U.S. Department of Commerce Economics and Statistics Administration

Current

Population

Household Economic Studies

 Reports

Dynamics of Economic Well-Being:

Income, 1991 to 1992

By Wilfred Masumura

C E N S U S B U R E A U P70-49

 August 1995

Income gains were less

common from 1990 to 1992

than from 1984 to 1988.

One measure of national wellbeing is the income ratio — the

ratio of a person’s annual family

income to their poverty level1.

The chart at right describes 

Americans by whether their 

income ratio rose or dropped 

significantly (5 percent or more)

or remained about the same from

one year to the next. Data are

shown for five different two-year

periods.

During each of the three periods

in the 1980’s, more people saw

their ratios rise than fall. However,

during the 1990 to 1991 and 1991

to 1992 periods, the reverse was

true. Median household income

also dropped during the early

1990’s, from $32,706 in 1989 to

$30,786 in 1992 (in 1992 dollars).

Changes in personal and

family circumstances can 

affect 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.

As the chart below demonstrates,

historically fewer than one-fourth

of all Americans had stable income ratios (that is, ratios that

changed less than 5 percent from

one year to the next). This means,

conversely, that the large majority

(about three-fourths) are subject

to some kind of income fluctuation

from one year to the next, regardless of the stage of the business

cycle. Over the course of a life1The poverty level differs based on the

size and composition of one’s family.

shows, people had about a 50-50 time, the average American will chance or better of seeing their in- experience a number of these come ratio rise significantly (5 shifts.

percent or more) from one year to

The state of the economy is an the next if, over the course of two

important factor in determining years —

which way these fluctuations go.

 They began to work year- But it’s not the only factor. round, full-time; Changes in personal circumstances also play a significant  The number of workers in

role. As the chart on page 2 their household increased;

1984 to 1985

1985 to 1986

1987 to 1988

1990 to 1991

1991 to 1992

Distribution of Americans, by Year-to-Year 

Percentage Changes in Income Ratio: 1984–1992

Note: The data in this Brief was collected by the Survey of Income and Program Participation (SIPP), which follows approximately 20,000 households over a 28-month or longer period.

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%

40%

22%

37%
2 P70-49

 They married or otherwise

became part of a marriedcouple family; or

 The number of adults in

their household increased 

or the number of children

decreased.

Conversely, most people saw their

income ratio 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,

among those whose 1991 household income was below the

poverty level, 48 percent saw 

their income ratio rise 5 percent 

or more the following year, while

33 percent suffered a drop. On

the other hand, among those at

the top of the ladder (households

with income four or more times

the poverty level in 1991), there

was often nowhere to go but

down, as 47 percent experienced

declines, while only 30 percent

posted gains. (See chart, right.)

Income sources are a good

indicator of changes in economic

well-being.

As the chart on page 3 shows, the

mere appearance or disappearance of a particular income source

often indicates an improvement or

decline in economic well-being.

For instance —

 The majority of persons 

(70 percent) who lived in

households where someone

received earnings during

1992, but not the previous

year, saw their income ratio

rise significantly from 1991

to 1992. On the other hand,

most (83 percent) people in

households with earnings

during 1991, but not the

next year, posted income 

ratio declines.

(No change in number of children)

Changes in Personal and Family Circumstances

Affect Well-Being...

Work Experience (Persons 18 and over)

Year-round, full-time in 1991 not year-round, full-time in 1992

Not year-round, full-time in 1991,

year-round, full-time in 1992

*Number of Workers in Household

Fewer workers in 1992

than in 1991

More workers in 1992

than in 1991

Married in 1991,

but not in 1992

Not married in 1991,

married in 1992

Member of married-couple

family in 1991, other family

type in 1992

Member of other family type

in 1991, married-couple

family in 1992

Fewer children in 1992 than

in 1991

More children in 1992 than

in 1991

Fewer adults in 1992 than

in 1991

More adults in 1992

than in 1991

Distribution of persons with certain characteristics, by

percentage change in income ratio: 1991 to 1992

*Marital Status (Persons 18 and over)

*Family Status

*Household Composition

*Household Composition

(No change in number of adults)

*Refers to the situation that existed the majority of the year

Declined 5 percent or more

Increased 5 percent or more

Changed less than 5 percent

66%

12%

22%

28%

12%

59%

72%

10%

19%

23%

12%

65%

65%

7%

28%

30%

8%

62%

69%

71%

5%

26%

32%

5%

63%

36%

15%

49%

9%

20%

61%

10%

29%

26%

11%

63%

...As Does Your Position on the Income Ladder

Income Ration in 1991

47%

24%

30%

39%

23%

38%

37%

43%

48%

20%

33%

21%

4.00 or more

2.00 to 3.99

1.00 to 1.99

Less than 1.00
P70-49 3

 If you (or someone else in

your household) received

unemployment benefits 

during 1992, but not in

1991, you had a better

chance of seeing your 

income ratio decline in 1992

than if you received them in

1991, but not in 1992.

 Social Security and railroad retirement income, 

and pensions and private

disability income are major

sources of income for 

retirees. Those who saw

these sources appear the

second year had a better

chance of improving their

economic well-being than

those who saw these

sources disappear the 

second year.

 More often than not, the 

appearance of public assistance benefits the second

year was accompanied by

an income ratio decline,

while the disappearance of

them signaled a rise. This

relationship also held true

for two individual programs:

food stamps and Medicaid.

The end of the last recession did not appear to bring

an immediate improvement

in economic well-being.

The last recession began in July

1990 and ended in March 1991.

During the year following the 

recession (1992) —

 Forty percent of the population posted income ratio

losses and 37 percent had

gains, not significantly different from what happened

between 1990 and 1991.

(See chart, front page.)

 The percentage of persons

living in households where

someone received earnings

dipped between 1991 and

1992. (See chart, page 4.)

 The percentage in households where someone

received unemployment

Income Sources are Associated with Changes in Well-Being

Household Earnings

Had them in 1992,

but not in 1991

Had them in 1991,

but not in 1992

Household Asset Income

Had it in 1992 

but not in 1991

Had it in 1991

 but not in 1992

Household received it in 1992, but not in 1991

Distribution of persons with various income source changes ,

by percentage change in income ratio: 1991 to 1992

Unemployment Compensation or Benefits

Social Security (and Railroad Retirement)

Pension and Private Disability Income

Public Assistance Program Benefits

Household covered in 1992, but not 1991

Food Stamps

Medicaid

AFDC and General Assistance

Supplemental Social Security Income (SSI)

Note: Pension and private disability income includes Social Security,

U.S. Government, Railroad Retirement Pay, nonmeans-tested veterans’

compensation or pensions, unemployment compensation, workers’ com- pensation, and State temporary sickness or disability benefits. See page

4 for a listing of public assistance programs

Declined 5 percent or more

Household received it in 1991, but not in 1992

Household received benefits

in 1992, but not in 1991

Household received benefits

 in 1991, but not in 1992

Household received benefits

in 1992, but not in 1991

Household received benefits

 in 1991, but not in 1992

Household received them

in 1992, but not in 1991

Household received them

 in 1991, but not in 1992

Household received them

in 1992, but not in 1991

Household received them

 in 1991, but not in 1992

Household covered in 1991, but not 1992

Household received aid 

in 1992, but not 1991

Household received aid 

in 1991, but not 1992

Household received aid 

in 1992, but not 1991

Household received aid 

in 1991, but not 1992

17%

83%

7%

10%

36%

15%

49%

13%

70%

57%

13%

30%

49%

13%

38%

38%

18%

44%

44%

9%

47%

66%

14%

19%

42%

14%

45%

52%

17%

31%

49%

15%

36%

37%

14%

50%

60%

10%

31%

29%

10%

61%

48%

16%

36%

36%

13%

52%

49%

10%

41%

39%

12%

50%

39%

10%

51%

46%

9%

46%

Increased 5 percent or more

Changed less than 5 percent
4 P70-49

	




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AID AGE & FEES P POST

Bureau of the Census

Permit No. G-58

U.S. Department of Commerce

Administration Economics and Statistics 

BUREAU OF THE CENSUS

benefits at some time during above.) Assistance prothe year increased. (See grams include Aid to

chart, above.) Families With Dependent

 Children (AFDC), General The share of the population Assistance, Supplemental residing in households that Security Income (SSI), participated in government Medicaid, Food Stamps, assistance programs at and Federal or State some point during the year

rent assistance. did not change. Participation

rates remained statistically A previous publication issued

unchanged for each of the by the Census Bureau, Dynamics

individual assistance pro- of Economic Well-Being: Labor

grams as well. (See chart, Force and Income, 1990 to 

1992, reported similar economic

trends between 1990 and 1991,

the period when the recession 

actually took place. Thus, it 

appears that economic conditions

present during the recession 

continued into the immediate 

post-recession period.

For more information — 

Income trends —

Wilfred Masumura

301-763-8576

Survey design —

Vicki Huggins

301-457-4192

This report was prepared by

Wilfred Masumura, with assistance from Robert Bernstein.

Source and Accuracy 

of Estimates

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Although the Recession Ended in 1991, Economic

Well-Being Failed to Improve the Next Year

1991

86.5%

85.4%

76.5%

75.7%

11.9%

13.0%

11.9%

12.6%

21.3%

21.9%

5.5%

5.2%

17.2%

18.1%

Percent of persons who lived in households with specified income sources or benefits: 1991 and 1992 calendar years

7.8%

7.8%

Earnings

Asset income

Unemployment

compensation

Public assistance

program benefits

Medicaid

Supplemental

Security Income

(SSI)

AFDC or General

Assistance

Food Stamps

1992