A Changing Nation—Wealth and Income Distribution - 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

TABLE 4.1
Selected characteristics of households, by income, 2001
(Numbers in thousands. Households as of March of the following year)

							Median income		Mean income
	$87,500 to $89,999	$90,000 to $92,499	92,500 to $94,999	$95,000 to $97,499	$97,500 to $99,999	$100,000 and over	Value (Dol.)	Standard error (Dol.)	Value (Dol.)	Standard error (Dol.)	Gini ratio
Size of household
One person	43	122	65	82	43	880	21,761	159	31,724	306	.477
Two people	335	325	293	313	248	5,264	45,245	252	60,689	407	.427
Three people	236	275	204	240	203	3,166	54,481	494	68,221	584	.398
Four people	200	261	170	251	185	3,571	62,595	471	78,353	718	.378
Five people	91	94	89	93	84	1,481	59,898	839	75,709	1,015	.385
Six people	23	38	23	34	30	491	57,548	990	73,315	1,729	.389
Seven people or more	10	26	22	17	10	271	54,560	1,587	71,388	2,124	.400
Mean size of household	3.14	3.14	3.15	3.20	3.26	3.21	(X)	(X)	(X)	(X)	(X)
Number of earners
No earners	25	24	24	35	34	389	15,452	120	21,944	166	.463
One earner	165	267	180	182	132	2,908	34,104	197	48,177	372	.442
Two earners or more	749	850	663	813	636	11,828	68,106	251	83,406	389	.330
2 earners	518	631	505	576	457	8,424	64,552	289	80,171	437	.339
3 earners	184	153	121	182	126	2,284	77,255	534	90,971	950	.295
4 earners or more	47	66	37	56	54	1,120	94,589	1,561	109,976	1,768	.256
Mean number of earners	2.14	2.03	2.01	2.11	2.11	2.14	(X)	(X)	(X)	(X)	(X)
Work experience of householder
Total	939	1,141	867	1,030	802	15,124	42,228	129	58,208	232	.450
Worked	833	1,029	788	924	716	13,547	53,002	224	68,544	294	.396
Worked at f-t jobs	750	947	719	852	654	12,279	55,723	184	71,065	324	.383
50 weeks or more	678	862	643	774	582	11,111	58,608	264	74,407	363	.369
27 to 49 weeks	65	59	57	57	58	854	43,558	611	56,640	749	.406
26 weeks or less	8	25	19	22	14	313	30,239	765	45,336	1,171	.495
Worked at p-t jobs	83	83	70	71	62	1,268	36,726	423	52,770	657	.472
50 weeks or more	33	45	42	29	32	748	39,961	665	57,097	969	.456
27 to 49 weeks	30	20	5	17	13	264	37,219	1,013	52,191	1,265	.458
26 weeks or less	20	18	13	25	18	257	29,339	886	44,307	1,189	.511
Did not work	106	112	79	106	87	1,577	20,887	158	33,314	302	.513
Educational attainment of householder
Total, 25 yrs & over	920	1,089	849	1,016	782	14,878	43,592	198	59,578	244	.447
Less than 9th grade	21	15	16	18	9	138	18,120	287	26,202	375	.456
9th to 12th grade, no diploma	30	35	18	18	30	268	23,251	385	32,356	530	.460
High school graduate
(includes equivalency)	214	216	187	234	155	2,156	36,055	203	46,226	329	.420
Some college, no degree	90	203	175	172	172	2,170	45,810	333	55,850	408	.397
Associate Degree	87	137	89	93	70	1,143	51,162	437	61,399	682	.383
Bachelor's Degree or more	377	482	364	480	346	9,004	72,284	355	93,060	647	.369
Bachelor's Degree	252	317	237	323	209	4,961	67,165	416	84,794	716	.376
Master's Degree	93	110	89	111	99	2,474	78,902	786	98,795	1,453	.347
Professional Degree	12	36	14	32	28	873	100,000	(NA)	134,761	3,523	.273
Doctorate Degree	20	19	24	15	10	696	92,806	2,368	119,629	3,154	.237
Tenure
Owner occupied	797	966	721	906	708	13,325	51,597	174	67,473	306	.420
Renter occupied	134	170	39	117	94	1,741	28,513	221	38,674	300	.460
Occupier paid no cash rent	7	5	7	7	1	59	26,022	678	3,943	1,000	.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 1996–1999, (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.

TABLE 4.2
Distribution of households by income, 1967–2002

		Percent distribution										Median income		Mean income
	Number (thousands)	Total	Under $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 over	Value (dollars)	Standard error (dollars)	Value (dollars)	Standard error (dollars)
All races
2002	111,278	100.0	3.2	5.9	7.0	13.2	12.3	15.1	18.3	11.0	14.1	42,409	139	57,852	217
2001	109,297	100.0	3.1	5.7	6.8	13.2	12.4	15.3	18.3	11.0	14.3	42,900	131	59,134	236
20001	108,209	100.0	2.8	5.7	6.8	12.6	12.6	15.2	18.7	11.0	14.5	43,848	138	59,664	235
19992	106,434	100.0	2.7	5.7	6.7	13.3	12.3	15.3	18.5	11.0	14.4	43,915	205	59,067	306
1998	103,874	100.0	3.0	6.2	6.9	13.2	12.5	15.3	18.9	10.8	13.2	42,844	253	57,134	309
1997	102,528	100.0	3.0	6.5	7.3	13.8	12.5	15.5	18.8	10.3	12.3	41,346	191	55,522	311
1996	101,018	100.0	2.9	6.9	7.6	13.8	13.0	15.5	18.9	10.2	11.2	40,503	204	53,776	301
19953	99,627	100.0	3.0	6.8	7.5	14.5	12.3	16.6	18.5	10.1	10.6	39,931	231	52,659	288
19944	98,990	100.0	3.3	7.3	7.7	14.4	12.8	16.2	17.9	9.9	10.4	38,726	176	51,771	278
19935	97,107	100.0	3.5	7.5	7.9	14.2	13.1	16.3	18.1	9.4	10.0	38,287	179	50,772	275
19926	96,426	100.0	3.3	7.6	7.6	14.5	13.0	16.3	18.8	9.5	9.4	38,482	182	48,788	205
1991	95,669	100.0	3.0	7.6	7.4	14.1	13.4	16.5	18.9	9.5	9.4	38,791	187	48,829	201
1990	94,312	100.0	3.0	7.3	7.3	13.6	13.3	17.1	19.0	9.5	9.7	39,949	204	49,902	211
1989	93,347	100.0	2.8	7.0	7.3	13.7	12.4	17.2	19.4	10.0	10.1	40,484	223	51,148	223
1988	92,830	100.0	3.0	7.7	7.2	14.0	12.3	17.0	19.6	10.0	9.4	39,767	194	49,688	222
19877	91,124	100.0	3.2	7.7	7.1	14.1	13.0	16.6	19.3	9.9	9.1	39,453	188	49,065	201
1986	89,479	100.0	3.4	7.8	7.1	14.1	13.1	16.8	19.3	9.7	8.6	38,975	202	48,152	196
19858	88,458	100.0	3.3	8.0	7.6	14.5	13.4	17.5	18.9	9.3	7.6	37,648	204	46,332	183
1984	86,789	100.0	3.2	8.0	8.0	14.9	13.7	17.5	18.7	8.8	7.2	36,921	168	45,238	166
19839	85,290	100.0	3.5	8.1	8.0	15.3	14.2	17.5	18.8	8.2	6.5	36,001	163	43,865	163
1982	83,918	100.0	3.4	8.4	8.2	15.2	13.7	18.4	18.3	8.1	6.1	35,986	162	43,369	161
1981	83,527	100.0	3.2	8.5	7.9	15.8	13.4	18.1	19.1	8.2	5.8	36,042	189	43,059	157
1980	82,368	100.0	2.9	8.3	8.2	15.0	13.6	18.5	19.6	8.1	5.9	36,608	188	43,539	159
197910	80,776	100.0	2.9	8.1	7.5	14.4	13.9	17.9	20.6	8.3	6.4	37,784	179	44,883	170
1978	77,330	100.0	2.6	8.1	7.8	14.5	13.7	18.2	20.5	8.6	6.0	37,826	153	44,520	171
1977	76,030	100.0	2.8	8.7	8.5	15.3	14.2	18.7	19.5	7.4	4.9	35,545	134	42,166	128
197611	74,142	100.0	2.8	8.8	8.3	15.3	14.4	19.2	19.6	7.1	4.5	35,345	131	41,575	128
197512	72,867	100.0	3.0	9.0	8.5	15.5	14.4	19.6	19.1	6.7	4.2	34,763	141	40,593	127
197412,13	71,163	100.0	2.9	8.5	7.8	15.0	14.7	19.9	19.4	7.0	4.6	35,719	137	41,770	131
1973	69,859	100.0	3.4	7.9	8.0	14.6	13.6	20.3	19.8	7.4	5.0	36,855	140	42,623	130
197214	68,251	100.0	3.8	8.2	7.9	14.4	14.4	20.1	19.5	6.9	4.8	36,126	138	42,046	130
197115	66,676	100.0	4.3	8.7	7.5	15.2	15.2	20.9	18.2	6.1	3.9	34,669	134	39,873	127
1970	64,778	100.0	4.5	8.4	7.4	14.7	15.3	21.2	18.6	6.0	4.0	35,030	128	40,111	128
1969	63,401	100.0	4.4	8.5	7.1	14.1	16.1	21.1	19.2	5.9	3.8	35,266	130	40,122	126
1968	62,214	100.0	4.8	8.3	7.5	14.9	16.3	22.2	17.8	5.0	3.1	33,968	123	38,430	123
196716	60,813	100.0	5.6	8.8	7.8	15.3	17.1	21.5	16.3	4.6	3.1	32,591	119	36,452	119
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.

TABLE 4.3
Work experience for people 16 and over, 2002
(Numbers in thousands)

Characteristic	Total	Number in poverty	Percent in poverty
All workers	151,546	8,954	5.9
Worked full-time year-round	100,659	2,635	2.6
Not full-time year-round	50,887	6,318	12.4
Did not work at least one week	69,595	14,647	21.0
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 FIGURE 4.1
Median net worth and median net worth excluding home equity of households, by age of householder, 2000
(2000 dollars) 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

TABLE 4.4
Measures of median household net worth by selected characteristics, 1998 and 2000
(In 2000 dollars. Excludes residents of group quarters)

	Total		Non-Hispanic white		Black		Hispanic origin2
Monthly household income quintile1	2000	1998	2000	1998	2000	1998	2000	1998
All households (thousands)	104,644	101,782	79,562	78,140	12,808	12,156	9,264	8,587
Median measured net worth (dollars)	55,000	49,932	79,400	70,954	7,500	6,200	9,750	7,189
Excluding home equity	13,473	12,440	22,566	20,106	1,166	1,024	1,850	1,823
Net worth by income
Lowest quintile:
Households (thousands)	20,937	20,385	13,992	13,529	4,007	3,998	2,314	2,316
Median measured net worth (dollars)	7,396	6,073	24,000	18,979	57	(NA)	500	521
Excluding home equity	1,025	938	3,466	2,945	(NA)	(NA)	50	21
Second quintile:
Households (thousands)	20,937	20,347	15,274	15,010	2,943	2,771	2,296	2,091
Median measured net worth (dollars)	26,950	24,841	48,500	44,373	5,275	5,709	5,670	3,493
Excluding home equity	6,349	6,177	10,825	9,489	1,125	1,043	1,500	1,044
Third quintile:
Households (thousands)	20,913	20,344	16,054	15,871	2,436	2,250	1,905	1,779
Median measured net worth (dollars)	44,400	40,828	59,500	56,460	11,500	11,816	11,200	8,546
Excluding home equity	12,333	11,828	17,400	16,878	3,350	3,088	2,650	4,171
Fourth quintile:
Households (thousands)	20,935	20,351	16,724	16,303	1,917	1,935	1,669	1,504
Median measured net worth (dollars)	78,001	68,297	92,842	81,823	32,600	24,037	36,225	24,536
Excluding home equity	26,998	22,909	34,435	29,920	8,625	7,664	10,543	8,349
Highest quintile:
Households (thousands)	20,923	20,354	17,518	17,420	1,505	1,201	1,080	896
Median measured net worth (dollars)	185,500	161,174	208,023	181,016	65,141	57,736	73,032	77,498
Excluding home equity	98,510	82,947	115,658	94,656	20,975	15,721	25,639	24,483
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.

TABLE 4.5
Distribution of assets and net worth, by monthly household income quintile, 1998 and 2000
(Excludes residents of group quarters)

Monthly household income quintile1	Interest earning assets at financial institutions	Other interest-earning assets	Stocks and mutual fund shares	Equity in own home	Equity in motor vehicles	Equity in own business or profession	IRA or Keogh accounts	401K and thrift saving plans
Percent distribution of asset value
2000
Total	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0
Lowest quintile	7.1	1.6	3.2	11.5	9.4	3.9	5.9	2.2
Second quintile	14.7	5.0	9.6	14.9	14.7	7.2	13.9	4.2
Third quintile	16.4	10.9	12.1	17.0	18.7	12.3	14.9	10.3
Fourth quintile	19.9	16.2	20.3	21.3	23.9	17.4	21.1	22.5
Highest quintile	41.9	65.6	54.8	35.4	33.3	59.0	44.2	60.8
1998
Total	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0
Lowest quintile	5.5	1.5	3.6	11.1	8.6	6.8	5.4	1.9
Second quintile	12.8	4.3	5.9	14.9	14.5	8.4	13.6	3.2
Third quintile	18.3	10.3	11.3	18.7	19.4	11.2	14.9	9.7
Fourth quintile	21.7	16.7	20.8	21.1	23.8	20.0	14.6	20
Highest quintile	41.6	67.2	58.3	34.2	33.7	53.0	46.5	65.1
Percent distribution of net worth
2000
Total	8.9	1.7	15.6	32.3	3.7	7.7	8.6	9.7
Lowest quintile	9.6	0.4	7.7	56.2	5.2	4.6	7.7	3.3
Second quintile	11.8	0.8	13.5	43.4	4.9	5.0	10.8	3.7
Third quintile	10.4	1.3	13.5	39.0	4.9	6.8	9.2	7.1
Fourth quintile	8.4	1.3	15.1	32.6	4.2	6.4	8.6	10.4
Highest quintile	7.9	2.4	18.1	24.2	2.6	9.6	8.1	12.5
1998
Total	8.1	2.7	18.8	33.7	4.4	7.3	7.9	8.6
Lowest quintile	6.7	0.6	10.3	56.1	5.7	7.5	6.3	2.4
Second quintile	9.8	1.1	10.4	47.4	6.1	5.8	10.1	2.6
Third quintile	9.9	1.8	14.3	42.1	5.8	5.5	7.9	5.6
Fourth quintile	8.5	2.2	19.1	34.7	5.2	7.2	7.6	8.4
Highest quintile	7.1	3.8	23.1	24.3	3.2	8.2	7.7	11.8
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]

FIGURE 4.2
Duration of poverty spells, 1996–99
(Percent of poverty spells. Excludes spells underway during the first interview month.)

FIGURE 4.3
Median poverty spells, 1996–99
(Months. Excludes spells underway during the first interview month.)

FIGURE 4.4
Chronic poverty rates, 1996–99
(Percent poor all 48 months)

FIGURE 4.5
Percent of the poor in 1996 who were not poor in 1999

FIGURE 4.6
Percent of the nonpoor in 1996 who were poor in 1999
(Exit rates in percent)
(Exit rates in percent)