A Changing Nation—Wealth and Income Distribution

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CHAPTER 4
A CHANGING NATION—WEALTH AND INCOME DISTRIBUTION

The U.S. Census Bureau has released a number of studies showing a change in the distribution of wealth and earnings in the United States. This change has resulted in an increase in the gap between the rich and the poor. Unlike many short-term economic changes that are often the product of normal economic cycles of growth and recession, these changes seem to indicate fundamental changes in American society.

GROWING INCOME INEQUALITY

The Census Bureau has tracked a growing inequality in income in the United States that began in the 1980s. For comparison purposes, the bureau divides the population into five income groups (quintiles). In 2001 the income differences were close to record highs, with only the top fifth having increased its percentage of the nation's income since the 1980s. According to the Census Bureau's Historical Income Table for income dispersion among the five quintiles, the average income of the top fifth of households, after adjusting for inflation, was 27.7 percent higher in 2001 than in 1990. In contrast, the average income of the poorest fifth of households was only 7 percent higher than in 1990. Census data show that in 2001 the quintile of households with the highest incomes received 50 percent of the national income, about the same as that received by the other 80 percent of the population combined.

Why Is the "Income Gap" Growing?

Many reasons exist to explain the growing inequality, although observers disagree about which are more important. One reason is that the proportion of the elderly population, who are likely to earn less, is growing. Using the data from the Census 2000, the bureau has analyzed income data as it relates to various characteristics, including race, age, employment, and education level of householder, as well as type and size of household. These data showed that in 2001, 20.6 percent of all households were headed by a householder sixty-five years of age or older. (A "household" may consist of a single individual or a group of related or unrelated people living together, while a "family" is made up of related individuals.) In addition, more people are living in nonfamily situations (either alone or with nonrelatives). In 2001, 32 percent lived in nonfamily households, which tend to earn about half the median income of family households. (See Table 4.1.)

Also contributing to growing income inequality is the increase in the number of households headed by females, as well as the increase in labor force participation of women. In 2001 the proportion of female-headed households constituted 29.8 percent of all households in the nation. (See Table 4.1.) Female-headed households typically earn significantly less than other types of households. According to the U.S. Census Bureau in "Facts for Features" (February 14, 2003), on average, women earn 76 percent of what men earn.

Other factors that contribute to the growing income gap include the decline in the influence of unions and the changing occupational structure, in general, from better-paying manufacturing positions to lower-paying service jobs. The average wage paid to less-educated workers (after adjusting for inflation) has actually dropped since the 1980s. In 2000 the annual income of male workers who attended one to three years of high school without graduating was 21.5 percent lower than in 1980. High-school graduates experienced an 18 percent wage decline. In addition, the proportion of low-wage workers who receive employer-based health insurance and pension benefits dropped significantly between 1979 and 2000.

MEDIAN HOUSEHOLD INCOMES

Table 4.2 shows the distribution of median income for households from 1967 to 2002. ("Median" means that half the measured values are above the specified value and half are below.) In 2002 median income was $42,409, 10.2 percent above the level ten years earlier and 30.1 percent

TotalUnder $2,500$2,500 to $4,999$5,000 to $7,499$7,500 to $9,999$10,000 to $12,499$12,500 to $14,999$15,000 to $17,499$17,500 to $19,999$20,000 to $22,499$22,500 to $24,999$25,000 to $27,499
All races
All households109,2972,1431,2222,9443,4863,9083,6064,0053,4033,8923,2783,799
Type of residence
Inside metro areas88,1121,6729272,1332,6052,9202,6773,0632,5702,9702,4712,919
Inside central cities32,5408565071,1691,3221,3841,1701,3971,0941,2681,0491,263
One million or more20,440572311674871866718871605764629782
Under one million12,099284195495451518452526489504420481
Outside central cities55,5728164209641,2831,5361,5071,6661,471,7021,4221,656
One million or more38,3555682655268309929281,0549841,0919341,023
Under one million17,217248155438453544579612492611489633
Outside metro areas21,185471295810881988929942832921807879
Regions/divisions
Northeast21,128400242546772787644755601705574608
New England5,7357840140212218171184150186141180
Middle Atlantic15,393322202406561569473571451519433428
Midwest25,755374263664678833811930855891786916
East North Central18,050286185467468583593691585613542639
West North Central7,7048878197210249218239270278245278
South39,1519185201,3051,3551,5111,4021,5601,2861,5131,2191,488
South Atlantic20,827480272617692735723764663768657783
East South Central6,736185100307288285274313254258180266
West South Central11,588253148380375491405483369487382439
West23,263451197429680777749760662783699786
Mountain6,92512459144186237213243227255207265
Pacific16,338327138285495541535517435528492521
Type of household
Family households74,3291,0995698271,0921,4691,5322,0581,8622,2861,9812,319
Married-couple families56,7474631532924197418251,2361,0791,4091,2471,498
Male householder, nsp4,438102367383116102153119160152200
Female householder, nsp13,143534380461590612605668664717582622
Nonfamily households34,9691,0446532,1172,3942,4392,0741,9471,5411,6061,2971,479
Male householder15,579449260628749729623650518724567721
Living alone12,004408235587703668547582453607467625
Female householder19,3905943931,4881,6441,7101,4511,2971,023882730758
Living alone16,7715553801,4461,6141,6521,3831,215955820645661
Age of householder
Under 65 years86,8211,8559111,8491,8592,0681,8812,4662,0552,6852,2332,830
15 to 24 years6,391283190229267289250356298333298342
25 to 34 years18,9884652022158470419559476678532740
35 to 44 years24,031422191375418388399578471662529766
45 to 54 years22,208341187398346472385469434546465549
55 to 64 years15,203345141527470449429504376465409433
65 years and over22,4762883111,0951,6261,8401,7251,5391,3481,2071,045969
65 to 74 years11,472124140520642722638648584605488506
75 years and over11,0041641715759841,1181,087892764602556463
Mean age of householder48.844.748.155.658.358.158.654.554.551.051.648.8

above the 1967 level. In 1967, 22.2 percent of households earned less than $15,000 per year, and 24 percent earned $50,000 or more. By 2002, 16.1 percent earned less than $15,000 while 43.4 percent earned $50,000 or more.

Types of Households

In 2001 family households made up nearly 68 percent of all households in the United States. Their median income was $52,275. The type of household, however, made a big difference in income level. The median income of families headed by married couples was $60,471. But male householders with no wife present made only $40,715, and female householders with no husband present earned only $28,142. Nonfamily households showed consistently lower median incomes. Female householders living alone earned only $17,868, the lowest median income. (See Table 4.1.)

Race and Hispanic Origin

The level of income also varied widely by race and ethnicity. According to the U.S. Census Bureau in Income in the United States: 2002 (Washington, DC, 2003), in 2002 the median income for non-Hispanic, white alone households (meaning those households for which respondents indicated one race, in this case white, non-Hispanic) was $46,900; for African-Americans alone, $29,026; and for Hispanics alone, $33,103. Across the scale, African-American and Hispanic households tend to have lower earnings than non-Hispanic white households. More than 27 percent of African-American

TotalUnder $2,500$2,500 to $4,999$5,000 to $7,499$7,500 to $9,999$10,000 to $12,499$12,500 to $14,999$15,000 to $17,499$17,500 to $19,999$20,000 to $22,499$22,500 to $24,999$25,000 to $27,499
Size of household
One person28,7759636152,0332,3162,3201,9301,7971,4091,4271,1121,286
Two people36,2406032544836079069871,2501,1271,3841,2231,348
Three people17,742299157194283309337444438472397509
Four people15,794153116124164214217288229373303372
Five people6,948755273728781133136147152186
Six people2,4383522182356385731644864
Seven people or more1,360156191916163533254235
Mean size of household2.582.072.031.601.641.761.832.042.092.192.282.28
Number of earners
No earners22,6611,5937152,0952,3552,2891,9801,6811,3791,133989863
One earner38,6395054487531,0001,3941,3301,9071,5612,1321,6312,111
Two earners or more47,997455895131225296417463627658824
2 earners37,971415492117213276392437572596742
3 earners7,5553431413202522535375
4 earners or more2,47110000004287
Mean number of earners1.390.280.470.330.370.480.550.700.750.900.951.03
Work experience of householder
Total109,2972,1431,2222,9443,4863,9083,6064,0053,4033,8923,2783,799
Worked77,2314884497341,0071,3711,4231,9921,7532,3821,9202,549
Worked at f-t jobs66,5892912334225588969571,5161,3481,997,5602,176
50 weeks or more56,274159641442465565891,0879631,5621,1991,797
27 to 49 weeks6,844435381137164214260243284226276
26 weeks or less3,4718911519717417515416914252134104
Worked at p-t jobs10,643197216312449476466477406384361372
50 weeks or more5,6213457100203245204267233224171207
27 to 49 weeks2,3062630731061051249372788578
26 weeks or less2,7161361291391411261381161008210588
Did not work32,0661,6557732,2092,4792,5372,1832,0121,6491,5101,3581,250
Educational attainment of householder
Total, 25 yrs & over102,9061,8601,0322,7153,2193,6193,3563,6493,1053,5592,9803,456
Less than 9th grade6,841205202633640634539473384350264274
9th to 12th grade, no diploma9,437293244585660691547581463554336470
High school graduate (includes equivalency)31,3605962798751,1041,2761,2671,3991,2121,3311,2341,257
Some college, no degree18,141280173299426495473592518653504648
Associate Degree8,57511741128149195207206169233207282
Bachelor's Degree or more28,55236892195240328324399359437434525
Bachelor's Degree18,35924865139177238225290227308313377
Master's Degree6,97475184445675964918395112
Professional Degree1,73327741310212928241923
Doctorate Degree1,486171751319161321614
Tenure
Owner occupied74,3991,0144661,1861,4502,0572,0422,1781,9892,1431,9392,172
Renter occupied33,2971,0497111,6801,9451,7511,5091,7501,3451,6431,2711,548
Occupier paid no cash rent1,600804578911005577691066979

alone households earned less than $15,000 per year, compared to 19.1 percent of Hispanic households and 13.9 percent of non-Hispanic white households from the alone category. Minorities were also less likely to have high incomes. While 16 percent of non-Hispanic, white alone households earned $100,000 or more in 2002, only 6.4 percent of African-American alone households and 7.2 percent of Hispanic households earned that much.

Age

The age of the householder is also a factor in the level of income. For example, in 2001 householders age sixty-five and older, who are usually past their peak earning years, had a median income of only $23,118, while householders under age sixty-five had a median income of $49,227. Those from forty-five to fifty-four, the highest-earning age group, had a median income of $58,045. (See Table 4.1.)

Work Experience

Although working is an important factor in avoiding poverty, working in itself may not be enough to save a household from poverty. Of the 100.7 million full-time, year-round workers in the United States in 2002, more than 2.6 million did not earn enough to exceed the poverty threshold ($9,359

$27,500 to $29,999$30,000 to $32,499$32,500 to $34,999$35,000 to $37,499$37,500 to $39,999$40,000 to $42,499$42,500 to $44,999$45,000 to $47,499$47,500 to $49,999$50,000 to $52,499$52,500 to $54,999$55,000 to $57,499
All races
All households3,0433,9302,8183,5712,5433,4332,2782,6552,3242,8902,0332,400
Type of residence
Inside metro areas2,3533,0692,1702,8282,0022,7621,7612,1021,8222,3471,6711,932
Inside central cities9411,2458151,1417351,106615779583812587630
One million or more530785488721430697406477341549327406
Under one million411461326420305409208302242264260224
Outside central cities1,4131,8241,3561,6871,2671,6561,146,3231,2391,5341,0841,302
One million or more8411,1998601,1098501,1557758497841,008757925
Under one million572624495577417501371474455526327378
Outside metro areas690861648743541671516553502543362467
Regions/divisions
Northeast529748472603419582437489407548381478
New England136194109145116149851292114790144
Middle Atlantic93554363458303433352360287401292333
Midwest741909703848621743586661590748533599
East North Central540598489583421546416468419553346404
West North Central201310213265200197170193171195186195
South1,1591,3921,0461,3879161,3198169528461,013658760
South Atlantic84730548770454698471528485543345443
East South Central23022317222418919912314617115122127
West South Central34643932739427322223278191320190189
West614881597733587789439553481580461563
Mountain1892971962401702051591731512035169
Pacific42558440149341784280380330377310394
Type of household
Family households1,9992,4891,9192,3191,7672,2771,6701,9501,7952,0711,5821,819
Married-couple families1,3241,6771,3211,6251,2811,7051,2891,5101,4071,6471,2801,479
Male householder, nsp14622316320114117010630103172113109
Female householder, nsp529590435493346402275310286252189232
Nonfamily households1,0441,4408991,2527751,156608705529818451581
Male householder486740409634429630311405277448256286
Living alone386627321527342491226304176342169180
Female householder558700490618346526296300252370195295
Living alone478635400534285441218227183299129208
Age of householder
Under 65 years2,2183,0582,1232,8522,0262,9501,8502,2811,9722,5741,7382,152
15 to 24 years219312216229174227118149158159109135
25 to 34 years513770528769505763408565431601383529
35 to 44 years580826577775536834530621561815494607
45 to 54 years478648417620454687443558474621463561
55 to 64 years428502384460356438351387348379289320
65 years and over825872695719517483427374352316295248
65 to 74 years439487392386298286277200231188197172
75 years and over385385303333219197150175122129876
Mean age of householder50.548.049.047.547.945.348.246.246.644.846.744.8

for a single person under age sixty-five, $18,556 for a family of four). Of all workers, full-or part-time, nearly six percent remained in poverty. However, those who worked did fare better than those who did not, with 5.9 percent of workers in poverty compared to 21 percent of those who did not work at all during 2002. (See Table 4.3.)

Education

Not surprisingly, the more education a person has, the more likely he or she is to earn a higher income. For example, according to U.S. Census Bureau historical income tables for 2000, for men with doctoral degrees, the median personal income was $70,961, and for women with doctoral degrees, the median personal income was $50,430. For those with less than a ninth-grade education, men earned a median income of $17,658, and women earned a median income of $11,370. High-school graduates (including those with general equivalency diplomas) fared better, with men earning $30,665 and women earning $18,393.

Ratio of Income to Poverty Levels

For purposes of analysis, the Census Bureau uses income-to-poverty ratios, calculated by dividing income by the respective poverty threshold for each family size. The resulting number is then tabulated on a scale that includes three categories, "poor," "near-poor," and "non-poor." Poor persons have a poverty ratio below 1.0. Persons above the poverty level are divided into two groups: the "near-poor" and the "non-poor." The "near-poor" have a poverty ratio between 1.00 and 1.24 (100 percent to 124 percent of the

$27,500 to $29,999$30,000 to $32,499$32,500 to $34,999$35,000 to $37,499$37,500 to $39,999$40,000 to $42,499$42,500 to $44,999$45,000 to $47,499$47,500 to $49,999$50,000 to $52,499$52,500 to $54,999$55,000 to $57,499
All races
All households3,0433,9302,8183,5712,5433,4332,2782,6552,3242,8902,0332,400
Type of residence
Inside metro areas2,3533,0692,1702,8282,0022,7621,7612,1021,8222,3471,6711,932
Inside central cities9411,2458151,1417351,106615779583812587630
One million or more530785488721430697406477341549327406
Under one million411461326420305409208302242264260224
Outside central cities1,4131,8241,3561,6871,2671,6561,146,3231,2391,5341,0841,302
One million or more8411,1998601,1098501,1557758497841,008757925
Under one million572624495577417501371474455526327378
Outside metro areas690861648743541671516553502543362467
Regions/divisions
Northeast529748472603419582437489407548381478
New England136194109145116149851292114790144
Middle Atlantic93554363458303433352360287401292333
Midwest741909703848621743586661590748533599
East North Central540598489583421546416468419553346404
West North Central201310213265200197170193171195186195
South1,1591,3921,0461,3879161,3198169528461,013658760
South Atlantic84730548770454698471528485543345443
East South Central23022317222418919912314617115122127
West South Central34643932739427322223278191320190189
West614881597733587789439553481580461563
Mountain1892971962401702051591731512035169
Pacific42558440149341784280380330377310394
Type of household
Family households1,9992,4891,9192,3191,7672,2771,6701,9501,7952,0711,5821,819
Married-couple families1,3241,6771,3211,6251,2811,7051,2891,5101,4071,6471,2801,479
Male householder, nsp14622316320114117010630103172113109
Female householder, nsp529590435493346402275310286252189232
Nonfamily households1,0441,4408991,2527751,156608705529818451581
Male householder486740409634429630311405277448256286
Living alone386627321527342491226304176342169180
Female householder558700490618346526296300252370195295
Living alone478635400534285441218227183299129208
Age of householder
Under 65 years2,2183,0582,1232,8522,0262,9501,8502,2811,9722,5741,7382,152
15 to 24 years219312216229174227118149158159109135
25 to 34 years513770528769505763408565431601383529
35 to 44 years580826577775536834530621561815494607
45 to 54 years478648417620454687443558474621463561
55 to 64 years428502384460356438351387348379289320
65 years and over825872695719517483427374352316295248
65 to 74 years439487392386298286277200231188197172
75 years and over385385303333219197150175122129876
Mean age of householder50.548.049.047.547.945.348.246.246.644.846.744.8

poverty level), and the "non-poor" have an income-to-poverty ratio of 1.25 (125 percent of the poverty level) and above.

In 2002, 12.1 percent of the total population had income-to-poverty ratios under 1.00; in other words, close to 34.6 million persons in the United States had incomes below the poverty threshold. Those under eighteen years of age were most likely to be poor (16.7 percent of the juvenile population), followed by those ages eighteen to twenty-four (16.5 percent of the population for that age group). More than 18 percent of families with children under six years of age had income-to-poverty ratios below 1.00, driven by the large number of female-headed households, which typically have lower incomes. In addition, nearly a quarter (22.9 percent) of all single females had ratios below the poverty threshold. (See Table 3.4 in Chapter 3.)

Of the total population, 4.4 percent (12.5 million people) had an income classified as "near-poor," between 100 and 125 percent of the poverty threshold. (In Table 3.4 in Chapter 3, the right-hand column labeled "Under 1.25" includes all those with an income-to-poverty ratio of less than 1.25. Consequently, this figure includes both poor and near-poor. To calculate the figures on only the near-poor, figures in the middle column, "Under 1.00," must be subtracted from figures in the column "Under 1.25.")

$57,500 to $59,999$60,000 to $62,49962,500 to $64,999$65,000 to $67,499$67,500 to $69,999$70,000 to $72,499$72,500 to $74,999$75,000 to $77,499$77,500 to $79,999$80,000 to $82,499$82,500 to $84,999$85,000 to $87,499
All races
All households1,7832,4241,6561,9731,5471,9071,4431,8271,2161,5611,1371,317
Type of residence
Inside metro areas1,4731,9891,3341,6261,2461,5811,1991,5141,0371,3359881,103
Inside central cities494679416517381500399459302418295337
One million or more298432268340244323249301181277184214
Under one million196247148177137177150159121141111123
Outside central cities9781,3109181,1098651,0818011,054735917693766
One million or more670915623756607767555774494669508552
Under one million309395295353258314245281241248185213
Outside metro areas310435322348301325244314179226148215
Regions/divisions
Northeast307508297395293384260320264282245255
New England941498112682105739576927593
Middle Atlantic213359216269211279188224189191170162
Midwest518554453472438470349475299397272318
East North Central370370312317271304239333207268194200
West North Central1481841411551671661101429312978117
South556810564689493653498638423489367441
South Atlantic263467311374279370258348234252203236
East South Central931369011553109859276936685
West South Central20020716320016217515619811214498120
West402552342417323399336396230393252303
Mountain1181811021298711491117681087588
Pacific284372240288236285245279162285177215
Type of household
Family households1,4501,8201,3261,6291,2881,5361,2261,4659991,3379501,103
Married-couple families1,1821,5281,0931,4121,1051,3251,0651,2678741,1588261,003
Male householder, nsp8910276714376476947783144
Female householder, nsp179191157146140135114129771019357
Nonfamily households333604330344259371217363218224187214
Male householder15933819920315821613722612216192118
Living alone88244125128751346913970925262
Female householder1742651311411011558013796629496
Living alone91188857969105507749314954
Age of householder
Under 65 years1,6062,2201,4711,7881,4051,7201,2831,6811,0991,4811,0311,230
15 to 24 years947269697474515534212741
25 to 34 years444621335457324445219356239315196241
35 to 44 years415666424531427459417544378460330411
45 to 54 years409557382489344459389492306439309365
55 to 64 years24430326124323628220823314224617072
65 years and over177205185185142187160471177910587
65 to 74 years114147120120861321049583455763
75 years and over635865655756565234344824
Mean age of householder44.343.946.044.645.144.946.745.144.945.046.244.7

NET WORTH OF HOUSEHOLDS

Income is one measure of a household's economic well-being; another measure is net worth, that is, the value of assets (what a person owns) minus any debts (what a person owes). In 2000 the median net worth of all households was $55,000 or $13,473 when home equity was excluded. While the median net worth of the lowest quintile was only $7,396, the median net worth of the highest quintile was $185,500. (See Table 4.4.)

Race and Hispanic Origin

The Census Bureau found huge disparities in net worth among the various sectors of society. The overall median net worth of a non-Hispanic white household in 2000 ($79,400) was more than ten times that of an African-American household ($7,500). In 2000 the highest quintile among whites had a median worth of $208,023, while among African-Americans, the median net worth of the highest one-fifth was $65,141. Among Hispanics, the median net worth of the highest quintile was $73,032. In the lowest quintile, the median net worth of whites was $24,000, while for African-Americans it was only $57, and $500 for Hispanics. (See Table 4.4.)

Age and Household Type

As householders age, they have greater opportunity to accumulate wealth. For many young and middle-aged workers, the accumulation of assets is one of the primary goals of their employment. As workers age and acquire

$57,500 to $59,999$60,000 to $62,49962,500 to $64,999$65,000 to $67,499$67,500 to $69,999$70,000 to $72,499$72,500 to $74,999$75,000 to $77,499$77,500 to $79,999$80,000 to $82,499$82,500 to $84,999$85,000 to $87,499
Size of household
One person179432210206144238119215119123101116
Two people707823617686531666539660417559356422
Three people372443318401323394280350252310239308
Four people320492298412319375300380265359278287
Five people121151135160134160138163117141114122
Six people635149815654463131473241
Seven people or more223330273919212816221720
Mean size of household2.942.802.943.063.142.963.082.963.083.103.193.15
Number of earners
No earners7910273716673796435354921
One earner439814447543315555297505246361235279
Two earners or more1,2641,5091,1361,3601,1671,2791,0681,2599351,1648531,018
2 earners1,0021,2619011,087889990796964697905617770
3 earners211201184207220217203235177188156183
4 earners or more514650665872696061718064
Mean number of earners1.891.751.871.881.981.881.991.892.061.982.072.05
Work experience of householder
Total1,7832,4241,6561,9731,5471,9071,4431,8271,2161,5611,1371,317
Worked1,5552,1331,4281,7101,3531,6441,2521,6351,0861,4089851,195
Worked at f-t jobs1,3801,9601,2631,5651,1951,5121,1221,5069571,2739201,109
50 weeks or more1,1981,7591,1181,3681,0651,3499851,3398441,1628221,008
27 to 49 weeks148147109147931249312383877273
26 weeks or less345436493738444530232628
Worked at p-t jobs1751731651461591321301291281366586
50 weeks or more8610697889484726380753754
27 to 49 weeks48313829282636383235179
26 weeks or less40353128362222816261212
Did not work228291228263194263191192131152151123
Educational attainment of householder
Total, 25 yrs & over1,6892,3521,5871,9041,4731,8331,3931,7731,1821,5391,1101,276
Less than 9th grade416028452831363225162016
9th to 12th grade, no diploma79105118947981515637324934
High school graduate (includes equivalency)540707473560438484411508319390247293
Some college, no degree377493318390310372268331223303210218
Associate Degree162246174197153180155216133174163142
Bachelor's Degree or more491740476619465685470629446625420573
Bachelor's Degree352494329450315481330425270405274321
Master's Degree116181112130118159110140142147116186
Professional Degree73020261120153618431225
Doctorate Degree163515132125152816301841
Tenure
Owner occupied1,3171,7941,2851,5351,2381,5211,2281,4959981,3179581,115
Renter occupied450611367422300374197319209232171187
Occupier paid no cash rent16204169121913912715

homes and other investments, their net worth increases; that is, the value of what they own becomes greater than what they owe. (See Figure 4.1.)

Type of Assets

In its surveys, the Census Bureau asks respondents what type of financial assets they own. In 2000 only 7.1 percent of those in the lowest quintile held an interest-bearing account at a financial institution, while 41.9 percent of those in the highest income bracket did. Low-income households held equity in their own homes at a rate of 11.5 percent, compared with 35.4 percent of wealthy households. Upper-income households also held stocks or mutual fund shares and 401k savings plans at significantly higher rates than households in the lower quintiles. (See Table 4.5.)

Households with considerable net worth can generally offer their members greater opportunities. Householders with high net worth are better able to send their children to college, to travel, to help their children financially as they get started in life, to buy the things they want, and to feel more secure. Considerable net worth can buy political influence and power, or at least present the opportunity to meet those who have that power. Net worth is a major factor determining a household's position and power in American society.

Median incomeMean income
$87,500 to $89,999$90,000 to $92,49992,500 to $94,999$95,000 to $97,499$97,500 to $99,999$100,000 and overValue (Dol.)Standard error (Dol.)Value (Dol.)Standard error (Dol.)Gini ratio
All races
All households9391,1418671,03080215,12442,22812958,208232.450
Type of residence
Inside metro areas8221,00776590070513,74145,21918861,694275.446
Inside central cities2272842012272043,73136,73121152,705431.471
One million or more1551741201601182,58137,69139354,764577.476
Under one million721118167851,15035,21536949,226625.461
Outside central cities59572256367350210,01050,69720566,957353.427
One million or more4205334264773657,93854,32134572,037462.424
Under one million1751901381961362,07243,63147255,640476.420
Outside metro areas117134103130971,38333,60136743,711412.433
Regions/divisions
Northeast2022272032061703,58145,71637464,344598.461
New England53735260411,05349,72661666,516891.449
Middle Atlantic1491551511461292,52844,31645463,534731.464
Midwest2322862092602113,26143,83434956,944398.428
East North Central1652011501801512,38243,67743457,205496.431
West North Central678459806087944,21856456,332637.419
South3263362683572534,64838,90430854,046390.459
South Atlantic1971681612041382,61140,62329355,393535.452
East South Central467035483162835,38749648,772791.466
West South Central839871106841,40938,19559154,690781.462
West1792921882071683,63445,08745061,041567.441
Mountain537257554889842,59052956,557668.432
Pacific1262201301511202,73646,13353862,942772.444
Type of household
Family households8169414489370613,34952,27517667,856294.409
Married-couple families71883468080063912,33660,47120876,171357.379
Male householder, nsp294421452043040,71552352,7551,006.410
Female householder, nsp686442474858328,14228937,057381.441
Nonfamily households123200124137961,77525,63116937,700341.486
Male householder.771227549711,12532,31224046,176647.473
Living alone296636263456328,28337939,089597.472
Female householder477848892565020,26421130,891319.479
Living alone14562957831717,86818126,453297.460
Age of householder
Under 65 years8551,06480695472613,91649,22719964,139274.426
15 to 24 years195218142124628,19648636,148521.431
25 to 34 years1622031422021331,97145,08037355,414466.400
35 to 44 years2503522942742254,21953,32041969,088577.407
45 to 54 years2833232392982394,87158,04548774,722592.407
55 to 64 years1411341131671082,60945,86442563,523666.456
65 years and over84776175761,20823,11819135,298339.473
65 to 74 years615143395089228,17232541,973565.474
75 years and over232619372731619,17418328,339349.447
Mean age of householder46.444.245.346.046.247.1(X)(X)(X)(X)(X)

Those with the fewest assets and net worth have the least to fall back on if they become ill or lose a job. They are the least able to provide financial support for their children. In addition, they are the least likely to have political power. These are the Americans most likely to fall into poverty if misfortune strikes.

ENTERING AND LEAVING POVERTY

For most poor Americans, poverty is not a static condition. Some people near the poverty level improve their economic status within two years or less, while others at near-poverty levels become poor through economic catastrophes, such as illness or job loss. The Census Bureau collects annual poverty data in its Current Population Surveys (CPS). These surveys, however, do not reflect the dynamic nature of poverty for individual persons and families.

In its Survey of Income and Program Participation (SIPP), the Census Bureau gathered longitudinal information (measurements over time for specific individuals or families) in order to examine poverty over a forty-eight-month period. This makes it possible to measure the movement of individuals and families into and out of poverty (entry and exit rates) and the duration of poverty spells (the number of months in poverty for those who were not poor during the first interview month, but who

Median incomeMean income
$87,500 to $89,999$90,000 to $92,49992,500 to $94,999$95,000 to $97,499$97,500 to $99,999$100,000 and overValue (Dol.)Standard error (Dol.)Value (Dol.)Standard error (Dol.)Gini ratio
Size of household
One person4312265824388021,76115931,724306.477
Two people3353252933132485,26445,24525260,689407.427
Three people2362752042402033,16654,48149468,221584.398
Four people2002611702511853,57162,59547178,353718.378
Five people91948993841,48159,89883975,7091,015.385
Six people233823343049157,54899073,3151,729.389
Seven people or more102622171027154,5601,58771,3882,124.400
Mean size of household3.143.143.153.203.263.21(X)(X)(X)(X)(X)
Number of earners
No earners252424353438915,45212021,944166.463
One earner1652671801821322,90834,10419748,177372.442
Two earners or more74985066381363611,82868,10625183,406389.330
2 earners5186315055764578,42464,55228980,171437.339
3 earners1841531211821262,28477,25553490,971950.295
4 earners or more47663756541,12094,5891,561109,9761,768.256
Mean number of earners2.142.032.012.112.112.14(X)(X)(X)(X)(X)
Work experience of householder
Total9391,1418671,03080215,12442,22812958,208232.450
Worked8331,02978892471613,54753,00222468,544294.396
Worked at f-t jobs75094771985265412,27955,72318471,065324.383
50 weeks or more67886264377458211,11158,60826474,407363.369
27 to 49 weeks655957575885443,55861156,640749.406
26 weeks or less82519221431330,23976545,3361,171.495
Worked at p-t jobs83837071621,26836,72642352,770657.472
50 weeks or more334542293274839,96166557,097969.456
27 to 49 weeks30205171326437,2191,01352,1911,265.458
26 weeks or less201813251825729,33988644,3071,189.511
Did not work10611279106871,57720,88715833,314302.513
Educational attainment of householder
Total, 25 yrs & over9201,0898491,01678214,87843,59219859,578244.447
Less than 9th grade21151618913818,12028726,202375.456
9th to 12th grade, no diploma303518183026823,25138532,356530.460
High school graduate
(includes equivalency)2142161872341552,15636,05520346,226329.420
Some college, no degree902031751721722,17045,81033355,850408.397
Associate Degree871378993701,14351,16243761,399682.383
Bachelor's Degree or more3774823644803469,00472,28435593,060647.369
Bachelor's Degree2523172373232094,96167,16541684,794716.376
Master's Degree9311089111992,47478,90278698,7951,453.347
Professional Degree1236143228873100,000(NA)134,7613,523.273
Doctorate Degree201924151069692,8062,368119,6293,154.237
Tenure
Owner occupied79796672190670813,32551,59717467,473306.420
Renter occupied13417039117941,74128,51322138,674300.460
Occupier paid no cash rent757715926,0226783,9431,000.444
NSP = No spouse present.
source: Adapted from "HINC-01. Selected Characteristics of Households, by Total Money Income in 2001," inAnnual Demographic Survey, March Supplement, Current Population Surveys, March 2002 [Online] http://ferret.bls.census.gov/macro/032002/hhinc/new01_001.htm [accessed January 15, 2004]

became poor at some point in the study). The study defined entry rates into poverty as the percentage of people who were not poor during 1996 but who were poor in 1999. Exit rates from poverty were defined as the percentage of people who were poor during 1996 but who were not poor in 1999.

In Dynamics of Economic Well-Being, Poverty 19961999, (U.S. Bureau of the Census, Current Population Reports, July 2003), John Iceland studied data from the 1996 SIPP panel to examine poverty in the period from January 1996 through December 1999. He focused on monthly measures of poverty and distinguished between short- and long-term poverty. Some highlights of the survey include:

  • The average annual monthly poverty rate in 1996 was 15.5 percent, representing about 40.9 million people. In 1999 the rate dropped to 12.8, representing about 34.8 million people.
Percent distributionMedian incomeMean income
Number (thousands)TotalUnder $5,000$5,000 to $9,999$10,000 to $14,999$15,000 to $24,999$25,000 to $34,999$35,000 to $49,999$50,000 to $74,999$75,000 to $99,999$100,000 and overValue (dollars)Standard error (dollars)Value (dollars)Standard error (dollars)
All races
2002111,278100.03.25.97.013.212.315.118.311.014.142,40913957,852217
2001109,297100.03.15.76.813.212.415.318.311.014.342,90013159,134236
20001108,209100.02.85.76.812.612.615.218.711.014.543,84813859,664235
19992106,434100.02.75.76.713.312.315.318.511.014.443,91520559,067306
1998103,874100.03.06.26.913.212.515.318.910.813.242,84425357,134309
1997102,528100.03.06.57.313.812.515.518.810.312.341,34619155,522311
1996101,018100.02.96.97.613.813.015.518.910.211.240,50320453,776301
1995399,627100.03.06.87.514.512.316.618.510.110.639,93123152,659288
1994498,990100.03.37.37.714.412.816.217.99.910.438,72617651,771278
1993597,107100.03.57.57.914.213.116.318.19.410.038,28717950,772275
1992696,426100.03.37.67.614.513.016.318.89.59.438,48218248,788205
199195,669100.03.07.67.414.113.416.518.99.59.438,79118748,829201
199094,312100.03.07.37.313.613.317.119.09.59.739,94920449,902211
198993,347100.02.87.07.313.712.417.219.410.010.140,48422351,148223
198892,830100.03.07.77.214.012.317.019.610.09.439,76719449,688222
1987791,124100.03.27.77.114.113.016.619.39.99.139,45318849,065201
198689,479100.03.47.87.114.113.116.819.39.78.638,97520248,152196
1985888,458100.03.38.07.614.513.417.518.99.37.637,64820446,332183
198486,789100.03.28.08.014.913.717.518.78.87.236,92116845,238166
1983985,290100.03.58.18.015.314.217.518.88.26.536,00116343,865163
198283,918100.03.48.48.215.213.718.418.38.16.135,98616243,369161
198183,527100.03.28.57.915.813.418.119.18.25.836,04218943,059157
198082,368100.02.98.38.215.013.618.519.68.15.936,60818843,539159
19791080,776100.02.98.17.514.413.917.920.68.36.437,78417944,883170
197877,330100.02.68.17.814.513.718.220.58.66.037,82615344,520171
197776,030100.02.88.78.515.314.218.719.57.44.935,54513442,166128
19761174,142100.02.88.88.315.314.419.219.67.14.535,34513141,575128
19751272,867100.03.09.08.515.514.419.619.16.74.234,76314140,593127
197412,1371,163100.02.98.57.815.014.719.919.47.04.635,71913741,770131
197369,859100.03.47.98.014.613.620.319.87.45.036,85514042,623130
19721468,251100.03.88.27.914.414.420.119.56.94.836,12613842,046130
19711566,676100.04.38.77.515.215.220.918.26.13.934,66913439,873127
197064,778100.04.58.47.414.715.321.218.66.04.035,03012840,111128
196963,401100.04.48.57.114.116.121.119.25.93.835,26613040,122126
196862,214100.04.88.37.514.916.322.217.85.03.133,96812338,430123
19671660,813100.05.68.87.815.317.121.516.34.63.132,59111936,452119
1Implementation of a 28,000 household sample expansion.
2Implementation of Census 2000-based population controls.
3Full implementation of 1990 census-based sample design and metropolitan definitions, 7,000 household sample reduction, and revised race edits.
4Introduction of 1990 census sample design.
5Data collection method changed from paper and pencil to computer-assisted interviewing. In addition, the March 1994 income supplement was revised to allow for the coding of different income amounts on selected questionnaire items. Limits either increased or decreased in the following categories: earnings limits increased to $999,999; social security limits increased to $49,999; supplemental security income and public assistance limits increased to $24,999; veterans' benefits limits increased to $99,999; child support and alimony limits decreased to $49,999.
6Implementation of 1990 census population controls.
7Implementation of a new March CPS processing system.
8Recording of amounts for earnings from longest job increased to $299,999. Full implementation of 1980 census-based sample design.
9Implementation of Hispanic population weighting controls and introduction of 1980 census-based sample design.
10Implementation of 1980 census population controls. Questionnaire expanded to show 27 possible values from 51 possible sources of income.
11First year medians were derived using both Pareto and linear interpolation. Before this year, all medians were derived using linear interpolation.
12Some of these estimates were derived using Pareto interpolation and may differ from published data which were derived using linear interpolation.
13Implementation of a new March CPS processing system. Questionnaire expanded to ask 11 income questions.
14Full implementation of 1970 census-based sample design.
15Introduction of 1970 census sample design and population controls.
16Implementation of a new March CPS processing system.
source: Adapted from Carmen DeNavas-Walt, Robert W. Cleveland, and Bruce H. Webster, Jr., "Table A-1. Households by Total Money Income, Race, and Hispanic Origin of Householder: 1967 to 2002," in Income in the United States: 2002, Current Population Reports, Consumer Income, U.S. Census Bureau [Online] http://www.census.gov/prod/2003pubs/p60-221.pdf [accessed January 3, 2004]
  • More than one in three persons (34.2 percent) were poor for at least two months in the four years between 1996 and 1999.
  • Some 2.0 percent of the population were chronically poor. That is, they were poor during all forty-eight months from January 1996 through December 1999.
  • Nonelderly adults were more likely to exit poverty than children and the elderly.
CharacteristicTotalNumber in povertyPercent in poverty
All workers151,5468,9545.9
Worked full-time year-round100,6592,6352.6
Not full-time year-round50,8876,31812.4
Did not work at least one week69,59514,64721.0
Notes: Full-time, year-round workers are those who worked 50 or more weeks and 35 or more hours per week during the calendar year. Paid vacations are counted as time worked. Details may not sum to totals because of rounding.
source: Bernadette D. Proctor and Joseph Dalaker, "Table 3. Work Experience During the Year for People Aged 16 and Older: 2002," in Poverty in the United States: 2002, Current Population Reports, Consumer Income, U.S. Census Bureau, September 2003 [Online] http://www.census.gov/prod/2003pubs/p60-222.pdf [accessed June 3, 2004]
  • Children had the highest entry rates into poverty and, along with retirement-age adults, had a low exit rate.
  • More than half of all poverty spells lasted two to four months.

Spells of poverty reported from 1996 through 1999 lasted for varying lengths of time. Over half (51.1 percent) lasted from two to four months, while 11.9 percent lasted more than twenty-one months. (See Figure 4.2.) African-Americans (with a median poverty spell duration of 4.9 months) and Hispanics (with a median of 4.6 months) had longer poverty spells than non-Hispanic whites (3.8 months). For the elderly, the median poverty spell lasted four months. The shortest poverty spells were for families headed by married couples (3.7 months). The longest spells were for female heads of households (5.8 months). (See Figure 4.3.)

Two percent of the population was poor during all forty-eight months from January 1996 through December 1999. African-Americans (5.1 percent) and Hispanics (5.6 percent) were significantly more likely to be chronically poor (poor for a longer duration or more frequently recurring poverty) than white non-Hispanics (1 percent). Almost 6 percent of people in female-householder families were poor continuously for forty-eight months. (See Figure 4.4.)

Characteristics of Those Changing Their Poverty Status

Based on the SIPP interviews, 34.2 percent of those surveyed had experienced poverty lasting for two or more months in the 1996–1999 study period. During that same period, the number of people who exited poverty (14.8 million) was nearly double the number of people who entered poverty (7.6 million).

RACE AND AGE. Of the poor in 1996, non-Hispanic whites (57.1 percent) were more likely to have left poverty by 1999 than either African-Americans (42.4 percent) or Hispanics (41.6 percent). (See Figure 4.5.) Figure 4.6 shows the newly poor as a percent of the population that was not poor in 1996. Non-Hispanic whites were less likely to have entered poverty by 1999 than African-Americans or Hispanics.

The elderly (often on fixed incomes) and children were less likely to exit poverty than were persons of other ages. About 32.4 percent of the elderly and 47.9 percent of children under eighteen years of age who were poor in 1996 were able to escape poverty by 1999. Adults eighteen to sixty-four years of age were the most likely to escape—53.9 percent moved out of poverty. (See Figure 4.5.) However, only 3.3 percent of the elderly entered poverty by 1999, compared to 4.5 percent of children under eighteen years of age. (See Figure 4.6.)

FAMILY STATUS. Families headed by married couples were much more likely than other family types to have left poverty by 1999. Of the poor families headed by married couples in 1996, 59.7 percent were able to escape

TotalNon-Hispanic whiteBlackHispanic origin2
Monthly household income quintile120001998200019982000199820001998
All households (thousands)104,644101,78279,56278,14012,80812,1569,2648,587
Median measured net worth (dollars)55,00049,93279,40070,9547,5006,2009,7507,189
Excluding home equity13,47312,44022,56620,1061,1661,0241,8501,823
Net worth by income
Lowest quintile:
Households (thousands)20,93720,38513,99213,5294,0073,9982,3142,316
Median measured net worth (dollars)7,3966,07324,00018,97957(NA)500521
Excluding home equity1,0259383,4662,945(NA)(NA)5021
Second quintile:
Households (thousands)20,93720,34715,27415,0102,9432,7712,2962,091
Median measured net worth (dollars)26,95024,84148,50044,3735,2755,7095,6703,493
Excluding home equity6,3496,17710,8259,4891,1251,0431,5001,044
Third quintile:
Households (thousands)20,91320,34416,05415,8712,4362,2501,9051,779
Median measured net worth (dollars)44,40040,82859,50056,46011,50011,81611,2008,546
Excluding home equity12,33311,82817,40016,8783,3503,0882,6504,171
Fourth quintile:
Households (thousands)20,93520,35116,72416,3031,9171,9351,6691,504
Median measured net worth (dollars)78,00168,29792,84281,82332,60024,03736,22524,536
Excluding home equity26,99822,90934,43529,9208,6257,66410,5438,349
Highest quintile:
Households (thousands)20,92320,35417,51817,4201,5051,2011,080896
Median measured net worth (dollars)185,500161,174208,023181,01665,14157,73673,03277,498
Excluding home equity98,51082,947115,65894,65620,97515,72125,63924,483
NA = Not available.
1Quintile upper limits for 2000 were: lowest quintile-$1,304; second quintile-$2,426; third quintile-$3,813; fourth quintile-$5,988. Upper limits for 1998 were: lowest quintile-$1,194; second quintile-$2,006; third quintile-$3,463; fourth quintile-$5,417.
2People of Hispanic origin may be of any race.
source: Shawna Orzechowski and Peter Sepielli, "Table H. Median Net Worth and Median Net Worth Excluding Home Equity of Households by Monthly Household Income Quintile and Race and Hispanic Origin of Householder: 1998 and 2000," in Net Worth and Asset Ownership of Households: 1998 and 2000, Current Population Reports, Household Economic Studies, U.S. Census Bureau, May 2003 [Online] http://www.census.gov/prod/2003pubs/p70-88.pdf [accessed June 3, 2004]

poverty by 1999. Only 39.4 percent of the poor families of other types recovered from poverty by 1996. (See Figure 4.5.) Families headed by married couples were also significantly less likely to have entered poverty by 1999. (See Figure 4.6.) With at least two adults in the household, a family headed by a married couple is more likely to have at least one person working than a family headed by a single person.

Monthly household income quintile1Interest earning assets at financial institutionsOther interest-earning assetsStocks and mutual fund sharesEquity in own homeEquity in motor vehiclesEquity in own business or professionIRA or Keogh accounts401K and thrift saving plans
Percent distribution of asset value
2000
Total100.0100.0100.0100.0100.0100.0100.0100.0
Lowest quintile7.11.63.211.59.43.95.92.2
Second quintile14.75.09.614.914.77.213.94.2
Third quintile16.410.912.117.018.712.314.910.3
Fourth quintile19.916.220.321.323.917.421.122.5
Highest quintile41.965.654.835.433.359.044.260.8
1998
Total100.0100.0100.0100.0100.0100.0100.0100.0
Lowest quintile5.51.53.611.18.66.85.41.9
Second quintile12.84.35.914.914.58.413.63.2
Third quintile18.310.311.318.719.411.214.99.7
Fourth quintile21.716.720.821.123.820.014.620
Highest quintile41.667.258.334.233.753.046.565.1
Percent distribution of net worth
2000
Total8.91.715.632.33.77.78.69.7
Lowest quintile9.60.47.756.25.24.67.73.3
Second quintile11.80.813.543.44.95.010.83.7
Third quintile10.41.313.539.04.96.89.27.1
Fourth quintile8.41.315.132.64.26.48.610.4
Highest quintile7.92.418.124.22.69.68.112.5
1998
Total8.12.718.833.74.47.37.98.6
Lowest quintile6.70.610.356.15.77.56.32.4
Second quintile9.81.110.447.46.15.810.12.6
Third quintile9.91.814.342.15.85.57.95.6
Fourth quintile8.52.219.134.75.27.27.68.4
Highest quintile7.13.823.124.33.28.27.711.8
1Quintile upper limits for 2000 were: lowest quintile - $1,304; second quintile - $2,426; third quintile - $3,813; fourth quintile - $5,987. Upper limits for 1998 were: lowest quintile - $1,194; second quintile - $2,006; third quintile - $3,463; fourth quintile - $5,417.
source: Shawna Orzechowski and Peter Sepielli, "Table E. Distribution of Asset Values for Households and the Distribution of Net Worth by Monthly Household Income Quintile for Selected Asset Types: 1998 and 2000," in Net Worth and Asset Ownership of Households: 1998 and 2001, Current Population Reports, Household Economic Studies, U.S. Census Bureau, May 2003 [Online] http://www.census.gov/prod/2003pubs/p70-88.pdf [accessed January 15, 2004]

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