Congress of the United States 

Congressional Budget Office 

Washington. D.C. 

ACKGROUND PAPER NO. 17 Poverty Status of Families ~evised) 

Under Alternative 

Definitions of Income 

June 1977 

POVERTY STATUS OF FAMILIES 

UNDER ALTERNATIVE DEFINITIONS OF INCOME 

Tbe Congress of the United States 

Congressional Budget Office 

For sale by the Superintendent of Documents, U.S. Government Printing Offioo 

Washington, D.C. 20402 

PREFACE 

The 95th Congress will be considering legislation to reform 

social welfare programs. Important criteria for evaluating any new 

proposal are how it will affect families in poverty and what it costs. 

This paper provides the basis for such an evaluation by analyzing how the current income transfer programs lift families out of poverty. 

This analysis was requested by former 

of the Senate Budget Commi ttee in May 1976. 

and Senator Henry Bellmon of the Senate Budget interest in the preparation of the study. 

Senator Walter Mondale 

Chairman Edmund Muskie 

Committee also expressed 

This report is a revision of an earlier one published under 

the same title by the Congressional Budget Office. The revision was 

necessary to correct a computer programmi ng error that resul ted in 

a systemati c underestimate of the number of famil i es in poverty under 

all definitions of income. Although all of the poverty incidence 

fi gures were affected, the correcti on of th; s error does not affect 

the findings of the earlier report. 

The study was prepared by John J. Korbel of CBO's Human Resources 

Division, under the supervision of Stanley Wallack and C. William 

Fi scher. The author wi shes to acknowl edge the assi stance of Bri an 

Davidson, G. William Hoagland, Benjamin Okner, and Robert Reischauer 

of CBO. The technical support that made this analysis possible was 

provided by Jodie T. Allen, Harold Beebout, and Raymond J. Uhalde 

of Mathematica Policy Research of Washington, D.C. and Helen Cohn of 

The Hendrickson Corporation. In accordance with CBO's mandate to 

provide objective and impartial analysis, Poverty Status Under Alternative Definitions of Income contains no recommendations. 

The manuscript was edi ted by Mary R; chardson Boo and prepared for publication under the supervision of Johanna Zacharias. Norma 

Leake typed the several drafts. 

Revised June 1977 

Alice M. Rivlin 

Director 

iii 

TABLE OF CONTENTS 

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Summary . . . . . . . . . . . . . . 

Part I: Analysis of Poverty Status. 

Part II: Appendix -- Estimating the 

Poverty Population •••• 

v 

· . . . . . . . . . . . . 

· . . . . . . . . . . . . 

· . . . . . . . . . . . . 

Page 

iii 

xii; 

1 

15 

TEXT TABLES 

1. Distribution of Income by Source: 

Total Dollars in Billions and Percent. 

2. Distribution of Federal, State, and Local 

Taxes and Transfer Benefits to Families 

Classified by Pre-Tax/Pre-Transfer 

Income Quintiles •••••••••••• 

3. Families Below the Poverty Level Under 

Alternative Income Definitions •••• . . . . . . . . . . . 

4. 

5. 

Families by Type Below the Poverty Level 

Under Alternative Income Definitions •• 

Families by Race Below the Poverty Level 

Under Alternative Income Definitions •• . . . . . . . . . . 6. Families by Age Below the Poverty Level 

Under Alternative Income Definitions ••. 

7. Families by Region Below the Poverty Level 

Under Alternative Income Definitions ••• 

vi i 

. . . . . . . . . 

2 

4· 

8 

8 

11 

12 

13 

APPENDIX TABLES 

A-l. 

A-2. 

A-3. 

A-4. 

A Comparison of CPS Aggregate Money 

Income Amounts with Aggregate Money Income Amounts Derived from Independent 

Sources Adjusted to CPS Income Concepts, 

by Type of Income • • • • • • • • • • 

Summary of Total Beneficiaries, Total 

Non-Transfer Income and Transfer 

I ncome by Source ••••••••••• 

Weighted Average Poverty Thresholds by Family Size and Sex of Head, by Farm 

or Nonfarm Residence ••••••• 

Distribution of Income Under 

Alternative Definitions to Families 

Classified by Pre-Tax/Pre-Transfer 

Income Quintiles ••••••••• 

A-5. Distribution of Families Below and Above 

Poverty Level by Various Definitions of 

A-6. 

Income • • • • • • • • • ••••• 

Distribution of Families by Family 

Type Below and Above Poverty Level 

Classified by Various Definitions of 

. . . . . . . . . 

. . . . . . . . . 

Income . . . . • . . . . . . . . . . . . . . . . . . . . . A-7. Distribution of Families by Race Below 

and Above Poverty Level Classified by Various Definitions of Income ••••• 

ix 

o 77 - 2 

. . . . . . . . . . 

21 

22 

23 

24 

25 

26 

28 

APPENDIX TABLES (continued) 

A-S. Distribution of Families by Age Below 

and Above Poverty Level Classified by Various Definitions of Income ••• 

A-9. Distribution of Families by Region Below and Above Poverty Level 

Classified by Various Definitions 

of Income • • • • • • • • • • • • 

xi 

. . . . . . . . . . . 

30 

32 

SUMMARY 

During the past decade, public expenditures for social welfare 

programs have grown four-fold--from $77.2 billion in 1965 to $286.5 

billion in 1975. At the same time, according to official poverty 

statistics, the percentage of families in poverty has declined by 

only 30 percent. An apparent paradox, thi s s ituati on has led some 

observers to question the efficacy of the current system of public 

transfers. This dilemma ;s the result of two factors: the types of 

programs that account for most of the recent growth; and the i nadequacies of the measures used to estimate families in poverty. 

Today, federal, state, and local government income-transfer 

payments account for roughly 60 percent of all soci al welfare expend;-

tures. The three classes of these expenditures are: (1) social insurance programs, such as social security and unemployment insurance; 

(2) cash assistance programs, such as Aid to Families with Dependent 

Children and Supplemental Security Income; and (3) in-kind programs, 

such as food stamps and medicaid. Most of these expenditures are 

recei ved by the pub 1 i c in general, not ju st by persons in poverty. 

In fiscal year 1976, social insurance program expenditures, 

which are designed to replace reduced income, accounted for 68 percent 

of major government income-transfer payments. Only about a third, 

however, went to those families who were in the lowest 20 percent 

(lowest quintile) of the income distribution. Cash assistance accounted 

for 10 percent of all ; ncome-transfer payments and i n-k i nd transfers 

for 23 percent. Cash assistance and in-kind transfers are generally 

intended to benefit only the low-income population, and more than 

50 percent of these benefits were in fact paid to families in the 

bottom quintile. 

Looking only at those programs targeted primarily on the poor, 

mos t of the recent rap; d growth has been in the var; ous forms of i nkind-transfers, notably food stamps, medicare, and medicaid. Expenditures for in-kind transfers increased sixteen-fold over the last 

decade, while cash assistance increased four-fold. The growth in 

in-kind transfers is not reflected in the official poverty statistics 

because these benefits are not counted as income. 

xiii 
The income concept used to measure poverty in the offi ci a 1 s tatistics ;s that of the Bureau of the Census. It;s basically money income before paying taxes. On this basis, Census estimated that 

in calendar year 1975, 13.8 percent of families (including single-person families) were poor. However, if in-kind income is included, taxes 

are taken out, and the Census data base is adjusted for underreporting 

of incomes, a very different picture emerges. 11 

In fiscal year 1976, without any public transfer payments or 

taxes, approximately 21.4 million families would have been poor-- roughly one out of every four families. When public cash transfers 

are counted--the Census concept of income--the incidence of poverty is 

halved to 10.7 million families (13.5 percent of all families). If 

in-kind transfers are included and taxes are taken, 6.6 million families 

remain in poverty (8.3 percent of all families). If medicare and 

medicaid benefits are not counted as income, then an additional 2.6 

million families would be counted among the poor (3.2 percent of 

all families). Including medicare and medicaid benefits, this represents about a 70 percent reduction in the number of families who would 

be consi dered poor usi ng the pre-tax/pre-transfer concept. If these 

medical benefits are excluded, the reduction in poverty would be more 

than 57 percent. The table below summarizes these results. 

If income is looked at after taxes and after total transfers, 

the incidence of poverty among families has fallen by approximately 56 percent since 1965. 

The effecti veness of transfer programs in 1 i fti ng fami 1 i es out 

of poverty varies considerably according to family type, race, age, and 

region of residence: 

o Families of two or more persons derive relatively greater benefi ts from these transfer programs than do si ngl e-person 

famil i es. 

11 All of these calculations were made with a statistical model using family survey data. For a number of the transfer programs in the 

i n-k'j nd and cash assi stance areas, benefi ts were estimated and attributed to families according to specific program rules and general characteristics of the recipient populations. Taxes and transfer program benefits were cal cul ated after family incomes had been adjusted for 

underreporting and nonreporting. 

xiv 
o While the pre-tax/pre-transfer poverty incidence is greater for nonwhites than whites, the relative impact of public transfer payments in alleviating poverty is slightly greater 

for whites. 

o Before taxes and transfers, more than one out of every two 

families headed by an aged person (65 or over) would be counted 

as poor. After taxes and transfers, poverty counts have been 

substantially reduced; only 6 percent would remain among the 

poor. 

o Public transfers are relatively more effective in reducing 

poverty for families residing in the Northeast and North 

Central regi ons than for famil i es in the South and West regions. 

FAMILIES al BELOW THE POVERTY LEVEL UNDER ALTERNATIVE INCOME DEFINITIONS 

FISCAL YEAR 1976 

Pre-Taxi Pre-Taxi Pre-Tax Post-Taxi 

Pre-Taxi Post-Social Post-Money Post-in-Kind Post Total 

Families in Pre-Transfer Insurance Transfer Transfer Transfer 

Poverty Income Income Income Income bl Income bl 

I IT I II 

Number in 

Thousands 21,436 12,454 10,716 8,978 6,441 9,165 6,597 

Percent of 

All Families 27.0 15.7 13.5 11.3 8.1 11.5 8.3 

SOURCE: Appendix Table A-5. 

~/ Families are defined to include unrelated individuals as one-person famil i es. 

B/ Column I excludes medicare and medicaid benefits received by families participating in those programs; Column II includes medicare 

and medicaid benefits. 

xv 

PART I: ANALYSIS OF POVERTY STATUS 

Publ ; shed stati sti cs reveal an apparent paradox between growth 

in public expenditures for social welfare programs and their effectiveness in alleviating poverty. In the nation, the number of families or 

persons in poverty has been used as an indicator of our economic wellbei ng. Thi s recent growth in spendi ng without a commensurate drop 

in the number of people in poverty has i nevi tab ly gi ven ri se to the 

question: Have the programs failed? The answer is no for a number 

of reasons. The most important are the nature and intent of the programs in the social welfare area and inadequacies of the measures 

generally used to compute poverty status. 

Recent Growth of Transfer Programs and the Incidence of Poverty 

I n the 1 ast decade there has been a four-fol d growth in spendi ng 

by all levels of government for social welfare programs--$77.2 billion 

in fiscal year 1965 to an estimated $286.5 billion by fiscal year 

1975. 1/ This represents a relative growth of from 11.7 percent of 

the gross national product in fiscal year 1965 to 19.9 percent in 

fiscal year 1975. Today, roughly 60 percent of expenditures for social 

welfare are in programs that provide cash and in-kind transfer payments 

to individuals. Not all of the transfer payments are directed at 

people whose current earned incomes are low. 

In fiscal year 1976, it is estimated that total individual income, 

which includes major government money and in-kind transfer payments, 

was $1,247 billion (Table 1). Total government transfers to individuals 

amounted to $183 billion or about 15 percent of all income. 

1/ This includes transfer payments to individuals through social 

insurance programs such as sod al securi ty, government pensions, and unemployment insurance; cash assistance such as Aid to Families 

with Dependent Children (AFDC) and Supplemental Security Income 

(SSI); and in-kind transfer programs such as food stamps, medicare 

and medicaid, as well as public expenditures for veterans programs, health, and aid to education. (See Social Security Bulletin, 

Vol. 39, No.1, January 1976.) 

1 

92-020 0 - 77 3 
TABLE 1. DISTRIBUTION OF INCOME BY SOURCE: TOTAL DOLLARS IN BILLIONS 

AND PERCENT, FISCAL YEAR 1976 

Non-transfer Income 

Transfer Income a/ 

Social Insurance 

Cash Assistance 

In-Kind Transfers 

Total Transfers 

Total Income 

SOURCE: Appendix Table A-2. 

Amount 

$1,063.4 

124.0 

18.0 

41.4 

183.4 

$1,246.8 

Income 

Percent 

85.3 

9.9 (67.6) 

1.4 (9.8) 

3.3 (22.6) 

14.7 (100.0) 

100.0 

~/ See Appendix Table A-2 for specific transfers included in each 

category. 

These cash and in-kind transfers may be divided into three broad 

categories. The first is social insurance programs, such as social 

security, government pensions, and unemployment insurance, all of 

whi ch reql.Ji re employee or emp 1 oyer contri buti ons and pay benefi ts that 

are wage-related. Social insurance programs paid benefits totaling $124 billion or about 68 percent of major government transfer payments 

in fiscal year 1976. The second broad category is cash assistance 

programs, such as Aid to Families with Dependent Children and Supplemental Security Income, which provided $18 billion in benefits, about 

10 percent of total transfers. The third category is in-kind forms 

of assistance, such as food stamps, housing assistance, and medical 

care, which accounted for $41 billion or the remaining 23 percent of 

transfers. 

2 
Accardi ng to offi ci al poverty stati sti cs, in cal endar year 1965, 

19.1 percent of all U.S. families (including one-person families) 

had incomes below the poverty level after counting money transfer 

payments from public and private sources. By calendar year 1975, the 

indicence of poor families had declined to an estimated 13.8 percent. 

Although the number of poor families was roughly the same, about 11 

million in both years, the number of poor persons in these families fell 

by 7 million over the decade from a total of 33 million poor persons in 

1965 to 26 million in 1975. It is this limited success in the face of 

growing expenditures that has caused some people to question the effectiveness of the current transfer system. ~/ 

Several factors help to explain the limited success implied 

by the official poverty measure. First, the bulk of public expenditures 

go to families whose incomes before public transfers are above the 

poverty level. In many of the programs, this is intended. Second, 

the measured income used to test a fami ly I S poverty status does not 

accurately reflect resources available for current consumption; inkind transfers are ignored, taxes are not taken out, and families 

underreport both transfer and non-transfer incomes. 

Intent of Social Welfare Programs 

Many of the transfer programs, by design, benefit the general 

population, not just those with low incomes. The objective of social 

insurance programs is to replace earnings that have been lost as a 

result of unemployment, old age, sickness, disability, or death. 

In fiscal year 1976, the poorest 20 percent of families received about 

one-third of the estimated $124 billion spent by federal, state, and 

local governments for these programs, while the rest went to families 

in the higher quintiles (Table 2). Those in the top qu;ntile, families 

with pre-tax and pre-transfer incomes in excess of $21,682 a year, 

received roughly 12 percent of total social insurance. 

In contrast to social insurance, cash assistance and in-kind 

transfers are targeted more directly on the low-income population. 

Often, these programs categori ca lly 1 im; t el i gi bi 1; ty and ; ncome 

~/ Changes in the distribution of non-transfer income accounted for 

part of the poverty reduction occurring between 1965 and 1975. 

The percent of families below the poverty level before public 

transfers declined slightly over the decade, from about 28 percent 

in 1965 to an estimated 24 percent in 1975. 

3 
support to specific groups, such as poor famil i es with chi 1 dren and 

the low-income aged and disabled. In fiscal year 1976, more than 

60 percent of the $18 billion in cash assistance benefits went to 

families in the lowest quintile, and only 4 percent to families in the 

top quintile. More then 50 percent of the $41 billion in-kind transfers 

went to families in the lowest quinti1e and less than 5 percent to 

families in the highest qu;ntile. 

TABLE 2. DISTRIBUTION OF FEDERAL, STATE, AND LOCAL TAXES AND TRANSFER 

BENEFITS a/ TO FAMILIES CLASSIFIED BY PRE-TAX/PRE-TRANSFER 

INCOME QUTNTILES: FISCAL YEAR 1976 

Social Cash In-Kind 

Qui ntil es 'pj Insurance Assistance Transfers S../ Taxes !4./ 

I II 

Low 20% 31.9 61.5 47.6 53.2 0.3 

Second 20% 28.4 20.5 31.2 26.5 3.3 

Third 20% 16.2 9.2 12.2 10.5 13.1 

Fourth 20% 12.0 5.0 5.5 5.4 24.5 

High 20% 11.5 3.8 3.5 4.5 58.8 

TOTAL ~/ 100.0% 100.0% 100.0% 100.0% 100.0% 

Total 0011 ars 

in Bi 11 ions $124.0 $ 18.0 $9.6 $41.4 $206.2 

SOLIRCE: Appendix Table A-4. 

2./ See Appendi x Table A-2 

benefits. 

for a 1 i sti ng of individual programs and 

~/ The upper limits of each quintile are as follows: Low 20% ($1,812), 

Second 20% ($7,871), Third 20% ($13,994), and Fourth 20% ($21,682). 

E./ Column I excludes medicare and medicaid benefits received by families participating in those programs; Column II includes medicare 

and medicaid benefits. 

d/ Includes federal personal income and employee taxes and state 

income taxes. 

e/ Components may not add to totals because of rounding. 

4 
Looking at programs targeted primarily on the poor, much of 

the recent rapi d growth has been in the i n-k i nd trans fer programs, 

rather than cash assi stance. Whi le cash assi stance expendi tures grew 

about four-fold, in-kind transfer payments to individuals increased 

sixteen-fold, from $2.3 billion in fiscal year 1965 to $37.9 billion by 

fiscal year 1975. This growth is not reflected in official poverty 

statistics because in-kind benefits are not counted as income. 

Official Poverty Definition and Data Base 

According to the official poverty definition, a family is judged 

to be poor if its "welfare ratio"--income divided by the poverty level--

is less than one. Contrary to popular belief, there is no single 

poverty line. Rather, there is a set of poverty thresholds that vary 

according to family characteristics such as size, sex of head, number of 

related children, and farm or nonfarm residence. Based on studies of 

family budgets, which revealed that about one-third of post-tax cash 

incomes went towards food, the poverty thresholds were originally 

established at three times the "economyll food budget, a minimally 

adequate food budget for the very poor.3/ Today, these thresholds are 

changed periodically to reflect price-inflation and still represent 

family post-tax cash income levels. Some observers believe that the 

official poverty levels are inadequate measures of need. This is 

because they are based on consumpti on patterns in 1955 and bear no 

relation to the overall growth in real income or the rise in the standard of living. 

The income concept used to determine poverty status for the 

official statistics is the Bureau of the Census definition, which is 

basically money income before taxes. It includes non-transfer income, 

~/ For couples and single persons, the multiplication factors were 

3.88 and 5.92, respectively. These larger factors account for 

the fact that, while food expenditures may be less for these 

families, other expenditures are not proportionately reduced. 

In 1969, two modifications were made to the definition of poverty: 

(1) the original thresholds for nonfarm families were retained for 

the base year 1963, but annual adjustments in levels are based on 

changes in the Consumer Pri ce I ndex, rather than on changes in 

the cost of the "economyll food budget, and (2) the farm threshol ds 

were raised from 70 to 85 percent of corresponding nonfarm levels. 

The "economy" food budget was determined by the Department of 

Agriculture, Agricultural Research Service, and was based on minimal 

nutritional needs. 

5 
such as wages and salaries, rents, interests, and dividends, as well 

as government cash transfer payments. slJch as sod al securi ty, government pensions, and public assistance. While this is the official 

definition of income used to measure the number of families in poverty, 

it does not represent all sources of income available for family consumption expenditures. 

The Census definition ignores all forms of in-kind income, both 

publ i c and pri vate, and taxes are not subtracted. Were government 

in-kind transfers to be included in the definition of income, fewer 

fami li es woul d be counted as poor. On the other hand, if taxes were 

excluded from income--as they should be, since they are not available 

for current consumption expenditures and are not included in the definition of poverty leve1s--additional families would be counted among 

the poor. A comprehensive income defi niti on p 1 aci n9 the numerator 

and denominator of the welfare ratio in consistent terms is needed to 

appropriately evaluate the government's role in alleviating poverty.~/ 

The offici a1 stat; sti cs al so contai n certa; n bi ases whi ch are 

embod; ed ; n the data base. Poverty counts are from the Current Population Survey (CPS), a Census survey of representative U.S. families. Census-surveyed families underreport incomes, and in some cases, 

do not report receipt of certain types of income at all.~/ This under-

~/ The problems associ ated wi th the defi niti on and measure of poverty 

have been discussed for a long time. For example, some people 

have argued that if in-kind transfers are counted as income, the 

poverty levels themselves should include in-kind benefits. This 

issue and others are analyzed in a series of publications, entitled 

The Measure of Poverty, prepared by the U.S. Department of Health, 

Education and Welfare. 

~/ Census estimated that 97 percent of wages are reported on the 

CPS. Farm income and the various forms of non-wage income, such 

as di vi dends and interest, are seri ously underreported. It is 

estimated that they are underreported on the CPS by 51.6 for 

farm income and 55.8 percent for non-wage income. The variations ; n report-j ng cash transfer incomes are as d; vergent. Whi 1 e 

almost 90 percent of social security and railroad retirement benefits are accounted for by the CPS, only 75 percent of public assistance payments, and less than 60 percent of other cash transfer 

payments, such as unemployment insurance and government pens; ons, 

are reported. The most seri ous defi ci ency for measuri ng poverty 

from the survey is, of course, in the area of in-kind income, where 

these sources of income are not counted at all. See Appendix Table 

A-I for estimates of underreporting by source. 

6 
reporting, which varies considerably by sources of income, can result 

in the erroneous identification of some families as poor. On the 

other hand, the Census counts may understate the number of families in 

poverty because the CPS does not include families residing in the 

territories and institutions--populations which are predominantly poor. 

Measuring Poverty Under Different Definitions of Income 

Using the 1975 Current Population Survey expanded to include 

the omitted populations noted above, the poverty status of families 

was estimated under alternative definitions of income. The population and family incomes, including public in-kind transfers, were adjusted 

to fiscal year 1976 levels, and incomes were adjusted both for underreporting and nonreporting. A statistical model was used to make these 

adjustments. Transfer benefits attributed to individual families 

were not those actually rece; ved but rather were estimated accordi ng 

to specific program rules and general characteristics of the recipient 

populations. §/ 

Table 3 summarizes what happens to the incidence of poverty 

under different income concepts. Calculated before the receipt of 

public transfer payments or payment of taxes, an estimated 21.4 million 

families (including single persons as one-person families) would be 

in poverty today -- over 27 percent of all famil i es. Three-fourths 

of these families had pre-tax/pre-transfer incomes that were less than 

50 percent of the poverty level. When social insurance is counted, 

the number of fam; 1; es in poverty is reduced by about 42 percent to 

12.5 million or 15.7 percent of all families. The inclusion of other 

cash assistance, which produces the Census concept of income, results 

in further reduction to a level of 10.7 million or 13.5 percent of 

all families. 71 If in-kind transfer payments are counted as income, 

6.4 million families remain below the poverty level, or about 8.1 

~I See Appendix for a discussion of the estimation procedure and 

supporting tables. 

II This estimate for fiscal year 1976 is slightly lower than the 

13.8 percent counted as poor by Census in calendar year 1975 (cited 

earlier in the text). Given that these two time periods are similar, the estimates differ for two reasons that are offsetting. The 

CBO estimate for fiscal year 1976 raises the poverty count by 

including about 2.1 million poor families in institutions or residing in Puerto Rico. The institutionalized population and Puerto 

Rico are not included in the CPS. On the other hand, the CBO 

estimate lowers the family poverty count by about 1.9 million 

because of the adjustment for underreporting and nonreporti ng of 

incomes. 

7 
TABLE 3. FAMILIES al BELOW THE POVERTY LEVEL UNDER ALTERNATIVE INCOME 

DEFINITIONS: FISCAL YEAR 1976 

Pre-TaxI Pre-TaxI Pre-TaxI 

Pre-Taxi Post-Social Post-Money Post-In-Kind 

Families in Pre-Transfer Insurance Transfer Transfer 

Poverty Income Income Income Income 

Number in 

Thousands 21,436 12,454 10,716 8,978 6,441 9,165 6,597 

Percent of all 

Famill i es 27.0 15.7 13.5 11.3 8.1 11.5 8.3 

SOURCE: Appendix Table A-5. 

~I Families are defined to include unrelated individuals as one-person families. 

~I Column I excludes medicare and medicaid benefits received by families 

participating in those programs; Column II includes medicare and medicaid benefits. 

TABLE 4. FAMILIES BY TYPE BELOW THE POVERTY LEVEL UNDER ALTERNATIVE INCOME 

DEFINITIONS: FISCAL YEAR 1976 

Families in 

Poverty 

A. SinglePerson 

Families: 

Number in 

Thousands 

Percent of 

SinglePerson 

Famil; es 

B. MultiplePerson 

Famil ; es: 

Number in 

Thousands 

Percent of 

MultiplePerson 

Families 

Pre-Taxi 

Pre-Transfer 

Income 

10,306 

47.8 

11,130 

19.2 

SOURCE: Appendix Table A-6. 

Pre-TaxI 

Post-Social 

Insurance 

Income 

6,131 

28.4 

6,323 

10.9 

Pre-TaxI 

Post-Money 

Transfer 

Income 

5,396 

25.0 

5,320 

9.2 

Pre-TaxI 

Post-In-Kind 

Transfer 

Income 

5,002 3,537 5,130 3,659 

23.2 16.4 23.8 17.0 

3,977 2,904 4,035 2,938 

6.9 5.0 7.0 5.1 

~I Column I excludes medicare and medicaid benefits received by families 

participating in those programs; Column II includes medicare and medicaid benefits. 

8 
percent of all families. If medicare and medicaid are not counted as 

income, then the addition of the remaining in-kind benefits, such as 

food stamps and housing assistance, reduce the poverty incidence among 

families from 13.5 to 11.3 percent rather than to 8.1 percent. 8/ 

However, when taxes are subtracted from income -- primarily payroll 

taxes, which account for most of the tax burden on low-income families -- some families move back into poverty, raising the post-tax/post-total transfer poverty count slightly to 6.6 million, or approximately 8.3 

percent of all families. This represents about a 70 percent reduction in 

the incidence of poverty from its pre-tax/pre-transfer level. Not 

counting medicare and medicaid, the reduction in the incidence of 

poverty would be still more than 57 percent. 

If income ;s examined after taxes and after transfers, there has 

been marked progress ; n reduci ng the ; nci dence of poverty among families. Since 1965 the percent of families in poverty has been reduced 

by roughly 56 percent, using this concept, in contrast to the more 

modest reduction -- about 28 percent -- when the Census income concept is employed. 9/ 

~/ Estimated benefits received are counted as income and it is assumed 

that recipients value the in-kind benefits at their full cost 

to the government. For further discussion of the conceptual prob- lems associated with valuing.;n-kind benefits. see Appendix. 

~j According to Census, and as discussed earlier, 19.1 percent of 

all families were in poverty in calendar year 1965. If this percentage were adjusted to reflect the underreport1ng of incomes and 

the poor in institutions and residing in Puerto Rico at a rate equal 

to that found between calendar year 1975 and fiscal year 1976 (see 

footnote 7), perhaps only 18.7 percent of all families were poor in 

calendar year 1965. If the in-kind transfers were included in the 

calculation of the base, fewer families would have been found to be 

poor in 1965, and the reduction would be somewhat lower than the 56 

percent reported in the text. However, since in-kind transfers in 

1965 were only 3 percent of all social welfare expendi tures, the 

adjustment would be slight. 

9 

92-020 0 - 77 - 4 
Impact on Target Populations 

The effectiveness of cash and in-kind transfer programs in moving 

families out of poverty varies significantly according to family type, 

race, age, and region of residence. 

Family Type. More than a quarter of all families are single 

persons, most of whom are either aged or young. Of these, about 48 

percent are poor before taxes and government transfers, and about 

80 percent of these poor i ndi vi du a 1 shave incomes that are 1 ess than 

half the poverty level (Table 4). The incidence of pre-tax/pre-transfer 

poverty for other families (those with two or more persons) is less 

than half that for single persons -- about 19 percent. The incl.usion 

of social insurance as income has relatively identical impacts for 

both these family types, resulting in a 41 percent reduction in poverty 

for single persons and 43 percent for other families. Other cash 

transfers are targeted slightly more effectively on multiple-person families, in which the poverty count is reduced by another 9 percent and 

only 7 percent for single persons. In-kind transfers, on the other 

hand, have a relatively greater impact on the multiple-person families, 

even though the medical programs on the average are targeted more 

effectively on single persons. Overall, in moving from a pre-tax/pre- transfer income to a post-taxi post-transfer income, multiple-person families derive relatively greater benefits from the transfer programs considered here than do single persons. 

Race of Family Head. About 12 percent of all families have 

a family head who is nonWhite (Table 5). Although the pre-tax/pretrans fer poverty i nci dence is greater for nonwhi tes (44 percent) than 

for whites (25 percent), the relative effect of public transfer payments in alleviating poverty is slightly greater for whites. The 

post-tax/post-transfer income distribution for whites and nonwhites 

results in a 7 percent and 16 percent incidence of poverty, respectively. Poor whites benefit more from the social insurance programs because of their higher earnings records, while cash assistance and 

in-kind transfers result in a relatively larger reduction in poverty 

among nonWhites. 

10 
TABLE 5. FAMILIES BY RACE BELOW THE POVERTY LEVEL UNDER ALTERNATIVE 

INCOME DEFINITIONS: FISCAL YEAR 1976 

Pre-TaxI Pre-TaxI Pre-TaxI Post-Tax 

Pre-TaxI Pos t-Soci a 1 Post-Money Post-In-Ki nd Post-Total 

Families in Pre-Transfer Insurance Transfer Transfer Transfer 

Poverty Income Income Income Income al Income al 

I II I 

A. White 

Number in 

Thousands 17,330 9,305 8,006 6,053 4,948 7,013 

Percent 

of White 24.7 13.3 11.4 9.8 7.1 10.0 

B. Nonwhite 

Number in 

Thousands 4,106 3,148 2,709 2,126 1,492 2,152 

Percent of 

Nonwhite 43.8 33.6 28.9 22.7 15.9 23.0 

SOURCE: Appendix Table A-7. 

~j Column I excludes medicare and medicaid benefits received by families participating ;n those programs; Column II includes medicare and 

medicaid benefits. 

II 

5,091 

7.3 

1,506 

16.1 

Age of Fami 1y Head. The current transfer system benefi ts fam;-

1 i es headed by an aged person (65 or over) more than famil i es headed 

by a younger person. About 16 million families (20 percent of all 

fami 1 ; es) have a head who is 65 or over; more than one out of every 

two of these families is in poverty before taxes and transfers (Table 

6). For the rest of the families, the incidence of pre-tax/pre-transfer 

poverty is less than 19 percent. After taxes and transfers (including in-kind), however, the poverty count of the aged is substantially reduced; only about 6 percent would be counted among the poor. Social 

insurance, which is dominated by social security, lifts about 64 percent of the aged poor over the poverty line. As expected, the impact of 

social insurance on those under 65 is modest by comparison: 24 percent 

are moved out of poverty by the receipt of social insurance. The 

11 
inclusion of cash assistance and in-kind transfers, especially medicare 

and medi cai d, accounts for the rest of the dramati c poverty reducti on 

among the aged. Without medicare and medicaid, about 14.1 percent of 

the aged families would be counted as poor. 

TABLE 6. FAMILIES BY AGE BELOW THE POVERTY LEVEL UNDER ALTERNATIVE 

INCOME DEFINITIONS: FISCAL YEAR 1976 

Pre-Taxi Pre-Taxi Pre-Taxi Post-Taxi 

Pre-Taxi Post-Soci al Post-Money Post-In-Kind Post-Total 

Famil i es Pre-Transfer Insurance Transfer Transfer Transfer 

in Poverty Income Income Income Income al Income ~./ 

I II I 

A. Under 65 

Number in 

Thousands 11,789 8,994 8,029 6,710 5,463 6,886 

Percent of 

Under 65 18.6 14.2 12.7 10.6 8.6 10.9 

B. 65 and Over 

Number in 

Thousands 9,647 3,459 2,686 2,268 977 2,279 

Percent of 

65 and Over 59.9 21.5 16.7 14.1 6.1 14.1 

SOURCE: Appendix Table A-8. 

M Column I excludes medicare and medicaid benefits received by families participating in those programs; Column II includes medicare 

and medicaid benefits. 

II 

5,615 

8.9 

982 

6.1 

Region. Under most definitions of income, relatively more families are poor in the South and West regions than in the Northeast 

and North Central regions (Table 7). 101 For example, based on pre-taxi 

pre-transfer income, about 31 percent of families in the South are 

poor, whil e 23 percent of famil ; es ; n the North Central reg; on are 

poor. 

12 
TABLE 7. FAMILIES BY REGION BELOW THE POVERTY LEVEL UNDER ALTERNATIVE 

INCOME DEFINITIONS: FISCAL YEAR 1976 

Pre-Taxi Pre-Taxi Pre-Taxi Post-Taxi 

Pre-Taxi Post-Social Post-Money Post-In-Kind Post-Total 

Famil i es Pre-Transfer Insurance Transfer Transfer Transfer 

in Poverty Inc.ome Income Income Income al Income al 

I II I II 

A. South Region 

Number in 

Thousands 7,873 4,986 4,552 3,928 3,041 3,993 3,092 

Percent of 

South 30.8 19.5 17.8 15.4 11.9 15.6 12.1 

B. West Regi on 

Number in 

Thousands 3,918 2,339 1,824 1,551 1,200 1,585 1,233 

Percent of 

West 26.2 15.6 12.2 10.4 8.0 10.6 8.2 

C. Northeast 

Region 

Number in 

Thousands 4,765 2,521 2,072 1,622 1,005 1,662 1,032 

Percent of 

Northeast 26.4 14.0 11.5 9.0 5.6 9.2 5.7 

D. North Central 

Region 

Number in 

Thousands 4,881 2,607 2,268 1,878 1,194 1,924 1,240 

Percent of 

North 

Central 23.3 12.5 10.8 9.0 5.7 9.2 5.9 

SOURCE: Appendix Table A-9. 

~/ Column I excludes medicare and medicaid benefits received by families participating in those programs; Column II includes medicare 

and medicaid benefits. 

13 
The effectiveness of public transfers in reducing poverty is 

relatively greater for families residing in the Northeast and North 

Centra 1 regi ons than in the South and West regi ons. About 46 percent 

of the poor families in the North Central region are moved out of 

poverty through soci al insurance, compared to roughly 37 percent 

in the South. This disparity reflects not only the types of programs 

and families residing in the different regions, but also the differences in the relative wage structures which affect the benefits in 

wage-related programs such as social security and unemployment insurance. 

The post-tax/post-transfer poverty counts do not improve the 

status of the South compared to the other regions. In fact, the 

differenti al is wi dened. Before taxes and transfers, the i nci dence 

of poverty is roughly 30 percent higher in the South than in the 

North Central regi on. After taxes and trans fers , although there is 

an absolute reduction in poverty in both regions, the incidence of 

poverty in the South (12.1 percent) increases to more than twice that 

of the North Central region (5.9 percent). 

10/ The use of national poverty thresholds to count families in 

poverty by region of residence may exaggerate the differences 

among regions if there are regional cost-of-living differentials. 

For example, if the cost-of-living is less in the South and West 

regions, as some people may contend, the estimates in this paper 

overstate the poverty inci dence in these reg; ons and understate 

the number of poor famil i es res; d; ng in the Northeast and North 

Central reg; ons. 

14 
APPENDIX 

PART II: APPENDIX -- ESTIMATING THE POVERTY POPULATION 11 

In order to calculate the number of families in poverty under 

alternative definitions of income, it is necessary to develop a consistent and comprehensive data base. The March 1975 Current Population Survey (CPS) was adjusted to reflect changes in the economic and demographic characteristics of the population between the survey year (calendar year 1974) and the projection year (fiscal year 1976). 

Various sources of money income, both transfer and nontransfer, were 

adjusted for underreporting and nonreporting. In addition, major 

sources of income not surveyed in the original CPS, that is, government 

in-kind transfers, were estimated and allocated to families in the 

CPS. 

The 1975 CPS consists of approximately 50 thousand househol ds 

and 150 thousand persons selected to represent the total noni nstitutionalized population of the United States, excluding U.S. territories. 

In order to remain consistent with budget totals, this data base was 

expanded by using the 1970 decennial census to include families repre- sentative of the institutionalized population and those residing in 

Puerto Rico (the bulk of the population in U.S. territories). 

Detailed information relating to the economic and demographic composition of the population is available for the individual families 

sampled in the CPS. This survey is adjusted to represent families 

in fi sca 1 year 1976. The adjustment employs Census Bureau estimates 

of the U.S. population by age, race, and sex as well as Census projec- tions of households by type and size. 

The survey data identify for each family the types and amounts 

of each major cash transfer program shown in Table A-1. As noted 

above, however, these data are not accurate because of underreporti ng and nonreporting and must be corrected to provide a consistent base 

for evaluating poverty status. The amount of underreporting and nonreporting varies among the different sources of income. In the past, 

11 For a description of the technical procedures, see Mathematica 

Policy Research Analysis of Current Income Maintenance Programs and Budget Alternatives, Fiscal Years 1976; 1978, and 1982: Technical 

Documentation and Basic Output, March, 197 • 

17 
the Bureau of the Census has estimated the amount of underreporti ng 

on the CPS for various sources of income (see Table A-l following 

the text of this appendix). 

Independent sources for total transfer and non-transfer incomes 

were used in correcting the survey data for underreporting and, in 

the case of transfer programs, for nonreporting as well. ~I As a 

result, the adjusted survey data base reflects aggregate levels for 

all major sources of income and recipient levels for the major income 

transfer programs. Table A-2 shows the estimated levels of non-transfer income and of the number of recipient units and benefits in each of 

the government transfer programs after these adjustments. 

For all cash transfer benefits, with the exception of AFDC and 

SSI, the amounts reported on the survey were adjusted to 1 evel s reflected by independent sources. For AFOC and SS!, the reported data 

were disregarded. Instead, caseloads and costs for AFDC and SSI were 

estimated by using a statistical model. This model applied the accounting rules of the respective programs to families in the CPS, first 

determi ni ng whether or not the fami 1 i es were eli gi b 1 e for the program 

and, if they were, calculating their benefit. Since only a portion 

of those eligible for the program actually participate, a subset of 

these eligible families was picked to be actual recipients. The number 

of recipients and amount of benefits in the survey were made equivalent 

to the numbers estimated from independent sources. Si nce benefits 

for each family are cal cul ated accordi ng to the accounti ng rul es of 

the program, they are not necessari ly the exact amount recei ved by 

that family, but are rather the amount the family wou1 d have received 

if there were no admi~istrative discretion exercised or error in 

applying program rules. 

The statistical model also was used to calculate and distribute 

in-kind transfers to families in the survey. In the case of the food 

stamp program, the program accounting rules were applied to CPS families 

and the same procedure followed as for the cash assistance. Benefits 

from the rest of the programs -- child nutrition, housing assistance, 

medicare, and medicaid -- were distributed to recipients according 

to broad economic, and demographic characteristics of the families 

categorically eligible for the particular program. 

~I Independent sources include both budget data and aggregate levels 

reflected in the national income and product accounts. 

18 
Since the poverty definition includes normal expenditures for 

food, and other income to meet housing and health needs, the income 

definition used to measure poverty status must include the value of 

i n-ki nd transfers designated to meet these consumpti on needs. The 

question is at what value? In this analysis, the full government cost 

was used. It may be argued that the cash value to the recipient of 

in-kind transfers is less than the cost of the transfer to the government. Therefore, by imputing to families the full cost to the government, the actual benefit as viewed by the recipient family may be 

overstated. 

For medicare and medicaid, the costs were distributed among 

classes of recipients according to their average utilization rates. 

An alternative would have been to impute an insurance value or premium 

to all those eligible for assistance. Conceptually. this second 

alternaive seems preferable; it was not used because of the difficulties 

in calculating the actuarial value of the premium for the different 

state medicaid programs. 

Either the benefit-received or calculated-premium approach can 

be cri t i ci zed. I n extreme cases, the benefi t-recei ved approach coul d 

count thousands of dollars in benefits as income available for alternative use. Since the current poverty levels are based on normal 

hea 1 th expendi tures whi ch may be small for the poor, thi s approach 

implies that a family can be made non-poor by virtue of large health 

costs. The criticism is that this is not a fair measure of income 

unless the poverty levels are also adjusted to reflect a higher level of 

health care need. 

If the calculated-premium approach were used, the premium could 

be calculated by spreading benefits over the entire eligible population, 

but the premium would be lower than that of any individual private 

insurance plan providing the same health benefits. On the other hand, 

if the prem; ums were cal cul ated for groups wi th di fferent ri sks (for 

example the aged), the calculated premium would be much higher than 

the high-risk groups would or could pay for health insurance. Under 

either of these methods of calculating premium cost, the calculated 

premium would not be a fair measure of income available for alternative 

uses. 

All the sources of incomes noted above have been adjusted and 

assigned to each of the appropriate families in the projected CPS 

data base. With transfer benefits imputed to individual families, 

it is possible to analyze the aggregate and distributional impacts 

19 
of the different programs for various cross sections of the population. 

This consistent data base permits an evaluation of the effectiveness 

of these programs in moving families out of poverty as well as an 

analysis of the distributions of families above and below the poverty 

1 eve 1. 

Table A-3 shows the poverty threshol ds used to test fami ly 

poverty status. Table A-4 shows the distr'lbution of families classifi ed by pre-tax/pre-transfer income qui nt i1 es accordi ng to di fferent 

income concepts. Tables A-5 through A-9 contain information regarding 

the distribution of families below and above the poverty level under 

di fferent defi ni ti ons of income for vari ous delllographi c characteri stics of families. 

20 
TABLE A-I. A COMPARISON OF CPS AGGREGATE MONEY INCOME AMOUNTS WITH 

AGGREGATE MONEY INCOME AMOUNTS DERIVED FROM INDEPENDENT 

SOURCES ADJUSTED TO CPS INCOME CONCEPTS, BY TYPE OF 

INCOME: AGGREGATE MONEY INCOME IN 1973, IN BILLIONS OF 

DOLLARS 

CPS Aggregate Aggregate as a Percent 

Independent Income of Independent Source CPS Source 

Total Income $ 957.1 $ 854.1 89.2% 

Wages and Salaries 676.3 656.7 97.1 

Nonfarm Self-Employment Income 56.0 55.5 99.1 

Farm Self-Employment 32.3 15.6 48.3 

Dividends, Interest, Net Rental 

Income, Income and Estates, 

Trusts, and Net Royalties 83.0 36.7 44.2 

Social Security and Railroad 

Retirement 50.0 44.7 89.4 

Unemployment Insurance, Workers 

Compensation, Government Pensions, 

Veterans' Payments 34.2 19.8 57.9 

Public Assistance 11.0 8.2 74.5 

SOURCE U.S. Bureau of the Census, Current Population Reports, Series 

P-60, No. 97, "Money Income in 1973 of Families and Persons in 

the United States," U.S. Government Printing Office, Washington, D.C. 1975, 0.180, Table A-8. 

21 
TABLE A-2. SUMMARY OF TOTAL BENEFICIARIES, TOTAL NON-TRANSFER INCOME AND 

TRANSFER INCOME BY SOURCE: FISCAL YEAR 1976 ~/ 

Beneficiary Units b/ 

During the Year - (Numbers in 

Thousands) 

Simulated 

Benefits c/ 

(Dollars in 

Mi 11 ions) 

Non-transfer Income 79,463 $1,063,438 

Transfer Income 

Cash Social Insurance 

Social Security and Railroad 

Retirement 

Government Pensions 

Unemployment Insurance 

Workers Compensation 

Veterans' Compensation 

Cash Assistance d/ 

Veterans' Pensions 

Supplemental Security Income 

Aid to Families With Dependent Children 

In-Kind Transfers 

Food Stamps 

Child Nutrition 

Housing Assistance 

Medi care 

Hospital Insurance 

Supplemental Medical Insurance 

Medicaid 

27,751 73,665 

4,379 22,720 

16,266 18,524 

2,554 3,791 

2,591 5,259 

2,156 2,687 

4,368 6,029 

4,103 9,257 

7,733 5,304 

26,088 2,026 

2,046 2,265 

5,701 12,274 

13,302 4,673 

23,514 14,900 

TOTAL -- ~/ $1,246,813 

SOURCE: Prepared by the Congressional Budget Office from Mathematica 

Policy Research Analysis of Current Income Maintenance 

Programs and Budget Alternatives, Fiscal Years 1976, 1978, 

and 1982: Technical Documentation and Basic Output, March, 

1977 . 

~/ Simulated benefits may not be exactly the same as figures shown in 

Appendix Tables 5 through 9. Small differences result from 

computer truncation of simulated benefits. 

~/ Beneficiary units refer to families, except for medicaid and 

medicare, in which beneficiary units are actual recipients, and 

for food stamps and housing assistance, in which beneficiary units are households. For food stamps and housing assistance, the total 

value of household benefits are attributed to primary families and 

primary individuals only, not to secondary families or secondary individuals though they may also be recipients. 

~/ The simulated benefits do not correspond exactly to control totals on an item-by-item basis because of simulation error. It is 

unlikely that correction for this simulation error would significantly alter the basic conclusions of this study. 

Q/ Does not include state general assistance. 

~/ Cannot be summed due to multiple program entitlements. 

22 
TABLE A-3. WEIGHTED a/ AVERAGE POVERTY THRESHOLDS BY FAMILY SIZE 

AND SEX OF HEAD, BY FARM OR NONFARM RESIDENCE: 

FISCAL YEAR 1976 

Nonfarm Farm 

Male Female Male Female 

Size of Family Head Head Head Head 

1 Person, under 65 years $2,992 $2,769 $2,543 $2,353 

1 Person, 65 years and over 2,690 2,654 2,285 2,255 

2 Persons, head under 65 years 3,750 3,640 3,182 3,025 

2 Persons, head 65 years & over 3,362 3,338 2,859 2,857 

3 Persons 4,452 4,306 3,766 3,589 

4 Persons 5,674 5,644 4,844 4,760 

5 Persons 6,707 6,635 5,726 5,770 

6 Persons 7,551 7,497 6,425 6,296 

7 or more persons 9,339 9,094 7,878 7,886 

SOURCE U.S. Bureau of the Census, Current Population Reports, Series 

P-60, "Money Income and Poverty Status of Families and Persons 

in the United States: 1975 and 1974 Revision," (Advance Report), No. 103, U.S. Government Printing Office, Washington, 

D.C., 1976, p. 33, adjusted to fiscal year 1976 levels. 

~/ The average poverty thresholds are weighted by the presence of 

children. The Census poverty count is based on a more detailed set 

of poverty levels--124 in all--which explicitly account for the 

number of children. These levels are periodically adjusted to 

reflect changes in the Consumer Price Index. 

23 
TABLE A-4. DISTRIBUTION OF INCOME UNDER ALTERNATIVE DEFINITIONS TO FAMILIES 

CLASSIFIED BY PRE-TAX/PRE-TRANSFER INCOME QUINTILES: FISCAL YEAR 1976 

Pre-Taxi Soc; a 1 Cash In-Kind Post-Taxi 

Pre-Transfer Insurance Transfers Transfers Post Transfer 

Quintile ~I Income Added Added Added ~I Income ~I 

I II I II 

DOLLARS IN BILLIONS 

Low 20% 3.3 42.8 53.9 58.4 75.9 57.9 75.3 

Second 20% 76.3 111.5 115.2 118.2 126.1 111.4 119.4 

Thi rd 20% 173.7 193.8 195.4 196.6 199.7 169.5 172.6 

Fourth 20% 276.2 291.0 291.9 292.4 294.2 241.9 243.7 

Hi gh 20% 534.0 548.3 549.0 549.3 550.8 428.1 429.6 

TOTAL f./ $1,063.4 $1,187.4 $1,205.4 $1,215.0 $1,246.8 $1,008.8 $1,040.6 

PERCENT DISTRIBUTION 

Low 20% .3 3.6 4.5 4.8 6.1 5.7 

Second 20% 7.2 9.4 9.6 9.7 10.1 11.0 

Third 20% 16.3 16.3 16.2 16.2 16.0 16.8 

Fourth 20% 26.0 24.5 24.2 24.1 23.6 24.0 

High 20% 50.2 46.2 45.5 45.2 44.2 42.4 

TOTAL f,./ 100.0 100.0 100.0 100.0 100.0 100.0 

SOURCE: Mathematica Policy Research, ~. cit. 

~I The upper limits of each quintile are as follows: Low 20% ($1,812). 

Second 20% ($7,871), Third 20% ($13,994), and Fourth 20% ($21,682). 

~I Column I excludes medicare and medicaid benefits received by families 

participating in those programs; Column II includes medicare and medicaid 

benefits. 

£1 Components may not add to totals because of rounding. 

24 

7.2 

11.5 

16.6 

23.4 

41.3 

100.0 
TABLE A-5. DISTRIBUTION OF FAMILIES BELOW AND ABOVE POVERTY LEVEL BY VARIOUS 

DEFINITIONS OF INCOME: FISCAL YEAR 1976 

Pre-Taxi Sod al Cash In-Kind Post-Tax/ 

Pre-Transfer Insurance Transfers Transfers Post-Transfer 

Welfare Ratio ~/ Income Added Added Added Q./ Income b/ 

I II I 

Number of Families! in Thousands 

Less Than 0.50 15,776 6,675 3,988 3,356 2,727 3,411 

0.50-0.74 2,804 2,673 2,519 1,953 1,429 1,952 

0.75-0.99 2,857 3,106 4,209 3,670 2,285 3,802 

1.00-1.24 2,835 3,614 3,993 4,650 3,806 5,079 

1.25-1.49 2,892 3,479 3,915 4,330 4,070 5,040 

Greater Than-1.49 52,299 59,917 60,839 61,505 65,146 60,179 

TOTAL f./ 79,463 79,463 79,463 79,463 79,463 79,463 

Percentage Distribution of Families 

Less Than 0.50 19.9 8.4 5.0 4.2 3.4 4.3 

0.50-0.74 3.5 3.4 3.2 2.5 1.8 2.5 

0.75-0.99 3.6 3.9 5.3 4.6 2.9 4.8 

1.00-1.24 3.6 4.5 5.0 5.9 4.8 6.4 

1.25-1.49 3.6 4.4 4.9 5.4 5.1 6.3 

Greater Than-1.49 65.8 4 76.6 77 .4 82.0 75.7 

TOTAL f./ 100.0 100.0 100.0 100.0 100.0 100.0 

SOURCE: Mathematica Policy Research, QR. cit. 

!/ Income divided by the poverty level. 

Q./ Column I excludes medicare and medicaid benefits received by families 

participating in those programs; Column II includes medicare and medicaid 

benefits. 

f./ Components may not add to totals because of rounding. 

25 

II 

2,777 

1,435 

2,385 

4,212 

4,726 

68,928 

79,463 

3.5 

1.8 

3.0 

5.3 

5.9 

80.5 

100.0 
TABLE A-6. DISTRIBUTION OF FAMILIES BY TYPE FAMILY BELOW AND ABOVE POVERTY LEVEL 

CLASSIFIED BY VARIOUS DEFINITIONS OF INCOME: FISCAL YEAR 1976 

SINGLE-PERSON FAMILIES 

Pre-Taxi Soci al Cash In-Kind 

Pre-Trans fer Insurance Transfers Transfers 

Welfare Ratio !I Income Added Added Added 

Number of Families, in Thousands 

Less Than 0.50 8,217 3,061 2,294 2,165 1,714 2,213 1,757 

0.50-0.74 1,090 1,461 1,155 1,036 770 1,052 791 

0.75-0.99 998 1,609 1,947 1,800 1,052 1,866 1,111 

1.00-1. 24 939 1,847 2,014 2,054 1,562 2,191 1,692 

1.25-1.49 814 1,462 1,828 1,961 1,619 2,060 1,735 

Greater Than-1.49 9,503 12,122 12,323 12,545 14,843 12,181 14,475 

TOTAL 21,562 21,562 21,562 21,562 21,562 21,562 21,562 

Percentage Distribution of Families 

Less Than 0.50 38.1 14.2 10.6 10.0 8.0 10.3 8.2 

0.50-0.74 5.1 6.8 5.4 4.8 3.6 4.9 3.7 

0.75-0.99 4.6 7.5 9.0 8.3 4.9 8.7 5.2 

1.00-1.24 4.4 8.6 9.3 9.5 7.2 10.2 7.8 

1.25-1.49 3.8 6.8 8.5 9.1 7.5 9.6 8.0 

Greater Than-1.49 44 56.2 58.2 68 56.5 67.1 

TOTAL S./ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

26 
TABLE A-6. (CONTINUED) 

MULTIPLE-PERSON FAMILIES 

Pre-TaxI Soci al Cash In-Kind Post-TaxI 

Pre-Transfer Insurance Transfers Transfers Post-Transfer 

Welfare Ratio ~I Income Added Added Added Q/ Income bl 

I II I II 

Number of Familiesl in Thousands 

Less Than 0.50 7,558 3,614 1,694 1,191 1,013 1,198 1,019 

0.50-0.74 1,713 1,212 1,363 917 658 901 644 

0.75-0.99 1,854 1,497 2,262 1,869 1,233 1,936 1,274 

1.00-1.24 1,896 1,767 1,980 2,596 2,244 2,888 2,520 

1.25-1.49 2,079 2,016 2,087 2,369 2,451 2,980 2,981 

Greater Than-1.49 42,796 47,795 48,516 48,960 50,303 47,999 49,453 

TOTAL f./ 57,902 57,902 57,902 57,902 57,902 57,902 57,902 

Percentage Distribution of Families 

Less Than 0.50 13.1 6.2 2.9 2.1 1.7 2.1 1.8 

0.50-0.74 3.0 2.1 2.4 1.6 1.1 1.6 1.1 

0.75-0.99 3.2 2.6 3.9 3.2 2.1 3.3 2.2 

1.00-1.24 3.3 3.1 3.4 4.5 3.9 5.0 4.4 

1.25-1.49 3.6 3.5 3.6 4.1 4.2 5.1 5.2 

Greater Than-1.49 9 82.5 83.8 84.6 86.9 9 85.4 

TOTAL fl 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

SOURCE: Mathematica Policy Research, ~. 

~I Income divided by the poverty level. 

~I Column I excludes medicare and medicaid benefits received by families 

participating in those programs; Column II includes medicare and medicaid 

benefits. 

fl Components may not add to totals because of rounding. 

27 
TABLE A-7. DISTRIBUTION OF FAMILIES BY RACE BELOW AND ABOVE POVERTY LEVEL 

CLASSIFIED BY VARIOUS DEFINITIONS OF INCOME: FISCAL YEAR 1976 

WHITE 

Pre-Taxi Sod al Cash In-Kind Post-Taxi 

Pre-Transfer Insurance Transfers Transfers Post-Transfer 

Welfare Ratio !I Income Added Added Added bl Income bl 

I -II I TI 

Number of Families! in Thousands 

less Than 0.50 12,586 4,745 3,062 2,672 2,163 2,725 2,214 

0.50-0.74 2,360 2,120 1,818 1,490 1,097 1,491 1,099 

0.75-0.99 2,385 2,441 3,126 2,691 1,688 2,796 1,778 

1.00-1.24 2,380 2,951 3,228 3,590 2,829 3,915 3,123 

1.25-1.49 2,428 2,894 3,208 3,495 3,126 4,131 3,731 

Greater Than-1.49 47 54 55,645 56,149 54,184 55,027 58,143 

TOTAL f./ 70,087 70,087 70,087 70,087 70,087 70,087 70,087 

Percentage Distribution of Families 

Less Than 0.50 18.0 6.8 4.4 3.8 3.1 3.9 3.2 

0.50-0.74 3.4 3.0 2.6 2.1 1.6 2.1 1.6 

0.75-0.99 3.4 3.5 4.5 3.8 2.4 4.0 2.5 

1.00-1.24 3.4 4.2 4.6 5.1 4.0 5.6 4.5 

1.25-1.49 3.5 4.1 4.6 5.0 4.5 5.9 5.3 

Greater Than-1.49 68.4 78.4 79.4 80.1 84.4 83.0 

TOTAL f./ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

28 
TABLE A-7. (CONTINUEO) 

NON-WHITE 

Pre-TaxI Social Cash In-Kind Post-TaxI 

Pre-Transfer Insurance Transfers Transfers Post-Transfer 

Welfare Ratio ~I Income Added Added Added Q.I Income bl 

I II I TI 

Number of Families! in Thousands 

Less Than 0.50 3.190 1,930 925 684 564 685 563 

0.50-0.74 444 553 701 463 332 461 336 

0.75-0.99 472 665 1,083 978 597 1,006 607 

1.00-1.24 455 663 765 1,059 977 1,164 1,089 

1.25-1.49 464 585 708 836 944 909 996 

Greater Than-1.49 ~ ~ 5.356 5.963 5,152 

TOTAL f./ 9,376 9,376 9,376 9,376 9.376 9,376 9,376 

Percentage Distribution of Families 

Less Than 0.50 34.0 20.6 9.9 7.3 6.0 7.3 6.0 

0.50-0.74 4.7 5.9 7.5 4.9 3.5 4.9 3.6 

0.75-0.99 5.0 7.1 11.6 10.4 6.4 10.7 6.5 

1.00-1.24 4.9 7.1 8.2 11.3 10.4 12.4 11.6 

1.25-1.49 4.9 6.2 7.5 8.9 10.1 9.7 10.6 

Greater Than-1.49 46.4 55.4 57.1 6 54.9 

TOTAL s./ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

SOURCE: Mathematica Policy Research, QR. cit. 

~I Income divided by the poverty level. 

Q.I Column I excludes medicare and medicaid benefits received by families 

participating in those programs; Column II includes medicare and medicaid 

benefits. 

£1 Components may not add to totals because of rounding. 

29 
TABLE A-8. DISTRIBUTION OF FAMILIES BY AGE BELOW AND ABOVE POVERTY LEVEL, CLASSIFIED 

BY VARIOUS DEFINITIONS OF INCOME: FISCAL YEAR 1976 

UNDER 65 

Pre-Taxi Social Cash 

Pre-Transfer Insurance Transfers 

Welfare Ratio ~I Income Added Added 

Number of Families, in Thousands 

Less Than 0.50 8,090 5,617 3,457 2,888 2,525 2,939 2,573 

0.50-0.74 1,759 1,595 1,912 1,495 1,206 5,577 1,214 

0.75-0.99 1,940 1,783 2,660 2,328 1,732 2,451 1,828 

1.00-1.24 2,114 2,143 2,446 2,994 2,791 3,421 3,196 

1.25-1.49 2,263 2,246 2,335 2,647 2,908 3,328 3,538 

Greater Than-1.49 47,186 49,968 50,542 51,000 49,715 51,003 

TOTAL 63,352 63,352 63,352 63,352 63,352 63,352 63,352 

Percentage Distribution of Families 

Less Than 0.50 12.8 8.9 5.5 4.6 4.0 4.6 4.1 

0.50-0.74 2.8 2.5 3.0 2.4 1.9 8.8 1.9 

0.75-0.99 3.1 2.8 4.2 3.7 2.7 3.9 2.9 

1.00-1.24 3.3 3.4 3.9 4.7 4.4 5.4 5.0 

1.25-1.49 3.6 3.5 3.7 4.2 4.6 5.3 5.6 

Greater Than-1.49 74.5 9 49.8 80.5 82.4 78.5 80.5 

TOTAL S./ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

30 
TABLE A-S. (CONTINUED) 

65 AND OVER 

Pre-Taxi Soci a 1 Cash 

Pre-Transfer Insurance Transfers 

Welfare Ratio ~I Income Added Added 

Number of Families, in Thousands 

Less Than 0.50 7,686 1,058 530 469 202 

0.50-0.74 1,045 1,078 607 458 223 

0.75-0.99 917 1,323 1,549 1,342 553 

1.00-1.24 722 1,471 1,547 1,655 1,015 

1.25-1.49 630 1,233 1,581 1,683 1,162 

Greater Than-1.49 5,113 9,949 10,297 10,505 12,957 

TOTAL 5:.1 16,112 16,112 16,112 16,112 16,112 

Percentage Distribution of Families 

Less Than 0.50 47.7 6.6 

0.50-0.74 6.5 6.7 

0.75-0.99 5.7 8.2 

1.00-1.24 4.5 9.1 

1.25-1.49 3.9 7.6 

Greater Than-l.49 .7 6 7 

TOTAL S./ 100.0 100.0 

SOURCE: Mathematica Policy Research, Q£. cit. 

~I Income divided by the poverty level. 

3.3 2.9 1.3 

3.8 2.8 1.4 

9.6 8.3 3.4 

9.6 10.3 6.3 

9.8 10.4 7.2 

63.9 65.2 80.4 

100.0 100.0 100.0 

472 

456 

1,351 

1,658 

1,711 

10,464 

16,112 

2.9 

2.8 

8.4 

10.3 

10.6 

64.9 

100.0 

QI Column I excludes medicare and medicaid benefits received by families 

participating in those programs; Column II includes medicare and medicaid 

benefits. 

£1 Components may not add to totals because of rounding. 

31 

203 

221 

558 

1,016 

1,188 

12,926 

16,112 

1.3 

1.4 

3.5 

6.3 

7.4 

80.2 

100.0 
TABLE A-9. DISTRIBUTION OF FAMILIES BY REGION, BELOW AND ABOVE POVERTY LEVEL, 

CLASSIFIED BY VARIOUS DEFINITIONS OF INCOME: FISCAL YEAR 1976 

SOUTH 

Pre-Taxi Social -----cash 

Pre-Transfer Insurance Transfers 

Welfare Ratio ~/ Income Added Added 

Number of Families, in Thousands 

Less Than 0.50 5,739 2,561 1,782 1,363 1,156 1,377 

0.50-0.74 1,057 1,186 1,182 920 691 919 

0.75-0.99 1,077 1,239 1,588 1,645 1,194 1,698 

1.00-1.24 1,069 1,408 1,511 1,691 1,677 1,877 

1.25-1.49 1,102 1,277 1,378 1,534 1,453 1,790 

Greater Than-1.49 15,496 17,868 18,100 18,387 19,369 17,879 

TOTAL s/ 25,540 25,540 25,540 25,540 25,540 25,540 

Percentage Distribution of Families 

Less Than 0.50 22.5 10.0 7.0 5.3 4.5 5.4 

0.50-0.74 4.1 4.6 4.6 3.6 2.7 3.6 

0.75-0.99 4.2 4.9 6.2 6.4 4.7 6.6 

1.00-1. 24 4.2 5.5 5.9 6.6 6.6 7.3 

1.25-1.49 4.3 5.0 5.4 6.0 5.7 7.0 

Greater Than-1.49 60.7 72.0 75.8 70.0 

TOTAL s/ 100.0 100.0 100.0 100.0 100.0 100.0 

SOURCE: Mathematica Policy Research 2R. cit. 

~/ Income divided by the poverty level. 

~/ Column I excludes medicare and medicaid benefits received by families 

participating in those programs; Column II includes medicare and medicaid 

benefits 

£/ Components may not add to totals because of rounding. 

32 

1,170 

689 

1,233 

1,872 

1,688 

18,887 

25,540 

4.6 

2.7 

4.8 

7.3 

6.6 

74.0 

100.0 
TABLE A-9. (CONTINUED) 

WEST 

Pre-Taxi Social --cash 

Pre-Transfer Insurance Transfers 

Welfare Ratio ~I Income Added Added 

Number of Families 2 in Thousands 

Less Than 0.50 2,812 1,258 698 613 538 635 560 

0.50-0.74 541 499 381 314 270 311 268 

0.75-0.99 566 582 746 623 392 639 405 

1.00-1.24 569 655 698 805 654 892 731 

1.25-1.49 571 690 876 927 820 1,061 951 

Greater Than-1.49 9,894 11,268 11,554 11 ,669 12,278 11 ,414 12,036 

TOTAL fj 14,952 14,952 14,952 14,952 14,952 14,952 14,952 

Percentage Distribution of Families 

Less Than 0.50 18.8 8.4 4.7 4.1 3.6 4.2 3.7 

0.50-0.74 3.6 3.3 2.5 2.1 1.8 2.1 1.8 

0.75-0.99 3.8 3.9 5.0 4.2 2.6 4.3 2.7 

1.00-1.24 3.8 4.4 4.7 5.4 4.4 6.0 4.9 

1.25-1.49 3.8 4.6 5.9 6.2 5.5 7.1 6.4 

Greater Than-1.49 66.2 75.4 77 .3 78.0 82.1 76.3 80.5 

TOTAL fj 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

33 
TABLE A-9. (CONTINUED) 

NORTHEAST 

Pre-Taxi Sod al Cash 

Pre-Transfer Insurance Transfers 

Welfare Ratio ~I Income Added Added 

Number of Families, in Thousands 

Less Than 0.50 3,654 1,516 767 721 518 735 525 

0.50-0.74 593 440 372 293 215 290 221 

0.75-0.99 517 564 933 608 272 637 286 

1.00-1.24 537 764 899 1,112 659 1,184 715 

1.25-1.49 619 754 834 940 879 1,089 1,003 

Greater Than-1.49 12,118 14,000 14,234 14,366 15,496 14,103 15,290 

TOTAL f./ 18,039 18,039 18,039 18,039 18,039 18,039 18,039 

Percentage Distribution of Families 

Less Than 0.50 20.3 8.4 4.3 4.0 2.9 4.1 2.9 

0.50-0.74 3.3 2.4 2.1 1.6 1.2 1.6 1.2 

0.75-0.99 2.9 3.1 5.2 3.4 1.5 3.5 1.6 

1.00-1.24 3.0 4.2 5.0 6.2 3.7 6.6 4.0 

1.25-1.49 3.4 4.2 4.6 5.2 4.9 6.0 5.6 

Greater Than-1.49 77 .6 79.6 85.9 78.2 84.8 

TOTAL f./ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

34 
TABLE A-9. (CONTINUED) 

NORTH CENTRAL 

Pre-Taxi Social Cash In-Kind Post-Taxi 

Pre-Transfer Insurance Transfers Transfers Post-Transfer 

Welfare Ratio ~I Income Added Added Added .!2,1 Income bl 

I II I II 

Number of Families! in Thousands 

Less Than 0.50 3,571 1,340 741 660 515 665 522 

0.50-0.74 612 547 584 425 253 433 257 

0.75-0.99 697 720 943 793 426 827 461 

1.00-1.24 660 787 885 1,042 816 1,126 893 

1.25-1.49 600 758 828 929 918 1,099 1,084 

Greater Than-1.49 14,791 16,780 16,951 17,083 18,003 16,783 17,715 

TOTAL s/ 20,932 20,932 20,932 20,932 20,932 20,932 20,932 

Percentage Distribution of Families 

Less Than 0.50 17.1 6.4 3.5 3.2 2.5 3.2 2.5 

0.50-0.74 2.9 2.6 2.8 2.0 1.2 2.1 1.2 

0.75-0.99 3.3 3.4 4.5 3.8 2.0 4.0 2.2 

1.00-1.24 3.2 3.8 4.2 5.0 3.9 5.4 4.3 

1.25-1.49 2.9 3.6 4.0 4.4 4.4 5.2 5.2 

Greater Than-1.49 70.7 80.2 81.0 81.6 86.0 80.2 84.6 

TOTAL s/ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

SOURCE: Mathematica Policy Research, Q£. cit. 

~I Income divided by the poverty level • 

.!2,1 Column I excludes medicare and medicaid benefits received by families 

participating in those programs; Column II includes medicare and medicaid 

benefits. 

£1 Components may not add to totals because of rounding. 

35 

o