1984 to 1985

1985 to 1986

1987 to 1988

1990 to 1991

1991 to 1992*

1992 to 1993

Figure 1.

Percent Distribution of Persons by the

Year-to-Year Percentage Change in Their

Family Income-to-Poverty Ratio

* Revised

Note: Longitudinal data are not available for 1986-87,

1988-89, and 1989-90.

Source: U.S. Bureau of the Census, Survey of Income and

Program Participation

Declined 5 percent or more

Changed less than 5 percent

Increased 5 percent or more

34

24

42

30

23

47

32

24

44

40

23

36

38

22

40

39

22

39

U.S. Department of Commerce Economics and Statistics Administration

Current Dynamics of Economic Well-Being:

Income, 1992 to 1993

Moving Up and Down the

Income Ladder

By Wilfred T. Masumura

C E N S U S B U R E A U

Population Reports

 P70-56

 June 1996

Household Economic Studies

The great majority of Americans

experience significant fluctuations

in their economic well-being from

one year to the next. About threefourths of the population see their

economic well-being go either up

or down by at least 5 percent from

one year to the next as a result of

changes in living arrangements,

program participation, work status,

or other circumstances.

Income gains were less

common in the 1990’s than

in the 1980’s.

One measure of economic wellbeing is the income-to-poverty 

ratio—called the income ratio

here—that is, the ratio of a 

person’s annual family income 

to the family’s poverty threshold.

Figure 1 describes Americans by

whether their income ratios rose

or dropped significantly (5 percent 

or more) or remained about the

same (moved less than 5 percent)

from one year to the next. Data

are shown for six two-year

periods.

The proportion of persons whose

income ratios rose from one year

to the next was smaller in the

1990’s than in the 1980’s, reaching its minimum during the

1990-1991 recession. Conversely,

the percentage of people who experienced declines in their income

ratios from one year to the next

grew larger from the last decade

to the present one.

Changes in personal and

family circumstances can

affect economic well-being.

Even though summary measures,

such as median income, do not

change much in real terms from

one year to the next, income ratios do shift for most Americans.

Figure 1 demonstrates that, from

one year to the next, about onefourth of all Americans had stable

income ratios (that is, ratios that

change less than 5 percent from

year to year). In other words, the

large majority (about three-fourths)

are subject to considerable income changes from one year to

the next, regardless of the stage

of the business cycle. Over the

course of a lifetime, the average

American will experience a number of these shifts.

The state of the economy is an

important factor in determining

which way these fluctuations go,

but it is not the only factor.

Changes in personal circumstances also play a significant

role. Table 1 shows people had

an even (50-50) chance or better

of experiencing an income-ratio

rise (of 5 percent or more) from

one year to the next if, over the

course of two years:

 They began to work year-round,

full-time;
P70-56 2

 The number of workers in 

their household increased;

 They married or otherwise became part of a married-couple

family; or

 The number of adults in their

household increased or the

number of children dropped.

Conversely, most people saw their

income ratios decline significantly

when they ceased to:

 Be married; or

 Work year-round, full-time.

And where one stands on

the income ladder can

influence changes too.

The lower one’s current annual income is, the more likely it will rise

the following year, and the less

likely it will fall. For instance,

Table 1 also shows that among

those whose 1992 family income

was below the poverty level (i.e.,

an income-to-poverty ratio of less

than 1.00), 51 percent saw their

income ratios rise 5 percent or

more the following year, while just

29 percent experienced drops.

On the other hand, among those

at the top of the ladder (families

with incomes four or more times

the 1992 poverty level), 47 percent experienced declines, while

only 30 percent posted gains.

Changes in income sources 

can serve as barometers of

changes in economic well-being.

Table 2 shows the mere appearance or disappearance of a particular income source can often

forecast an improvement or a 

decline in economic well-being.

For instance:

 The large majority (72 percent)

of persons who lived in

households where someone received earnings during 1993,

but no one did the previous

year, saw their income ratios

rise significantly from 1992 to

1993. On the other hand, a

similarly high proportion (73

percent) in households with

earnings during 1992, but not

the next year, posted declines.

 Households in which someone

received unemployment benefits during 1993, but no one did

in 1992, were more likely to experience an income-ratio decline in 1993 (52 percent) than

those that received benefits in

1992, but not in 1993 (37 percent).

 Two groups of people—Social

Security (and railroad retirement

income) recipients and those

with pensions and private disTable 1.

Percent Distribution of Persons by Percentage Change in Their Income-to-Poverty 

Ratios and Selected Characteristics: 1992 to 1993

Declined Changed Increased 

Total 5 percent less than 5 percent

Characteristic (thousands) or more 5 percent or more

All persons 246,176 39.4 21.9 38.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

WORK EXPERIENCE (Persons 18 and over)

Year-round, full-time in 1992 to 

not year-round, full-time in 1993 10,028 60.3 14.1 25.6 . . . . . . . . . . . . . . . . . . . . . . . . . 

Not year-round, full-time in 1992 to 

year-round, full-time in 1993 11,311 24.7 13.7 61.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

NUMBER OF WORKERS IN HOUSEHOLD

Fewer workers in 1993 than 1992 27,628 68.7 10.2 21.1 . . . . . . . . . . . . . . . . . . . . . . . . 

More workers in 1993 than 1992 26,306 20.2 12.3 67.5 . . . . . . . . . . . . . . . . . . . . . . . . . . 

MARITAL STATUS (Persons 18 and over)

From married in 1992 to other in 1993 2,474 65.1 5.9 29.0 . . . . . . . . . . . . . . . . . . . . . 

From other marital status in 1992 to married in 1993 3,392 29.8 7.3 62.9 . . . 

FAMILY STATUS

From married-couple family in 1992 to 

other family type in 1993 3,422 75.5 5.8 18.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

From other family type in 1992 to 

married-couple family in 1993 2,589 24.3 4.8 70.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

HOUSEHOLD COMPOSITION

No change in number of adults:

Fewer children in 1993 than 1992 3,873 35.1 11.1 53.8 . . . . . . . . . . . . . . . . . . . . . . . . 

More children in 1993 than 1992 10,171 60.1 13.5 26.5 . . . . . . . . . . . . . . . . . . . . . . . . 

No change in number of children:

Fewer adults in 1993 than 1992 12,371 58.9 10.3 30.8 . . . . . . . . . . . . . . . . . . . . . . . . . 

More adults in 1993 than 1992 8,368 28.7 12.2 58.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

INCOME-TO-POVERTY RATIO IN 1992

Less than 1.00 29,986 29.3 19.8 50.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

1.00 to 1.99 52,003 36.2 19.7 44.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2.00 to 3.99 91,634 38.5 22.7 38.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

4.00 or more 73,553 46.8 23.4 29.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
3 P70-56

ability benefits—have similar

patterns in their income ratios

over time. Persons who saw

those sources appear the 

second year were less likely 

to experience income ratio

drops than those who saw

those sources disappear the

second year.

 Those starting to receive

means-tested benefits during a

year were more likely to have

experienced income ratio declines than increases. In 

contrast, people receiving

means-tested benefits in the

previous year but not the current year were more likely to

have income ratio gains than

declines. This relationship also

held true for two individual 

programs: food stamps 

and Medicaid.

Economic well-being 

was about the same in 

1993 as in 1992.

From 1992 to 1993, increases 

in economic well-being were about

as frequent as declines (about 

39 percent for each). Overall, the

percentage of persons living in

households where someone had

earnings dipped slightly between

1992 and 1993, from 86 percent

to 85 percent (see Figure 2). In

contrast, the percentage in households where someone received

unemployment benefits at some

time during the year remained the

same—13 percent in both years.

The share of the population residing in households that participated

in means-tested programs at

some point during the year stayed

about the same—22 percent in

1992 compared with 23 percent in

1993. Participation rates also 

Table 2.

Percent Distribution of Persons by Percentage Change in Their Income-to-Poverty Ratios and

Changes in Their Receipt of Selected Types of Income

Declined Changed Increased

Total 5 percent less than 5 percent

Income Source (thousands) or more 5 percent or more

HOUSEHOLD EARNINGS

Earnings in 1993 but not in 1992 3,314 14.6 13.4 72.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Earnings in 1992 but not 1993 5,786 73.3 9.5 17.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

HOUSEHOLD ASSET INCOME

Income from assets in 1993 but not 1992 8,396 30.5 16.9 52.6 . . . . . . . . . . . . . . . . . 

Income from assets in 1992 but not 1993 10,421 50.9 16.1 33.1 . . . . . . . . . . . . . . . 

UNEMPLOYMENT COMPENSATION OR BENEFITS

Household compensated in 1993 but not 1992 15,156 51.9 13.9 34.2 . . . . . . . . 

Household compensated in 1992 but not 1993 16,511 37.0 13.4 49.6 . . . . . . . . . 

SOCIAL SECURITY (AND RAILROAD RETIREMENT)

Household received benefits in 1993 but not 1992 5,113 38.3 16.2 45.5 . . . . . . 

Household received benefits in 1992 but not 1993 3,015 51.8 7.3 40.8 . . . . . . 

PENSION AND PRIVATE DISABILITY INCOME1

Household received benefits in 1993 but not 1992 8,683 42.8 15.0 42.2 . . . . . . 

Household received benefits in 1992 but not 1993 7,684 49.6 13.9 36.6 . . . . . . 

MEAN-TESTED BENEFITS2

Household received benefits in 1993 but not 1992 10,409 52.0 14.3 33.8 . . . . 

Household received benefits in 1992 but not 1993 9,070 36.1 13.1 50.7 . . . . . . 

FOOD STAMPS

Household received stamps in 1993 but not 1992 5,568 58.0 14.1 27.9 . . . . . . 

Household received stamps in 1992 but not 1993 5,568 28.8 15.7 55.4 . . . . . . 

MEDICAID

Household covered in 1993 but not 1992 9,278 51.8 13.5 34.7 . . . . . . . . . . . . . . . . . 

Household covered in 1992 but not 1993 6,977 34.0 13.2 52.7 . . . . . . . . . . . . . . . . . 

AFDC AND GENERAL ASSISTANCE

Household received aid in 1993 but not 1992 4,223 58.9 10.2 30.9 . . . . . . . . . . . . 

Household received aid in 1992 but not 1993 3,710 31.8 11.5 56.7 . . . . . . . . . . . . 

SUPPLEMENTAL SECURITY INCOME (SSI)

Household received aid in 1993 but not 1992 3,002 41.0 13.5 45.5 . . . . . . . . . . . . 

Household received aid in 1992 but not 1993 1,609 50.6 11.7 37.7 . . . . . . . . . . . . 

1 Pension and private disability income includes retirement and life insurance payments, pensions, annuities, and compensation 

for death, disability, and illness. Not included are Social Security and Railroad Retirement pay.

2 Means-tested benefits include, Aid to Families With Dependent Children (AFDC), General Assistance, Supplemental Security

Income (SSI), Medicaid, food stamps, and Federal or State rent assistance.
Figure 2.

Persons Receiving

Selected Types of Income:

1992 and 1993 1992

1993

86.0%

85.0%

75.8%

75.0%

13.4%

12.9%

12.8%

12.8%

22.2%

22.7%

5.6%

5.0%

18.0%

18.9%

7.6%

7.8%

Earnings

Asset income

Unemployment

compensation

Means-tested

benefits

Medicaid

Supplemental

Security Income

(SSI)

AFDC or General

Assistance

Food Stamps

Source: U.S. Bureau of the Census, Survey of

Income and Program Participation.

P70-56 4

remained statistically unchanged

for some of these individual assistance programs, such as Aid to

Families with Dependent Children

(AFDC), General Assistance, and

food stamps. However, there

were small but statistically significant increases in the number of

persons in households covered by

Medicaid and in those receiving

Supplemental Security Income.

For more information -

Income trends—

Wilfred Masumura

301-763-8577

Survey design—

Vicki Huggins

301-457-4192

Source and Accuracy 

of Estimates

This report is one of a series that

presents information of current

policy interest. All statistics are

subject to sampling variability, as

well as survey design flaws, respondent classification errors, and

data processing mistakes. The

Census Bureau has taken steps to

minimize errors, and analytic

statements have been tested and

meet statistical standards.

However, because of methodological differences, use caution when

comparing these data with data

from other sources. For information on the source of data and the

accuracy of estimates, including

the use and computation of standard errors, see the “Source and

Accuracy Statement for the 1992

SIPP Longitudinal Panel File.”