(1281)

APPENDIX H. DATA ON POVERTY

CONTENTS

Measuring Poverty

Trends in the Overall Poverty Rate

Poverty Rates for Individuals in Selected Subgroups of the

Population

Poverty Rates for Families

Poverty Under Alternative Measures of Income and Price

Inflation

Poverty by Metro Area and State

Trends in Family Composition and Income, 1967–98

Definitions and Methods

Income Measure

Income Shares

Trends in Pretax Cash Incomes by Type of Family

Pretax Adjusted Family Income

Average Family Cash Income By Family Type

Antipoverty Effectiveness of Various Cash and Noncash

Transfers

References

MEASURING POVERTY

When the Federal Government began measuring poverty in the

early 1960s, the continued existence of poor people in a time of the

‘‘Affluent Society’’ seemed anomalous. Official concern soon translated into efforts to measure the size of the poverty population, and

the search began for programmatic ways to alleviate poverty. The

first rough estimates of the incidence of poverty were based on survey data indicating that families generally spent about one-third of

their income on food. A poverty level income was then calculated

by using as a yardstick the amount of money necessary to purchase

the lowest cost ‘‘nutritionally adequate’’ diet calculated by the Department of Agriculture (roughly equivalent to the current Thrifty

Food Plan). This price tag was multiplied by three to produce a

poverty threshold. The assumption underlying this procedure is

that if a family did not have enough income to buy the lowest cost

nutritionally adequate diet, and twice that amount to buy other

goods and services, it was ‘‘poor.’’ Adjustments were made for the

size of the family, the sex of the family head, and for whether the

family lived on a farm. Farm families were assumed to need less

cash income because their needs could be met partially by farm

products, particularly food. The adjustments for sex of the family

head and for farm-nonfarm residence were abolished in 1981. Policy officials made a major change to the basic approach for calculating the poverty threshold in 1969. Rather than multiplying the cost

1282

1 All poverty trend information is based upon published Census Bureau data contained in Current Population Reports, Series P–60, Nos. 124, 140, 145, 149, 154, 157, 161, 166, 168, 174, 180,

and 185. These figures may differ with other parts of this report which provide a more refined

breakdown of this age category. Data for blacks, the aged, and nonaged population were not

available for the years 1961–65.

of the Thrifty Food Plan by three to establish the poverty threshold, officials decided to simply increase the previous year’s threshold by the change in the Consumer Price Index (CPI).

In addition to this major change, the Census Bureau made minor

revisions in its method of estimating the poverty threshold four

times—in 1966, 1974, 1979, and 1981. These revisions changed the

estimate of the poverty rate. The first two revisions slightly reduced the estimated number of poor, while the more recent revisions slightly increased the number. In 1984, the Census Bureau

also revised its method of imputing missing values for interest income, which slightly lowered the estimated poverty rate.

Data on income and poverty after 1987 may not be comparable

to data in earlier years because of changes in the methods used by

the Census Bureau to process survey results. This new processing

system was applied to 1987 data so that 1988 and 1987 data are

comparable. Revised 1987 data are denoted as 1987R. The new

processing system increased aggregate income by 0.9 percent and

lowered the poverty rate for 1987 by 0.1 percent.

The tables in this subsection provide poverty data calculated

using the official Census definition of poverty. The Census definition of poverty has remained fairly standard over time and is useful for measuring progress against poverty. Under this definition,

poverty is determined by comparing pretax cash income with the

poverty threshold.

Table H–1 shows the population, number of persons in poverty,

and the poverty rate in 1998 by age, race, region and family type.

In 1998, 12.7 percent (34.5 million persons) of the total U.S. population lived in poverty. Of all demographic groups shown, poverty

was second highest among female-headed families with children

(33.1 percent). Among children under age 18, 18.9 percent, or 13.5

million children, lived in poverty in 1998.

The weighted average poverty thresholds for families of various

sizes for selected years between 1959 and 1998 are presented in

table H–2.

TRENDS IN THE OVERALL POVERTY RATE 1

In 1959, the overall poverty rate for individuals in the United

States was 22 percent, representing 39.5 million poor persons (tables H–3 and H–4). Between 1959 and 1969, the poverty rate declined dramatically and steadily to 12.1 percent. As a result of a

sluggish economy, the rate increased slightly to 12.5 percent by

1971. In 1972 and 1973, however, it began to decrease again. The

lowest rate over the entire 24-year period occurred in 1973, when

the poverty rate was 11.1 percent. At that time roughly 23 million

people were poor, 42 percent less than were poor in 1959.

TABLE H–1.—POVERTY STATUS OF PERSONS BY AGE, ETHNICITY, REGION, AND FAMILY TYPE, 1998

Category Poverty rate (percent) Population (thousands) Percent of total population Number of poor (thousands) Percent of poverty population Poverty difference 1997–98 P

d

Age:

Under 18 .................................................................... 18.9 71,378 26.3 13,467 39.0

¥647

18–64 ......................................................................... 10.5 167,327 61.7 17,623 51.1

¥462

65 and older .............................................................. 10.5 32,394 12.0 3,386 9.8 10

Race/ethnicity:

White .......................................................................... 10.5 222,837 82.0 23,454 68.0

¥942

Black .......................................................................... 26.1 34,877 12.9 9,091 26.4

¥25

Hispanic 1 ................................................................... 25.6 31,515 11.6 8,070 23.4

¥238

Region:

Northeast .................................................................... 12.3 51,472 19.1 6,357 18.4

¥117

Midwest ...................................................................... 10.3 63,155 23.3 6,501 18.9 8

South .......................................................................... 13.7 94,640 34.9 12,992 37.7

¥757

West ........................................................................... 14.0 61,522 22.7 8,625 25.0

¥233

Family type: 2

Unrelated individuals ................................................. 19.9 42,539 15.7 8,478 24.6

¥209

Female-headed families ............................................ 33.1 39,000 14.4 12,907 37.4

¥164

Married-couple families ............................................. 6.2 177,042 65.3 10,982 31.9 58 Unrelated subfamilies ................................................ 48.8 1,288 4.8 628 1.8

¥152 

Total .................................................................. 12.7 271,059 26.3 34,476 100.0

¥1,098

1 Persons of Hispanic origin may be of any race.2 About 1.5 million families are in categories other than the ones listed here.

Source: U.S. Census Bureau (1999).

TABLE H–2.—WEIGHTED AVERAGE POVERTY THRESHOLDS FOR NONFARM FAMILIES OF SPECIFIED SIZE, SELECTED YEARS 1959–98

Calendar year

Unrelated individuals Two persons Families of more than two persons

All ages Under age 65 Age 65 or older All ages Head under age 65 Head age 65 or older Three persons Four persons Five persons Six persons 

1959 ...................................................... $1,467 $1,503 $1,397 $1,894 $1,952 $1,761 $2,324 $2,973 $3,506 $3,944 1960 ...................................................... 1,490 1,526 1,418 1,924 1,982 1,788 2,359 3,022 3,560 4,002 1965 ...................................................... 1,582 1,626 1,512 2,048 2,114 1,906 2,514 3,223 3,797 4,264 1970 ...................................................... 1,954 2,010 1,861 2,525 2,604 2,348 3,099 3,968 4,680 5,260 1975 ...................................................... 2,724 2,797 2,581 3,506 3,617 3,257 4,293 5,500 6,499 7,316 1980 ...................................................... 4,190 4,290 3,949 5,363 5,537 4,983 6,565 8,414 9,966 11,269 

1983 ...................................................... 5,061 5,180 4,775 6,483 6,697 6,023 7,938 10,178 12,049 13,630 

1984 ...................................................... 5,278 5,400 4,979 6,762 6,983 6,282 8,277 10,609 12,566 14,207 1985 ...................................................... 5,469 5,593 5,156 6,998 7,231 6,503 8,573 10,989 13,007 14,696 1986 ...................................................... 5,572 5,701 5,255 7,138 7,372 6,630 8,737 11,203 13,259 14,986 1987 ...................................................... 5,778 5,909 5,447 7,397 7,641 6,872 9,056 11,611 13,737 15,509 1988 ...................................................... 6,022 6,155 5,674 7,704 7,958 7,157 9,435 12,092 14,304 16,146 1989 ...................................................... 6,310 6,451 5,947 8,076 8,343 7,501 9,885 12,674 14,990 16,921 1990 ...................................................... 6,652 6,800 6,268 8,509 8,794 7,905 10,419 13,359 15,792 17,839 1991 ...................................................... 6,932 7,086 6,532 8,865 9,165 8,241 10,860 13,924 16,456 18,587 1992 ...................................................... 7,143 7,299 6,729 9,137 9,443 8,487 11,186 14,335 16,952 19,137 1993 ...................................................... 7,363 7,518 6,930 9,414 9,728 8,740 11,522 14,763 17,449 19,718 1994 ...................................................... 7,547 7,710 7,108 9,661 9,976 8,967 11,821 15,141 17,900 20,235 1995 ...................................................... 7,763 7,929 7,309 9,933 10,259 9,219 12,158 15,569 18,408 20,804 

1996 ...................................................... 7,995 8,163 7,525 10,145 10,507 9,484 12,273 16,183 19,516 22,447 1997 ...................................................... 8,183 8,350 7,698 10,473 10,805 9,712 12,802 16,400 19,380 21,886 1998 ...................................................... 8,316 8,480 7,818 10,634 10,972 9,862 13,003 16,660 19,680 22,228 

1 Poverty threshold for seven persons, not seven persons or more.

Source: U.S. Census Bureau, technical papers.

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TABLE H–3.—NUMBER OF PERSONS IN POVERTY FOR INDIVIDUALS IN SELECTED

DEMOGRAPHIC GROUPS, 1959–98

[Numbers in thousands]

Year Overall Aged Children 1

Individuals in

female-headed

families 2

Black Hispanic

origin 3 White

1959 .......... 39,490 5,481 17,552 7,014 9,927 NA 28,484

1960 .......... 39,851 NA 17,634 7,247 NA NA 28,309

1961 .......... 39,628 NA 16,909 7,252 NA NA 27,890

1962 .......... 38,625 NA 16,963 7,781 NA NA 26,672

1963 .......... 36,436 NA 16,005 7,646 NA NA 25,238

1964 .......... 36,055 NA 16,051 7,297 NA NA 24,957

1965 .......... 33,185 NA 14,676 7,524 NA NA 22,496

1966 .......... 28,510 5,114 12,389 6,861 8,867 NA 19,290

1967 .......... 27,769 5,388 11,656 6,898 8,486 NA 18,983

1968 .......... 25,389 4,632 10,954 6,990 7,616 NA 17,395

1969 .......... 24,147 4,787 9,691 6,879 7,095 NA 16,659

1970 .......... 25,420 4,793 10,440 7,503 7,548 NA 17,484

1971 .......... 25,559 4,273 10,551 7,797 7,396 NA 17,780

1972 .......... 24,460 3,738 10,284 8,114 7,710 2,414 16,203

1973 .......... 22,973 3,354 9,642 8,178 7,388 2,366 15,142

1974 .......... 23,370 3,085 10,156 8,462 7,182 2,575 15,736

1975 .......... 25,877 3,317 11,104 8,846 7,545 2,991 17,770

1976 .......... 24,975 3,313 10,273 9,029 7,595 2,783 16,713

1977 .......... 24,720 3,177 10,288 9,205 7,726 2,700 16,416

1978 .......... 24,497 3,233 9,931 9,269 7,625 2,607 16,259

1979 .......... 26,072 3,682 10,377 9,400 8,050 2,921 17,214

1980 .......... 29,272 3,871 11,543 10,120 8,579 3,491 19,699

1981 .......... 31,822 3,853 12,505 11,051 9,173 3,713 21,553

1982 .......... 34,398 3,751 13,647 11,701 9,697 4,301 23,517

1983 .......... 35,303 3,625 13,911 12,072 9,882 4,633 23,984

1984 .......... 33,700 3,330 13,420 11,831 9,490 4,806 22,955

1985 .......... 33,064 3,456 13,010 11,600 8,926 5,236 22,860

1986 .......... 32,370 3,477 12,876 11,944 8,983 5,117 22,183

1987 .......... 32,221 3,563 12,843 12,148 9,520 5,422 21,195

1988 .......... 31,745 3,481 12,455 11,972 9,356 5,357 20,715

1989 .......... 31,528 3,363 12,590 11,668 9,302 5,430 20,785

1990 .......... 33,585 3,658 13,431 12,578 9,837 6,006 22,326

1991 .......... 35,708 3,781 14,341 13,824 10,242 6,339 23,747

1992 4 ....... 38,014 3,928 15,294 14,205 10,827 7,592 25,259

1993 .......... 39,265 3,755 15,727 14,636 10,877 8,126 26,226

1994 .......... 38,059 3,663 15,289 14,380 10,196 8,416 25,379

1995 .......... 36,425 3,318 14,665 14,205 9,872 8,574 24,423

1996 .......... 36,529 3,428 14,463 13,796 9,694 8,697 24,650

1997 .......... 35,574 3,376 14,113 13,494 9,116 8,308 24,396

1998 .......... 34,476 3,386 13,467 12,907 9,091 8,070 23,454

1 All children including unrelated children.

2 Does not include females living alone.

3 Hispanic origin may be of any race; it is an overlapping category.

4 For 1992, figures are based on 1990 Census population controls.

NA—Not available.

Source: U.S. Census Bureau (1996, 1999).

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TABLE H–4.—POVERTY RATES FOR INDIVIDUALS IN SELECTED DEMOGRAPHIC GROUPS,

1959–98

Year Overall Aged Children 1

Individuals in

female-headed

families 2

Black Hispanic

origin 3 White

1959 ................ 22.4 35.2 27.3 49.4 55.1 NA 18.1

1960 ................ 22.2 NA 26.9 48.9 NA NA 17.8

1961 ................ 21.9 NA 25.6 48.1 NA NA 17.4

1962 ................ 21.0 NA 25.0 50.3 NA NA 16.4

1963 ................ 19.5 NA 23.1 47.7 NA NA 15.3

1964 ................ 19.0 NA 23.0 44.4 NA NA 14.9

1965 ................ 17.3 NA 21.0 46.0 NA NA 13.3

1966 ................ 14.7 28.5 17.6 39.8 41.8 NA 11.3

1967 ................ 14.2 29.5 16.6 38.8 39.3 NA 11.0

1968 ................ 12.8 25.0 15.6 38.7 34.7 NA 10.0

1969 ................ 12.1 25.3 14.0 38.2 32.2 NA 9.5

1970 ................ 12.6 24.6 15.1 38.1 33.5 NA 9.9

1971 ................ 12.5 21.6 15.3 38.7 32.5 NA 9.9

1972 ................ 11.9 18.6 15.1 38.2 33.3 22.8 9.0

1973 ................ 11.1 16.3 14.4 37.5 31.4 21.9 8.4

1974 ................ 11.2 14.6 15.4 36.5 30.3 23.0 8.6

1975 ................ 12.3 15.3 17.1 37.5 31.3 26.9 9.7

1976 ................ 11.8 15.0 16.0 37.3 31.1 24.7 9.1

1977 ................ 11.6 14.1 16.2 36.2 31.3 22.4 8.9

1978 ................ 11.4 14.0 15.9 35.6 30.6 21.6 8.7

1979 ................ 11.7 15.2 16.4 34.9 31.0 21.8 9.0

1980 ................ 13.0 15.7 18.3 36.7 32.5 25.7 10.2

1981 ................ 14.0 15.3 20.0 38.7 34.2 26.5 11.1

1982 ................ 15.0 14.6 21.9 40.6 35.6 29.9 12.0

1983 ................ 15.2 13.8 22.3 40.2 35.7 28.0 12.1

1984 ................ 14.4 12.4 21.5 38.4 33.8 28.4 11.5

1985 ................ 14.0 12.6 20.7 37.6 31.3 29.0 11.4

1986 ................ 13.6 12.4 20.5 38.3 31.1 27.3 11.0

1987 ................ 13.4 12.5 20.3 38.1 32.4 28.1 10.4

1988 ................ 13.0 12.0 19.5 37.2 31.3 26.7 10.1

1989 ................ 12.8 11.4 19.6 35.9 30.7 26.2 10.0

1990 ................ 13.5 12.2 20.6 37.2 31.9 28.1 10.7

1991 ................ 14.2 12.4 21.8 39.7 32.7 28.7 11.3

1992 4 ............. 14.8 12.9 22.3 39.0 33.4 29.6 11.9

1993 ................ 15.1 12.2 22.7 38.7 33.1 30.6 12.2

1994 ................ 14.5 11.7 21.8 38.6 30.6 30.7 11.7

1995 ................ 13.8 10.5 20.8 36.5 29.3 30.3 11.2

1996 ................ 13.7 10.8 20.5 35.8 28.4 29.4 11.2

1997 ................ 13.3 10.5 19.9 35.1 26.5 27.1 11.0

1998 ................ 12.7 10.5 18.9 33.1 26.1 25.6 10.5

1 All children including unrelated children.

2 Does not include females living alone.

3 Hispanic origin may be of any race; it is an overlapping category.

4 For 1992, figures are based on 1990 Census population controls.

NA—Not available.

Source: U.S. Census Bureau (1996, 1999).

1287

2 Income figures reported in this subsection were from the March Current Population Survey

(CPS) computer data tapes. There is a tendency in surveys, such as the CPS, for respondents

to underreport their incomes by both source and amount. Reporting of income from earnings

is usually more accurate than reporting of income from other sources. In general, CPS estimates

of amounts or numbers of recipients of various cash and noncash transfer programs tend to be

lower than administrative program totals. As a result, the data are a better reflection of general

trends and patterns than of absolute numbers with income from a particular source, or the

amount received. Unrelated subfamilies are included as families in this analysis. The Census

Bureau excludes such families from its poverty counts.

The poverty rate increased by 1975 to 12.3 percent, and then oscillated around 11.5 percent through 1979. After 1978, however,

the poverty rate rose steadily, reaching 15.2 percent in 1983. Between 1983 and 1993, the poverty rate moved up and down within

a narrow range of about 2.5 percentage points, declining somewhat

during economic recoveries and rising somewhat during economic

downturns. However, poverty declined every year after 1993, reaching 12.7 percent in 1998, the last year for which data are available.

The 1998 rate was the lowest since 1979. The children’s rate of

18.9 percent was the lowest since 1980.

POVERTY RATES FOR INDIVIDUALS IN SELECTED

SUBGROUPS OF THE POPULATION

As table H–4 illustrates, there are substantial differences between the overall poverty rate and the poverty rates of individuals

in certain demographic subgroups. Most notably, blacks, individuals in female-headed households, and Hispanics have poverty

rates that greatly exceed the average. The poverty rates for individuals in female-headed households remained above 35 percent over

the 1959–97 period. However, it declined every year after 1991 and

in 1998 reached its lowest level ever at 33.1. The poverty rate for

blacks and Hispanics has remained near 30 percent during the

1980s and mid 1990s. However, both rates declined every year

after the early 1990s and for blacks it reached its lowest level ever

in 1998 at 26.1. The poverty rate for the aged, which exceeded the

overall poverty rate in 1959, fell quickly beginning in the 1960s. By

1998 it had reached the remarkably low level of 10.5, a decline of

over 70 percent since 1979. The poverty rate for whites was below

the overall poverty rate throughout the entire 1959–98 period. It

was 10.5 percent in 1998. Unfortunately, the poverty rate for children exceeded the overall poverty rate every year between 1959

and 1998.

POVERTY RATES FOR FAMILIES 2

Table H–5 shows the composition of the poverty population for

various demographic groups for selected years between 1959 and

1998. Table H–6 presents poverty data for families and unrelated

individuals (individuals living alone). Female-headed families with

children and unrelated individuals are more likely to be poor than

other families with children or families with aged members. In

1998, 39.2 percent of female-headed families with children were

poor, compared with 7.8 percent of male-present families. Although

only 6.4 percent of all families with an aged member were poor,

20.4 percent of all aged unrelated individuals were poor. About

19.8 percent of nonaged unrelated individuals were poor.

TABLE H–5.—COMPOSITION OF POVERTY POPULATION FOR SELECTED DEMOGRAPHIC GROUPS,1 SELECTED YEARS 1959–1997

[Percent of poverty population]

Demographic group

Year

1959 1966 1975 1985 1987 1988 1990 1991 1992 1993 1994 1996 

Aged .................................................................... 13.9 17.9 12.8 10.5 10.9 11.0 10.9 10.6 10.3 9.6 9.6 9.4 Children ............................................................... 43.6 42.6 42.1 38.8 39.4 38.7 39.5 39.5 39.7 39.5 39.6 38.8 Nonaged adults ................................................... 42.5 39.5 45.1 50.7 49.7 50.3 49.7 49.9 49.9 50.9 50.8 51.8 Individuals in female-headed families 2 ............ 26.3 36.0 47.4 49.5 52.6 52.9 53.4 54.0 52.6 52.4 52.8 53.5 

Individuals in all other families 2 ....................... 73.7 64.0 52.6 50.5 47.4 47.1 46.6 46.0 47.4 47.6 47.2 46.5 

Blacks .................................................................. 25.1 31.1 29.2 27.0 29.8 29.5 29.3 28.7 28.5 27.7 26.8 26.5 Whites .................................................................. 72.1 67.7 68.7 69.1 65.6 65.3 66.5 66.5 66.4 66.8 66.7 67.5 Other races .......................................................... 2.8 1.2 2.1 3.9 4.7 5.3 4.2 4.8 5.1 5.5 6.5 6.0 Hispanic origin 3 .................................................. NA NA 11.6 15.8 16.9 16.9 17.9 17.8 20.0 20.7 22.1 23.8 

Individuals in families with children 4 ............... NA NA NA NA NA NA 68.0 68.4 68.4 68.7 68.0 66.7 

Male present .............................................. NA NA NA NA NA NA 30.7 30.3 31.4 32.0 31.2 30.1 Female head ............................................... NA NA NA NA NA NA 37.2 38.1 37.0 36.7 36.9 36.5 

Individuals in all other families ......................... NA NA NA NA NA NA 32.0 31.6 31.6 31.3 32.0 33.3 

1 Demographic data are for March of the following year.2 Includes unrelated or single individuals.3 Hispanic origin may be of any race; therefore numbers add to more than 100 percent.4 Family includes related children under 18.

NA—Not available.Note.—Estimates for 1987–94 are not comparable to prior years due to processing changes in the Current Population Survey.Source: Table prepared by the Congressional Research Service. 1959–85 estimates based on data from U.S. Census Bureau (1986); 1986–98 data from March Current P

Survey.

TABLE H–6.—POVERTY RATES BY FAMILY TYPE, SELECTED YEARS 1987–97, AND PERCENTAGE OF FAMILIES AND UNRELATED INDIVIDUALS BY 

OF TOTAL INCOME TO POVERTY THRESHOLD, 1997 1 2

Family type

Poverty rate, 1987–98 Ratio of total income to poverty threshold, 1998 

1987 1990 1991 1993 1996 1997 1998 Under 0.50 0.50– 0.99 1.00– 1.24 1.25– 1.49 1.50– 1.99 2.00– 2.99 3.00 and over

Total:

Families .................... 11.0 11.1 11.8 12.7 11.3 10.6 10.3 4.2 6.1 3.6 3.9 8.6 17.1 56.6 Unrelated individuals 20.4 20.7 21.1 22.1 20.8 20.8 19.9 8.6 11.4 6.6 6.0 10.6 17.9 38.9 

No members age 65 or

older:

Families .................... 11.9 12.2 13.0 14.0 12.4 11.7 11.2 4.8 6.5 3.5 3.7 8.0 15.7 57.9 Unrelated individuals 19.1 19.1 19.6 21.3 20.7 20.8 19.8 10.2 9.6 4.8 4.3 8.4 18.0 44.7 

Any member age 65 or

older:

Families .................... 7.2 6.4 6.7 7.0 6.4 6.1 6.4 1.8 4.6 3.7 4.8 11.2 22.8 51.1 Unrelated individuals 23.9 24.7 24.9 24.1 20.9 21.0 20.4 3.5 16.9 12.2 11.2 17.3 17.3 21.6 

Families with children:

Female-headed family, no husband

present ................. 46.3 45.3 47.6 46.7 42.3 41.5 39.2 18.9 20.3 9.0 6.8 12.4 16.9 15.8 

Male-present families 8.1 8.5 9.0 9.9 8.5 8.0 7.8 2.4 5.4 3.3 4.2 9.4 19.0 56.4 

1 Based on Census (‘‘Orshansky’’) poverty levels.2 Unrelated subfamilies are treated as separate families. Related subfamilies are not treated as separate families but as members of the family with whom they reside.

Source: Table prepared by the Congressional Research Service based on March Current Population Survey for selected years.

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POVERTY UNDER ALTERNATIVE MEASURES OF INCOME AND PRICE

INFLATION

The Census Bureau publishes data that reflect two adjustments

in the official definition of poverty. The first of these is an alternative inflation adjustment. The official poverty line is based on a

procedure developed in 1965 with yearly adjustments for inflation

using the CPI. The CPI, in turn, is based on the yearly change in

prices of goods used by most Americans. Prior to 1983, the CPI

measured housing prices using a procedure that included changes

in the asset value of owned homes. Because the asset value of

houses was growing so much faster than the consumption value,

the inflation rate that included asset values was excessive.

In 1983 the Bureau of Labor Statistics began using a rental

equivalence approach to measure the value of housing. The official

CPI–U inflation rate is based on the asset value of housing prior

to 1983 and rental equivalence in 1983 and later. To provide a consistent time series, the Bureau constructed an experimental series,

the CPI–U–X1, for 1967–82 based on rental equivalence.

The general effect of using the CPI–U–X1 is to lower inflation in

past years which in turn has the effect of lowering poverty thresholds for those years. A lower threshold means that fewer people are

poor. As can be seen by comparing the first two columns in table

H–7, adjusting the poverty threshold using the CPI–U–X1 reduced

the official poverty rate by about 1.4 or 1.5 percentage points in

most years between 1979 and 1998. In 1998, the CPI–U–X1 reduced the poverty rate by 1.4 percentage points (11 percent or 3.8

million persons).

The second adjustment in the official poverty rate made by the

Census Bureau is to expand the definition of income to take into

account some noncash income, including government benefits.

Under the procedures by which the official poverty rate is calculated, only cash is counted in determining whether a family is

poor; income from cash welfare programs counts, but benefits from

food programs, medical care, social services, education and training, and housing are not included in the calculation. Moreover, because government spending on means-tested noncash benefits has

increased more rapidly than spending on means-tested cash benefits over the years, ignoring noncash benefits may be an increasingly serious omission if we want a broad picture of the impact of

government programs on poverty.

The question of how to value noncash benefits raises a variety

of substantive and technical issues. The Census Bureau has been

working on these issues, consulting with academic experts, sponsoring conferences, and issuing technical reports for many years. In

1997, the Bureau published a consistent historical data series, covering the years 1979–91, to trace the impact of a variety of taxes

and noncash benefits on poverty and income. The measurement of

noncash benefits extended beyond government spending for the

poor to include government spending programs such as Medicare

that are not means tested as well as to employer contributions to

employee health plans.

To examine the impact on income and poverty of various State

and Federal taxes, government noncash programs, employerVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 01290 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.023 WAYS3 PsN: WAYS3
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provided benefits, and so forth, the Bureau has adopted a framework that includes 15 definitions of income. By comparing income

under these multiple definitions, it is possible to estimate the impact of the various income sources on the average income and the

poverty rates of individuals and families.

TABLE H–7.—POVERTY UNDER ALTERNATIVE MEASURES OF INCOME AND PRICE

INFLATION, 1979–98

Year

Poverty rate Percentage reduction in

official poverty associated

with:

Official

(CPI–U)

Using

CPI–U–X1

CPI–U–X1

with

noncash

benefits 1 CPI–U–X1

CPI–U–X1

with

noncash

benefits 1

1979 ............................. 11.7 10.6 7.9 9.4 32.5

1980 ............................. 13.0 11.5 8.6 11.5 33.8

1981 ............................. 14.0 12.2 9.8 12.9 30.0

1982 ............................. 15.0 13.2 10.6 12.0 29.3

1983 ............................. 15.2 13.7 11.0 9.9 27.6

1984 ............................. 14.4 12.8 10.4 11.1 27.8

1985 ............................. 14.0 12.5 10.1 10.7 27.9

1986 ............................. 13.6 12.2 9.8 10.3 27.9

1987 ............................. 13.4 12.0 9.5 10.4 29.1

1988 ............................. 13.0 11.7 9.5 10.0 26.9

1989 ............................. 12.8 11.4 8.9 10.9 30.5

1990 ............................. 13.5 12.1 9.5 10.4 29.6

1991 ............................. 14.2 12.7 9.9 10.6 30.3

1992 ............................. 14.8 13.4 10.5 9.5 29.1

1993 ............................. 15.1 13.7 10.7 9.3 29.1

1994 ............................. 14.5 13.2 9.8 9.0 29.7

1995 ............................. 13.8 12.3 9.0 10.9 34.8

1996 ............................. 13.7 12.2 8.9 10.9 35.0

1997 ............................. 13.3 11.8 8.8 11.3 33.8

1998 ............................. 12.7 11.3 8.2 11.0 35.4

Percent change:

1979–89 .............. 9.4 7.5 12.7 NA NA

1979–98 .............. 8.5 6.6 3.8 NA NA

1 Including income from capital gains, health insurance supplements to wage or salary income, nonmeans-tested and means-tested government cash transfers, other means-tested government noncash

transfers, the value of Medicare, the value of regular-price school lunches, the value of Medicaid, the

earned income credit (EIC), less Social Security payroll taxes, less Federal income taxes (excluding the

EIC), less State income taxes.

NA—Not available.

Source: U.S. Census Bureau (1998 and various years).

Income definition 14 is of interest to those concerned with the

impact of government means-tested, noncash benefits on poverty

rates. Unlike the official poverty rate, which includes only cash

government benefits, definition 14 includes the effects of State and

Federal taxes, employer-provided benefits, non-means-tested government benefits, and means-tested noncash benefits including

1292

food stamps, housing, school lunch, and the fungible value of Medicaid.

By comparing the official poverty rate with the definition 14 poverty rate, we can determine the impact on poverty of noncash benefits and government taxes. The third column in table H–7 is the

poverty rate for years 1979–98 based on definition 14 and using the

CPI–U–X1 deflator. Compared with the rate based on CPI–U–X1

(column 2), including taxes and noncash benefits (and a few other

types of income that have little impact on poverty) in the poverty

calculation reduces the poverty rate in 1998 by 3.1 percentage

points. Compared with the official poverty rate, the reduction is 4.5

percentage points or 35 percent.

The question of whether to include medical benefits when measuring poverty has great implications on poverty rates. The valuation of medical benefits is particularly difficult. Most poverty experts believe that medical coverage should not by itself raise poor

individuals above the poverty line or constitute a major portion of

the poverty threshold. The development of the poverty thresholds

did not take into account medical costs. Although poor persons are

clearly better off with medical coverage, such benefits cannot be

used by recipients to meet other needs of daily living. Also, since

health insurance costs are not imputed to the incomes of those

above poverty, it seems inappropriate to count health benefits as

income for those below the poverty line.

POVERTY BY METRO AREA AND STATE

Tables H–8 and H–9 present poverty rates for nonmetro and

metro areas and by race in nonmetro and metro areas respectively.

Table H–8 shows that poverty rates have increased more in metro

than in nonmetro areas (18.3 percent compared to 6.7 percent, respectively, between 1978 and 1998). Moreover, since 1983 poverty

has decreased much more in nonmetro areas (21.3 percent) than

metro areas (10.9 percent). Poverty in central cities is higher than

in either nonmetro areas or metro areas and progress in reducing

poverty over the same 1983–98 period (6.6 percent) is slower. Table

H–9 shows that poverty among blacks and Hispanics is much higher than poverty among whites in metro areas, nonmetro areas, and

inner cities.

Table H–10 presents poverty rates by State for 1988–98, based

on 3-year averages. The data are shown as 3-year averages due to

poor statistical reliability of State poverty rates in a single year, resulting from small sample sizes.

TRENDS IN FAMILY COMPOSITION AND INCOME, 1967–98

In the past 30 years, the level of and inequality among family

incomes has changed significantly according to all income measures. Between 1967 and 1973, income increased for all quintiles,

and income inequality went down. As measured by the Congressional Budget Office, over this time period the lowest quintile experienced an increase in mean adjusted family income (AFI; family

income divided by the poverty threshold for the appropriate family

size) of 30 percent, while income for the highest quintile grew by

21 percent. Since, 1973, however, the trend has been markedly difVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 01292 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.023 WAYS3 PsN: WAYS3
1293

ferent. Income of the bottom quintile has declined, while income for

the highest quintile has risen.

TABLE H–8.—POVERTY RATES IN NONMETRO AND METRO AREAS, 1978–98

[Persons in percent]

Year Nonmetro

Metro

Total Central

cities only

1978 ............................................................................. 13.5 10.4 15.4

1979 ............................................................................. 13.8 10.7 15.7

1980 ............................................................................. 15.4 11.9 17.2

1981 ............................................................................. 17.0 12.6 18.0

1982 ............................................................................. 17.8 13.7 19.9

1983 ............................................................................. 18.3 13.8 19.8

1984 ............................................................................. NA NA NA

1985 ............................................................................. 18.3 12.7 19.0

1986 ............................................................................. 18.1 12.3 18.0

1987 ............................................................................. 17.0 12.3 18.3

1988 ............................................................................. 16.0 12.2 18.1

1989 ............................................................................. 15.7 12.0 18.1

1990 ............................................................................. 16.3 12.7 19.0

1991 ............................................................................. 16.1 13.7 20.2

1992 1 ........................................................................... 16.9 14.2 20.9

1993 ............................................................................. 17.2 14.6 21.5

1994 ............................................................................. 16.0 14.2 20.9

1995 ............................................................................. 15.6 13.4 20.6

1996 ............................................................................. 15.9 13.2 19.6

1997 ............................................................................. 15.9 12.6 18.8

1998 ............................................................................. 14.4 12.3 18.5

Percent increase, 1978–98 .......................................... 6.7 18.3 20.1

Percent change, 1983–98 ........................................... ¥21.3 ¥10.9 ¥6.6

1 For 1992, figures are based on 1990 Census population controls.

NA—Not available.

Source: U.S. Census Bureau (1996 and various years).

TABLE H–9.—PERCENTAGE OF PERSONS IN POVERTY BY RACE, BY METRO AND

NONMETRO RESIDENCE, 1998

Race Nonmetro

Metro

Total Central

cities only

All races ....................................................................... 14.4 12.3 18.5

White ............................................................................ 12.4 10.0 14.9

Black ............................................................................ 29.8 25.5 29.3

Hispanic 1 ..................................................................... 26.9 25.5 29.7

1 Persons of Hispanic origin may be of any race.

Source: U.S. Census Bureau (1999).

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TABLE H–10.—STATE POVERTY RATES: 3-YEAR AVERAGES, 1988–90 THROUGH 1996–

98

State 1988–90 1990–92 1991–93 1992–94 1993–95 1994–96 1996–98

Alabama .......... 19.1 18.4 17.9 17.0 18.0 16.8 14.7

Alaska ............. 11.0 11.1 10.4 9.8 8.8 8.5 8.8

Arizona ............ 14.0 14.5 15.6 15.7 15.8 17.5 18.1

Arkansas ......... 19.8 18.1 18.3 17.6 16.7 15.8 17.2

California ........ 13.3 15.1 17.0 17.5 17.6 17.2 16.3

Colorado .......... 12.8 11.6 10.4 9.9 9.2 9.5 9.3

Connecticut ..... 4.3 8.0 9.1 9.7 9.7 10.7 9.9

Delaware ........ 8.5 7.3 8.6 8.8 9.6 9.1 9.5

District of

Columbia .... 18.1 20.0 21.8 22.6 23.3 22.5 22.7

Florida ............. 13.5 15.0 16.4 16.1 16.3 15.1 13.9

Georgia ............ 14.9 16.9 16.1 15.1 13.2 13.6 14.3

Hawaii ............. 11.1 9.9 9.0 9.3 9.0 10.4 12.3

Idaho ............... 13.3 14.6 14.1 13.4 13.2 12.8 13.2

Illinois ............. 13.0 14.2 14.3 13.9 12.8 12.3 11.1

Indiana ............ 12.3 13.5 13.3 12.6 11.8 10.3 8.6

Iowa ................. 10.0 10.4 10.5 10.8 11.1 10.8 9.4

Kansas ............ 9.7 11.2 12.2 13.0 12.9 12.3 10.1

Kentucky .......... 17.0 18.6 19.6 19.5 17.9 16.7 15.5

Louisiana ......... 23.2 22.3 23.4 25.5 23.9 22.0 18.6

Maine .............. 12.2 13.5 14.4 12.8 12.0 10.6 10.6

Maryland ......... 9.6 10.2 10.3 10.7 10.2 10.4 8.6

Massachusetts 9.3 10.6 10.8 10.2 10.5 10.3 10.3

Michigan ......... 13.2 14.0 14.4 14.4 13.9 12.5 10.8

Minnesota ........ 11.6 12.6 12.6 12.1 10.8 10.2 9.9

Mississippi ...... 25.0 24.6 24.4 23.1 22.7 21.3 18.3

Missouri ........... 12.9 14.6 15.6 15.8 13.7 11.5 10.4

Montana .......... 15.5 15.1 14.7 13.4 13.9 14.6 16.4

Nebraska ......... 11.1 10.0 10.2 9.9 9.6 9.5 10.8

Nevada ............ 9.7 11.9 12.0 11.9 10.7 10.1 9.9

New Hampshire 6.9 7.4 8.7 8.8 7.6 6.5 8.4

New Jersey ....... 7.9 9.6 10.4 10.1 9.3 8.7 9.0

New Mexico ..... 21.1 21.4 20.7 20.0 21.3 24.0 22.4

New York ......... 13.4 15.0 15.9 16.4 16.6 16.7 16.6

North Carolina 12.6 14.4 14.9 14.8 13.7 13.0 12.5

North Dakota ... 12.5 13.4 12.7 11.2 11.2 11.1 13.2

Ohio ................. 11.5 12.4 13.0 13.2 12.9 12.8 11.6

Oklahoma ........ 15.9 17.0 18.6 18.5 17.9 16.8 14.8

Oregon ............. 10.3 11.3 12.3 11.7 11.6 11.6 12.8

Pennsylvania ... 10.6 11.2 12.1 12.5 12.6 12.1 11.3

Rhode Island ... 8.0 10.0 11.4 11.3 10.7 10.6 11.8

South Carolina 16.2 17.2 18.1 17.2 17.5 15.6 13.3

South Dakota .. 13.6 14.0 14.5 14.6 14.4 13.6 13.0

Tennessee ........ 17.8 16.5 17.4 17.1 16.6 15.3 14.5

Texas ............... 17.0 17.1 17.9 18.3 18.0 17.7 16.1

Utah ................ 8.7 10.1 11.0 9.4 9.0 8.0 8.5

Vermont ........... 9.0 11.3 11.1 9.4 9.3 10.2 10.6

Virginia ............ 10.9 10.1 9.7 10.0 10.2 11.1 11.3

Washington ..... 9.1 9.8 11.0 11.7 12.1 12.0 10.0

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TABLE H–10.—STATE POVERTY RATES: 3-YEAR AVERAGES, 1988–90 THROUGH 1996–

98—Continued

State 1988–90 1990–92 1991–93 1992–94 1993–95 1994–96 1996–98

West Virginia ... 17.2 19.4 20.8 21.0 19.2 17.9 17.6

Wisconsin ........ 8.5 10.0 11.2 10.8 10.0 8.8 8.6

Wyoming .......... 10.5 10.4 11.2 11.0 11.6 11.1 12.0

Total ....... 13.1 14.1 14.8 14.5 14.5 14.0 13.2

Source: U.S. Census Bureau (1999).

While the general trends in families’ economic well-being are

similar regardless of how measured, varying results for the distribution of family incomes are obtained depending on which income measure is used. Three commonly used income measures (all

adjusted for inflation) are family cash income, family cash income

per capita, and AFI. While no measure perfectly captures the economic well-being of families, AFI most accurately accounts for differences in family size by incorporating the scale implicit in the official Federal poverty thresholds.

Family composition in the United States has undergone pronounced changes since 1973 (table H–11). The number of married

couples with children has been almost flat since 1973. By contrast,

the number of families headed by a single mother grew by 104 percent over the entire 1973–98 period, the number of nonelderly

childless units grew by 94 percent, and the number of elderly childless units grew by nearly 60 percent.

Changes in family composition are also reflected in the number

of persons and earners per family. The average family has become

smaller, reflecting in part relatively fewer families with children

(and fewer children in those families). The average family also had

fewer earners in 1998 than in 1973.

DEFINITIONS AND METHODS

Analyzing trends in the distribution of family incomes over time

requires making decisions about a number of variables: How should

variation in incomes be measured? What is the appropriate timeframe over which to examine changes? How should inflation be

taken into account? And, finally, what is the appropriate measure

of income to use?

TABLE H–11.—CHANGES IN POPULATION, FAMILY COMPOSITION, AND NUMBER OF EARNERS PER FAMILY, SELECTED YEARS 1973–98

Family group

Year Percent change

1973 1979 1989 1998 1973–79 1979–89 

Distribution of families by family type (in thousands):

Families with children ......................................................... 31,098 32,166 34,768 37,758 3.4 8.1 

Married couples with children .................................... 24,798 24,166 24,378 24,872

¥2.5 0.9 

Single mothers with children ..................................... 4,126 5,650 7,123 8,425 36.9 26.1 

Nonelderly childless units 1 ................................................. 28,183 35,730 46,467 54,780 26.8 30.1 

Elderly childless units 2 ....................................................... 13,884 16,331 20,428 22,058 17.6 25.1 

Total number of families ................................... 73,166 84,229 101,663 114,596 15.1 20.7 

Distribution of persons by family type (in thousands):

Families with children ......................................................... 134,248 130,426 135,381 147,486

¥2.8 3.8 

Married couples with children .................................... 108,976 101,318 99,471 102,603

¥7.0

¥1.8 

Single mothers with children ..................................... 14,240 18,132 21,504 25,657 27.3 18.6 

Nonelderly childless units 1 ................................................. 50,148 60,514 77,025 87,276 20.7 27.3 

Elderly childless units 2 ....................................................... 23,129 26,778 33,440 36,279 15.8 24.9 

Total number of persons ................................... 207,525 217,718 245,846 271,040 4.9 12.9 

Average number of persons per family:

Under 18 .............................................................................. 0.94 0.75 0.63 0.62

¥20.2

¥16.1

18 to 64 ............................................................................... 1.64 1.55 1.50 1.46

¥5.5

¥3.4

65 and older ........................................................................ 0.30 0.28 0.29 0.28

¥6.7 3.9

Total ............................................................................ 2.87 2.59 2.42 2.37

¥9.8

¥6.6

Average number of earners per family:

Male earners ........................................................................ 0.81 0.75 0.69 0.66

¥7.4

¥8.5

Female earners .................................................................... 0.57 0.59 0.58 0.58 3.5

¥1.1 

Total ............................................................................ 1.39 1.34 1.27 1.24

¥3.6

¥5.2

1 Families in which both the head and spouse are under age 65 and there are no children under 18, and unrelated individuals under age 65. 2 Families in which either the head or spouse of head is 65 or older and there are no children under 18, and unrelated individuals 65 and older.

Source: Congressional Budget Office based on data from the March 1974, 1980, 1990 and 1999 Current Population Surveys.

1298

Measuring variation

Most of the data in this section are presented for income

quintiles, each of which represents one-fifth of the income distribution (either families or persons, as indicated). Quintiles are calculated by ordering all relevant family units from those with the

lowest income to those with the highest. For the analysis of

changes in incomes among different types of families, quintiles are

defined separately for each family type.

The analysis of changes in the distribution of family incomes

over time is done by examining average incomes, adjusted for inflation, by income quintile for specific types of families.

Timeframe

Most of the analysis focuses on data for 4 years: 1973, 1979,

1989, and 1998. The first 3 years reflect peaks in the business

cycle, and allow comparisons to be made across time periods in

which general economic conditions were broadly similar. Information is also presented for 1998, the most recent year for which data

are available.

Income data provided by the Census Bureau to outside researchers are frequently limited in certain ways both to protect confidentiality and to reduce the impact of reporting and coding errors on

statistical calculations. Beginning with information for 1995, the

Census Bureau substantially increased the maximum earnings it

reports for individuals on public-use computer files. As a result,

comparisons of incomes for high-income individuals and families in

years before and after 1995 may reflect actual differences in their

economic circumstances, differences in the way their income is

coded, or both.

To account for this reporting change, income data for 1998 are

presented here in two ways. First, individuals’ earnings for 1998

are limited to (or topcoded at) the same inflation-adjusted value

they were limited to in 1989 ($99,999 in 1989; $131,450 in 1998.)

Second, individuals’ earnings in 1998 are presented the same way

they are reported on the Census Bureau’s public-use files ($1 million upper limit).

Adjustment for inflation

To examine changes in family income over time, the dollar

amounts must be adjusted for inflation to compare actual buying

power. Adjustment for inflation is done here using the CPI–U–X1,

a revised version of the official Consumer Price Index that provides

a consistent treatment of the costs of home ownership over the

years examined. The CPI–U–X1 is an index of the cost of a market

basket of goods and services representing the average consumption

of the urban population (table H–7).

INCOME MEASURE

The purpose of examining the distribution of family incomes over

time is to analyze changes in family economic well-being. Two important issues in choosing an appropriate income measure are how

to adjust for differences in family size and what to include as income.

1299

One measure is real family cash income, which is the sum of

wage, salary, and self-employment earnings, private pension and

retirement income, interest and dividends, and government cash

transfers received by each family member. By this measure, which

takes inflation into account but not changes in family size, noncash

transfers, or taxes, the average income of families increased

throughout the 1973–98 period (table H–12, top panel). However,

the increases were uneven over time and among families with different levels of income. Regarding the former, the period from 1973

to 1979 was one of relatively slow growth in family income while

the period from 1979 to 1989 saw more rapid growth. The decade

from 1989 to 1998 saw moderate growth under one measure and

more robust growth under the income measure that allows more income in the top quintile. It is notable that for the 60 percent of

American families in the middle- and upper-income quintiles, average income growth over the decade of the 1980s is stronger than

growth during the preceding period and during the following period

when a similar method of computing income in the upper quintile

is used for both periods.

These figures for mean family growth over the three periods

mask very large differences in the patterns of growth in the five

income quintiles. The table shows clearly that progress in family

income over the entire 1973–98 period was negative for the bottom

two income quintiles. The drop in income was especially large for

the bottom quintile over the period 1989–98. By contrast, growth

was substantial for the upper two income quintiles, especially after

1979. Examining the income data by quintiles also shows why the

two measures of computing family income for the 1989 and 1998

period yield such different estimates of income growth; namely,

$43,350–$45,062 or 3.9 percent under one definition versus

$43,350–$47,209 or 8.9 percent under the other. Not surprisingly,

the decision to allow more income at the top of the distribution has

an impact only on the top income quintile (see the last two columns

of the top panel). More specifically, income growth in the top quintile under the more restricted income definition is only from

$102,159 to $109,301 or 7.0 percent, whereas growth under the

broader income definition used by the Congressional Budget Office

starting in 1995 is from $102,159 to $120,037 or 17.5 percent.

Thus, the difference in the two measures of average family income

growth over the 1989–98 period is accounted for entirely by the top

quintile.

Family cash income has several shortcomings as a measure of

change in economic well-being. Most notably, it fails to take into

account change in family size and composition: a family of one with

$30,000 in income is treated as being as well off as a family of four

with $30,000 in income. This assumption is inappropriate, however,

as a family of four requires more income to attain the same standard of living as a single person.

TABLE H–12.—ALTERNATIVE MEASURES OF FAMILY INCOME BY INCOME QUINTILE AND CHANGE OVER TIME, SELECTED YEARS 1967–98 FOR 

FAMILIES

[In 1998 dollars]

Income measure and quintile

Year Percent change

1967 1973 1979 1989 1998 1 1998 2 1973–79 1979–89 1989–98 1 1

Mean family cash income (family weighted):

Lowest ................................................................. NA $7,967 $7,879 $7,711 $7,247 $7,247

¥1.1

¥2.1

¥6.0

Second ................................................................. NA 20,265 20,120 19,858 19,844 19,844

¥0.7

¥1.3

¥0.1

Middle ................................................................. NA 34,058 33,663 33,945 34,007 34,007

¥1.2 0.8 0.2 

Fourth .................................................................. NA 49,881 50,845 53,072 54,912 54,912 1.9 4.4 3.5 Highest ................................................................ NA 87,237 89,689 102,159 109,301 120,037 2.8 13.9 7.0 

Total ........................................................... NA 39,884 40,440 43,350 45,062 47,209 1.4 7.2 3.9 

Mean adjusted family income (person weighted): 3

Lowest ................................................................. 0.69 0.90 0.90 0.86 0.85 0.85 0.0

¥4.3

¥1.3

Second ................................................................. 1.54 1.94 2.06 2.09 2.12 2.12 6.2 1.3 1.6 Middle ................................................................. 2.26 2.82 3.07 3.27 3.38 3.38 8.9 6.7 3.2 Fourth .................................................................. 3.16 3.94 4.32 4.77 5.04 5.04 9.6 10.4 5.7 Highest ................................................................ 5.67 6.87 7.39 8.84 9.58 10.63 7.6 19.6 8.4 

Total ........................................................... 2.66 3.29 3.55 3.97 4.19 4.40 7.9 11.7 5.8 

1 Individual’s earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989 topcoded value ($99,999) adjusted for inflation. 2 Individual’s earnings in 1998 are as reported on Census public-use files (which use a topcode value of $1 million).3 Family income divided by the poverty threshold. Thresholds are based on the 1989 distribution of family sizes, with no adjustment for the age of the head of househ

number of children.

NA—Not available.Note.—Income is pretax income.Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1968, 1974, 1980, 1990, and 1999.

1301

3Poverty thresholds for one- and two-person families in this section do not vary by the age

of the family head. The 1989 weighted averages are adjusted for inflation using the CPI–U–

X1.

An alternative approach to measuring family economic well-being

is to take advantage of the family size adjustment implicit in the

official Federal poverty thresholds. This scale assumes, for example, that a family of four needs about twice as much income as a

single person to attain an equivalent standard of living (table H–

13). The equivalence scale implicit in the poverty thresholds may

not perfectly capture the disparate needs of families of different

sizes, but it yields a better assessment of relative economic wellbeing than making no adjustment (mean family cash income) or assuming no economies of scale (mean family cash income per capita).

TABLE H–13.—POVERTY THRESHOLDS AND EQUIVALENCE VALUES FOR DIFFERENT

FAMILY SIZES, 1998

Family size (persons)

Official

poverty

threshold

Adjusted

poverty

threshold

Equivalence

value 1

1 ............................................................................. $8,316 $7,633 1.00

2 ............................................................................. 10,634 9,768 1.28

3 ............................................................................. 13,003 11,956 1.57

4 ............................................................................. 16,660 15,330 2.01

5 ............................................................................. 19,680 18,130 2.37

6 ............................................................................. 22,228 20,466 2.68

7 ............................................................................. 25,257 23,176 3.04

8 ............................................................................. 28,166 25,796 3.37

9 or more ............................................................... 33,339 30,818 4.01

1 Equivalence value is calculated based on the official poverty thresholds. Values would be slightly different using the adjusted poverty threshold because of different numbers of children in a family of a

given size.

Note.—Poverty thresholds shown for one- and two-person families are a weighted average of the separate official thresholds for elderly and nonelderly individuals and families. Adjusted poverty thresholds

are computed using the CPI–U–X1 to adjust for inflation. The official poverty threshold is adjusted for

inflation using the Consumer Price Index (CPI).

Source: Congressional Budget Office.

The AFI measure shown in the second panel of table H–12 incorporates the equivalence scale underlying the poverty thresholds.

Each family’s pretax cash income is divided by its poverty threshold, yielding family income as a multiple of poverty. Thus, for example, the average family in the middle quintile in 1998 had an

income of 3.38 times its poverty threshold. 3

By taking family size into account, the AFI measure greatly reduces the income losses in the bottom two quintiles over the 1973–

98 period. In fact, it completely eliminates income losses in the second quintile. It also increases the income gains experienced by the

top three income quintiles. The obvious conclusion to be drawn

from the comparison of the two income definitions is that taking

family size into account substantially improves the picture of family income changes over the years since 1973. However, as chart

H–1 shows, the difference in income between the top and bottom

1302

quintiles, even under the AFI measure, grew substantially throughout the 1973–98 period.

CHART H–1. RATIO OF AVERAGE ADJUSTED FAMILY INCOME OF HIGHEST QUINTILE TO

AVERAGE ADJUSTED FAMILY INCOME OF LOWEST QUINTILE, 1973–98

1 Individual’s earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989

topcoded value ($99,999) adjusted for inflation. 2 Individual’s earnings in 1998 are as reported on Census public-use files (which use a topcode value

of $1 million).

Source: Congressional Budget Office.

INCOME SHARES

Another way of tracking income trends is to look at changes in

the percentage share of income received by families in each quintile. Income shares measure whether families have gained or lost

in relative terms. That is, a given quintile may receive a smaller

share of real income even as its average income has increased.

All three income measures (family cash income, AFI, family income per capita) show broadly similar trends in the share of income received by each quintile (table H–14). In general, between

1973 and 1998, the shares of the lowest four quintiles fell, and the

share of the top quintile rose. The measures show somewhat different patterns of shares at any point in time, however. For example, in 1998 the top quintile had 50.9 percent of income under the

family cash income definition, but 48.3 percent under the AFI definition. In that same year, the bottom quintile had 3.1 percent

under the family cash income definition, but 3.9 percent under the

AFI definition and 3.6 percent under the family per capita definition. Even so, the income shares analysis, like the other analyses

in this section, generally shows that the top quintile had an increasing percentage of the income pie over the period 1973–98.

1303

TABLE H–14.—SHARES OF FAMILY INCOME BY INCOME QUINTILE FOR SELECTED YEARS

1967–98 FOR ALL FAMILIES

[In percent]

Income measure and quintile

Year

1967 1973 1979 1989 1994 1998 1 1998 2

Family cash income

(family weighted):

Lowest .................. NA 4.0 3.9 3.6 3.3 3.2 3.1

Second .................. NA 10.2 10.0 9.2 8.8 8.8 8.4

Middle .................. NA 17.1 16.6 15.7 15.2 15.1 14.4

Fourth ................... NA 25.0 25.1 24.5 24.6 24.4 23.3

Highest ................. NA 43.7 44.4 47.1 48.1 48.5 50.9

Adjusted family income

(person weighted): 3

Lowest .................. 5.2 5.5 5.1 4.3 4.0 4.1 3.9

Second .................. 11.6 11.8 11.6 10.5 10.2 10.1 9.6

Middle .................. 16.9 17.1 17.3 16.5 16.3 16.1 15.3

Fourth ................... 23.7 23.9 24.3 24.0 24.3 24.0 22.9

Highest ................. 42.6 41.7 41.7 44.6 45.2 45.7 48.3

Family cash income per

capita (person

weighted): 4

Lowest .................. NA 5.2 4.9 4.1 3.8 3.8 3.6

Second .................. NA 11.0 11.0 10.0 9.7 9.5 9.1

Middle .................. NA 16.1 16.3 15.6 15.5 15.2 14.5

Fourth ................... NA 23.1 23.6 23.4 23.5 23.4 22.3

Highest ................. NA 44.6 44.3 46.9 47.5 48.1 50.5

1 Individual’s earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989

topcoded value ($99,999) adjusted for inflation. 2 Individual’s earnings in 1998 are as reported on Census public-use files (which use a topcode value

of $1 million). 3 Family income divided by the poverty threshold. Thresholds are based on the 1989 distribution of

family sizes, with no adjustment for the age of the head of household or the number of children. 4 Total family income divided by the number of persons in the family.

Source: Congressional Budget Office tabulations of data from the March Current Population Survey,

1968, 1974, 1980, 1990, 1995, and 1999.

TRENDS IN PRETAX CASH INCOMES BY TYPE OF

FAMILY

As we have seen (table H–11), the composition of the typical family has changed over time. Compared with 1973 and 1979, there

were fewer persons in each family in 1998, on average, and married couples with children made up a smaller fraction of all families (table H–15). Additional insights can therefore be gained by

looking at changes in incomes for specific family types. This analysis distinguishes six types of family units:

1. Married couples with children, which are families composed of

a married couple living only with their own or related children,

at least one of whom is under age 18;

2. Single mothers with children, which are families composed of

unmarried, divorced, separated, or widowed mothers living

1304

only with their own or related children, at least one of whom

is under age 18;

3. Nonelderly childless families, which are families composed of

two or more related people living together, in which the family

head and the spouse of the head are both under age 65 and

there are no children under age 18;

4. Nonelderly unrelated individuals, which are people over age 17

and under age 65 who are not living with relatives;

5. Elderly childless families, which are families composed of two

or more related people living together, in which either the family head or the spouse of the head is 65 or older and there are

no children under age 18; and

6. Elderly unrelated individuals, which are people 65 or older

who are not living with relatives.

TABLE H–15.—AVERAGE FAMILY SIZE AND NUMBER OF FAMILIES, 1 BY FAMILY TYPE,

WEIGHTED BY FAMILIES, SELECTED YEARS 1973–98

Family type and year Persons per

family

Number of

families

(thousands)

Percent of

families

All families: 1

1973 .................................................. 2.87 73,166 100.0

1979 .................................................. 2.59 84,229 100.0

1989 .................................................. 2.42 101,663 100.0

1994 .................................................. 2.41 108,522 100.0

1998 .................................................. 2.37 114,596 100.0

All families with children:

1973 .................................................. 4.35 31,098 42.5

1979 .................................................. 4.09 32,166 38.2

1989 .................................................. 3.89 34,768 34.2

1994 .................................................. 3.90 37,413 34.5

1998 .................................................. 3.91 37,758 32.9

Married couples with children

1973 .................................................. 4.42 24,798 33.9

1979 .................................................. 4.23 24,166 28.7

1989 .................................................. 4.08 24,378 24.0

1994 .................................................. 4.11 25,079 23.1

1998 .................................................. 4.13 24,872 21.7

Single mothers with children:

1973 .................................................. 3.50 4,126 5.6

1979 .................................................. 3.24 5,650 6.7

1989 .................................................. 3.02 7,123 7.0

1994 .................................................. 3.04 8,351 7.7

1998 .................................................. 3.05 8,425 7.4

Nonelderly childless units:

1973 .................................................. 1.76 28,183 38.5

1979 .................................................. 1.68 35,730 42.4

1989 .................................................. 1.66 46,467 45.7

1994 .................................................. 1.62 49,580 45.7

1998 .................................................. 1.59 54,780 47.8

1305

TABLE H–15.—AVERAGE FAMILY SIZE AND NUMBER OF FAMILIES, 1 BY FAMILY TYPE,

WEIGHTED BY FAMILIES, SELECTED YEARS 1973–98—Continued

Family type and year Persons per

family

Number of

families

(thousands)

Percent of

families

Nonelderly childless families:

1973 .................................................. 2.32 16,363 22.4

1979 .................................................. 2.35 17,931 21.3

1989 .................................................. 2.44 21,257 20.9

1994 .................................................. 2.43 21,473 19.8

1998 .................................................. 2.42 22,823 19.9

Nonelderly unrelated individuals:

1973 .................................................. 1.00 11,820 16.2

1979 .................................................. 1.00 17,799 21.1

1989 .................................................. 1.00 25,210 24.8

1994 .................................................. 1.00 28,106 25.9

1998 .................................................. 1.00 31,956 27.9

Elderly childless units:

1973 .................................................. 1.64 13,884 19.0

1979 .................................................. 1.62 16,331 19.4

1989 .................................................. 1.64 20,428 20.1

1994 .................................................. 1.65 21,530 19.8

1998 .................................................. 1.64 22,058 19.2

Elderly childless families:

1973 .................................................. 2.17 7,590 10.4

1979 .................................................. 2.16 8,676 10.3

1989 .................................................. 2.23 10,600 10.4

1994 .................................................. 2.26 11,100 10.2

1998 .................................................. 2.24 11,494 10.0

Elderly unrelated individuals:

1973 .................................................. 1.00 6,294 8.6

1979 .................................................. 1.00 7,655 9.1

1989 .................................................. 1.00 9,828 9.7

1994 .................................................. 1.00 10,430 9.6

1998 .................................................. 1.00 10,564 9.2

1 Corresponds more closely to Census definition of household. Includes families of one person.

Source: Congressional Budget Office tabulations of data from the March Current Population Survey,

1974, 1980, 1990, 1995, and 1999.

In addition, results are also presented for four aggregates:

1. All families with children, which comprises married couples,

single mothers, and other families with children;

2. Nonelderly childless units, which comprises nonelderly childless families and nonelderly unrelated individuals;

3. Elderly childless units, which comprises elderly childless families and elderly unrelated individuals; and

4. All families, which comprises all families and unrelated individuals (i.e., the noninstitutional U.S. population).

Unless otherwise noted, the analysis of changes in income for

each family type listed above is based on quintiles computed for

that family type. This procedure permits comparisons within, but

1306

not across, family types; the quintile in which a particular family

is found says nothing about its place among all families, but measures its position in relation to families of the same type. For example, individuals in the middle quintile of single mothers with children may be in the lowest quintile of the all-families grouping.

Comparisons over time show how the incomes of families of a

given type compare with similar families at another time, not how

incomes have changed for a particular type of family. Families may

move among income quintiles as their incomes—or the incomes of

other families—rise or fall; they may also change types as their

members grow older, have children, marry, or divorce. In addition,

the average number of members and earners within a given type

of family may change over time, as may the characteristics of those

persons.

PRETAX ADJUSTED FAMILY INCOME

Trends in incomes for different family types show more variation

than trends for families overall. Between 1973 and 1979, adjusted

family income (AFI) grew 12.2 percent, on average, for all families

with children (table H–16). This compares with an income gain of

only 7.9 percent for all families. For families with children, average

AFI fell 4.5 percent during this period for the lowest quintile, from

88 percent of poverty to 84 percent of poverty. For the highest

quintile, average AFI rose 7.3 percent, compared with 7.6 percent

for all families. During the 1979–89 period, the bottom two

quintiles of families with children experienced reduced income, by

11.7 percent and 4.1 percent respectively for the lowest and second

quintiles; meanwhile, the highest quintile had an income increase

of 17 percent. These losses at the bottom were greater for families

with children than for all families.

Most of the divergence in incomes among families with children

reflects compositional change, as families of single mothers with

children became increasingly common (table H–11). The lowest

quintile of married couples with children had a 3.0-percent decline

in average AFI between 1979 and 1989; the lowest quintile of single mothers with children fared much worse, with a 22.0-percent

decline during the same period. These two family types as a whole,

however, showed income gains over the period: 11.2 percent for

married couples with children and 3.3 percent for single mothers

with children. More recently, during the 1989–98 period, all

quintiles of both family types have experienced rising incomes. Single mothers in the bottom quintile had a modest increase of 0.2

percent, and mother-headed families in the second and third

quintiles enjoyed more than twice the percentage increases of the

top two quintiles. These developments in the bottom quintiles are

almost certainly due to increased work by poor and low-income

mothers in general and by mothers leaving welfare in particular

(see Appendix L).

TABLE H–16.—AVERAGE PRETAX ADJUSTED FAMILY INCOME (INCOME AS A MULTIPLE OF POVERTY) BY FAMILY TYPE AND INCOME QUINTI

WEIGHTED BY PERSONS, SELECTED YEARS 1967–98

Family type and quintile

Year Percent change

1967 1973 1979 1989 1998 1 1998 2 1973– 79 1979–89 1989– 98 1 

All families:

Lowest .................................................................. 0.69 0.90 0.90 0.85 0.85 0.85 0.0

¥4.3

¥1.3

Second ................................................................. 1.54 1.94 2.06 2.09 2.12 2.12 6.2 1.3 1.6 Middle .................................................................. 2.26 2.82 3.07 3.27 3.38 3.38 8.9 6.7 3.2 Fourth ................................................................... 3.16 3.94 4.32 4.77 5.04 5.04 9.6 10.4 5.7 Highest ................................................................. 5.67 6.87 7.39 8.84 9.58 10.63 7.6 19.6 8.4 

Total ................................................................ 2.66 3.29 3.55 3.97 4.19 4.40 7.9 11.7 5.8 

All families with children:

Lowest .................................................................. 0.74 0.88 0.84 0.74 0.76 0.76

¥4.5

¥11.7 2.5 

Second ................................................................. 1.54 1.88 1.95 1.87 1.91 1.91 3.7

¥4.1 2.2 

Middle .................................................................. 2.13 2.65 2.84 2.93 3.03 3.03 7.2 3.3 3.3 Fourth ................................................................... 2.84 3.54 3.85 4.14 4.45 4.45 8.8 7.5 7.5 Highest ................................................................. 4.77 5.73 6.15 7.20 8.00 9.04 7.3 17.0 11.1 

Total ................................................................ 2.40 2.94 3.30 3.38 3.63 3.84 12.2 2.3 7.5 

Married couples with children:

Lowest .................................................................. 0.89 1.16 1.18 1.14 1.19 1.19 1.7

¥3.0 3.9 

Second ................................................................. 1.66 2.12 2.29 2.34 2.47 2.47 8.0 2.0 5.7 Middle .................................................................. 2.23 .84 3.12 3.34 3.61 3.61 9.9 7.1 8.0 Fourth ................................................................... 2.93 3.71 4.11 4.52 5.04 5.04 10.8 10.1 11.4 

TABLE H–16.—AVERAGE PRETAX ADJUSTED FAMILY INCOME (INCOME AS A MULTIPLE OF POVERTY) BY FAMILY TYPE AND INCOME QUINTI

WEIGHTED BY PERSONS, SELECTED YEARS 1967–98—Continued

Family type and quintile

Year Percent change

1967 1973 1979 1989 1998 1 1998 2 1973– 79 1979–89 1989– 98 1 

Highest ................................................................. 4.88 5.94 6.41 7.67 8.71 10.12 7.9 19.7 13.5 

Total ................................................................ 2.52 3.15 3.42 3.80 4.20 4.49 8.6 11.2 10.5 

Single mothers with children:

Lowest .................................................................. 0.21 0.33 0.32 0.25 0.25 0.25

¥3.0

¥22.0 0.2 

Second ................................................................. 0.59 0.71 0.75 0.64 0.74 0.74 5.6

¥14.0 14.8 

Middle .................................................................. 0.91 1.03 1.22 1.14 1.30 1.30 18.4

¥6.1 13.5 

Fourth ................................................................... 1.45 1.67 2.01 2.03 2.16 2.16 20.4 0.9 6.5 Highest ................................................................. 2.78 3.29 3.65 4.14 4.34 4.42 10.9 13.6 4.7 

Total ................................................................ 1.19 1.41 1.59 1.64 1.76 1.77 12.8 3.3 7.0 

Nonelderly childless units:

Lowest .................................................................. 0.80 1.22 1.24 1.19 1.07 1.07 1.6

¥3.7

¥10.4

Second ................................................................. 2.19 2.81 2.91 2.94 2.91 2.91 3.6 1.0

¥1.0

Middle .................................................................. 3.28 4.09 4.27 4.45 4.48 4.48 4.4 4.3 0.6 Fourth ................................................................... 4.47 5.49 5.78 6.29 6.46 6.46 5.3 8.8 2.7 Highest ................................................................. 7.42 8.95 9.35 10.94 11.69 13.02 4.5 17.0 6.8 

Total ................................................................ 3.63 4.51 4.71 5.16 5.32 5.59 4.4 9.6 3.1 

Nonelderly childless families:

Lowest .................................................................. 1.03 1.74 1.85 1.80 1.83 1.83 6.3

¥2.8 1.8 

Second ................................................................. 2.47 3.31 3.59 3.68 3.80 3.80 8.5 2.4 3.3 Middle .................................................................. 3.52 4.53 4.89 5.20 5.40 5.40 7.9 6.4 3.8 Fourth ................................................................... 4.70 5.88 6.33 7.03 7.40 7.40 7.7 11.1 5.2 Highest ................................................................. 7.65 9.33 9.94 11.72 12.79 14.55 6.5 17.9 9.1 

Total ................................................................ 3.87 4.96 5.32 5.89 6.24 6.60 7.3 10.7 6.1 

Nonelderly unrelated individuals:

Lowest .................................................................. 0.32 0.51 0.61 0.61 0.49 0.49 19.6

¥0.3

¥19.4

Second ................................................................. 1.14 1.49 1.72 1.83 1.74 1.74 15.4 6.6

¥5.1

Middle .................................................................. 2.12 2.53 2.78 3.00 3.04 3.04 9.9 7.9 1.3 Fourth ................................................................... 3.23 3.82 4.03 4.46 4.51 4.51 5.5 10.7 1.1 Highest ................................................................. 5.88 7.00 7.11 8.48 8.89 9.47 1.6 19.3 4.8 

Total ................................................................ 2.54 3.07 3.25 3.68 3.73 3.85 5.9 13.1 1.5 

Elderly childless units:

Lowest .................................................................. 0.48 0.76 0.84 0.95 0.97 0.97 10.5 13.4 1.8 Second ................................................................. 0.95 1.34 1.50 1.73 1.84 1.84 11.9 15.2 6.5 Middle .................................................................. 1.48 1.97 2.26 2.64 2.74 2.74 14.7 16.7 3.9 Fourth ................................................................... 2.40 3.02 3.38 4.02 4.14 4.13 11.9 19.0 2.9 Highest ................................................................. 5.32 6.54 6.85 8.63 9.27 9.68 4.7 26.0 7.4 

Total ................................................................ 2.13 2.73 2.97 3.59 3.79 3.87 8.8 21.0 5.5 

Elderly childless families:

Lowest .................................................................. 0.60 0.96 1.06 1.20 1.24 1.24 10.4 13.1 3.5 Second ................................................................. 1.16 1.63 1.86 2.15 2.28 2.28 14.1 15.4 6.2 Middle .................................................................. 1.77 2.34 2.67 3.14 3.25 3.25 14.1 17.5 3.6 Fourth ................................................................... 2.76 3.50 3.83 4.61 4.75 4.75 9.4 20.5 2.9 Highest ................................................................. 5.73 7.12 7.37 9.54 10.12 10.61 3.5 29.5 6.0 

TABLE H–16.—AVERAGE PRETAX ADJUSTED FAMILY INCOME (INCOME AS A MULTIPLE OF POVERTY) BY FAMILY TYPE AND INCOME QUINTI

WEIGHTED BY PERSONS, SELECTED YEARS 1967–98—Continued

Family type and quintile

Year Percent change

1967 1973 1979 1989 1998 1 1998 2 1973– 79 1979–89 1989– 98 1 

Total ................................................................ 2.40 3.11 3.36 4.13 4.33 4.43 8.0 22.9 4.8 

Elderly unrelated individuals:

Lowest .................................................................. 0.35 0.54 0.64 0.73 0.73 0.73 18.5 13.8 0.2 Second ................................................................. 0.63 0.93 1.02 1.17 1.23 1.23 9.7 15.1 4.8 Middle .................................................................. 0.86 1.23 1.37 1.62 1.71 1.71 11.4 18.6 5.3 Fourth ................................................................... 1.29 1.73 2.05 2.46 2.50 2.50 18.5 20.3 1.4 Highest ................................................................. 3.44 4.08 4.83 5.58 6.28 6.49 18.4 15.5 12.6 

Total ................................................................ 1.31 1.70 1.98 2.31 2.49 2.53 16.5 16.9 7.6 

1 Individual’s earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989 topcoded value ($99,999) adjusted for inflation. 2 Individual’s earnings in 1998 are as reported on Census public-use files (which use a topcode value of $1 million).

Note.—Poverty thresholds are based on the 1989 distribution of family sizes, with no adjustment for the age of the head of household or the number of children. Qui

based the number of persons.

Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1968, 1974, 1980, 1990, and 1999.

1311

Elderly persons experienced income gains across the board between 1973 and 1998. For elderly childless units, which include

both single persons and married couples, average AFI rose 10.5,

13.4, and 1.8 percent respectively for the lowest quintile across the

three periods shown in the last panel of table H–16 and 4.7, 26.0,

and 12.1 percent respectively over the same periods for the highest

quintile (using the new method of income coding). Despite their

gains, the elderly generally had much lower incomes than the nonelderly. In 1998, for example, the average income of elderly childless units was about 3.9 times poverty; the average income of nonelderly childless units, by comparison, was about 5.6 times poverty

(not shown in table).

AVERAGE FAMILY CASH INCOME BY FAMILY TYPE

For all families, average cash income grew more slowly than average pretax AFI between 1973 and 1998. This was also generally

true for specific family types. At the same time, those groups of

families whose average cash incomes declined had more pronounced decreases than occurred in pretax AFI.

Average family cash income grew throughout the 1973–98 period

for families with children (table H–17, second panel). However,

families at the bottom of the income distribution lost ground during

the 1973–89 period, with income declines of 11.0 percent during the

1973–79 period and 17.7 percent during the 1979–89 period. The

decline stopped between 1989 and 1999 when the income of families with children in the bottom quintile actually increased slightly.

As was the case with all the measures we have examined, average

family cash income of families in the top two quintiles improved

substantially throughout the entire period after 1973.

As compared with the cash family income losses in the bottom

quintile for all families, the pattern of losses in the bottom quintile

was even greater for single mothers with children before 1989

(table H–17, fourth panel). From 1979 to 1989, for example, these

mothers lost almost a quarter of their income. However, between

1989 and 1998 they made up for at least some of the lost ground

because their income increased by 3.9 percent. It is also interesting

that during both the 1973–79 and the 1989–98 periods, income

gains in the second, third, and fourth income quintiles of single

mothers with children were usually greater than income gains in

the top quintile.

Because the change in family size among elderly persons was almost negligible over the period, their trend in average family cash

incomes is almost identical to the trend in average pretax AFI. Elderly childless units and elderly childless families experienced income gains in every quintile during every period between 1973 and

1998.

Table H–18 shows family cash income limits (the income cutoffs

between quintiles) by quintile and family type. Between 1973 and

1998, except for the top quintile, income limits among families with

children have declined or grown slowly while those for the elderly

have increased, in some cases significantly. Across all family types

except elderly childless units and families, income limits among the

higher quintiles have increased more than among the lower

TABLE H–17.—AVERAGE FAMILY CASH INCOME BY FAMILY TYPE AND INCOME QUINTILE, SELECTED YEARS 1973–98

[In 1998 dollars]

Family type and income quintile

Year Percent change

1973 1979 1989 1998 1 1998 2 1973–79 1979–89 1989–98 1 1

All families:

Lowest ................................... $7,967 $7,879 $7,711 $7,247 $7,247

¥1.1

¥2.1

¥6.0

Second .................................. 20,265 20,120 19,860 19,844 19,844

¥0.7

¥1.3

¥0.1

Middle ................................... 34,058 33,663 33,947 34,007 34,007

¥1.2 0.8 0.2 

Fourth ................................... 49,881 50,845 53,075 54,912 54,912 1.9 4.4 3.5 Highest ................................. 87,237 89,689 102,163 109,301 120,037 2.8 13.9 7.0 

Total ................................. 39,881 40,440 43,351 45,062 47,209 1.4 7.2 3.9 

All families with children:

Lowest ................................... 13,841 12,316 10,141 10,181 10,181

¥11.0

¥17.7 0.4 

Second .................................. 30,465 29,399 27,166 27,236 27,236

¥3.5

¥7.6 0.3 

Middle ................................... 42,874 43,796 43,473 44,782 44,782 2.1

¥0.7 3.0 

Fourth ................................... 57,084 59,074 62,077 66,273 66,273 3.5 5.1 6.8 Highest ................................. 92,568 95,922 107,760 119,729 134,993 3.6 12.3 11.1 

Total ................................. 47,366 48,101 50,124 53,640 56,693 1.6 4.2 7.0 

Married couples with children:

Lowest ................................... 20,309 19,912 19,203 20,060 20,060

¥2.0

¥3.6 4.5 

Second .................................. 35,715 37,193 37,680 40,120 40,120 4.1 1.3 6.5 Middle ................................... 46,682 49,548 52,171 56,761 56,761 6.1 5.3 8.8 Fourth ................................... 60,182 63,907 69,815 77,907 77,907 6.2 9.2 11.6 Highest ................................. 95,752 100,622 115,904 131,859 153,767 5.1 15.2 13.8 

Total ................................. 51,728 54,236 58,955 65,341 69,723 4.8 8.7 10.8 

Single mothers with children:

Lowest ................................... 4,607 4,388 3,372 3,502 3,502

¥4.8

¥23.2 3.9 

Second .................................. 10,425 10,677 8,861 10,077 10,077 2.4

¥17.0 13.7 

Middle ................................... 15,672 17,267 15,529 17,028 17,028 10.2

¥10.1 9.7 

Fourth ................................... 23,486 26,164 25,563 26,946 26,946 11.4

¥2.3 5.4 

Highest ................................. 43,944 46,947 50,503 52,894 53,811 6.8 7.6 4.7 

Total ................................. 19,627 21,089 20,766 22,089 22,273 7.4

¥1.5 6.4 

Nonelderly childless units:

Lowest ................................... 7,636 7,707 7,529 6,302 6,302 0.9

¥2.3

¥16.3

Second .................................. 20,882 20,780 20,825 20,129 20,129

¥0.5 0.2

¥3.3

Middle ................................... 33,602 33,385 34,382 33,779 33,779

¥0.6 3.0

¥1.8

Fourth ................................... 49,518 50,237 53,306 53,762 53,762 1.5 6.1 0.9 Highest ................................. 88,251 90,888 104,577 108,118 118,709 3.0 15.1 3.4 

Total ................................. 39,978 40,599 44,124 44,418 46,536 1.6 8.7 0.7 

Nonelderly childless families:

Lowest ................................... 17,147 18,247 18,027 18,390 18,390 6.4

¥1.2 2.0 

Second .................................. 33,326 36,508 37,970 39,786 39,786 9.5 4.0 4.8 Middle ................................... 46,345 50,739 54,847 57,099 57,099 9.5 8.1 4.1 Fourth ................................... 62,044 67,117 75,877 79,714 79,714 8.2 13.1 5.1 Highest ................................. 101,043 109,139 129,385 138,648 157,815 8.0 18.6 7.2 

Total ................................. 51,981 56,350 63,221 66,727 70,561 8.4 12.2 5.5 

Nonelderly unrelated individuals:

Lowest ................................... 3,875 4,606 4,631 3,716 3,716 18.9 0.5

¥19.8

Second .................................. 11,331 13,089 13,963 13,283 13,283 15.5 6.7

¥4.9

TABLE H–17.—AVERAGE FAMILY CASH INCOME BY FAMILY TYPE AND INCOME QUINTILE, SELECTED YEARS 1973–98—Continued

[In 1998 dollars]

Family type and income quintile

Year Percent change

1973 1979 1989 1998 1 1998 2 1973–79 1979–89 1989–98 1 1

Middle ................................... 19,229 21,118 22,860 23,182 23,182 9.8 8.2 1.4 Fourth ................................... 29,057 30,668 33,984 34,428 34,428 5.5 10.8 1.3 Highest ................................. 53,310 54,178 64,663 67,828 72,295 1.6 19.4 4.9 

Total ................................. 23,361 24,732 28,020 28,487 29,381 5.9 13.3 1.7 

Elderly childless units:

Lowest ................................... 5,453 6,089 6,866 6,954 6,954 11.7 12.8 1.3 Second .................................. 9,932 10,999 12,708 13,453 13,453 10.7 15.5 5.9 Middle ................................... 15,285 17,516 20,308 21,322 21,322 14.6 15.9 5.0 Fourth ................................... 24,418 27,870 32,902 34,271 34,271 14.1 18.1 4.2 Highest ................................. 59,516 62,541 77,626 83,954 87,303 5.1 24.1 8.2 

Total ................................. 22,921 25,003 30,082 31,991 32,661 9.1 20.3 6.3 

Elderly childless families:

Lowest ................................... 9,311 10,337 11,758 12,312 12,312 11.0 13.7 4.7 Second .................................. 15,871 18,194 21,000 22,420 22,420 14.6 15.4 6.8 Middle ................................... 22,610 25,962 30,751 32,034 32,034 14.8 18.4 4.2 Fourth ................................... 34,340 37,975 45,862 47,887 47,887 10.6 20.8 4.4 Highest ................................. 73,792 76,193 98,755 104,899 109,889 3.3 29.6 6.2 

Total ................................. 31,185 33,732 41,625 43,910 44,908 8.2 23.4 5.5 

Elderly unrelated individuals:

Lowest ................................... 4,086 4,886 5,549 5,550 5,550 19.6 13.6 0.0 Second .................................. 7,089 7,798 8,948 9,411 9,411 10.0 14.8 5.2 Middle ................................... 9,351 10,467 12,378 13,087 13,087 11.9 18.3 5.7 Fourth ................................... 13,206 15,618 18,786 19,124 19,124 18.3 20.3 1.8 Highest ................................. 31,057 36,785 42,512 47,984 49,550 18.4 15.6 12.9 

Total ................................. 12,958 15,111 17,635 19,031 19,344 16.6 16.7 7.9 

1 Individual’s earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989 topcoded value ($99,999) adjusted for inflation. 2 Individual’s earnings in 1998 are as reported on Census public-use files (which use a topcode value of $1 million).

Note.—Quintiles are based on the number of families.Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1974, 1980, 1990, and 1999.

TABLE H–18.—FAMILY CASH INCOME LIMITS BY QUINTILE AND FAMILY TYPE

[In 1998 dollars]

Family type

Year Percent change

1973 1979 1989 1998 1 1998 2 1973–79 1979–89 1989–98 1 1

All families:

Lowest ........................................... $13,883 $13,939 $13,739 $13,600 $13,600 0.4 ¥1.4 ¥1.0 

Second .......................................... 27,072 26,420 26,297 26,271 26,271 ¥2.4 ¥0.5 ¥0.1 

Middle ........................................... 41,460 41,643 42,130 42,862 42,862 0.4 1.2 1.7 Fourth ........................................... 60,151 61,718 66,145 69,883 69,883 2.6 7.2 5.7 

All families with children:

Lowest ........................................... 23,369 22,017 19,024 19,000 19,000 ¥5.8 ¥13.6 ¥0.1 

Second .......................................... 36,871 36,889 35,418 35,483 35,483 0.0 ¥4.0 0.2 

Middle ........................................... 49,101 50,718 51,792 54,060 54,060 3.3 2.1 4.4 Fourth ........................................... 66,705 68,862 74,158 81,000 81,000 3.2 7.7 9.2 

Married couples with children:

Lowest ........................................... 29,716 30,163 29,811 31,200 31,200 1.5 ¥1.2 4.7 

Second .......................................... 41,460 43,681 44,838 48,219 48,219 5.4 2.6 7.5 Middle ........................................... 52,494 55,670 59,842 65,500 65,500 6.0 7.5 9.5 Fourth ........................................... 69,587 73,756 81,763 93,000 93,000 6.0 10.9 13.7 

Single mothers with children:

Lowest ........................................... 8,084 7,992 6,270 6,850 6,850 ¥1.1 ¥21.5 9.2 

Second .......................................... 13,026 13,659 11,831 13,224 13,224 4.9 ¥13.4 11.8 

Middle ........................................... 19,003 21,449 19,718 21,320 21,320 12.9 ¥8.1 8.1 

Fourth ........................................... 28,831 31,924 32,777 34,000 34,000 10.7 2.7 3.7 

Nonelderly childless unit:

Lowest ........................................... 14,511 14,752 14,529 13,310 13,310 1.7 ¥1.5 ¥8.4 

Second .......................................... 27,259 26,470 27,015 26,520 26,520 ¥2.9 2.1 ¥1.8 

Middle ........................................... 40,989 40,764 42,196 42,000 42,000 ¥0.5 3.5 ¥0.5 

Fourth ........................................... 60,444 61,665 66,621 68,300 68,300 2.0 8.0 2.5 

Nonelderly childless families:

Lowest ........................................... 26,565 28,996 29,577 30,500 30,500 9.1 2.0 3.1 Second .......................................... 39,773 43,875 46,021 48,557 48,557 10.3 4.9 5.5 Middle ........................................... 53,455 58,124 64,280 66,909 66,909 8.7 10.6 4.1 Fourth ........................................... 72,553 78,395 90,359 95,885 95,885 8.1 15.3 6.1 

Nonelderly unrelated individuals:

Lowest ........................................... 7,463 8,915 9,465 8,661 8,661 19.5 6.2

¥8.5

Second .......................................... 15,271 17,173 18,403 18,030 18,030 12.5 7.2

¥2.0

Middle ........................................... 24,166 25,350 27,631 28,300 28,300 4.9 9.0 2.4 Fourth ........................................... 34,954 37,319 41,585 42,026 42,026 6.8 11.4 1.1 

Elderly childless units:

Lowest ........................................... 7,978 8,648 9,814 10,317 10,317 8.4 13.5 5.1 Second .......................................... 12,264 13,884 16,057 16,932 16,932 13.2 15.7 5.5 Middle ........................................... 18,706 21,654 25,303 26,505 26,505 15.8 16.9 4.7 Fourth ........................................... 32,131 35,815 42,552 45,050 45,050 11.5 18.8 5.9 

Elderly childless families:

Lowest ........................................... 13,102 14,833 16,782 18,272 18,272 13.2 13.1 8.9 Second .......................................... 18,799 21,821 25,573 26,776 26,776 16.1 17.2 4.7 Middle ........................................... 27,225 30,427 36,806 38,250 38,250 11.8 21.0 3.9 Fourth ........................................... 43,843 47,864 57,050 61,902 61,902 9.2 19.2 8.5 

Elderly unrelated individuals:

Lowest ........................................... 5,852 6,574 7,477 7,773 7,773 12.3 13.7 4.0 Second .......................................... 8,247 9,018 10,390 10,986 10,986 9.3 15.2 5.7 Middle ........................................... 10,686 12,479 14,943 15,325 15,325 16.8 19.8 2.6 Fourth ........................................... 16,418 19,815 23,741 24,525 24,525 20.7 19.8 3.3 

1 Individual’s earnings in 1998 are limited to $131,450. That topcoded value is equal to the 1989 topcoded value ($99,999) adjusted for inflation. 2 Individual’s earnings in 1998 are as reported on Census public-use files (which use a topcode value of $1 million).

Source: Congressional Budget Office tabulations of data from the March Current Population Survey, 1974, 1980, 1990, and 1999.

1318

quintiles. In fact, income limits for the lower quintiles have decreased for several family types during several periods.

ANTIPOVERTY EFFECTIVENESS OF VARIOUS CASH AND

NONCASH TRANSFERS

Tables H–19 through H–21 provide estimates of the number and

percentage of individuals removed from poverty by market income

and by social insurance programs (Social Security, unemployment

compensation, and workers’ compensation), means-tested cash programs (Aid to Families with Dependent Children, Supplemental

Security Income, and general assistance), means-tested noncash

programs (food stamps, housing benefits, and school lunch), and

Federal payroll and income taxes and the earned income credit

(EIC). Tables are provided separately for elderly persons, for children, and for persons in units with an unmarried head and children under age 18, for selected years between 1979 and 1998.

The tables present alternative measures of poverty to the official

measure. They include counts of the number of people below the

poverty line before any government benefits are taken into account,

after each type of benefit is added to income, and after the government cash and noncash benefits and Federal taxes and the EIC are

added to (or subtracted from) income.

The tables also measure the effect of these government programs

on the ‘‘poverty gap’’—the gap between a poor family’s income and

the poverty line. The poverty gap represents the degree of poverty

by showing the amount of money that would be needed to lift every

poor person exactly to the poverty line.

Table H–19 shows the antipoverty effectiveness of market income

and government programs for the elderly. Based both on cash income before transfers and on posttransfer income, the poverty rates

among the elderly in 1998 were among the lowest on record. As

compared with 1979, when over 54 percent of the elderly were poor

before transfers, by 1998 only a little over 48 percent of the elderly

were poor before transfers. The comparable figures for the percentage of the elderly in poverty after transfers were 13.5 in 1979 and

8.8 in 1998. The impact of Social Security transfers is by the far

the greatest reason so many of the poor are removed from poverty

by government transfers. In 1979 the poverty rate was dropped

from 54.2 to 17.4 by Social Security payments; in 1998 the comparable figures were 48.2 to 8.8 percent. In 1979, a total of 8.9 million elderly persons were removed from poverty by Social Security;

in 1998, the number had jumped to 11.8 million. The figures for

the poverty gap for the elderly are not quite as impressive as the

overall figures. Both the total number of dollars required to close

the poverty gap and the size of the poverty gap per person in poverty have been almost stagnant in recent years. Even so, in 1998

the poverty gap is only $6.4 billion or $2,234 per person in poverty.

As we will see, no other government program has as huge an impact on poverty among any group as does Social Security among

the elderly.

The impact of market income and the safety net on children’s

poverty are shown in table H–20. The poverty rate among children

before transfers was 21.5 percent in 1998, its lowest level since

1979 and nearly 5 percentage points lower than in 1993. Similarly,

1319

the child poverty rate after transfers in 1998 was 14.3, its lowest

level since 1979 and 5.7 percentage points or nearly 30 percent

below its level in 1993. These figures show substantial progress

against children’s poverty, both before and after government transfers. That the pretransfer level is so low suggests that the substantial increase in work by former welfare mothers after the 1996 welfare reform legislation (see Appendix L) may be playing an important role in poverty reduction among children.

The important role of work by single mothers in reducing child

poverty is also shown by the data on percentage of children removed from poverty due to Federal taxes. The row of figures for

taxes in all the panels of table H–20 show that Federal tax policy

is having a major and growing effect in reducing child poverty. In

1983, Federal taxes actually increased the poverty level among

children by 5.1 percent. However, as the Federal Government reduced taxes and increased the EIC for low-income families with

children by enacting reform legislation in 1986, 1990, and 1993, the

impact of taxes actually became positive. By 1998, EIC payments

to families reduced the child poverty rate from 16.5 percent to 14.3

percent. It seems reasonable to conclude that the effectiveness of

the EIC in fighting poverty can be attributed to two factors—the

increasing generosity of EIC policy itself and the increase in work

by low-income families with children, especially families headed by

mothers.

Data on the poverty gap for children are somewhat mixed. Data

on the pretransfer poverty gap is uniformly positive. Despite the

fact that the number of children grew by over 9 million or nearly

15 percent between 1983 and 1998, the poverty gap before transfers nonetheless fell from $44 billion to about $38 billion, a decline

of over 13 percent. Similarly, the pretransfer poverty gap per poor

child in 1998 reached its lowest level since 1979. However, perhaps

because there were fewer children to remove from poverty, social

insurance, means-tested cash transfers, and means-tested noncash

transfers were generally less effective in removing children from

poverty. As shown in the last panel of table H–20, taken together

these policies reduced the poverty gap by only 50.6 percent in 1998

as compared with 62.4 percent in 1979, 58.1 percent in 1989, 58.5

percent in 1995, and 53.7 percent in 1997. The effect of the EIC

in reducing the poverty gap, however, remained potent; in fact, at

6.4 percent it was greater than in any previous year. Despite the

effectiveness of the EIC, the overall impact of government programs reduced the poverty gap less than in any previous year except 1983. The major reason for the reduced effectiveness of government programs in reducing the poverty gap seems to be a decline in the impact of means-tested cash benefits. In 1979 these

benefits reduced the poverty gap by 28.8 percent. By contrast, in

1998 they reduced the poverty gap by only 16.2 percent. Undoubtedly, the decline in the welfare rolls and in cash benefits from the

Temporary Assistance for Needy Families Program play an important role here.

Poverty data for persons in units headed by single parents is

generally consistent with the data for children. The first point to

emphasize with these data (see the top row of table H–21), which

simply reinforces the conclusion from the data on single mothers in

TABLE H–19.—IMPACT OF MARKET INCOME AND SAFETY NET PROGRAMS ON POVERTY; ELDERLY PERSONS, SELECTED YEARS 1979–98

Number of elderly and poverty measure

Year

1979 1983 1989 1993 1994 1995 1996 1997 

Total population (in thousands) ....................................... 24,194 26,313 29,094 30,779 31,267 31,658 31,877 32,082 Number of poor persons (in thousands):

Cash income before transfers .................................. 13,120 13,253 13,853 15,640 16,256 15,810 15,977 15,754 Plus social insurance ............................................... 4,202 4,095 3,934 4,270 4,114 3,722 3,905 3,831 Plus means-tested cash benefits (official measure) 3,682 3,625 3,312 3,755 3,663 3,318 3,428 3,376 Plus means-tested noncash benefits ...................... 3,261 3,158 2,793 3,123 3,048 2,839 2,936 2,872 Less Federal taxes (including EIC) .......................... 3,276 3,177 2,841 3,159 3,062 2,838 2,943 2,876 

Poverty rate (in percent):

Cash income before transfers .................................. 54.2 50.4 47.6 50.8 52.0 49.9 50.1 49.1 Plus social insurance ............................................... 17.4 15.6 13.5 13.9 13.2 11.8 12.3 11.9 Plus means-tested cash benefits ............................ 15.2 13.8 11.4 12.2 11.7 10.5 10.8 10.5 Plus means-tested noncash benefits ...................... 13.5 12.0 9.6 10.1 9.7 9.0 9.2 9.0 Less Federal taxes (including EIC) .......................... 13.5 12.1 9.8 10.3 9.8 9.0 9.2 9.0 

Number (in thousands) removed from poverty due to:

Social insurance ....................................................... 8,918 9,158 9,919 11,370 12,142 12,088 12,072 11,923 Means-tested cash benefits ..................................... 520 470 622 515 451 404 477 455 Means-tested noncash benefits ............................... 421 467 519 632 615 479 492 504 Federal taxes (including EIC) ...................................

¥15

¥19

¥48

¥36

¥14 1

¥7 ¥4 

Total ................................................................. 9,844 10,076 11,012 12,481 13,194 12,972 13,034 12,878 

Percent removed from poverty due to:

Social insurance ....................................................... 68.0 69.1 71.6 72.7 74.7 76.5 75.6 75.7 Means-tested cash benefits ..................................... 4.0 3.5 4.5 3.3 2.8 2.6 3.0 2.9 Means-tested noncash benefits ............................... 3.2 3.5 3.7 4.0 3.8 3.0 3.1 3.2 

Federal taxes (including EIC) ...................................

¥0.1

¥0.1

¥0.3

¥0.2

¥0.1 0.0

¥0.0

¥0.0

Total ................................................................. 75.0 76.0 79.5 79.8 81.2 82.0 81.6 81.7 

Poverty gap (in billions of 1998 dollars):

Cash income before transfers .................................. 59.0 60.4 62.8 70.6 75.2 73.6 74.5 74.5 Plus social insurance ............................................... 10.3 10.0 9.5 10.8 11.0 9.4 10.3 10.0 Plus means-tested cash benefits (official measure) 7.0 6.6 6.3 8.0 8.0 6.8 7.2 7.1 Plus means-tested noncash benefits ...................... 5.8 5.7 5.2 6.7 6.8 5.8 6.2 6.2 Less Federal taxes (including EIC) .......................... 5.8 5.7 5.2 6.7 6.8 5.8 6.2 6.2 

Poverty gap per poor person (in 1998 dollars):

Cash income before transfers .................................. 4,501 4,557 4,536 4,515 4,628 4,654 4,662 4,732 Plus social insurance ............................................... 2,458 2,450 2,422 2,528 2,673 2,529 2,634 2,598 Plus means-tested cash benefits (official measure) 1,890 1,826 1,905 2,124 2,174 2,063 2,091 2,106 Plus means-tested noncash benefits ...................... 1,790 1,803 1,845 2,149 2,223 2,047 2,123 2,157 Less Federal taxes (including EIC) .......................... 1,782 1,803 1,825 2,132 2,216 2,052 2,118 2,154 

Percent reduction in the poverty gap due to:

Social insurance ....................................................... 82.5 83.4 84.8 84.7 85.4 87.2 86.2 86.6 Means-tested cash benefits ..................................... 5.7 5.7 5.1 4.0 4.0 3.5 4.2 3.8 Means-tested noncash benefits ............................... 1.9 1.5 1.8 1.8 1.6 1.4 1.3 1.2 Federal taxes (including EIC) ................................... 0.0

¥0.1

¥0.1

¥0.0

¥0.0

¥0.0 0.0 0.0

Total ................................................................. 90.1 90.5 91.7 90.5 91.0 92.1 91.6 91.7 

Source: Table prepared by the U.S. Department of Health and Human Services and the Congressional Budget Office based on Current Population Survey data. Poverty 

based on calculations by the U.S. Census Bureau.

TABLE H–20.—IMPACT OF MARKET INCOME AND SAFETY NET PROGRAMS ON POVERTY; CHILDREN, SELECTED YEARS 1979–98

Number of children and poverty measure

Year

1979 1983 1989 1993 1994 1995 1996 1997 

Total population (in thousands) ....................................... 63,375 62,333 65,602 69,292 70,020 70,566 70,650 71,069 Number of poor children (in thousands):

Cash income before transfers .................................. 12,761 16,146 14,954 18,198 17,828 17,098 16,642 16,294 Plus social insurance ............................................... 11,364 14,405 13,846 16,685 16,324 15,717 15,426 14,890 Plus means-tested cash benefits ............................ 10,377 13,911 13,154 15,727 15,289 14,665 14,463 14,113 Plus means-tested noncash benefits ...................... 8,421 12,464 11,409 13,874 13,212 12,476 12,576 12,511 Less Federal taxes (including EIC) .......................... 8,620 13,293 11,811 13,853 12,613 11,443 11,341 11,080 

Poverty rate (in percent):

Cash income before transfers .................................. 20.1 25.9 22.8 26.3 25.5 24.2 23.6 22.9 Plus social insurance ............................................... 17.9 23.1 21.1 24.1 23.3 22.3 21.8 21.0 Plus means-tested cash benefits ............................ 16.4 22.3 20.1 22.7 21.8 20.8 20.5 19.9 Plus means-tested noncash benefits ...................... 13.3 20.0 17.0 20.0 18.9 17.7 17.8 17.6 Less Federal taxes (including EIC) .......................... 13.6 21.3 18.0 20.0 18.0 16.2 16.1 15.6 

Number (in thousands) removed from poverty due to:

Social insurance ....................................................... 1,397 1,741 1,108 1,513 1,504 1,381 1,216 1,404 Means-tested cash benefits ..................................... 987 494 692 958 1,035 1,052 963 777 Means-tested noncash benefits ............................... 1,956 1,447 1,745 1,853 2,077 2,189 1,887 1,602 Federal taxes (including EIC) ...................................

¥199

¥829

¥402 21 599 1,033 1,235 1,431 

Total ................................................................. 4,141 2,853 3,143 4,345 5,215 5,655 5,301 5,214 

Percent removed from poverty due to:

Social insurance ....................................................... 10.9 10.8 7.4 8.3 8.4 8.1 7.3 8.6 Means-tested cash benefits ..................................... 7.7 3.1 4.6 5.3 5.8 6.2 5.8 4.8 Means-tested noncash benefits ............................... 15.3 9.0 11.7 10.2 11.7 12.8 11.3 9.8 

Federal taxes (including EIC) ...................................

¥1.6

¥5.1

¥2.7 0.1 3.4 6.0 7.4 8.8 

Total ................................................................. 32.5 17.7 21.0 23.9 29.3 33.1 31.9 32.0 

Poverty gap (in billions of 1998 dollars):

Cash income before transfers .................................. 33.2 44.0 40.3 50.6 48.1 45.1 43.8 42.6 Plus social insurance ............................................... 27.81 37.0 35.1 43.7 41.7 39.0 37.9 35.9 Plus means-tested cash benefits ............................ 18.3 26.5 25.1 31.4 30.2 28.2 28.4 28.2 Plus means-tested noncash benefits ...................... 12.5 18.4 16.8 20.9 19.9 18.7 19.1 19.7 Less Federal taxes (including EIC) .......................... 12.5 18.9 16.8 20.3 18.3 16.8 16.7 17.4 

Poverty gap per poor child (in 1998 dollars) due to:

Cash income before transfers .................................. 2,602 2,725 2,698 2,779 2,696 2,638 2,630 2,613 Plus social insurance ............................................... 2,450 2,572 2,532 2,620 2,554 2,482 2,456 2,412 Plus means-tested cash benefits ............................ 1,763 1,904 1,905 1,999 1,977 1,921 1,965 1,997 Plus means-tested noncash benefits ...................... 1,481 1,477 1,472 1,505 1,503 1,497 1,516 1,576 Less Federal taxes (including EIC) .......................... 1,447 1,425 1,422 1,468 1,455 1,471 1,476 1,569 

Percent reduction in the poverty gap due to:

Social insurance ....................................................... 16.1 15.8 13.1 13.6 13.3 13.5 13.4 15.7 Plus means-tested cash benefits ............................ 28.8 24.0 24.8 24.3 23.9 24.0 21.6 18.1 Plus means-tested noncash benefits ...................... 17.5 18.4 20.5 20.9 21.6 21.0 21.4 19.9 Federal taxes (including EIC) ...................................

¥0.0

¥1.2

¥0.0 1.1 3.1 4.1 5.3 5.5 

Total ................................................................. 62.4 56.9 58.4 59.8 61.8 62.7 61.8 59.2 

Source: Table prepared by the U.S. Department of Health and Human Services and the Congressional Budget Office based on Current Population Survey data. Poverty 

based on calculations by the U.S. Census Bureau.

TABLE H–21.—IMPACT OF MARKET INCOME AND SAFETY NET PROGRAMS ON POVERTY; PERSONS IN UNITS WITH UNMARRIED HEAD AND RE

CHILDREN, SELECTED YEARS 1979–98

Number of persons and poverty measure

Year

1979 1983 1989 1993 1994 1995 1996 1997 

Total population (in thousands) ....................................... 23,547 25,559 29,255 34,611 35,091 36,428 36,515 36,702 Number of poor persons (in thousands):

Cash income before transfers .................................. 11,786 13,751 14,074 17,965 17,971 17,199 16,851 16,757 Plus social insurance (other than Social Security) 11,568 13,501 13,820 17,509 17,628 16,882 16,589 16,459 Plus Social Security .................................................. 10,645 12,611 13,040 16,570 16,619 16,058 15,706 15,377 Plus means-tested cash benefits ............................ 9,491 12,063 12,388 15,550 15,401 14,930 14,692 14,463 Plus means-tested noncash benefits ...................... 7,115 10,531 10,636 13,705 13,014 12,381 12,682 12,655 Plus EIC and less Federal payroll and income

taxes ..................................................................... 7,141 10,800 10,648 13,378 12,257 11,338 11,540 11,103 

Poverty rate (in percent):

Cash income before transfers .................................. 50.1 53.8 48.1 51.9 51.2 47.2 46.1 45.7 Plus social insurance (other than Social Security) 49.1 52.8 47.2 50.6 50.2 46.3 45.4 44.8 Plus Social Security .................................................. 45.2 49.3 44.6 47.9 47.4 44.1 43.0 41.9 Plus means-tested cash benefits ............................ 40.3 47.2 42.3 44.9 43.9 41.0 40.2 39.4 Plus means-tested noncash benefits ...................... 30.2 41.2 36.4 39.6 37.1 34.0 34.7 34.5 Plus EIC and less Federal payroll and income

taxes ..................................................................... 30.3 42.3 36.4 38.7 34.9 31.1 31.6 30.3 

Total reduction in poverty rate ....................... 19.7 11.5 11.7 13.3 16.3 16.1 14.5 15.4 

Number (in thousands) removed from poverty due to:

Social insurance (other than Social Security) ......... 218 250 254 456 343 317 262 298 Social Security .......................................................... 923 890 780 939 1,009 824 883 1,082 Means-tested cash benefits ..................................... 1,154 548 652 1,020 1,218 1,128 1,014 914 Means-tested noncash benefits ............................... 2,376 1,532 1,752 1,845 2,387 2,549 2,010 1,808 

EIC and Federal payroll and income taxes ..............

¥26

¥269

¥12 327 757 1,043 1,142 1,552 

Total ................................................................. 4,645 2,951 3,426 4,587 5,714 5,861 5,311 5,654 

Percent removed from poverty due to:

Social insurance (other than Social Security) ......... 1.8 1.8 1.8 2.5 1.9 1.8 1.6 1.8 Social Security .......................................................... 7.8 6.5 5.5 5.2 5.6 4.8 5.2 6.5 Means-tested cash benefits ..................................... 9.8 4.0 4.6 5.7 6.8 6.6 6.0 5.5 Means-tested noncash benefits ............................... 20.2 11.1 12.4 10.3 13.3 14.8 11.9 10.8 EIC and Federal payroll and income taxes ..............

¥0.2

¥2.0

¥0.1 1.8 4.2 6.1 6.8 9.3 

Total ................................................................. 39.4 21.5 24.3 25.5 31.8 34.1 31.5 33.7 

Poverty gap (in millions of 1998 dollars):

Cash income before transfers .................................. 35,907 45,244 44,507 57,506 54,744 49,498 49,760 47,900 Plus social insurance (other than Social Security) 34,890 43,578 43,546 55,860 53,257 48,317 48,545 46,746 Plus Social Security .................................................. 30,813 39,275 39,506 51,194 48,032 43,683 43,597 41,188 Plus means-tested cash benefits ............................ 17,780 25,803 27,038 35,132 32,642 30,076 31,179 31,101 Plus means-tested noncash benefits ...................... 11,033 16,770 17,223 21,567 19,754 18,404 19,437 20,366 Plus EIC and less Federal payroll and income

taxes ..................................................................... 10,954 16,876 17,019 20,929 18,350 16,771 17,333 18,216 

Reduction in poverty gap (in millions) due to:

Social insurance (other than Social Security) ......... 1,017 1,666 961 1,646 1,487 1,181 1,215 1,154 Social Security .......................................................... 4,077 4,302 4,040 4,666 5,224 4,634 4,948 5,558 Means-tested cash benefits ..................................... 13,033 13,472 12,468 16,062 15,390 13,607 12,418 10,087 Plus means-tested noncash benefits ...................... 6,747 9,034 9,815 13,566 12,888 11,672 11,741 10,735 EIC and Federal payroll and income taxes .............. 79

¥106 204 637 1,403 1,633 2,105 2,150 

Total ................................................................. 24,953 28,368 27,488 36,576 36,393 32,727 32,428 29,683 

Percent reduction in the poverty gap due to:

Social insurance (other than Social Security) ......... 2.8 3.7 2.2 2.9 2.7 2.4 2.4 2.4 

TABLE H–21.—IMPACT OF MARKET INCOME AND SAFETY NET PROGRAMS ON POVERTY; PERSONS IN UNITS WITH UNMARRIED HEAD AND RE

CHILDREN, SELECTED YEARS 1979–98—Continued

Number of persons and poverty measure

Year

1979 1983 1989 1993 1994 1995 1996 1997 

Social Security .......................................................... 11.4 9.5 9.1 8.1 9.5 9.4 9.9 11.6 Means-tested cash benefits ..................................... 36.3 29.8 28.0 27.9 28.1 27.5 25.0 21.1 Plus means-tested noncash benefits ...................... 18.8 20.0 22.1 23.6 23.5 23.6 23.6 22.4 EIC and Federal payroll and income taxes .............. 0.2

¥0.2 0.5 1.1 2.6 3.3 4.2 4.5 

Total ................................................................. 69.5 62.7 61.8 63.6 66.5 66.1 65.2 62.0 

Note.—Poverty gap dollars for each year adjusted to 1998 dollars.Source: Table prepared by the U.S. Department of Health and Human Services and the Congressional Budget Office based on Current Population Survey data.

1327

table H–15, is that there has been a very large increase in the

number of persons in families with unmarried heads. The number

jumped from 23.5 million in 1979 to 36.8 million in 1998, an increase of nearly 60 percent. By contrast, the number of persons in

married couple families increased from 102.2 million to only 102.7

million, an increase of less than 1 percent. Thus, the family type

with the highest poverty rate has been increasing more than 40

times as fast as the family type with the lowest poverty rate. These

demographic developments make progress against poverty somewhat difficult.

Even so, the pretransfer poverty rate among persons in families

with an unmarried head reached its lowest level ever in 1998 at

42.7 percent. Compared with the 53.8 percent pretransfer rate in

1983, that’s a drop of over 20 percent. Progress against pretransfer

poverty among these families has also been continuous and rapid

during the current economic expansion, with a drop of 18 percent

from 51.9 percent to 42.7 percent since 1993. Again, as we saw in

the case of children, progress against pretransfer poverty has been

substantial in recent years, in all likelihood due to the increase in

work by single mothers.

On the other hand, again as was the case with children, progress

against poverty as measured by the poverty gap has been uneven.

Although the pretransfer poverty gap at $42.9 billion for these families is smaller than at any time since 1979, and although the gap

has fallen 25 percent just since 1993, means-tested cash and

noncash programs have been increasingly less effective in reducing

the poverty gap. By contrast, as with children, Federal tax policy

has been increasingly more effective at reducing the poverty gap.

Even so, the combination of the reduced pretransfer poverty gap

and the increased effectiveness of the EIC in reducing the poverty

gap failed to outweigh the declining effectiveness of means-tested

cash and noncash transfers in reducing the poverty gap. As a result, the reduction in the posttax, posttransfer poverty gap for

these families was lower than in the past as measured either by

dollars or percentage reduction.

REFERENCES

U.S. Census Bureau. (1986). Money income and poverty status of

families and persons in the United States: 1985. Current Population Reports (Series P–60, No. 154). Washington, DC: U.S.

Government Printing Office.

U.S. Census Bureau. (1993). Money income of households, families,

and persons in the United States: 1991. Current Population Reports (Series P–60, No. 180). Washington, DC: U.S. Government Printing Office.

U.S. Census Bureau. (1996 and various years). Income, poverty,

and valuation of noncash benefits, 1994. Current Population

Reports (Series P–60, No. 189). Washington, DC: U.S. Government Printing Office. [Several publications from the P–60 Series were used in preparing the tables for this chapter. These

include numbers 124, 140, 145, 149, 154, 157, 161, 166, 168,

174, and 180.]