Economic

Research

Service

Rural DeveJoprñéPffX

Research Report

Number 67

ut Not All Nonmetr

"k Case Sfijdy in 10 Georgia

Counties

Donald K. Larson
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Employment Growth Helps Some But Not All Nonmetro Households: A

Case Study in 10 Georgia Counties. By Donald K. Larson. Agriculture and

Rural Economics Division, Economic Research Service, U.S. Department of

Agriculture. Rural Development Research Report No. 67.

Abstract

Rapid employment growth in a 10-county nonmetro area in southern Georgia

provided jobs, but not for most longer term resident households whose head

lived in the area through 1976-81. Despite the area's impressive job growth

during 1976-81, only 20 percent of the longer term resident households had

more workers in 1981 than in 1976. Average income levels for longer term

residents plunged as more household members no longer worked (quit,

retired) or reduced their annual hours worked. But households headed by

women, blacks, and the elderly maintained their income position. The expanded employment enabled some households to escape poverty, but did not

reduce the area's overall poverty rate because age or disability kept many

of the poor from working.

Keywords: Rural employment growth, income status, poverty status,

households, blacks, females, elderly, longer term residents,

regression model.

Acknowledgments

James Schaub and Victor Oliveira shared their knowledge on the Georgia

household data file and the Statistical Analysis System programming

necessary to begin analyzing this data file.

Douglas Kleweno and Lawrence S. Williams helped develop the sample and

survey materials. Shirley Zonner assisted in data preparation. Robert Coltrane and Thomas Carlin supervised the study, and James Schaub was the

project leader. Many thanks go to the enumerators for collecting the data.

Joyce Su prepared the variance program used in statistical hypothesis

testing. Claudia White did the programming work to generate the data in the

tables. Sharon M. Davis and Wanda Petty helped prepare the actual report.

Washington, DC 20005-4788 July 1987

III
Contents

Page

Summary v

Glossary vi

Introduction 1

Employment Growth and Changes in Income 1

Study's Objectives 2

Local Population and Income Status 2

Households 2

Income Status 2

Factors Affecting Income Status 3

Study Area and Data 3

Characteristics of Households 4

All Households 4

Residents 5

Change in Household Income Status, 1976-81 6

Factors Affecting Change in Income Status 6

Change in Income Status 8

Employment and Household Size 8

Changes Among Household Groups 9

Poverty Status and Change 11

Poor Households in 1981 11

Change in Poverty Status, 1976-81 12

Strategy 12

Implications 14

References 15

Appendix: The Regression Analysis 18

IV
Summary

Rapid employment growth in a 10-county nonmetro area in southern Georgia

provided jobs, but not for most longer term resident households whose head

lived in the area through 1976-81. Despite the area's impressive job growth

during 1976-81, only 20 percent of the longer term resident households had

more workers in 1981 than in 1976. Only 27 percent had a stable economic

history: no changes in employment, hours worked, wages, or household size.

Average income levels fell despite the area's employment growth. Although

incomes for some households rose as additional members entered the labor

force, more households lost ground when members no longer worked (quit,

retired] or reduced annual hours. Income positions improved when

household size decreased, but other income positions slipped as children

were born because more persons shared the household's income.

The 1976-81 income gap was stable between households headed by the

elderly and nonelderly, between blacks and whites, and between males and

females. Households headed by women, blacks, and the elderly maintained

their income positions. Blacks and women got as many jobs as did whites or

men. Real income levels for the elderly stayed constant because Social

Security and Supplemental Security Income, major sources of income among

the elderly, are indexed for inflation and adjusted for the cost of living

through the Consumer Price Index.

Employment did not assure escape from poverty and did not reduce the

area's overall poverty rate. Age or disability kept many of the poor from

working. Although 12 percent of the poor households had more earners in

1981 than in 1976, their incomes were still below the poverty line. The same

was true for nearly 35 percent who had one or more members employed in

1981. Most of these households—the working poor—were headed by blacks.

Weekly wages for employed blacks were far below those for whites.

But not all the poor remained poor. A few benefited from the area's expanded job opportunities. The area's overall poverty level did not change

significantly during 1976-81: about as many households entered poverty as

escaped poverty.

This report examines how employment growth affects nonmetro areas and

how that growth is distributed among its residents, especially if it improves

incomes of longer term residents, minorities, and the poor. The data show

that factors other than employment may increase income, such as household

size, number of household members working, hours worked, real weekly

wages, education, health status, and other sources of income.
Glossary

statistical testing:

Significant difference. Two variables were

significantly different at the 95-percent confidence

level when the observed difference was greater

than twice the standard error of the difference.

Totals, ratios, percentages, dollar values, and so

forth were the variables tested.

Survey sample design:

Area frame. The area frame consisted of a twostage stratified cluster sample, where the first stage

involved sampling segments and the second stage involved sampling establishments and households. The

area frame provided a sample of establishments and

households not identified by the list frame. The area

frame and list frame together represented the total

population of establishments and households.

List frame. The Ust frame consisted of a list of

private-sector establishments and government units

located in the 10-county area. A sub-sample of

employees was drawn from the surveyed list frame

establishments which subsequently became the list

frame sample of households.

Primary sampling unit. Primary sampling units

(PSU's], which are associated with the frame sample,

serve as the base for deriving variances in a complex

survey design. For the list frame, establishments

were the PSU's; for the area frame, land segments

of varying size were the PSU's.

Household and related terms:

Household. A group of persons, not necessarily

related by blood or marriage, who resided in a house,

mobile home, an apartment, a group of rooms, or a

single room occupied as separate living quarters.

Also includes a single person residing in a house,

mobile home, and so forth.

Newer residents. Members of households existing

in both 1976 and 1981 but whose household was

located outside the study area in 1976. Head or

spouse in 1976 was still present during JanuaryFebruary 1982.

Newly formed households. Households not existing

in 1976, and households whose head or spouse in

1976 was no longer the head in January-February

1982.

Elderly heads. The household head was 65 years

old or older at the time of the survey.

Nonelderly heads. The household head was younger

than 65 years old.

Race of heads. Determined by respondents. Whites

and blacks were the statistically significant racial

groups in the 10 Georgia counties. Although included

in the overall population, such groups as Hispanics,

Asians, and American Indians made up less than

0.5 percent of the population, a statistically insignificant proportion. These groups were, therefore,

included in the "black" grouping.

Household income. Money income received by all

household members from all sources except income

received from the sale of land, buildings, stock, or

other capital assets during the year. Data on

household income for 1976 were not collected from

the new households.

Income status. The ratio of total household money

income divided by the household's poverty threshold

value. An income status ratio was derived for 1976

and 1981 for longer term resident households that

reported income for both years.

Poverty threshold. The poverty thresholds published

each year by the U.S. Bureau of the Census, U.S.

Department of Conmierce. A family of four had a

weighted average poverty threshold of $9,287 in

1981. This threshold was further adjusted by factors

such as family size, head's age, and presence of

children under 18 years old.

Existing household. The household existed in both

1976 and 1981 regardless of its location, and the

head and/or spouse in 1976 was still present during

the survey period, January-February 1982.

Longer term residents. Household members who

lived in the 10-county area during both 1976 and

1981, whose head and/or spouse in 1976 was still

present during January-February 1982.

Sources of income:

Earnings. Total annual money earned (before

deductions) by persons working as employees, including net income from nonfarm businesses, partnerships, professional practices, and family farms.

Employment-related. Payment for unemployment or

worker's compensation.

VI
Public assistance. Payment received from Aid to

Families with Dependent Children (AFDC), Supplemental Security Income (SSI), or other State or local

public assistance programs, excluding Food Stamps

and Medicaid.

Retirement Benefits received from Social Security,

railroad retirement, private pension or annuities,

government employee pensions, or military retirement.

''Other" sources. Income received from veteran's

payments, interest from savings or bonds, alimony,

dividends or stocks, child support, net rental income

or royalties, estates or trusts, or any source not

already mentioned.

Transfer payments. Money disbursed by government,

in return for which no services are rendered. Public

assistance payments and Social Security benefits

collectively are referred to as transfer payments.

VII
Employment Growth Helps Some

But Not All Nonmetro Households

A Case Study in 10 Georgia Counties

Donald K. Larson*

Introduction

Expanding job opportunities through industrial

growth in nonmetropolitan (nonmetro) areas is

perceived to improve the economic status of

nonmetro residents [2, 5, 7, 30, 34). i Improving their

status, particularly for the nonmetro poor, is one

major objective of Federal rural development efforts

[55). Money income often reflects the economic

status of households or families, and changes in

money income can measure hovir expanding job opportunities affect residents (34). Hov^ever, hov^ employment growth is distributed among nonmetro

residents has not been examined extensively even

though studies suggest that employment growth may

not equally affect all population segments [25, 41, 42].

The U.S. Department of Agriculture's (USDA) Economic Research Service has conducted a series of

studies of the distributional effects of economic

growth in nonmetro America. The idea was to identify a number of small geographic areas that typified general nonmetro economic conditions and to

examine the source and distribution of jobs and

income.

Between 1976 and 1981, employment grew at a relatively high rate in a 10-county nonmetro area in

southern Georgia [31). This report examines how

household income in that area changed among the

area's longer term residents, especially for poorer

longer term residents. The 1981 household data, collected in January-February 1982, are the most recent

data available for a study of this nature in nonmetro

Georgia.

This report, the second of three areas studied,

discusses how employment growth was distributed

in a nonmetro area. The first nonmetro area studied

*The author is an agricultural economist in the Agriculture and

Rural Economics Division, Economic Reseach Service, U.S. Department of Agriculture.

^ItaUcized numbers in parentheses cite sources listed in the

References section.

was a nine-county area in south-central Kentucky

where manufacturing was the primary economic base,

but where the employment in 1974-79 grew mostly

in services. In the second study, the Georgia area's

economy was based on government, wholesale-to-retail

trade, and manufacturing. But unlike the other two

areas, the Georgia area contained a large black

population and an important commercial agricultural sector. The third area studied was a 10-county

area straddling the Missouri-Arkansas border, an

economy based on retirement and recreation. The

data collection procedure was the same in all three

areas, enabling a comparison of findings. The data

for all three areas directly link the industries

creating the jobs and changes in employment with

characteristics of the sampled population, particularly changes in household income status.

Employment Growth and Changes in

Income

Income for people in many nonmetro areas rose as

industrial growth generated new jobs [1, 4, 16, 21,

33, 35, 38, 40). But one cannot always link income

gains solely to employment growth. Increases in

government transfer payments or growth in property

income could have raised aggregate income as (for

example) government transfer payments grew nearly

200 percent during 1969-77 in the nonmetro South

(19). While research shows sizable income changes

in nonmetro areas experiencing employment growth,

income has not been distributed equally among individuals or households. Sometimes employment

growth resulted in negligible income gains among

the area's residents [1, 2, 9, 33, 35, 36, 39), or gains

were less than anticipated [22). Other research

shows that employment growth improved the income

distribution by reducing inequality or by increasing

the residents' income [12, 23, 34, 43, 56).

Changes in income status from employment growth

were analyzed for a multicounty area in Kentucky

[24). Overall employment growth did not benefit all
households or residents there. Although some households improved relative incomes from employment

gains, others lost ground when members retired or

v^hen others reduced their annual v^ork hours.

Understanding the relationship between employment

growth and changes in household income is important because many government programs use income

to gauge the need for public assistance.

Study's Objectives

This report identifies factors that explain changes

in household income status in 10 Georgia counties,

examines how the most important factors affected

changes in household income status, and examines

how the area's poverty rate changed as new jobs

were introduced. The employment variables used in

this analysis, such as change in number of workers

in the households, reflect the household's behavior

when employment expanded in the study area. The

households' responses reflect the dynamic nature of

employment status and how changes in employment

status affect household income status.

Employment Growth and Income Status. Little

information exists on the extent that employment

growth improves the overall economic well-being

within a rural area or community. An increase in

the number of jobs is one way to raise economic

well-being (6). However, a community's income level

is sensitive to a number of factors, so changes in the

overall level of income may differ from the expected

[13, 14, 26, 34]. Second, little is known about how

employment growth is distributed among all households in a local economy [40).

Local residents, as opposed to inmigrants, are frequently the focus of debates about rural development

pohcy. Yet little is known about how local resident

households share in employment growth and how

such growth affects their income status. For example,

most Kentucky households did not increase their

work efforts nor did overall incomes increase

significantly during the rapid job expansion in

1974-79. Also, little information exists about how

households headed by blacks share in employment

growth and how employment growth affects their income status.

Employment Growth and Poverty. Whether rural

employment growth alleviates poverty has not been

well established (2, 5, 7, 1Ö), although some information exists on how expanded employment opportunities aid households once considered poor to

escape poverty. Working more helped some Kentucky

households escape poverty, but an equal number

became poor. Thus, the Kentucky area's overall

poverty rate did not change during the job expansion. These relationships are examined further in

this Georgia study.

Local Population and Income Status

I examine three aspects of the local population in

the 10-county Georgia study area: households, their

relative income status, and factors affecting

changes in household income status.

Households

Individuals, households, families, and communities

are frequently studied to determine how employment

growth affects income distribution (6, 12, 14, 23, 26).

The household is the appropriate unit for analysis

in this report because about 10 percent of the

surveyed units contained unrelated persons living

together, whereas families comprise people related

by blood or marriage. The households sampled

represented the community in January-February

1982; there was no similar representation for 1976.

The individual is too narrow a concept because it

ignores dependencies among individuals in a household. For example, decisions on how to spend income are often joint decisions of household

members. Also, earnings from two or more household members are often pooled, so a single

member's income may not reflect the relative

economic status of all household members.

This report focuses on the income status of longer

term resident households when employment opportunities expanded and when many people moved into

the area (inmigration). Longer term residents are

households where the head resided continuously in

the 10-county area during 1976-81 (see Glossary for

these and other definitions).

Income Status

Measuring income status helps us examine how

household income status changed as employment

grew (6, 14, 15, 17, 26, 52, 53). The following equation presents a ratio of total nominal household

income divided by the official poverty threshold.

The change in household income status (HISCG] is

measured by the difference between ratios for two

different time periods:
HISCG = NHI81 _ NHI76

0PT81 OPT76

where: NHI81 = Household money income

for 1981,

NHI76 = Household money income

for 1976,

0PT81 = A household's official

1981 poverty threshold,

and

OPT76 = A household's official

1976 poverty threshold

[14, 26].

The difference between the ratios reflects a real

change in income status because the fraction's

denominator—the official poverty threshold for any

given size family—is adjusted each year to reflect

increases in the cost of living as measured by the

Consumer Price Index (CPI). Therefore, if a household has the same number of persons each year, the

difference between 0PT81 and OPT76 reflects differences in the cost of living between the 2 years. A

similar measure from the University of Michigan

[14, 26] helped analyze households for the Kentucky

study area in 1974-79, allowing comparisons of the

economic status in Kentucky with that of the

Georgia area.

The ratio in the above equation reflects changes in

money income from a household member changing

employment status and changes in the number of

household members who share the income. With the

official poverty standards in the denominator, the

ratio further accounts for household economies of

scale in consumption and other basic needs among

various sized households. (That is, it costs less per

person to feed and clothe larger households.) The

ratio's value is easy to interpret and its statistical

properties are easy to analyze. The ratio's value

has no units, is not a percentage change, and is a

continuous value showing negative, zero, or positive

changes.

Factors Affecting income Status

To understand how an area's personal income distribution may change under rapid employment growth,

the factors influencing changes in household income

status must be explored (9, 10, 12, 14, 23, 26, 31, 36, 40).

Change in household size is negatively related to

change in income status: if household size increases

(with no other changes), income status declines [14,

26). Household head's gender and race affect household income status: female and black household heads

had lower incomes than did males and whites [40].

Age also affects a person's ability to benefit from

expanding job opportunities: the elderly do not compete for jobs in a growing labor market as much as

younger workers [10, 31, 40], Educational attainment

is positively associated with income status: those

with more education generally earn higher incomes.

Changes in health alter the annual hours worked by

household members, thus affecting a household's

income status. Household income can increase as

members enter the paid labor force, increase hours

worked, or work in a higher paying job. Household

income can also increase through higher interest,

rents, and transfer payments (unearned income).

Study Area and Data

The data analyzed in this report came from

households sampled in Berrien, Brooks, Colquitt,

Cook, Echols, Grady, Lanier, Lowndes, Thomas, and

Tift counties in southern Georgia during JanuaryFebruary 1982 (see figure).2 The data provide detailed

^See the Appendix and (31) for details about the sample design.

The survey used a randomly stratified multiple-frame design.

The 10-county Georgia study site

GRADY
information on household composition, employment

of household members, and household income in

1981 and 1976. Data on households residing in the

study area during 1976 but not in 1981 were not

available. Thus, the 1976 data cannot represent the

population residing in that area in 1976; it reflects

characteristics only from the present (1981)

residents' réponses about 1976.

The 10-county area in 1980 had approximately 81,580

households with 238,680 people (see 48, census has

only total data reported for 1980. Our sample is

representative of that total; see next section].

Employment increased about 12 percent between

1976 and 1981, and population increased about 5

percent, compared with 9 and 6 percent, respectively,

in all nonmetro areas (31). Most employment grew in

the private services and production sectors. The

area's economy, primarily based on manufacturing,

had a relatively large agricultural commerce: 40

percent of its 5,400 farms had sales exceeding

$20,000 (46). Five counties depended primarily on

farming; four counties depended on manufacturing

(3). Brooks was the only persistently low-income

county in 1969 [11]. But this county's income rose by

1979 enough to escape its low-income status [20].

Characteristics of Households

This section examines basic characteristics of the

area's households, including comparisons with other

nonmetro areas, and characteristics of subgroups of

the sampled households.

All Households

The Georgia household survey represented 75,130

households in 1981, or about 214,000 people (table

1). Households in the 10 Georgia counties averaged

2.8 persons, similar to the average for nonmetro

Georgia and nonmetro America [44, 49, 51). The

distribution of household heads by gender and age

also resembled that of other nonmetro areas. The

1981 mean household income in the 10 Georgia

counties was nearly $4,000 below the national

average for all nonmetro households, and about

$2,400 below the average for the nonmetro South

[45). But the below-average incomes may reflect the

smaller number of workers per household. The

surveyed households contained an average 1.2 income

earners, well below 1.6 nationally [44). This difference may partly explain the higher incidence of

poverty in the 10 counties compared with that in

nonmetro America. Lower wages may also have

affected the area's higher incidence of poverty, as

most wage levels lagged behind the national

average [31).

The southern Georgia area had a large black

population: nearly 27 percent of the surveyed

Table 1—Households in the 10-county Georgia study area

and in selected nonemetro areas, 1981

Household 10-county Nonmetro Nonmetro

characteristics study area^ Georgia^ United States^

Number

Total households 75,130 732,370 26,627,000

Total people

(all ages) 213,780 2,131,750

Percent

73,470,000

Household size:

One person 20.4 19.6 20.9

Two persons 31.4 29.7 32.2

Three persons 18.3 18.8 17.4

Four persons 16.4 16.5 15.7

Five or more

persons 13.5 15.4

Number

13.8

Average 2.8 2.9

Percent

2.8

Head of household:

Race—2

White 73.2 77.9 92.0

Black 26.8 22.1 8.0

Gender—

Male 72.5 71.5 75.5

Female 27.5 28.5 24.5

Age—

19-34 years 29.4 28.5 28.8

35-49 years 34.0 33.0 31.0

50-64 years 14.9 16.3 16.1

65 years and

older 21.7 22.2

Number

24.1

Average 47.6 48.4

Dollars

49.2

Household money

income:

Mean 15,500 NA 19,435^

Median 12,950 NA

Percent

16,259

Household poverty

status:

Not poor 77.8 NA 88.0^

Poor 22.2 NA 12.0

NA = Not available.

^Data collected in January-February 1982.

^See Glossary.

^Sources: [48, 49].

^Sources: (45, 47, 50, 51].

^Sources: (45, 47).
household heads were black, compared with 8 percent for nonmetro America (table 1). Blacks in the

10 Georgia counties completed fewer years of

school than-did whites. Average (mean) schooling

was 9.2 years among black adults, 11.1 years

among white adults [27, 31p Black households were

larger and more often headed by a woman than

were white households. Mean 1981 income for black

households was nearly $7,300 below that for whites.

Residents

Table 2—Households in the lO-county Georgia area by

residency status, 1981^

Longer Newer Newly

Household All term residents^ formed

characteristics households resi- housedents^ holds^

Total households

Number

75,130 53,730 7,350 14,050

Households were classed in three duration of

residency groups, based on the head's residency

status: longer term resident households, newer resident households, and newly formed households.

Heads of the longer term resident households resided

continuously within the study area for 5 years

before the survey. Most households (72 percent)

were longer term residents (table 2). Nine percent

of the surveyed households were newer resident

households (heads resided outside the study area in

1976). About 19 percent were newly formed households (households that did not exist in 1976).

Noneconomic and nonjob-related factors were frequent reasons (80 percent) why newer resident

household heads relocated there (23, 28, 57).4 Thus,

intangible factors (that cannot be satisfactorily controlled in the analysis) other than money income

influenced households' decisions to move.

On average, newer resident households had more

members than did longer term residents and newly

formed households (table 2). Surveyed household

heads' age followed an expected pattern: elderly

heads were more concentrated among the longer term

resident households, while yoimger heads were

more prevalent in newly formed households. Most

newer resident household heads during the seventies

were white (31). However, the racial mix did not differ significantly between longer term resident households and newly formed households. Income/poverty

status favored the newer resident households compared with the other two residency households in

1981, partly because of the lower concentration of

black household heads in the newer residency group.

There was a large portion of female heads in the

newly formed households from changes in household

^The surveyed household heads' average years of schooling was

10.6, somewhat below the mean 11.4 years in the nonmetro

United States [50].

"^Respondents indicated the major reason they moved to the

area. They were given a choice that included both job and nonjobrelated reasons.

Household size:

One person

Two persons

Three persons

Four persons

Five or more

persons

Average

Percent

20.4

31.4

18.3

16.4

20.3

32.0

16.0

16.2

10.3^

32.8

18.7

23.3

26.4

28.5

27.3

13.2

13.5 15.5 14.9 4.6^

Number

2.8 2.9 3.1 2.5

Percent

Head of household:

Race—2

White

Black

73.2

26.8

70.2

29.8

90.4

9.63

75.4

24.6

GenderMale

Female

72.5

27.5

73.7

26.3

79.9

20.1

64.1

35.9

Age—

19-34 years

35-49 years

50-64 years

29.4

34.0

14.9

15.3

31.3

25.8

38.3

32.6

17.3

78.6

14.6

2.83

65 years or

older 21.7 27.6 11.8^ 4.03

Number

Average 47.6 52.8 42.8 30.2

Household money

income:

Mean 15,500

Median 12,950

Household poverty

status:®

Not poor 77.8

Poor 22.2

Dollars

15,390^ 19,330^ 13,970

12,510 15,340 12,070

Percent

75.2

24.8

89.8

10.23

81.5

18.5

^Data collected in January-February 1982.

^See Glossary.

3Estimate based on fewer than 10 unweighted observations.

"^Excludes 920 households (12 unweighted observations) that did

not report 1981 household income.

^Excludes 260 households (3 unweighted observations) that did

not report 1981 household income.

^Official poverty thresholds for 1981 were used to determine

poverty status [47).
composition such as separations and divorces during

1976-81.

The employment growth benefited all three classes

of households. That is, many members in each household group were employed in 1981 and participated

in the area's job expansion. However, the detailed

analysis that follows will focus only on the longer

term resident households and how well they fared.

An objective of this study was examining how household income status changed for blacks as jobs expanded, and there were few black households

among newer resident households.

Newly formed households result from marriage,

divorce, single people moving from parental

households, and other changes in composition which

greatly influence changes in a household's income

status (13, 14, 26). Because these households

technically did not exist in 1976, they were identified at the interview so household income data for

1976 were not collected.

Change in Household Income Status,

1976-81

Table 3—Change in relative income status for longer term

resident households in the 10-county Georgia

area, 1976-81

Item Longer term

resident households

Number

Total longer term resident

households in 1981 52,150

Mean change in income status

ratios^

Eatio value

-0.189

Change in income status:^

Decrease

Little or no change

Increase

Percent

41.8

32.0

26.2

^The average value of the difference between the 1981 income

status ratio and that for 1976.

^Income status changes were:

Decrease = ratio difference was equal to or less than

-0.160,

Little or no change = ratio difference was -0.159 to +0.159,

and

Increase = ratio difference was equal to or greater than

+ 0.160.

Not all households' income gained as employment

opportunities expanded; more declined. The average

income status for longer term resident households

fell substantially between 1976 and 1981 (the mean

change of -0.189 differed significantly from zero,

table 3). The relative income status for the majority

of longer term resident households declined.^ But

gains in income status among some households can

be offset by declines among others.

Factors Affecting Change in Income Status

Economic growth, and its subsequent expansion in

employment opportunities, is not the only answer to

raising a household's income status. Changes in

household size, number of members working, hours

worked, real wages for household heads, and incidence of unearned income other than transfer payments also affect the income status of households

during employment expansion. (See the Appendix

for a discussion of the regression analysis and

methods used to reach these findings. Results of the

^From the 53,730 longer term resident households, 1,580 (about

3 percent) were eliminated from the analysis because of

nonresponses regarding 1976 or 1981 household income data.

These nonresponses were a random event and not associated with

any particular sample or household characteristic, such as race,

gender, or age of head.

multiple regression analysis are shown in appendix

table 1.] How do these changes influence a

household's income status?

Household Structure. Increased household size, or

more persons sharing the income, lowered household income status (changes in household size were

significant and had a negative coefficient, see app.

table 1].

Compared with the omitted classes, changes in

household income status were not significantly

different between households headed by women and

men (HDSEX] or between households headed by

blacks and whites (HDRACE] (these coefficients in

the regression analysis were not significantly different, see app. table 1]. The gap in income status

did not widen significantly. Therefore, the expanded

employment did not realign the distribution of jobs

that left women and blacks in poorer economic positions than before the expansion of jobs.

Employment and Related Variables. Income status

improved when additional members became employed

(CHGEAR), already employed members worked more

hours in 1981 than in 1976 (CHGHRS), or the head's

weekly wage level (CHGHWG) rose faster than the

inflation rate (these variables had positive coefficients, see app. table 1).
Unearned Sources of Income. Households receiving

transfer payments in 1981 (variables INCTRP,

NCGTRP) maintained their relative income position

over the study period [coefficients for transfer payment variables (INCTRP, NCGTRP) were not significantly different from zero, see app. table 1].

Because most transfer payments, such as Social

Security, were indexed for inflation, nominal increases in transfer payments kept recipient

households from losing ground on income status

(households v^ith workers were the omitted class

against which changes in income status were

measured]. About 20 percent more households

reported transfer payments in 1981 than in 1976.

Income status did not fall significantly, as expected,

among households reporting transfer payments

(variable DECTRP) in 1976 but not 1981 (only about

3 percent had a nonzero value for this variable].

Households reporting "other" sources of income in

1981 but not 1976 (variable INCOTI] increased income status, (INCOTI had a significant, positive

coefficient, see app. table 1]. But only a few

households (8 percent] reported "other" sources of

income. Income status did not decline significantly,

as expected, for households reporting "other"

sources of income in 1976 but not in 1981 (variable

DECOTI] (only about 1 percent of the households

had a nonzero value for this variable].

There was no reason to expect households reporting

"other" sources of income (NCGOTI] in both 1976

and 1981 to have a significant coefficient in the

regression. Why the income status of these households rose more than households never receiving

this source of income cannot be detected from the

data.

Household Well-Being. With all other variables

held constant, significant changes in household income status were not spread across all income levels.

Therefore, the expanded employment opportunities

did not even out the area's income status. In this

analysis, variables measured changes in 1976 income

(in 1981 dollars] by quintile. The positive or

negative sign and the magnitude of the coefficients

for each variable shows the extent that households

in a particular income level gained or lost relative

to the omitted households (third quintile]. Income

status for the higher income households did not rise

more after employment expansion than income status

for the omitted households [only the two highest income

quintiles (RHI4, RHI5] had significant, negative coefficients, see app. table 1]. While the two lowest

income quintiles had gains (positive coefficients],

their coefficients were not statistically significant.

Exits from the labor force, such as retirement,

largely produced the negative coefficients on the

two highest income quintiles.

Characteristics of the Household Head. The job

expansion did not lower the economic status of the

elderly; their already lower income status was not

lowered further during 1976-81 (HAGE4 was negative

but not significant, see app. table 1]. Elderly household heads (HAGE4] were expected to have a significant fall in income status compared with the omitted

heads in the prime working age (35-49] group

(HAGE3]. The elderly maintained their relative income status over the study period because most

elderly households received Social Security and/or

other retirement benefits, which were indexed for

inflation.

There was no difference in the change in income

status between household heads educated beyond

high school (HEDC3, the omitted class] and those

with high school (HEDC2] or less than high school

(HEDCl] training (although the coefficients were

negative, changes in income status for household

heads were not significant, see app. table 1].

Changes in the head's health status (CHGHLT] was

expected to affect the amount of labor supplied

between 1976 and 1981 and thus affect household

income status through the amount of earnings

received, but they did not (the coefficient for

CHGHLT was not significant, app. table 1]. Only

about 5 percent of the working household heads

reported a change in either a positive (improved

health] or negative (poor health] direction.

Early inmigrants competed more successfully for

jobs and obtained higher paying jobs than did

longer term residents, but the early inmigrants did

not continue to reap the higher paying jobs. The

change in household income status for early inmigrants did not differ significantly from that for

longer term residents (app. table 1]. Very few heads

of early inmigrants households changed jobs or

occupations during 1976-81. Also, members of early

inmigrant households who entered the area's labor

force in 1976-81 took jobs with similar pay as

members from longer term resident households who

also entered the area's labor market.

The regression analysis was the first step in explaining changes in household income status between 1976

and 1981. The following section examines the relationships between most of these factors and income

status. A household's composition and economic

activity changes over time. About 27 percent of the
area's households had no changes in the number of

members, members' labor force participation, annual

hours worked, or head's real wages. Most households

(73 percent) reported changes in household composition and/or economic activities that affected income

status. These findings parallel the Michigan study

findings that households are dynamic units (14, 26).

Change in Income Status

Overall income status for longer term resident

households fell during 1976-81, The dynamic nature

of employment status and other changes sometimes

negatively affect an area's average household income status.

Employment among longer term resident households

was generally stable but economic status was not.

Reductions in annual hours worked and declines in

the head's real weekly wage offset gains of those

households reporting increased hours worked and

higher head's real wage. Therefore, overall income

status for all longer term resident households fell.

Income status for many households hinged on unearned sources of income such as Social Security

because 20 percent had members who were not

employed during the entire 5-year period.

Employment and Household Size

Only a small portion of the longer term resident

households enjoyed the area's employment expansion

in 1976-81. About 20 percent had more workers in

1981 than in 1976; their income status rose significantly (table 4). But nearly half of the households

had no change in number of members working. Their

income status did not remain constant, it fell. About

25 percent of the households with no change in the

number of workers worked fewer hours in 1981. The

head's real weekly wage declined for 48 percent of

households whose head worked in both periods.

Change in household size significantly altered

income status. About 20 percent had larger households, and their relative income status fell (table 4).

The income status increased for the 15 percent with

smaller households. Household size remained unchanged for nearly 66 percent of the longer term

resident households.

Some longer term resident households changed

counter to what we might expect from employment

growth. About 12 percent had fewer members working between 1976 and 1981 (table 4), 70 percent of

whom retired. Among the 25,350 longer term resident

households where there was no change in the

Table 4—Factors affecting income status for longer term

resident households in the 10-county Georgia

area, 1976-81

Item Longer term Mean value change

resident in income status.

households 1976-81^

Number flatio value

Total longer term resident households in

1981 52,150

Percent

-0.189^

Employment status:

No change in number

working 48.6 -.3622

More workers 19.5 .3102

Fewer workers 11.9 -.5082

None working in 1976

or 1981 20.0

Number

-.015

Change in annual hours

worked^ 25,350

Percent

-.3762

Large decrease

(-1,000 or more hours) 13.8 -.7432

Moderate decrease

(-200 to -999 hours) 14.0 -.3982

Little or no change

(-199 to 199 hours) 58.2 -.3972

Moderate increase ^ .

(200 to 999 hours) 6.4 .006^

Large increase

(1,000 or more hours) 7.6

Number

.170^

Head's real weekly wage^ 25,970

Percent

-.249

Large decrease (-$100

or more 14.3 -.8772

Moderate decrease

(-$30 to -$99) 33.7 -.3432

Little or no change

(-$29 to $29) 37.1 -.102

Moderate increase

($30 to $99) 11.6 .200

Large increase ($100

or more) 3.3^

Number

.284^

Household size: 52,150

Percent

-.1892

No change 66.1 -.178

More members 19.1 -.5762

Fewer members 14.8 .2672

^Represents an average of the difference between the 1981

income status and that for 1976.

2lndicates the mean change differed significantly from zero at

the 0.01 confidence level.

^Pertains only to households where there was no change in

employment status of household members.

"^Statistical test not performed because there were fewer than

30 unweighted observations.

^Pertains only to households where the head worked for wages

or salaries in both 1976 and 1981.

^Estimate based on fewer than 10 unweighted observations.
number of members working during 1976-81, nearly

29 percent reduced hours worked in 1981 by at least

200 hours since 1976 (the Nation's business downturn in 1981 may have contributed). This result

affects income status because fewer hours worked

lowers annual income. However, annual hours

worked barely changed for most (58 percent) of

these households. Only 14 percent had members increase annual hours work by at least 200 hours.

About 25,970 longer term resident household heads

worked for wages or salaries in 1976 and 1981. Income for nearly half of these households fell considerably when inflation outpaced their real weekly

wage rates (table 4). Only 15 percent experienced

an exceptional real growth in weekly wages. Weekly wage levels for 37 percent generally kept pace

with inflation.

These dynamic changes and the resulting magnitude

of the changes produced the sizable fall in average

household income status during 1976-81 (the mean

ratio change of -0.189 in table 4 was significantly

less than zero). Only 27 percent of the 52,150 longer

term resident households had a stable economic

history: no changes in employment, annual hours

worked, head's weekly wage, and household size.

The balance experienced a change in one or more

of these factors; about 7 percent of which changed

annual hours worked, head's real weekly wage, and

household size while employment status remained

unchanged. However, declines in income status

among some households can offset gains among

other households. For example, the magnitude of the

decline in income status among households where

annual hours declined by 200 hours or more greatly

exceeded the gains in income status among households where annual hours worked increased by 200

hours or more.

The survey data do not provide sufficient information to consider how newly formed households affected the overall average household income status.

Newly formed households, excluded from the analysis

because their 1976 base income was not available,

have claims on the area's employment growth and

thus on the total income generated. But employment

expansion accomodated the new household members

into the workforce (recall that the area experienced

net population outmigration about 25 years ago,

primarily by the young). Also, there were no data

available on households in the area during 1976 that

left before 1981.

Newer resident households with employed household

members also had claims on the area's income. But

their claims were relatively small. Only 10 percent of

those working sometime in 1981 were members of

newer resident households. The jobs taken by

members of the newer resident households probably

did not significantly affect the changes in the longer

term resident household's income status.

Changes Among Household Groups

Although employment opportunities were expanding,

overall income status for longer term resident households fell during 1976-81. But at the same time,

households headed by women, blacks, and the elderly

maintained their relative income status.

Gender, race, and age were not significant variables

associated with changes in a household's income

status. Pubhshed research suggests that individuals

not participating in expansion of employment opportunities may become relatively poorer [32, 40, 42),

Therefore, households with people who do not benefit

from an area's employment growth may be relatively

worse-off economically after job opportunities grow.

Twenty percent of the longer term resident households in the Georgia study were not directly affected

by the area's employment growth because no member

worked in either 1976 or 1981 (table 4). Nearly all

households with no working members in both years

were headed by the elderly. Other research suggests

that households headed by blacks, women, and the

elderly may be relegated to lower income positions

once employment grows (8, 9, 27, 29, 37, 40, 41, 42].

That is, their income status may fall compared with

households headed by whites, men, and nonelderly

people. This report's regression analysis refutes this

contention in the Georgia study area. Income status

did not significantly decline between households

headed by whites and blacks, by women and men,

and by elderly and nonelderly (table 5).

Income status for female-headed households who lost

their spouse after 1976 declined, but not as much as

that for households headed by men. Losing the male

head reduced the flow of earnings if the former head

worked in 1976, or could reduce unearned income if

the former head was retired in 1976.6 However, size

of these households decreased from the loss of the

spouse. This change in household size partly explains

why the percentage change in income status was not

larger, as the denominator of income status (the

poverty threshold) accounts for changes in household

size.

^Data were not available on what the former head of the

household was doing in 1976.
Table 5—Average income status for selected longer term

resident households in the 10-county Georgia

area, 1976-81

Average household income

Longer term status ratio

Item resident

households

1976 1981 Percentage

difference

Number - Ratio value - Percent

Total longer

term resident

households 52,150 2.320 2.131 -8.1

Head of

household:

Race—1

White 70.0 2.693 2.486 -7.7

Black 30.0 1.450 1.305 -10.02

GenderMale 74.2 2.630 2.388 -9.2

Female 25.8 1.427 1.393 -2.42

Head both

years 87.1 1.358 1.344 -1.0

Spouse of

deceased

head^ 12.9 1.892 1.726 -8.82

Age-i

Elderly 28.1 1.625 1.533 -5.7

Nonelderly 71.9 2.590 2.364 -8.72

^See Glossary.

2These percentages did not differ significantly between heads

of household groups.

^These women lost their spouse before 1976. Women divorced

or separated after 1976 were placed in the newly formed

household group.

The income status gap betv^een these groups v^as

expected to v^iden during employment expansion.

But several factors buffered a decline in income

status of households headed by v^omen and blacks,

and employment grov^th v^as only one of the factors.

Proportions reporting more workers did not differ

significantly between households headed by blacks

and whites and by women and men (table 6]. While

more female-headed households reported no one

working in both periods, there were comparable

percentage wage increases for working women and

for men, yielding comparable increases in income

status for female-headed households with working

members.7

Households headed by an elderly person responded

little to employment growth (table 6). Compared with

their younger counterparts, the elderly rarely partook in new employment opportunities, a finding

consistent with other studies [24, 29, 40, 42). Nearly

60 percent of the elderly-headed households had no

working members in 1976 and 1981. Despite their

relatively low tie with the area's labor market, the

gap in household income status between the elderly

and nonelderly did not expand significantly (table 5].

Elderly-headed households depended on unearned

sources of income, such as Social Security and

public assistance payments. These transfer pay-

''There were comparable changes between wages for men and

women during 1976-81. But men's wages were still significantly

higher than women's (31).

Table 6—Employment status and change by groups of longer term resident households in the 10-county Georgia area,

1976-81

Household heads

Longer

term

resident

households

Employment status and change

No change More Fewer

in number working workers workers

None working

in 1976 and 1981

Race:

Black

White

15,640

36,510

43.5

50.82

21.2

18.8^

15.4

10.42

19.9

20.02

Gender:

Female

Male

13,450

38,700

29.3

55.33

14.2

21.42

15.6

10.62

40.9

12.73

Age in 1981:

Elderly

Nonelderly

14,650

37,500

20.5

59.63

4.34

25.5^

17.5

9.72

57.7

5.25

^Based on household members' change in employment between 1976 and 1981.

2proportions did not differ significantly between the household groups.

^Proportions differed significantly between the household groups at the 0.01 confidence level.

'^Based on fewer than 10 unweighted observations.

^There were not enough observations, within at least one group, to test for significant difference.

10
ments are indexed by the Consumer Price Index

(CPI). Indexing unearned income substantially buffered against a significant fall in the elderly's real

income. Some healthy elderly people worked past

the traditional retirement age of 65. Spouses often

held jobs when the head was elderly and unable to

work due to poor health. One or more members

worked in 1981 in about 25 percent of elderlyheaded households (table 6).

Poverty Status and Change

Many of the Nation's persistently low-income

nonmetro counties are in the South [11, 20). Rural

economic development has been often advocated to

aid the economically disadvantaged [55). This section examines the poverty status among the longer

term resident households and the extent that the

area's poor households increased their income

status during the growth in the local economy and

employment.

Poor Households in 1981

The area's poor longer term resident households did

not typify the poor in other areas. Nearly 25 percent

of the area's households were poor (table 7), much

higher than the near 14-percent level for all U.S.

nonmetro areas and the South (47). An equal

amount of the area's poor households were headed

by blacks and whites. In nonmetro areas nationwide, a higher percentage of the poor were white

(59 percent), but nearly 65 percent of the poor in

the South were black (47). The elderly headed nearly

44 percent of the area's poor households (table 7),

more than double the U.S. level (17 percent) for

nonmetro areas (47). Median income among the

area's poor households was $3,820 (table 7) considerably below the $4,640-median level for poor

households across all U.S. nonmetro areas (47). The

study area's poor households' average money income and income status ratio were about a quarter

of that for nonpoor households. Poor households

depended on retirement income, with earnings and

public assistance the next two most important

sources of income.

Employment alone does not guarantee exit from

poverty. This Georgia area contained a substantial

amount of working poor. Thirty-nine percent of poor

households earned income in 1981 (table 7). Over

half depended on retirement income, and another

third received public assistance. Therefore, transfer

payments were also not sufficient to keep

households out of poverty during 1981.

Table 7—Characteristics of longer term resident

households in the 10-county Georgia area, by

poverty status, 1981

Characteristics All

households^

Household poverty status

Poor Not poor

Number

Total longer term

resident households 52,810 13,090

Percent

39,720

Share of longer term

resident households 100.0 24.8

DoJiars

75.2

Household money income:

Mean

Median

15,390

12.510

4,730

3,820

Ratio value

18,910

16,030

Household income status:

Mean

Median

2.13

1.77

0.63

.69

Percent

2.59

2.19

Source of income:^'^

Earnings

Employment-related

Public assistance

Retirement

Other

72.8

6.0

13.6

41.0

26.3

39.3

3.44

34.2

56.2

8.3

83.9

6.9

6.8

36.0

32.3

Household head:

Race—2

White

Black

70.0

30.0

47.8

52.2

77.4

22.6

GenderMale

Female

73.7

26.3

49.4

50.6

81.8

18.2

Age—

16-34 years

35-49 years

50-64 years

65 years and older

15.4

31.2

25.5

27.9

12.4

23.1

20.7

43.8

Years

16.4

33.8

27.1

22.7

Average 52.9 58.5 51.0

Education—

Less than high

school

High school

Beyond high school

55.9

26.0

18.1

Percent

82.7

12.0

5.3-»

Years

47.1

30.6

22.3

Average years of

school completed 9.9 7.1 10.8

^Excludes 920 households (12 unweighted observations) that did

not report household income for 1981.

^See Glossary.

^Percentages will not sum to 100 because some households

reported more than one source.

"^Estimate based on fewer than 10 unweighted observations.

11
Change in Poverty Status, 1976-81

A household's poverty status may change for a

number of economic and/or noneconomic reasons

(13, 17, 26).8 Being poor need not be permanent.

About 20 percent of poor households in 1976 were

not poor in 1981 (table 8). Nine percent not poor in

1976 became poor in 1981. However, most of those

poor in 1976 (80 percent] were still poor in 1981.

Other research has found a substantial turnover in

the U.S. poverty population during 1969-78, and only

a small fraction (about 3 percent) were persistently

poor [13], However, a typical profile of the poor cannot be assessed fully from the survey data. Data

were not available to determine the extent of the

area's poverty turnover prior to 1976 or between

1976 and 1981 (that is, the structure of the area's

shorter and longer term poor). The overall level of

poverty for the 5-year period remained unchanged

at a relatively high level.

Households Escaping Poverty. The area's employment growth may have helped some households

escape poverty. About 55 percent of the households

escaping poverty between 1976 and 1981 had more

earners in the household in 1981 than in 1976 (table

9). There were too few observations to specifically

identify any other particular event that allowed

these households to exit poverty. Households escaping poverty were more likely headed by whites (62

percent), men (72 percent), and people under 65

years old (72 percent).

Households Entering Poverty. When people leave

employment, some of their households may enter

poverty. Forty-six percent of households entering

poverty during 1976-81 had fewer earners in 1981

than in 1976 (table 9). Working only part of 1981

encouraged entry into poverty.^ Reduced hours

worked contributed to some households becoming

poor in 1981. There was a disproportionate share of

blacks and women among the poor (table 9).

Households Poor Both Years. Background and

demographic factors, such as race, gender, age, and

education, influence households remaining poor

over time (26, 47, 54). Within the study area, heads

of households remaining poor were mostly black.

Table 8—Change in poverty status of longer term resident

households in the 10-county Georgia area,

1976-81^

^The terms "temporary" and "permanent" poor are often used

to distinguish between those that move in and out of poverty from

those seemingly trapped belov^ the poverty Une [26]. Special data

(annual income from a longitudinal sample) are required to make

these two distinctions, but annual income data were not collected

between 1976 and 1981 in this area. While the temporary and

permanent distinctions could not be identified from the survey

data, these two groups probably exist.

9A household member was considered employed in any year if

he or she worked 1 or more weeks.

Item

Longer term Poverty status in 1981

resident

households Poor Not poor

Number Percent

Total longer term

resident households in 1981 52,150

Percent

24.6 75.4

Poverty status in

1976:

Poor 22.4 80.1 19.9

Not poor 77.6 8.6 91.4

^Official thresholds for 1976 and 1981 were used to determine

poverty status [47, 54], but only for those households reporting

income in both years.

female, had low levels of education, and had low

rates of participation in the labor force (table 9).

Nearly 55 percent had no one within the household

working during the 5-year period. These households'

heads were usually women and were evenly split

between heads over 65 years old and those under

65. Social Security and pubhc assistance were their

main economic support.

Employment does not assure escape from poverty.

Twelve percent of the households remaining poor

had more earners in 1981 than in 1976 (table 9).

Nearly 35 percent had one or more members employed in 1981. These households contained the

area's working poor, who were primarily headed by

blacks. Weekly wages for employed blacks in the

area were significantly below those of employed

whites [31]. Their lower educational attainment

appeared to limit their wages.

Strategy

Economic development to generate employment opportunities should not be viewed as the only antipoverty strategy or as a substitute for retirement

benefits and public assistance programs. Slightly

over half the households classed as poor in both

years contained elderly people who probably would

not seek employment. Thus, Social Security and

public assistance will remain important income

sources for the elderly, particularly for those

households headed by elderly women.

Promoting employment growth will not necessarily

remedy the poverty problem, especially for the

working poor if they have limited education or job

12
Table 9—Poverty status and household characteristics of longer term resident households in the 10-county Georgia area,

1976 and 1981

Longer term

resident

households

Poverty status in 1981:

Characteristics Remained poor^ Escaped

poverty^

Entered

poverty^ Not poor^

Number

Total longer term resident households 52.150 9,360 2.330 3,470 36,990

Household nominal money income:

1981

1976

15,440

10,380

4,640

3,120

Dollars

12,680

4,610

4,710

7,660

19.360

12,830

Household income status ratio:

1981

1976

Average change in income status

2.1312

2.3100

-.1888

0.6483

.6651

-.0168

Ratio value

1.4913

.8329

.6584

Number

0.6204

1.7381

-1.1177

2.6886

2.8865

-.1979

Earners per household in 1981 1.2 .5 1.3 .6 1.4

Source of income in 1981:^' '^ Earnings

Employment-related

Public assistance

Retirement

Other

72.6

5.9

13.6

41.3

26.2

34.7

1.7«

38.5

59.0

1.7^

Percent

63.4

2.1«

25.4«

56.4

20.6«

53.1

8.2«

22.9«

50.0

10.7«

85.0

7.0

5.7

35.1

32.7

Household head:

Race—^

White

Black

70.0

30.0

44.6

55.4

61.7

38.3«

57.3

42.7

78.1

21.9

Gender—

Male

Female

74.2

25.8

46.4

53.6

72.2

27.8«

58.3

41.7

82.8

17.2

Age in 1981—

16-34 years

35-49 years

50-64 years

65 years and older

15.6

30.8

25.5

28.1

11.1

20.7

17.2

51.0

12.0«

40.0«

19.9«

28.1«

Years

16.9«

26.8

31.4

24.9«

16.8

33.2

27.4

22.6

Average 52.9 61.1 52.3 52.3 50.9

Education in 1981—

Less than high school

High school

Beyond high school

56.8

24.6

18.6

91.9

3.9«

4.2«

Vevceni

7A

10.1«

12.5«

Years

72.8

17.4«

9.8«

45.6

31.2

23.2

Average years of school completed 9.9 6.8 9.2 8.0 10.9

Status of employed household

members in 1981:

Same number of earners

More earners

Fewer earners

No earners both years

48.6

19.5

11.9

20.0

22.4

12.3

10.6«

54.7

Percent

16.1«

54.9

0

30.0«

39.8

5.7«

45.9

8.6«

58.2

20.4

10.1

11.3

Status of household size in 1981:

Same number of members

More members

Fewer members

66.1

19.1

14.8

67.9

17.8

14.3

61.9

32.8«

5.3«

47.8

27.0«

25.2«

67.5

18.0

14.5

^Household poor in 1976 and 1981. ^Household poor in 1976 but not in 1961. ^Household not poor in 1976 but poor in 1981.

'^Household not poor in both 1976 and 1981. ^See Glossary. «Estimate based on fewer than 10 unweighted observations. ^Percentages will not sum to 100 because some households reported more than one source of income.

13
skills. The working poor may need relocation, training, supplemental income, or wage-subsidy programs

to improve their economic plight. Some households

escaped poverty, and employment gains assisted

their exit. However, those escaping poverty by 1981

represented 19.9 percent of the 1976 poverty households, or 4 percent of all households analyzed. But 7

percent of all households analyzed entered poverty

in this 5-year period. Therefore, the area's employment growth did not decrease the area's overall

poverty rate.

Implications

Not all households benefited directly from the

growth-related jobs in the 10-county Georgia area.

Not all households' incomes increased as employment

opportunities expanded; incomes for some households

even declined. The overall income status did not

rise significantly when employment grew impressively; it declined significantly in the Georgia study

area. Gains in income status among some households can be offset by declines among other

households. Thus, the dynamic nature of changes

among households can unexpectedly affect an

area's average household income status. And, the

growth in employment opportunities did not alter

the incidence of poverty among the analyzed

households.

Understanding the relationship between employment

growth and changes in household income status (a

relative measure) is particularly important as many

government programs target public assistance according to relative income. Thus, it is important to

know how an improved income status is distributed

among an area's population when employment

opportunities expand.

Findings in both Georgia and Kentucky show that

employment growth does not directly benefit a

substantial portion of households that have continuously resided in the area. Most of these households

had a stable employment history in both areas. For

household members already in the labor force, income levels are not likely to rise substantially

unless labor is in short supply and area wage rates

increase dramatically (not the case during the

periods examined in either study area]. Also, both

areas had a sizable elderly population, typical of

many other nonmetro areas. The elderly participate

less often in the labor market and so do not usually

take advantage of new job opportunities created by

employment growth. The economic position of elderly

households did not significantly fall below that of

their younger counterparts as employment expanded.

The transfer payments, particularly payments indexed to the CPI, maintained the elderly's income

status.

Rural development strategies to create jobs will not

raise income status for all households. Increased

income status among the households analyzed in

both study areas was not the dominant trend as

employment opportunities grew. Income status for

some households rose significantly as additional

members entered the labor force. But others lost

ground when members quit working. Some households gained income status when young adults left

their parent's households, reducing the number of

persons sharing the income. But other households,

headed by younger people who expanded their

household size, had a decline in income status.

Gains made by some households can be offest by

declines in other households. Thus, overall net

effect on income status can be negligible, as for

Kentucky, or significantly negative as observed in

Georgia.

Changes can run counter to what one would expect

from employment growth. Income status declined

significantly when household members left the labor

force or reduced annual hours at work. A reduction

in total annual hours worked was prevalent in

Georgia, in contrast to that for Kentucky. The

Nation's economic downturn in 1981 may have

played a role in the Georgia area. Kentucky's study

period of 1974-79 was at a time when the Nation

was coming out of its economic slowdown of 1974.

Also, one might expect employment growth to improve the distribution of income status gains among

the area's households. However, an equalizing effect

on the distribution of income status gains was not

achieved in either study area.

Both studies indicate that local governments or community organizations can expand employment

without hurting the income status of households

headed by females, blacks, or elderly, especially if

the transfer payments system remains intact.

Expanding employment, while enabling some

households to escape poverty, did not reduce the

area's overall poverty rate because age or disability

prevented a substantial share of the poor in both

study areas from working. A wage subsidy, training,

or relocation program may be needed to lift the

working poor households out of poverty. If the goal

of policies is to reduce differences in income status,

particularly for blacks (data on blacks was not

available in Kentucky), females, or the elderly, then

current income security programs should be maintained while employment growth is stimulated.

14
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15
(24) Larson, D.K., and C.K. White. Will Employment

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of Industrial Grow^th on the Private Sector of

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103-18.

(35) Siger, L., and W.B. Chfford. fíuraJ Industrialization, Agr. Exp. Stat. Bull. 521. WV Univ.

Mar. 1966.

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(44)

(45)

(46)

(47)

(36) Smith, E.D. "Restrictions on Policy Alternatives Relating to Underdeveloped Regions of

Developed Counties," JournaJ of Farm

Economics, Vol. 48, No. 5 (Dec. 1961), pp.

1227-31.

(37) , and others. "Economic Development: Panacea or Perplexity for Rural

Areas?" fluraJ Sociology, Vol. 36, No. 3 (Mar.

1971), pp. 173-85.

(38) Stevens, J.B., and L.T. Wallace. Impact of Industrial Development on Howard County, Indiana, Agr. Exp. Stat. Bull. 784. Purdue Univ.

Aug. 1964.

(39) Summers, G.F. "Large Industry in a Rural

Area: Demographic, Economic, and Social Impacts," Working paper RID73.19. Univ. Wise,

Dept. Rural Sociology, 1973.

(40) Summers, CF., and F. Clemente. "Industrial

Development, Income Distribution, and Public

Policy," fíurai Sociology, Vol. 41, No. 2 (Summer 1976), pp. 248-68.

(41) Summers, CF., and others, industria] invasion

of Nonmetropolitan America. NY: Praeger

Publishers, 1976.

(42) Taylor, L., and A.R. Jones, fíurai Life and Urbanized Society. NY: Oxford Univ. Press, 1964.

Till, T.E., Jr. "Industrialization and Poverty in

Southern Nonmetropolitan Labor Markets,"

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pp. 18-24.

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Census. fiousehoJd and Family Characteristics,

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Series P-20, No. 371, 1982.

. Money income of Households,

Famiiies, and Persons in the United States,

1981: Current Population Reports, Series P-60,

No. 137, 1983.

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State and County Data, Part 10, Georgia,

AC78-A-10. June 1981.

. Characteristics of the Population

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16
(48)

(49)

(50)

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(52)

(53)

_. General Population Characteristics: Georgia, PG80-1-B12, 1982.

. General Social and Economic

Characteristics: Georgia, PC80-1-C112, 1983.

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1-Cl, 1983.

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Characteristics: United States Summary, PC80-

1-Bl, 1983.

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the Value of Noncosh Benefits: 1979 to 1962,

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Below the Poverty Level, 1976: Current Population Reports, Series P-60, No. 115, 1978.

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Consequences of Rural Industrialization."

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17
Appendix: The Regression Analysis

Two types of analyses were used to examine why

household income status changed among longer

term resident households during the employment expansion. A multiple regression analysis explores

and identifies which factors explain changes in

household income status. The text tables show how

the factors identified by the regression analysis

were distributed among households, then examine

differences in income status changes among population groups, such as blacks and whites, women and

men, and elderly and nonelderly. Regression

analysis findings then supported the tabular

analysis findings.

Changes in income status was the dependent

variable, that is, it depends on changes in other factors. This multiple regression model, developed for

longer term resident households, helps determine

changes in relative household income status

(CHWRB) between 1981 and 1976:i

CHWRB = f(CHS, CE, SI, 176, D)

where: CHS = Household structural variables,

CE = Employment-related change

variables,

SI = Households reporting unearned

sources of income,

176 = Household well-being levels for

1976 (transformed to real 1981

dollars), and

D = Characteristics of household heads.

increased household size increases the denominator

in the 1981 income status ratio, lowering the household's income status over the 5 years. If fewer

household members were being supported in 1981,

the household's income status rises [14, 26].

The household head's gender (HDSEX] and race

(HORACE) are discrete variables (not numerically

continuous as in household size), with female heads

denoted by 1 and male heads by 0. Black household

heads were denoted by 1 and whites by 0. There

was a substantial gap in income status between

households headed by men and women and between

those headed by whites and blacks. Variables

HDSEX and HDRACE were used to examine whether

the income status gap widened between men and

women and between blacks and whites. A significant regression coefficient means that the change in

income status was substantially different, thus the

income status gap widened. A significant change in

income status infers that expanded employment

realigns the distribution of jobs such that women

and blacks are placed in a relatively poorer

economic position [40).

Employment-Related Variables. Employmentrelated variables (employment status, amount of

hours worked, and wages earned) also affects income

status. Change in household member's employment

status (CHGEAR) was the total number of household

members working in 1981 minus those working in

1976. With all other effects held constant, increased

number of household members working by 1981 increases income status.

Regression Model, Variables, and Relationships

The five general categories of independent

variables determine income change (9, 12, 14, 23, 26,

30, 40] (see above equation).

Household Structure. Household structure (size,

gender, and race) may affect a household's income

status. Changes in household size (CHGSIZ), the

number of household members in 1981 minus those

in 1976, is a continuous variable in that it could

have a negative value, zero for no change, or a

positive value. With all other effects held constant.

^The expanded estimates were not used so as not to generate

greatly reduced standard errors on the regression coefficients, a

more acurate test of this hypothesis (10). The Statistical Analysis

System (SAS) regression computer program package obtained

weighted least-square estimates of the parameters. Thus, the

relative importance of each observation is taken into account

rather than treating each observation (such as household) as

having an equal weight. MulticoUinearity—high correlation

between independent variables—did not exist in the model.

Change in annual hours worked (CHGHRS) was the

total annual hours worked by all working household

members in 1981 minus that for 1976. CHGHRS included only those households where the CHGEAR

variable was 0 (persons in the household were

employed and the number employed did not change

during 1976-81) so as not to introduce multicollinearity and generate large standard errors. When

annual hours worked increased, such as a householdmember switching from part- to full-time

employment, the household's income status increases. Likewide, the household's income status

falls when annual hours worked declined such as

from an extended layoff.

Wage rates can change substantially over 5 years.

Inflation effects were eliminated, and thus changes

in household head's wages (CHGHWG) measures

real change in weekly wages from 1976 to 1981.

The 1976 weekly wage was adjusted to 1981 levels

from the national Consumer Price Index (CPI). Income status improved when the head's real weekly

18
wage rose faster than the inflation rate. The area's

expanded job opportunities should increase the

demand for workers and pressure wage rates upward. So if the head's wage rate rose faster than

inflation, the subsequent gain in household income

status would likely be due to improved employment

possibilities or management's desire to keep trained

workers, particularly workers with high skills.

Unearned Sources of Income. Income from unearned

sources (other than employment salaries) also affects a household's income status (see Glossary for

types of income). Households may have gained, lost,

maintained, or never have had transfer payments or

"other" sources of income between 1976 and 1981.

A 1 indicates the existence of either source of

income in 1976 or 1981. Discrete variables were

used here to measure only the effects of changes in

households reporting transfer payments (INCTRP,

DEGTRP) and changes in "other" sources of income

(INCOTI, DEGOTI) (app. table 1). Variables NGGTRP

and NGGOTI represent households reporting transfer payments and "other" sources of income in both

years, respectively. Households that never received

transfer payments or never received "other" sources

of income were omitted. Income status should increase for households reporting transfer payments

in 1981 but not in 1976 (INGTRP) or "other" sources

of income in 1981 but not in 1976 (INGOTI). Household income status should fall for variables DEGTRP

or DEGOTI, compared with the omitted classes.

Household Well-Being. Five variables measure

changes in income status for households in different

income classes in 1976 (household income for 1976

was adjusted to 1981 dollars). Ghanges in income

status were analyzed by classifying the longer term

resident households into approximate quintiles, and

by entering each household's quintile into the regression model using a series of discrete (0, 1) variables

(RHIl, RHI2, RHI4, RHI5). The third quintile variable

(RHI3) was the omitted class against which the changes

in household income status of the remaining four

quintiles were tested. A positive regression coefficient

indicates that income status for households in that

quintile rose more than those in the omitted quintile.

These variables were entered only to analyze changes

in income status among the longer term resident

households in various positions in the income

distribution.

Characteristics of Household Head. Profiling the

household head allows examining what characteristics

(if any) affects the household's income status. Age,

education, health, and residency status were variables

entered into the regression equation to examine other

characteristics of longer term resident household

heads. These variables were the control variables in

the regression. These variables show how income

status changed between other household groups,

such as for elderly and nonelderly household heads

and for households where the head had some college

education and no college education.

Heads of households were distributed according to

age (under 35, 35-49, 50-64, and 65 and older) by

using a series of discrete (0, 1) variables (HAGEl,

HAGE2, HAGE3, and HAGE4). Research suggests that

job expansion might lower the economic status for

older people since they do not compete for jobs as

much as younger people [40]. Younger household

heads should compete more for jobs, hence greater

income status gains, than would elderly household

heads. The variable HAGE2 (35-49 years) was omitted

because these households had the largest employment gains during 1976-81. Therefore, with all other

effects held constant, employment gains would increase income status.

Education of the household head was classed into

less than high school (HEDGl), completed high

school (HEDG2), and beyond high school (HEDG3).

The more educated household heads should have

relatively greater gains in wages, leading to relatively greater household income status gains.

Household heads educated beyond high school

(HEDG3) were omitted.

Ghanged health condition alters the amount worked

annually, thus a household's income status. Ghanged

heahh status of the household head (GHGHLT) was

specified using three discrete values. A -1 denotes

a health condition that Hmited the amount of work

in 1981 but not in 1976. Zero denotes that the

head's health condition remained unchanged or

never existed. A + 1 denotes a health condition that

limited the amount of work in 1976 but not in 1981.

Longer term resident households were made up of

local residents and early inmigrants. Local residents

lived in the study a:ea continuously between

January 1967 through January 1982. Early inmigrants

were those who moved to the area between January

1967 and December 31, 1976, but resided in the

area during 1976-81. Early inmigrants competed

more successfully for jobs and also obtained higher

paying jobs than local residents so they should

display higher income gains from the area's employment expansion, thus raising their household income

status. Early inmigrant residence status (EMG) was

a discrete variable, indicated by a 1. Local residents

were the omitted class.

19
Appendix table 1—Regression results: Changos in household income status for longer term resident households in the

Georgia study area

Independent variables

Household structure:

Change in household size (absolute number)

Households headed by women; where 1 = head

was female, 0 = head was male

Households headed by blacks; where 1 = head

was black, 0 = head was white

Employment-related:

Change in household member's employment

status (absolute value)

Change in annual hours worked by household

members (absolute hoursy*

Change in head's real weekly wage (absolute

dollars)

Unearned sources of household income (0, 1

variables):

Reported transfer payments in 1981 but not in

1976

Reported transfer payments in both years

Reported transfer payments in 1976 but not in

1981

Reported "other" income in 1981 but not in

1976

Reported "other" income in both years

Reported "other" income in 1976 but not in

1981

Household income in 1976 (1981 dollars):

Under $7,300

$7,300-11,799

$16,300-25,499

$25,500 and over

Characteristics of head:

AgeUnder 35 years

50-64 years

65 years and older

Education—

Less than high school

High school

Head's health status changed^

Head was an early inmigrante

Variable's Regression coefficients

prefix Unstandardized^ Standardized^

CHGSIZ -0.27103 -0.2603

HDSEX -.1086 -.0496

HORACE .0272 .0130

CHGEAR .43833 .3176

CHGHRS .00033 .1617

CHGHWG .00313 .2211

INCTRP

NCGTRP

DECTRP

INCOTI

NCGOTI

DECOTI

RHIl

RHI2

RHI4

RHI5

HAGEl

HAGE3

HAGE4

HEDCl

HEDC2

CHGHLT

EMG

.0925

-.0848

-.2369

.48733

.37153

.2382

.2660

.1054

-.33523

-I.OO893

-0.0972

.0058

-.0612

-.2606

-.1758

.0754

.2102

.0384

.0420

.0451

.1361

.1501

.0296

.1129

.0451

.1395

.4102

-0.0367

.0027

-.0287

-.1349

-.0786

.0288

.0756.

Constant = 0.1269

Adjusted R-squared = 0.4125

F = 21.2153

n = number of original or unweighted observations 7197

^Regression coefficients expressed in terms of the dependent variable: shows changes in household income status.

^Shows the relative importance of the regression coefficients: the higher the value, regardless of sign, the more likely it helps explain

changes in income status.

3The variable was significant at the 0.01 confidence level.

^Change in annual hours worked were limited to only those households containing working members where the number working did not

change during 1976-81.

^Changes were: -1 = health good in 1976 but poor in 1981; 0 = no change; and + 1 = poor in 1976 but good in 1981.

^Household heads that moved into the area between January 1, 1967, and December 31, 1976.

^Excludes 18 households because of nonresponses regarding 1976 or 1981 household income data. These responses were random and

not associated with any particular primary sampling unit or household characteristic, such as race, gender, or age of household head.

20
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Find out from tíñese related reports just what can happen when rapid economic growth

comes to a rural area.

Will Employment Growth Benefit All Households?

A Case Study in Nine Nonmetro Kentucky Counties, by

Donald K. Larson and Claudia K. White. RDRR-55.

Overall economic growth In a rural area will probably

not benefit all households or residents in that area. In a

nine-county area of south central Kentucky, rapid

employment growth between 1974 and 1979 did create

new job opportunities. However, only 18 percent of the

households had members who took advantage of the

new jobs. The employment growth also did not reduce

the area's overall poverty level. About as many households fell into poverty as left the poverty ranks during

the study period. Some population groups, such as

households headed by women, remained economically

disadvantaged despite the area's growth. Other groups,

such as the elderly, maintained their income status by

relying on public and private income transfer programs.

Distribution of Employment Growth in Nine Kentucky

Counties: A Case Study, by Stan G. Daberkow, Donald

K. Larson, Robert Coltrane, and Thomas A. Carlln.

RDRR-41.

Rapid employment growth between 1974 and 1979 in a

nine-county study area of south central Kentucky provided job opportunities for local residents and for persons with limited labor force experience. But recent inmigrants held a disproportionate share of better paying

executive jobs. This case study, which examines the

distributional effects of rapid employment growth in a

nonmetro area, shows that inmigrants also held a

disproportionate share of jobs in growing business

establishments. Although manufacturing was the major

economic force in the study area in January 1980, jobs

in the private service sector increased more than in

other sectors.

Distribution of Employment Growth in 10 Georgia Counties: A Case Study, by James D. Schaub and Victor J.

Oliveira. RDRR-53.

Rapid economic growth in a 10-county rural area in

south Georgia during 1976-81 favored employment of

whites, men, and inmigrants. They earned higher

average weekly salaries than blacks, women, and longterm residents. This study of growth in a mixed

manufacturing- and agricultural-based economy flows

from a research project on the impacts of economic expansion in nonmetro economies with different industrial bases. The Georgia area's job growth was greatest

in the trade and service sectors. Few businesses used

public sector funds to start or expand their operations.

Government employed 25 percent of the area's wage

and salary workers.

Distribution of Employment Growth in 10 Ozark Counties:

A Case Study, by Victor J. Oliveira and John A. Kuehn.

RDRR-66.

Service industries, some manufacturing, and a concentration of retirees can provide a strong economic base

for a rural area. Rapid growth of service businesses,

especially wholesale and retail firms and other businesses related to tourism and recreation, attracted jobseekers to a 10-county area in the Ozark Mountains of

Arkansas and Missouri during 1978-84. Newcomers

were better educated and held higher paying jobs than

long-term residents. The recreation businesses provided

increased job opportunities for youths but tended to

pay low wages and be seasonal, based on tourism patterns. Manufacturing industries provided about a fourth

of the jobs in the area, many of them higher paying

than jobs in the service sector. The area also benefited

from the stable incomes and buying patterns of retirees

who made up 33 percent of the adult residents.

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