................... 18.2 18.3 18.4 17.7 17.6
Fourth...................... 24.3 23.7 23.8 23.9 24.1
Highest..................... 39.5 37.6 37.4 39.8 40.2
Nonelderly unrelated
individuals:
Lowest...................... 2.5 3.3 3.8 3.3 2.8
Second...................... 9.0 9.7 10.6 10.0 9.3
Middle...................... 16.7 16.5 17.1 16.3 15.9
Fourth...................... 25.5 24.9 24.8 24.3 24.4
Highest..................... 46.3 45.6 43.8 46.1 47.6
Elderly childless units:
Lowest...................... 4.6 5.6 5.7 5.3 5.5
Second...................... 8.9 9.9 10.1 9.6 10.2
Middle...................... 13.9 14.4 15.2 14.7 14.9
Fourth...................... 22.6 22.1 22.8 22.4 22.1
Highest..................... 50.0 48.0 46.2 48.0 47.3
Elderly childless families:
Lowest...................... 5.0 6.1 6.3 5.8 6.3
Second...................... 9.6 10.5 11.1 10.4 11.0
Middle...................... 14.7 15.1 15.9 15.2 15.4
Fourth...................... 23.0 22.5 22.8 22.4 22.1
Highest..................... 47.7 45.8 43.9 46.2 45.2
Elderly unrelated individuals:
Lowest...................... 5.3 6.3 6.5 6.3 5.9
Second...................... 9.6 10.9 10.3 10.1 10.3
Middle...................... 13.1 14.4 13.8 14.0 14.3
Fourth...................... 19.6 20.4 20.7 21.3 20.5
Highest..................... 52.4 47.9 48.7 48.2 49.0
------------------------------------------------------------------------
Note.--Poverty thresholds are based on the distribution of family sizes,
with no adjustment for the age of the head of household or the number
of children. Quintiles are based on the number of persons.
Source: Congressional Budget Office tabulations of data from the March
Current Population Survey, 1968, 1974, 1980, 1990, and 1995.
Average Family Cash Income
For all families, average cash income grew more slowly than
average pretax AFI between 1973 and 1989. 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 5.8 percent for families
with children between 1973 and 1989, with most of the growth
taking place between 1979 and 1989 (see table H-18). The
average for the lowest quintile fell 26.7 percent during the
1973-89 period, while the average for the highest quintile rose
16.4 percent. As with pretax AFI, compositional change is
important for interpreting changes in incomes among families
with children. The 5.5 percent decrease in average family cash
income for the lowest quintile of married couples with children
was much smaller than the 26.9-percent decline for single
mothers with children. Similarly, although most family types
experienced cash income declines over the 1989 to 1994 period,
the declines were either smaller or nonexistent for upper-
income married couples with children but were generally greater
among upper-income single mothers with children.
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, which comprise married
couples and unrelated individuals, experienced income gains in
every quintile between 1973 and 1989 and income declines in
almost every quintile between 1989 and 1994.
Table H-19 shows family cash income limits (the income
cutoffs between quintiles) by quintile and family type. Between
1973 and 1994, 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 quintiles. In fact, income limits for the lower quintiles
have decreased for several family types.
For most family types, the share of family income going to
the bottom quintiles declined over the 1973-94 period while the
share of income going to top quintiles increased (table H-20).
Again, this generalization is less true for elderly units.
Income Trends Year By Year
Tables H-21 and H-22 show average pretax AFI and average
family cash income by type of family and income quintile for
selected years between 1973 and 1994.
TABLE H-18.--AVERAGE FAMILY CASH INCOME BY FAMILY TYPE AND INCOME QUINTILE, SELECTED YEARS 1973-94
[In 1989 dollars]
----------------------------------------------------------------------------------------------------------------
Year Percent change
Family type and income quintile --------------------------------------------------------------
1973 1979 1989 1994 1973-89 1979-89 1989-94
----------------------------------------------------------------------------------------------------------------
All families:
Lowest....................................... $6,061 $5,994 $5,886 $5,194 -3.2 -2.1 -11.5
Second....................................... 15,416 15,306 15,107 13,729 -2.0 -1.3 -9.1
Middle....................................... 25,909 25,609 25,823 23,886 -0.3 0.8 -7.5
Fourth....................................... 37,946 38,680 40,374 38,493 6.4 4.4 -4.7
Highest...................................... 66,364 68,230 77,716 75.434 17.1 13.9 -2.9
--------------------------------------------------------------
Total...................................... 30,341 30,764 32,978 31,347 8.7 7.2 -4.9
==============================================================
All families with children:
Lowest....................................... 10,529 9,369 7,714 6,843 -26.7 -17.7 -11.3
Second....................................... 23,176 22,365 20,664 18,790 -10.8 -7.6 -9.1
Middle....................................... 32,616 33,317 33,067 31,315 1.4 -0.8 -5.3
Fourth....................................... 43,426 44,940 47,217 46,412 8.7 5.1 -1.7
Highest...................................... 70,420 72,971 81,966 81,430 16.4 12.3 -0.7
--------------------------------------------------------------
Total...................................... 36,034 36,592 38,127 36,958 5.8 4.2 -3.1
==============================================================
Married couples with children:
Lowest....................................... 15,450 15,148 14,606 13,564 -5.5 -3.6 -7.2
Second....................................... 27,170 28,294 28,660 27,732 5.5 1.3 -3.3
Middle....................................... 35,513 37,693 39,683 39,425 11.7 5.3 -0.7
Fourth....................................... 45,783 48,616 53,106 53,798 16.0 9.2 1.3
Highest...................................... 72,842 76,547 88,168 88,576 21.0 15.2 0.5
--------------------------------------------------------------
Total...................................... 39,352 41,260 44,846 44,619 14.0 8.7 -0.5
==============================================================
Single mothers with children:
Lowest....................................... 3,505 3,338 2,563 2,738 -26.9 -23.2 6.7
Second....................................... 7,931 8,122 6,737 6,626 -15.1 -17.1 -1.7
Middle....................................... 11,922 13,136 11,803 11,349 -1.0 -10.1 -3.9
Fourth....................................... 17,867 19,904 19,427 18,905 8.7 -2.4 -2.8
Highest...................................... 33,430 35,714 38,394 37,227 14.8 7.5 -3.1
--------------------------------------------------------------
Total...................................... 14,930 16,043 15,792 15,369 5.8 -1.6 -2.7
==============================================================
Nonelderly childless units:
Lowest....................................... 5,809 5,863 5,727 4,584 -1.4 -2.3 -20.0
Second....................................... 15,886 15,808 15,840 13,926 -0.3 0.2 -12.1
Middle....................................... 25,562 25,397 26,154 23,930 2.3 3.0 -8.5
Fourth....................................... 37,670 38,217 40,549 38,140 7.6 6.1 -5.9
Highest...................................... 67,136 69,142 79,550 76,026 18.5 15.1 -4.4
--------------------------------------------------------------
Total...................................... 30,412 30,886 33,565 31,321 10.4 8.7 -6.7
==============================================================
Nonelderly childless families:
Lowest....................................... 13,044 13,881 13,712 12,860 5.1 -1.2 -6.2
Second....................................... 25,352 27,773 28,880 27,670 13.9 4.0 -4.2
Middle....................................... 35,256 38,599 41,716 40,477 18.3 8.1 -3.0
Fourth....................................... 47,199 51,058 57,713 56,304 22.3 13.0 -2.5
Highest...................................... 76,867 83,026 98,413 95,606 28.0 18.5 -2.9
--------------------------------------------------------------
Total...................................... 39,543 42,867 48,093 46,583 21.6 12.2 -3.1
==============================================================
Nonelderly unrelated individuals:
Lowest....................................... 2,948 3,504 3,522 2,710 19.5 0.5 -23.1
Second....................................... 8,620 9,957 10,621 9,114 23.2 6.7 -14.2
Middle....................................... 14,628 16,065 17,389 15,653 18.5 8.2 -10.0
Fourth....................................... 22,105 23,330 25,849 23,985 16.9 10.8 -7.2