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SOME REASONS FOR THE GROWING INEQUALITY IN DISTRIBUTION OF INCOME AMONG AMERICAN HOUSEHOLDS SINCE THE EARLY 1980s
Two primary factors: changes in the US labor market and changes in household composition.
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CHANGES IN THE US AND WORLD LABOR MARKETS AND ECONOMIES: |
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More highly skilled, trained, and educated workers at the top have been experiencing real wage gains, while those at the bottom are experiencing real wages losses. |
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Changes in the 1980s included a shift away from Goods Producing & Manufacturing Industries (that had disproportionately provided high wage opportunities for low-skilled workers) to Technical Service Industries (disproportionately employing college graduates) and low wage industries, such as retail trade. |
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More important, however, than the shift away from manufacturing industries has been the shift away from less-educated workers, whose wages have consequently eroded. |
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Intensifying global competition. |
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Increasing Immigration. |
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Decline of proportion of workers belonging to unions. |
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Decline in the real purchasing power and value of the minimum wage. |
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Increasing industry needs for computer skills and proficiency. |
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Increasing use of Temporary Workers. |
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CHANGES IN US HOUSEHOLD COMPOSITION SINCE THE 1980s:
At the same time, changes in living arrangements have occurred that tend to exacerbate differences in Household income because of shift away from a traditionally higher-income, married-couple households:
1. Increases in divorce and separation;
2. Increases in births out of wedlock;
3. Increasing age of first marriage;
4. Increasing numbers of single-parent households;
5. Increasing tendency for men earning high-wages to marry women earning high wages.
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SOCIAL CLASS and OCCUPATION: Individuals and Families who occupy a Similar Position in the Economic System of Production, Distribution, and Consumption of Goods and Services. One way to analyze Class Position, if you were to use one criterion, would be OCCUPATION. |
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Why is Occupation so important in the US? Because of the following Interrelated Factors, which are simply listed here, but will be discussed and integrated in class lectures: |
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Occupation sets structural limits to: |
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1. Financial Rewards |
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2. Social Status and Prestige |
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3. Stability of Employment |
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4. Opportunities for Social Mobility |
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5. Workplace authority, power, influence and Control over one's daily work |
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6. Social relationships off and on the job |
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7. Self-perception and self-esteem |
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8. Enduring consequences for worker's children |
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9. Safety of the work place |
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10. Pension and savings opportunities |
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11. Health Insurance and other Benefits |
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12. Level of Occupation is part and parcel of unequal access to educational and skill opportunities in the US. |
Facts and FiguresWealth Patterns | Income Patterns | Health Patterns
Compiled for INEQUALITY.ORG by Chris Hartman
Chris Hartman is a researcher at United for a Fair Economy
Last updated: October 8, 2002
Part 2: Income Patterns
2.1 Change in Family Income, 1947-79 and 1979-2001
|
Bottom 20% |
Second 20% |
Middle 20% |
Fourth 20% |
Top 20% |
Top 5% |
| 1979 Income Range |
up to $9,861 |
$9,861 - $16,215 |
$16,215 - $22,972 |
$22,972 - $31,632 |
$31,632 and up |
$50,746 and up |
| 1947-79 Income Change |
+116% |
+100% |
+111% |
+114% |
+99% |
+86% |
 |
| 2001 Income Range |
up to $24,000 |
$24,000 - $41,127 |
$41,127 - $62,500 |
$62,500 - $94,150 |
$94,150 and up |
$164,104 and up |
| 1979-2001 Income Change |
+3% |
+11% |
+17% |
+26% |
+53% |
+81% | Sources: 1947-79: Analysis of U.S. Census Bureau data in Economic Policy Institute, The State of Working America 1994-95, p. 37. 1979-2001: U.S. Census Bureau, Historical Income Tables, Table F-3: http://www.census.gov/hhes/income/histinc/f03.html. Thresholds: U.S. Census Bureau, Historical Income Tables, Table F-1: http://www.census.gov/hhes/income/histinc/f01.html.
2.2 Change in After-Tax Family Income, 1979-97
| |
Bottom 20% |
Second 20% |
Middle 20% |
Fourth 20% |
Top 20% |
Top 10% |
Top 5% |
Top 1% |
| 1979 Income |
$10,900 |
$23,300 |
$33,800 |
$44,700 |
$79,100 |
$101,200 |
$132,600 |
$263,700 |
| 1997 Income |
$10,800 |
$24,700 |
$37,200 |
$52,200 |
$121,000 |
$169,900 |
$245,900 |
$677,900 |
| Change |
-1% |
+6% |
+10% |
+17% |
+53% |
+68% |
+85% |
+157% | Source: Center on Budget and Policy Priorities, Pathbreaking CBO Study Shows Dramatic Increases in Both 1980s and 1990s in Income Gaps Between The Very Wealthy And Other Americans, May 31, 2001: http://www.cbpp.org/5-31-01tax.htm, and Congressional Budget Office, Effective Federal Tax Rates 1979-97, October 2001: http://www.cbo.gov/showdoc.cfm?index=3089&sequence=0
2.3 CEO Pay as a Multiple of Average Worker Pay, 1960-2001
| 1960 |
1970 |
1980 |
1990 |
1995 |
1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
| 41 |
79 |
42 |
85 |
141 |
209 |
326 |
419 |
475 |
531 |
411 | Source: Business Week, annual surveys of executive compensation. Each year, Business Week surveys executive pay at 360 to 365 of what it terms "the largest U.S. corporations," covering 36 industries. The list of companies in the survey changes from year to year. Other sources of CEO pay data are the Wall Street Journal and Forbes Magazine.
2.4 Increase in CEO Pay, Worker Pay, and Inflation, 1990-2001
| CEO Pay |
+463% |
| Worker Pay |
+42% |
| Inflation |
+36% | Sources: Institute for Policy Studies and United for a Fair Economy, Executive Excess 2002, August 26, 2002, citing the following sources: CEO Pay: Business Week annual executive pay surveys. Average Worker Pay: Bureau of Labor Statistics, Average Weekly Hours of Production Workers (Series EEU00500005) and Average Hourly Earnings of Production Workers (Series ID: EEU00500006). Inflation: Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers (CPI-U).
- Forty-seven million households in the United States have annual incomes below $35,000, and in the event of a layoff or a medical crisis, 40 percent of American families would run out of cash within three days. (New York Times)
- If pay for production workers had grown as fast as pay for chief executives, factory workers would be making an average of $101,156 a year (instead of $25,467) and the minimum wage would be $21.41 (instead of $5.15). (United for a Fair Economy and Institute for Policy Studies, Executive Excess 2002: http://www.FairEconomy.org/press/2002/EE2002_pr.html)
- Income inequality declined from the late 1930s through the '60s. In the 1920s, the richest five percent of American families received about 30 percent of the nation's personal income. That share had decreased to 17.5 percent of income by 1947, and to 15.6 percent by 1969, according to the Census Bureau (whose figures underestimate high incomes by, among other things, excluding capital gains). After a brief period of stability, inequality began widening in the late '70s. The income share going to the richest five percent of families reached 17.9 percent in 1989, 21.0 percent in 2001. The richest one-half of 1 percent of American taxpayers now account for more than 11 percent of aggregate income. In recent years, only college graduates, about a quarter of the work force, have racked up significant wage gains. (Frank Levy, "The New Dollars and Dreams: American Incomes and Economic Change" Income share data for 2001 from U.S. Census Bureau: http://www.census.gov/hhes/income/histinc/f02.html)
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After a period of stagnation, workers saw more benefits from the strong economy in the late 1990s. Between 1995 and 2000, average hourly wages rose 2.7 percent per year, compared to 0.6 percent per year between 1989 and 1995. In the more recent period, real wages at the10th percentile of workers rose 11.0 percent, beating the 10.6 percent gain by workers at the 95th percentile. However, since 1979, the top group has seen a 28.8 percent increase in real wages, while the bottom group's wages have risen only 0.2 percent. (Economic Policy Institute, The State of Working America 2002-03, pp. 118, 126)
- From 1995-2001:
Real income for bottom-quintile families rose 7.9 percent.
Real income for middle-quintie families rose 9.9 percent.
Real income for top 5% families rose 18.6 percent.
(U.S. Census Bureau, Current Population Survey: http://www.census.gov/hhes/income/histinc/f03.html)
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Between 1989 and 2000, the typical married couple's income rose 13.9 percent. However, families had to work an additional 186 hours per year (4.65 work weeks), for a total of 3,719 hours. The average African-American family worked 3,800 hours per year, an increase of more than 200 hours since 1989. In those same years, poverty rates fell faster for Hispanics (4.9 percentage points) and African-Americans (8.7 percentage points) than they did for whites (0.9 percentage points). Yet, minorities continue to have much higher overall poverty rates: African-Americans, 19.1 percent; Hispanics, 18.5 percent; Whites, 6.9 percent. (Economic Policy Institute, The State of Working America 2002-03, pp. 97,99, 318)
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Reversing a long-term trend, the percentage of workers in full-time jobs rose from 81.9 percent to 83.1 percent, between 1995 and 2001. (Economic Policy Institute, The State of Working America 2002-03, p. 260)
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Often, practical challenges prevent the unemployed from taking work. In Cleveland, 80 percent of welfare recipients live in the central city, but 80 percent of entry-level jobs are located in the suburbs. In Boston, 43 percent of entry-level jobs are not accessible by public transportation. (The Brookings Institution, Center on Urban and Metropolitan Policy. "Why Cities Matter to Welfare Reform.")
- Between 1973 and 2001, while the earnings of college graduates rose 16%, the inflation-adjusted earnings of male high school graduates with no college fell 11%. (Economic Policy Institute, The State of Working America 2002-03, pp. 157-158)
- In 1979, the combined after-tax income of the highest-earning 20 percent of American families was 7.7 times that of the bottom 20 percent. In 2000, the multiple was 10.1, representing a 30% increase in inequality between 1979 and 2000. (Economic Policy Institute, The State of Working America 2002-03, p. 67)
- In 2001, the average American production worker's inflation-adjusted weekly wages were 5 percent below what they had been in 1973. (Economic Policy Institute, The State of Working America 2002-03, p. 121)
- In 1979, the average male college graduate earned about a third more than the median high school graduate; by 2001, the gap had widened to 79 percent. (Economic Policy Institute, The State of Working America 2002-03, p. 121)
- In 1947, children were slightly less likely than adults to be poor. Now the reverse is true. (Frank Levy) The official poverty rate among children is about sixteen percent. Among adults, it's twelve percent. (U.S. Census Bureau: 2001 Current Population Survey: http://ferret.bls.census.gov/macro/032002/pov/new01_001.htm)
- With the value of cashed-in stock options factored in, the average CEO of a major U.S. corporation made $11 million in 2001, down from $13.1 million in 2000. (Business Week, 4/15/02)
- The average CEO makes 1,027 times more than a minimum wage worker. If the minimum wage had risen at the same rate as executive pay since 1990, it would stand at $21.41 an hour as opposed to $5.15. (United for a Fair Economy and Institute for Policy Studies, Executive Excess 2002: http://www.FairEconomy.org/press/2002/EE2002_pr.html)
- As a result of the merger between Chrysler and Daimler Benz, Chrysler chairman Robert Eaton will get $69.9 million in cash and stocks, and options worth another $239 million. In 1997, Daimler chairman Juergen Schrempp took home $2.5 million, while Eaton made $16 million, though Schrempp ran a larger and more profitable company. (United for a Fair Economy)
- The average wage of a Silicon Valley software engineer was $95,800 in 1998, the most recent year for which the data is available. In the largest of all employment categories, "local and visitor services" (including retail and restaurant workers), the average wage was $22,9000. (The New York Times, Jan. 10, 2000).
Health Patterns
- 33 million Americans including 13 million children - regularly go hungry or can't afford balanced meals. The number is down 2.9 million since 1998. (Food Research Action Center, citing US Department of Agriculture: http://www.frac.org/html/news/press031302.htm)
Infant Mortality
- Seven American infants die for every 1,000 who are born. The infant mortality rate for whites is 5.7 per 1,000 live births. The infant mortality rate for African-Americans is more than twice as high: 14.1 deaths per 1,000 live births. (National Center for Health Statistics: http://www.cdc.gov/nchs/fastats/infmort.htm)
- In 1960, the United States ranked 12th in lowest rate of infant mortality. In 1998, the U.S. ranked 28th. (National Center for Health Statistics, Health, United States, 2002: http://www.cdc.gov/nchs/products/pubs/pubd/hus/02hustop.htm table 26)
Life Expectancy
- The United States spends more on medical care--13.1 percent of gross domestic product--than any other advanced industrialized society. (National Center for Health Statistics, Health, United States, 2002: http://www.cdc.gov/nchs/products/pubs/pubd/hus/02hustop.htm table 112)
Yet among the 30 OECD nations, we rank 18th in female life expectancy and 19th in male life expectancy. (OECD: http://www.inequality.org/www.oecd.org/xls/M00031000/M00031357.xls) The average life expectancy for white Americans is 77.3 years. For black Americans, it stands at 71.4 years (National Center for Health Statistics, Health, United States, 2002: http://www.cdc.gov/nchs/products/pubs/pubd/hus/02hustop.htm table 28)
- Death rates in the most economically divided metropolitan areas--such as Pine Bluff, Ark., an Mobile, Ala.--are sharply higher than the national annual average of 850 deaths per 100,000 people. The increase in mortality--an extra 140 deaths per 100,000 people--is equivalent to the combined loss of life from lung cancer, diabetes, motor vehicle accidents, HIV, infection, suicide and homicide during 1995. (Lynch J.W., Kaplan G.A., Pamuk E.R., et al. "Income inequality and mortality in metropolitan areas of the United States," American Journal of Public Health 1998)
- The Japanese, well-known for the relatively small gap between the earnings of their top executives and ordinary workers, are the world's longest-lived people. Japanese men, who are twice as likely to smoke as American men, not only live longer but, remarkably, have lower rates of lung cancer. The 3.6-year gap in life expectancy between the United States and Japan (76.2 and 79.8 years, respectively) is equal to the gain we would realize if heart attacks vanished as a cause of death. (Washington Post, 8/16/98)
The Uninsured
- Roughly forty-one million Americans--one seventh of the population--have no health insurance. In 1990, the figure was 35 million. About 8.5 million children are uninsured. (U.S. Census Bureau: http://www.census.gov/hhes/hlthins/historic/hihistt1.html and http://www.census.gov/hhes/hlthins/historic/hihistt2.html)
- Eighteen percent of workers between 18 and 64 were uninsured in 1997--an increase of 15.7 percent over 1990. Sixty-nine percent of white workers were covered by employer-sponsored insurance, compared with 52 percent of African American workers and 44 percent of Latino workers. (Sacramento Bee)
- One in four American workers has no access to employment-based health insurance coverage at any price. (General Accounting Office, Feb 1997, Employment-Based Health Insurance Costs)
- About ten million children are uninsured. In 1996, 70 percent of all Americans added to the ranks of the uninsured were children. (Census Bureau)
EXCERPTS FROM DOCUMENT, TEXAS POVERTY
Federal dollars account for roughly 60 percent of funding for Texas state health and human services
Federal public assistance spending, 1998-1999
Per poor person $49 (TX) $301 (US)
Rank among 50 states 44 out of 50 States and D.C.
Declining coverage of eligible population by Food Stamps:
Percent of eligible Texans receiving Food Stamps:
1995 67%
1999 35%
Federal public assistance spending, 1998-1999
Per poor person $49 (TX) $301 (US)
Rank among 50 states 44 out of 50 States and D.C.
Declining coverage of eligible population by Food Stamps:
Percent of eligible Texans receiving Food Stamps:
1995 67%
1999 35%
TANF
The Texas Temporary Assistance for Needy Families (TANF) program provides financial and medical assistance to needy children who are deprived of support because of the absence or disability of one or both parents.
Eligible households receive monthly cash and Medicaid benefits. They also are usually eligible for food stamps and child care services.
Unless legally exempt, all TANF recipients (caretaker adults) must participate in an employment services program. Those participating will have their benefits time-limited.
To be eligible, recipients must sign a personal responsibility agreement in which they promise not to voluntarily quit a job, to stay free of alcohol or drug abuse,
To participate in parenting classes if referred, to obtain medical screenings for their children; ensure their children are immunized & attending school.
In addition, they must meet a number of criteria relating to the composition of their household and the financial resources available to the household. For example, households cannot have more than $2,000 in assets ($3,000 if the household includes a relative who is disabled or over age 60).
They cannot own a car worth more than $4650.
In terms of income, to receive the maximum cash benefit, households cannot have income greater than 17 percent of the poverty guideline set for their family size, once child care and certain other work-related expenses are deducted. For a family of three, this translates to $197 per month. This is also the size of the maximum monthly benefit they would receive.
Most TANF-Basic families consist of an adult and one or two children.
Ninety-six percent of family caretakers are female.
Almost half of TANF children are under age 6; about 63 percent of families have children under age 6.
Approximately two-thirds of TANF families live in four DHS regions: Houston, Dallas Metroplex, Edinburg (Rio Grande valley), and San Antonio.
The family is black or Hispanic in 79 percent of cases.
Only 4.6 percent of caretakers have jobs.
Caretakers must participate in CHOICES, the states welfare to work program, unless exempt. The three main reasons for being exempt are: caring for a child under age 4, illness, and disability.
In 1998, the average gross earnings of employed TANF-Basic families were $2,354 per year.
Food Stamps Client Profile:
The average food stamp household includes 2.7 persons.
Close to three-quarters (73.6 percent) are either black or Hispanic.
Females head the household in 83 percent of cases.
Again, almost two-thirds are concentrated in four DHS regions: Houston, Rio Grande Valley, Metroplex, and San Antonio.
Over 15 percent of household heads work full or part-time.
While 87.5 percent of households have income, only 35.3 percent have earned income.
Over 19 percent also receive TANF.
PLEASE NOTE: THE ABOVE DATA WERE COMPILED BEFORE THE NEW LAWS ENACTED BY THE TEXAS LEGISLATURE IN 2003, WHICH LOWERS BENEFITS AND MAKES MORE POOR PEOPLE, ESPECIALLY CHILDREN, INELIGIBLE FOR BENEFITS.
2003 FEDERAL HHS Poverty Guidelines
|
Size of
Family Unit |
48 Contiguous
States and D.C. |
Alaska |
Hawaii |
|
1 |
$ 8,980 |
$11,210 |
$10,330 |
|
2 |
12,120 |
15,140 |
13,940 |
|
3 |
15,260 |
19,070 |
17,550 |
|
4 |
18,400 |
23,000 |
21,160 |
|
5 |
21,540 |
26,930 |
24,770 |
|
6 |
24,680 |
30,860 |
28,380 |
|
7 |
27,820 |
34,790 |
31,990 |
|
8 |
30,960 |
38,720 |
35,600 |
|
For each additional
person, add |
3,140 |
3,930 |
3,610 |
Poverty Rate Rises, Household Income Declines, Census Bureau Reports
After falling for four straight years, the nation's poverty rate rose from 11.3 percent in 2000 to 11.7 percent in 2001. Median household income declined 2.2 percent in real terms from its 2000 level to $42,228 in 2001, according to reports released today by the Commerce Department's Census Bureau.
"Like the last year-to-year increase in poverty in 1991-1992 and the last decrease in real household income in 1990-1991, these changes coincided with a recession," said Daniel Weinberg, chief of the Census Bureau's Housing and Household Economic Statistics Division.
The poverty rate and the number of poor increased among several population groups between 2000 and 2001, including all families, married-couple families, unrelated individuals, non-Hispanic Whites, people 18-to-64 years old and the native population.
"The real median earnings of women age 15 and older who worked full time, year-round increased for the fifth consecutive year, rising to $29,215 -- a 3.5 percent increase between 2000 and 2001," said Weinberg.
Men with similar work experience did not experience a statistical change in earnings ($38,275). As a result, the female-to-male earnings ratio reached an all-time high of 0.76. The previous high was 0.74, first
recorded in 1996.
The reports, Poverty in the United States: 2001 and Money Income in
the United States: 2001, are available on the Internet. The data were
gathered in the 2002 Annual Demographic Supplement to the Current
Population Survey. In addition, the reports discuss experimental measures
of income and poverty that account for noncash benefits (such as food
stamps) and taxes (such as the Earned Income Credit) in income.
Poverty
According to the poverty report, about 1.3 million more people were poor
in 2001 than in 2000 -- 32.9 million versus 31.6 million. The number of
poor families increased from 6.4 million in 2000 (or 8.7 percent of all
families, a record low rate) to 6.8 million (or 9.2 percent) in 2001.
For non-Hispanic Whites, the poverty rate rose from 7.4 percent in 2000
to 7.8 percent in 2001. But poverty remained at historic lows for African
Americans (22.7 percent), Hispanics (21.4 percent) and Asians and Pacific
Islanders (10.2 percent). Among these groups, only non-Hispanic Whites (up
905,000 to 15.3 million) and Hispanics (up 250,000 to 8.0 million) saw an
increase in the number of poor.
The three-year-average (1999-2001) poverty rate for American Indians and
Alaska Natives was 24.5 percent, with an estimated 800,000 living in
poverty. American Indians and Alaska Natives were the only group to show a
decline in their poverty rate when the two-year 2000-2001 average was
compared with the two-year 1999-2000 average. (The average was used
because the American Indian and Alaska Native population is relatively
small and multiyear averages provide more reliable estimates.)
The poverty rate for the population age 18 to 64 rose from 9.6 percent
in 2000 to 10.1 percent in 2001. Children under 18 continued to have a
higher poverty rate (16.3 percent) than people 18 to 64 or 65 and over; it
was unchanged from 2000.
Increases in poverty were concentrated in metropolitan areas
(particularly outside central cities) and in the South. The poverty rate
for people living in the suburbs rose from 7.8 percent in 2000 to 8.2
percent in 2001, but did not change for those in central cities (16.5
percent) or in nonmetropolitan areas (14.2 percent). The South was the
only region to have an increase in its poverty rate from 2000 to 2001. Its
rate of 13.5 percent was the highest among all regions.
Averaging 1999 to 2001, poverty rates ranged from 6.2 percent in New
Hampshire (whose rate was not statistically different from Minnesota,
Maryland, Connecticut and Iowa) to 18.8 percent in New Mexico (whose rate did not differ from those in Arkansas, Mississippi and Louisiana). Based
on comparisons of 1999-2000 and 2000-2001, two states (South Carolina and tah) showed increases in poverty, while four states -- California,
Delaware, Massachusetts and Nevada -- experienced declines.
The average poverty threshold for a family of four in 2001 was $18,104
in annual income; compared with $14,128 for a family of three; $11,569 for
a family of two; and $9,039 for unrelated individuals.
Income
"Like the increase in poverty, the decline in real median household
income between 2000 and 2001 coincided with the recession that started in
March 2001," said Weinberg. "The decline was widespread. With the
exception of the Northeast, where income was unchanged, all regions
experienced a decline, as did each of the racial groups."
For non-Hispanic Whites, median household income declined 1.3 percent,
in real terms, between 2000 and 2001 to $46,305. For African Americans and Asians and Pacific Islanders, the drops were 3.4 percent (a loss of $1,025) to $29,470 and 6.4 percent (a loss of $3,678) to $53,635,
respectively. The percentage decline in median household income of African
Americans did not differ from that of non-Hispanic Whites and Asian and
Pacific Islanders. The real median income of Hispanics, however, remained
unchanged at $33,565. This was the first annual decline for non-Hispanic
Whites and Asians and Pacific Islanders since 1990-1991 and the first for
African Americans since 1980-1981.
The three-year-average (1999-2001) median household income estimate for
American Indians and Alaska Natives was $32,116. As with the poverty data, averages were used because the American Indian and Alaska Native population is relatively small and multiyear averages provide more
reliable estimates. Based on comparisons of two-year-average medians
(1999-2000 versus 2000-2001), the real median household income of American Indians and Alaska Natives did not change statistically.
The real median incomes of family households and of nonfamily households
declined between 2000 and 2001. Family household income dropped 1.7
percent (from $53,155 to $52,275) and nonfamily household income declined
1.5 percent ($26,012 to $25,631). These percentage declines are not statistically different.
Real median household income did not change in the Northeast between 2000 and 2001, remaining at $45,716. It did, however, decline by 3.7 percent in the Midwest (to $43,834); 2.3 percent in the West (to
$45,087); and 1.4 percent in the South (to $38,904). The South has the lowest median household income of all four regions. The percentage change in household income for the West was not statistically different from
those for the South and the Midwest. The difference between the 2001 median household incomes for the Northeast and the West was not statistically significant.
Real median household income declined by 1.6 percent for households in metropolitan areas, falling to $45,219 between 2000 and 2001. Both those inside and outside the central cities of metropolitan areas experienced a decline. Households outside metropolitan areas did not experience a change
between 2000 and 2001, remaining at $33,601.
Real per capita income was unchanged between 2000 and 2001 for the overall population ($22,851), each of the race groups and Hispanics. It was $26,134 for non-Hispanic Whites; $14,953 for African Americans;
$24,277 for Asians and Pacific Islanders; and $13,003 for Hispanics. Averaging 1999, 2000 and 2001, real median household income in Alaska, although not statistically different from the median incomes for Maryland, Connecticut and Minnesota, was higher than the values for the remaining 46
states and the District of Columbia. Conversely, median household income
for West Virginia, although not statistically different from the median
for Arkansas, was lower than the incomes of the remaining 48 states and
the District of Columbia.
Based on comparisons of two-year-average medians (comparing 1999-2000
with 2000-2001), real median household income rose in three states
(Arizona, Massachusetts and Pennsylvania) and declined in 12 (Illinois,
Indiana, Iowa, Michigan and Wisconsin in the Midwest; Alabama, Florida,
Mississippi and Tennessee in the South; Maine and Vermont in the
Northeast; and Washington in the West).
Various measures of income inequality differ on whether inequality
changed between 2000 and 2001. For example, using the Gini Index, overall
household income inequality did not change on a year-to-year basis for the
eighth consecutive year. However, the share of income going to the poorest
fifth of households declined, from 3.6 percent to 3.5 percent. Almost all
the measures examined in the report show inequality to be above its 1999
and earlier levels.
Experimental measures
The Census Bureau also produces a series of experimental estimates on
how much noncash benefits and taxes -- which are not considered in the
official measures -- affect income and poverty. The income report shows 14
experimental definitions of income.
Valuing noncash benefits and subtracting taxes also affects the
estimated poverty rate. In response to a 1995 report issued by a panel
from the National Academy of Sciences, the Census Bureau developed six
experimental poverty measures, each of which accounts for benefits and
taxes in income but differs by how they account for health care costs and
the effect of geographic differences in the cost of living. Four of the
six experimental measures showed a significant increase in poverty between
2000 and 2001, while two showed no change.
All of the alternative measures also present a different picture of who
is poor than the official measure presents. Among the groups with lower
experimental poverty rates are people in families with a female
householder with no spouse present, children under 18 and African
Americans.
Among the groups with higher poverty rates using the alternative
measures are non-Hispanic Whites, people in married-couple families,
people in male householder families, those age 65 and over and, when the
effect of geographic differences on the cost of living are taken into
account, people who live in areas with high housing costs (such as
Hispanics).
The estimates in these reports are based on the 2000, 2001 and 2002
Current Population Survey Annual Demographic Supplements. These income and poverty estimates, the first to use population estimates based on Census
2000 results, also include the results of a sample expansion of 28,000
households. The larger sample was designed to improve the reliability of
national and state estimates.
Because results presented in these reports were recalculated based on
the expanded sample and Census 2000 results, they may differ from
previously released estimates. All statements in the reports have
undergone statistical testing, and all comparisons cited are statistically
significant.
Source: U.S. Census Bureau
Public Information Office
(301) 763-3030
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NEWS RELEASE
EFFORTS TO CLOSE ACHIEVEMENT GAP MUST BEGIN MUCH EARLIER, NEW REPORT SHOWS
Disadvantaged Children Start Kindergarten Trailing Behind
Children from impoverished families start kindergarten at a tremendous disadvantage, trailing behind other children in the basic skills that are the foundation for learning math, reading, and other subjects, according to a new report written by two University of Michigan education experts and published today by the Economic Policy Institute. The report, Inequality at the Starting Gate, demonstrates a pressing national need to refocus and redouble efforts to close the gap well before children start school.
For this book-length study, authors Valerie E. Lee and David T. Burkam analyzed information from a nationwide U.S. Department of Education survey of more than 16,000 children at the point where they enter kindergarten. They found that children from the lowest socioeconomic group arrive at school with fewer cognitive skills than children from the higher groups.
Starting Gate paints a clear picture of how children's vastly disparate lives and family resources directly affect their test scores when they enter school. The lives of disadvantaged children are marked by a relative dearth of many of the learning and enriching experiences that are commonly associated with childhood. Compared to children from the families in the highest fifth of socioeconomic status (SES) - measured by income and the parents' occupations and education levels - the kindergartner whose family falls in the lowest fifth:
- Owned just 38 books, compared to the 108 owned by the top fifth, and was read to much less often (63% versus 94% were read to 3 or more times a week).
- Was far less likely to have a computer in the home (20% versus 85%)
- Was much less likely to have been taken to a museum, a public library, a play, or to have participated in dance, art, music, or crafts classes.
- Spent the most hours per week watching television (18 versus 11 hours)
- Was far more likely to have only one parent (48% versus 10%) and to have moved around more. (Over 48% of the most impoverished children have lived in at least three different homes by the time they enter kindergarten, while over 80% of children from the families of the highest socioeconomic status have lived in no more than two homes.)
"For everyone who cares about giving every child a fair chance to succeed, this study is very important," said Lawrence Mishel, EPI's president. "It shows us tangible evidence of the gap that poverty creates for children. If we are serious about closing the achievement gap and leaving no child behind, we must do more and we must do it earlier."
The report examines children who are at risk for school failure by exploring the tie between social background and academic skills. The authors look at a variety of factors, including family income, parents' education and occupation, non-English speaking households, the number of children in the home, participation in learning activities, time spent watching television, and parental involvement in play and learning activities. The report notes, for example, that:
- The average achievement score for children in the highest socioeconomic group surveyed is 60% higher than in the lowest group.
- Children who attended center-based child care before kindergarten show higher achievement, yet only 20% of low-SES kindergartners are likely to have attended, compared to 65% of upper-SES kindergartners.
- Low-SES and minority children are likely to experience larger class sizes, less outreach to smooth the transition to school, and fewer prepared and experienced teachers.
- Fourteen percent of low-SES kindergartners live in non-English speaking households, whereas only 5% of their upper-SES peers do.
Starting Gate underscores that children do not begin their education as equals. Math and reading scores for new kindergartners from the lowest socioeconomic group are 60% and 56% lower, respectively, than those of students at the highest end. The report has implications not only for how children from disadvantaged backgrounds can be assisted, but also for what role schools, especially ones that serve predominantly low-income children, and educator training can play to turn back the tide of inequality.
"Disparities in children's academic skills are substantial on their first day of formal schooling," Lee said, "so solutions that focus only on the school setting come too late to have as much impact as we would hope to achieve."
Lee and Burkam point out that the problem can be compounded when children from impoverished backgrounds enter schools with fewer resources, bigger classes, and fewer qualified teachers.
"We promise our children that education is the 'great equalizer' of society," Burkam says. "Yet social and economic factors, and low school quality in some cases, can leave some disadvantaged children without any realistic hope of catching up. Addressing these inequities is simply a matter of keeping our nation's promise of high-quality schooling for all children."
Although the report discusses the achievement gap between white and minority children, the research makes it clear that socioeconomic status, not race or ethnicity, is the most important factor explaining why some students aren't prepared for school. For example, only 9% of white kindergartners were classified in the lowest socioeconomic bracket, compared to a third of African-American kindergartners who were identified in the same category.
The authors analyzed the U.S. Department of Education's Early Childhood Longitudinal Study, Kindergarten Cohort (ECLS-K), a representative picture of five and six-year-olds nationwide who began kindergarten in 1998. Starting Gate is drawn from the lives of more than 16,000 children with test scores and whose parents provided full information about race, ethnicity and socioeconomic status.
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VIEW EXCERPT FROM INEQUALITY AT THE STARTING GATE AT: http://www.epinet.org/books/starting_gate.html
The Economic Policy Institute is a non-profit, non-partisan economic think tank founded in 1986. The Institute is located on the web at http://www.epinet.org.
THE 2003 HHS POVERTY GUIDELINES
There are two slightly different versions of the federal poverty measure:
- The poverty thresholds, and
- The poverty guidelines.
The poverty thresholds are the original version of the federal poverty measure. They are updated each year by the Census Bureau (although they were originally developed by Mollie Orshansky of the Social Security Administration). The thresholds are used mainly for statistical purposes for instance, preparing estimates of the number of Americans in poverty each year. (In other words, all official poverty population figures are calculated using the poverty thresholds, not the guidelines.) Poverty thresholds since 1980 and weighted average poverty thresholds since 1959 are available on the Census Bureau's Web site.
The poverty guidelines are the other version of the federal poverty measure. They are issued each year in the Federal Register by the Department of Health and Human Services (HHS). The guidelines are a simplification of the poverty thresholds for use for administrative purposes for instance, determining financial eligibility for certain federal programs. (The full text of the Federal Register notice with the 2003 poverty guidelines is available here.)
The poverty guidelines are sometimes loosely referred to as the "federal poverty level" (FPL), but that phrase is ambiguous and should be avoided, especially in situations (e.g., legislative or administrative) where precision is important. A more extensive discussion of poverty thresholds and poverty guidelines is available on the Institute for Research on Poverty's Web site.
2003 HHS Poverty Guidelines
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Size of
Family Unit |
48 Contiguous
States and D.C. |
<>Alaska |
<>Hawaii |
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1 |
$ 8,980 |
$11,210 |
$10,330 |
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2 |
12,120 |
15,140 |
13,940 |
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3 |
15,260 |
19,070 |
17,550 |
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4 |
18,400 |
23,000 |
21,160 |
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5 |
21,540 |
26,930 |
24,770 |
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6 |
24,680 |
30,860 |
28,380 |
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7 |
27,820 |
34,790 |
31,990 |
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8 |
30,960 |
38,720 |
35,600 |
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For each additional
person, add |
3,140 |
3,930 |
3,610 |
SOURCE: Federal Register, Vol. 68, No. 26, February 7, 2003, pp. 6456-6458.
The poverty guidelines (unlike the poverty thresholds) are designated by the year in which they are issued. For instance, the guidelines issued in February 2003 are designated the 2003 poverty guidelines. However, the 2003 HHS poverty guidelines only reflect price changes through calendar year 2002; accordingly, they are approximately equal to the Census Bureau poverty thresholds for calendar year 2002. (The 2002 thresholds are expected to be issued in final form in September or October 2003; a preliminary version of the 2002 thresholds is now available from the Census Bureau.) The computations for the 2003 poverty guidelines are available.
Go to the page of Information Contacts and References on the Poverty Guidelines, the Poverty Thresholds, and the Development and History of U.S. Poverty Lines.
Return to the main Poverty Guidelines, Research, and Measurement page.
Last updated 02/07/03
The following works from my personal collection are available to my students for further reading and/or for a class report for extra credit.
The Reluctant Welfare State: American Social Welfare Polices, Past, Present, and Future, 3rd Edition. Bruce S. Jansson. New York: Brooks/Cole Publishing Co., 1997. 406 Pages.
The New World of Welfare, by Rebecca Blank and Ron Haskins, Editors. Washington, DC: Brookings Institution Press, 2001. 514 Pages.
Facing Up to the American Dream: Race, Class, and the Soul of the Nation, by Jennfer L. Hochschild. Princeton, NJ: Princeton University Press, 1995. 412 Pages.
The Working Class Majority: Americas Best Kept Secret. Michael Zweig. Ithaca, NY: Cornell University Press/ILR Press, 2000. 198 Pages.
Inequality and Stratification: Race, Class, and Gender, Third Edition, by Robert A. Rothman. Upper Saddle River, NJ: Prentice Hall, 1999, 242 Pages.
The War Against the Poor: The Underclass and Antipoverty Policy, by Herbert J. Gans. New York: Basic Books, 1995. 195 pages.
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Child Poverty and Family Income
Childhood poverty has both immediate and lasting negative effects. Children in low-income families fare less well than children in more affluent families for many of the indicators presented in this report, including indicators in the areas of economic security, health, and education. Compared with children living in families above the poverty line, children living below the poverty line are more likely to have difficulty in school,22 to become teen parents,23 and, as adults, to earn less and be unemployed more frequently.22 The child poverty rate provides important information about the percentage of U.S. children whose current circumstances make life difficult and jeopardize their future economic well-being.
Indicator ECON1A: Percentage of related children under age 18 in poverty by family structure, 1980-2000
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NOTE: Estimates refer to children who are related to the householder and who are under age 18. In 2000, the average poverty threshold for a family of four was $17,603 in annual income.
SOURCE: Bureau of the Census, March Current Population Survey.
- The proportion of children living in families with incomes below the poverty threshold was 16 percent in 2000. The official poverty rate for children has fluctuated since the early 1980s: it reached a high of 22 percent in 1993 and has since decreased to 16 percent, the lowest rate since 1979. In response to the National Academy of Science's recommendations, the Census Bureau is researching alternative poverty measures.24
- This decrease in the poverty rate is also apparent for children living in female-householder (no spouse present) families. In 1980, 51 percent of children living in female-householder (no spouse present) families were living in poverty; by 2000, this proportion had decreased to 40 percent. This change is even more pronounced for black children: the percentage of black children living in female-householder families in poverty wavered around 66 percent until 1993 and has since declined to 49 percent in 2000.
- Children under age 6 are more likely to be living in families with incomes below the poverty line than children ages 6 to 17. In 2000, 17 percent of children under age 6 lived in poverty, compared with 15 percent of older children.
- Children in married-couple families are much less likely to be living in poverty than children living only with their mothers. In 2000, 8 percent of children in married-couple families were living in poverty, compared with 40 percent in female-householder families.
- This contrast by family structure is especially pronounced among certain racial and ethnic groups. For example, in 2000, 8 percent of black children in married-couple families lived in poverty, compared with 49 percent of black children in female-householder families. Twenty-one percent of Hispanic children in married-couple families lived in poverty, compared with 48 percent in female-householder families.
- The poverty rate is much higher for black or Hispanic children than for white, non-Hispanic children. In 2000, 9 percent of white, non-Hispanic children lived in poverty, compared with 30 percent of black children and 27 percent of Hispanic children.
- In 2000, 6 percent of all children lived in families with incomes less than half the poverty level, or $8,802 a year on average for a family of four, while 26 percent of children lived in families with incomes less than 150 percent of the poverty level, or $26,405 a year on average for a family of four.
Additional data can be found in a related report .
The full distribution of the income of children's families is important, not just the percentage of children living in poverty. The rise in the number of children living in affluent families tells us that a growing proportion of America's children live in households experiencing economic well-being. The growing gap between rich and poor children suggests that poor children may experience more relative deprivation even if the percentage of poor children is declining.
Indicator ECON1B: Percentage of related children under age 18 by family income relative to the poverty line, 1980-2000
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NOTE: Estimates refer to children who are related to the householder and who are under age 18. The income classes are derived from the ratio of the family's income to the family's poverty threshold. Extreme poverty is less than 50 percent of the poverty threshold (i.e., $8,802 for a family of four in 2000). Poverty is between 50 and 99 percent of the poverty threshold (i.e., between $8,802 and $17,602 for a family of four in 2000). Low income is between 100 and 199 percent of the poverty threshold (i.e., between $17,603 and $35,205 for a family of four in 2000). Medium income is between 200 and 399 percent of the poverty threshold (i.e., between $35,206 and $70,411 for a family of four in 2000). High income is 400 percent of the poverty threshold or more (i.e., more than $70,412 for a family of four in 2000).25
SOURCE: Bureau of the Census, March Current Population Survey.
- In 2000, more children lived in families with medium income (34 percent) than in other income groups. Smaller percentages of children lived in families with low income and with high income (21 and 30 percent, respectively).
- The percentage of children living in families with medium income fell from 41 percent in 1980 to 34 percent in 2000, while the percentage of children living in families with high income rose from 17 to 30 percent.
- The percentage of children living in families experiencing extreme poverty was 7 percent in 1980. This percentage rose to 10 percent in 1992 and has gradually decreased to 6 percent in 2000. Concurrently, three times as many children lived in families with very high income in 2000 than in 1980 (13 and 4 percent, respectively).
Additional data can be found in a related report .
Bullets contain references to data that can be found in Table ECON1A and Table ECON1B. |
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Industries with the fastest wage and salary employment growth, 2000-2010
Table 3a. Industries with the fastest wage and salary employment growth, 2000-2010 Thousands Change Average annual of jobs rate of change Industry description 2000 2010 2000-2010 2000-2010
Computer and data processing services 2,095 3,900 1,805 6.4 Residential care 806 1,318 512 5.0 Health services, nec. 1,210 1,900 690 4.6 Cable and pay television services 216 325 109 4.2 Personnel supply services 3,887 5,800 1,913 4.1 Warehousing and storage 206 300 94 3.8 Water and sanitation 214 310 96 3.8 Miscellaneous business services 2,301 3,305 1,004 3.7 Miscellaneous equipment rental and leasing 279 397 118 3.6 Management and public relations 1,090 1,550 460 3.6
NOTE: nec. = not elsewhere classified
SOURCE: http://www.bls.gov/news.release/ecopro.t03.htm |
