Poverty and Statistics in the US - Problems of Statistical Assessment
1. What is poverty? - A problem of statistical assessment
Before searching for an effective solution of the combat against poverty, it is necessary to observe the following question: How can we measure poverty? And who is poor? These questions help us to determine how many people can be concerned as poor in order to receive social services. Especially, the Federal Government is interested in having exact figures of poverty so that financial budgeting for social benefits are possible.
Poverty in the U.S. has always existed. But nobody was sure about the extension of poverty until 1959, when the first statistcs of poverty were published. Until this historical date the responsibility on poverty of U.S. State governments was limited. The first social services of U.S. districts have been the almshouses. In 1904 and 1910 the Bureau of the Census counted the almhouses and described them according to sociocultural characteristics.
But those inquiries could not provide a exact view of the extension of poverty. Only with the beginning of the Kennedy and Lyndon B. Johnson administrations, the Federal government started to collect exact datas allover the country in order to be prepared for the "War on Poverty" which was declared by Lyndon B. Johnson.
The Bureau of Census has declared five rules, on how to determine poverty:
These rules are complemented by the determination of the poverty threshold, which is executed by the Office of Management and Budget. Those rules are valid for the distribution of social benefits (food vouchers, school feeding, food assistance program for mothers, small children and children until the age o 5 years) by the governmental authorities.
Critics argued that according to those criterias someone needs to have a household in order to be categorized as poor. Therefore, homeless people are not included in the inquiries. Also wandering workers and illegal people are not registered. Other people criticized the ignorance of no cash transfers produces a wrong image of poverty.
The Social Security Administration (SSA) began publishing poverty statistics in the early 1960s, using a poverty measure developed by staff economist Mollie Orshansky. This measure had a set of poverty thresholds for different types of families that consisted of the cost of a minimum adequate diet (Orshansky used the Economy Food Plan, the least expensive of the four food plans designed by the U.S. Department of Agriculture in 1961) multiplied by three to allow for other expenses. The threshold value for the base year 1963 for a family of two adults and two children was about $3,100. To determine a family's poverty status, its resources, defined as cash income before taxes, were compared with the appropriate threshold.
For the poverty comparison, the thresholds are updated annually for price inflation and so are not changed in real dollar terms; in other words, the 1997 threshold value of $16,050 for a family of four (two adults and two children) represents the same purchasing power as the 1963 threshold value of about $3,100 for this type of family.
By resuming the facts, under the definition of poverty measurement, poverty is determined by comparing pre-tax cash income with the poverty threshold.
2. Who is poor? - Statistics of poverty in the US
The following statistics delivered by the Bureau of the Census represents the poverty figures for the whole population:
Poverty Status of Persons by Age, Race, Region, and Family Type, 1994
Table 1 shows that in 1994, 14.5 percent (38.1 million persons) of the total U.S. population lived in poverty. Of all demographic groups shown, poverty was highest among female-headed families with children (47.2 percent). Among children under the age of 18, nearly 22 percent, or 15.3 million, lived in poverty. As we can see, the separation of figures by race (like black, white and Hispanic) demonstrate a great contrast of poverty between whites, blacks and Hispanics. Ethnical minorities like Afro-Americans and Hispanics represent only a small part of the whole population. But their quotes of poverty are overproportional high in comparison of the white majority. The poverty figures of these minorities have increased over the past 15 years. There is a trend of growing disparities between the ethnical minorities.
Trends in the Overall Poverty Rate
In the late 1950s, the overall poverty rate for individuals in the United States was 22 percent, representing 39.5 million poor persons. Between 1959 and 1969, the poverty rate declined dramatically and steadily to 12.1 percent. As a result of a sluggish economy, the rate increased slightly to 12.5 percent by 1971. In 1972 and 1973, however, it began to decrease again. The lowest rate over the entire 24-year period occurred in 1973, when the poverty rate was 11.1 percent. At that time, roughly 23 million people were poor, 42 percent less than in 1959. The poverty rate increased by 1975 to 12.3 percent, and then oscillated around 11.5 percent through 1979. After 1978, however, the poverty rate rose steadily, reaching 15.2 percent in 1983. The poverty rate among families with children held steady at 17.4 percent between 1992 and 1994. Although it declined somewhat for both two-parent families with children and married-couple families with children, it increased sharply for other families with children from 22.9 to 24.5 percent. This increase offset the improvement in poverty rates among female-headed and married-couple families with children. In 1994, the last year for which data are available, the poverty rate was 14.5 percent.
Poverty Rates for Individuals in Particular Groups
There are substantial differences between the overall poverty rate and the poverty rates of individuals in certain demographic subgroups. Most notably, Afro-Americans, individuals in female-headed households, and Hispanics have poverty rates that greatly exceed the average. The poverty rates for Afro-Americans and individuals in female-headed households remained above 30 percent from 1959 to 1994. The poverty rate for all Hispanics has remained near 30 percent during the 1980s and early 1990s. The poverty rate for the aged, which exceeded the overall poverty rate in 1959, fell below the overall poverty rate beginning in 1982. It was 11.7 percent in 1994. The poverty rate for whites was below the overall poverty rate throughout the entire 1959-94 period. It was 11.7 percent in 1994. The poverty rate for children exceeds the average rate; it was 21.8 percent in 1994.
Poverty Rates for Families, over Time
Table 2 shows which families were poor among various demographic groups between 1959 and 1994. Female-headed families with children and unrelated individuals are more likely to become poor than other families with children or families with aged members. In 1994, 44.6 percent of female-headed families with children were poor, compared with 9.3 percent of families in which a male was present. The impoverishment of female-headed families with children is discussed with the hypothesis of the "feminization of poverty". Conservatives argue that traditional small families break down because loss of morality and unanimity for wedding. Liberal critics say, that the increase of poverty among female-headed families with children reflects a general demographic trend. But this statements neglects the risks of poverty of mothers raising up their children as the only person. Gebhardt agues, that the General Accounting Office shows in an evaluation that the figures have increased, but this increase was forced by mothers, which have never been married. So he argues, that female-headed households with children have actually a high risk to poverty.
Only about 7 percent of all families with an aged member were poor, 23.1 percent of all aged and about 21 percent of nonaged unrelated individuals were poor.
Poverty by Metropolitan Area and State
Tables 3 and 4 present poverty rates for nonmetropolitan and metropolitan areas; Table 4 includes race as well. Table 3 shows that poverty rates have increased almost twice as much in metropolitan than in nonmetropolitan areas. While poverty was distributed at the beginning of the "War on poverty" in the 60s, table 4 shows a concentration of poverty in metropolitan areas, Especially, poverty among Afro-Americans and Hispanics is nowadays much higher than rates among whites in metropolitan areas, nonmetropolitan areas, and inner cities. Table 5 presents poverty rates for each state between 1992 and 1994.
Trends in Family Income
Table 6 shows income trends for all families, using different measures of income. The real income of the average family rose between 1973 and 1989, but the size and timing of the increase depend on the income measure used. For example, family cash income rose about 9 percent between 1973 and 1989, on average; virtually all of the increase took place between 1979 and 1989. In contrast, average pretax adjusted family income (AFI) which takes into account changes in family size rose about 20 percent; the annual increase was about equally divided between the two time periods shown in Table 6. The larger increase in AFI reflects partly decrease in average family size.
Annex:
TABLE 1. POVERTY STATUS OF PERSONS BY AGE, RACE, REGION, AND FAMILY TYPE, 1994
Poverty U.S. % of No. of % of
Age, race, region, rate Population total U.S. poor poverty
and family type (%) (000) population (000) population
Age
Under 18 21.8 70,020 26.8 15,289 40.2
18 to 64 11.9 160,329 61.3 19,107 50.2
65 and over 11.7 31,267 12.0 3,663 9.6
Total 14.5 261,616 100.0 38,059 100.0
Race
White 11.7 216,460 82.7 25,379 66.7
Black 30.6 33,353 12.7 10,196 26.8
Hispanic \1\. 30.7 27,442 10.5 8,416 22.1
Region
Northeast 12.9 51,185 19.6 6,597 17.3
Midwest 13.0 61,379 23.5 7,965 20.9
South 16.1 91,717 35.1 14,729 38.7
West 15.3 57,335 21.9 8,768 23.0
Total 14.5 261,616 100.0 38,059 100.0
Family type
Unrelated individuals 21.5 38,538 14.7 8,287 21.8
Families with children
Female-headed 47.2 28,197 10.8 13,313 35.0
Married-couple 9.5 110,648 42.3 10,485 27.5
Other 24.5 5,407 2.1 13,253.5 22.5
All other families 5.9 78,826 30.1 4,649 12.2
Total 14.5 261,616 100.0 38,059 100.0
\1\ Persons of Hispanic origin may be of any race.
Source: U.S. Bureau of the Census (1996).
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TABLE 2. POVERTY AMONG DEMOGRAPHIC GROUPS, SELECTED YEARS 1959-1994 \1\
(as a percentage of the total poor population)
Demographic group
1959 1966 1975 1985 1987 1988 1989 1990 1991 1992 1993 1994
Aged 13.9 17.9 12.8 10.5 10.9 11.0 10.7 10.9 10.6 10.3 9.6 9.6
Children 43.6 42.6 42.1 38.8 39.4 38.7 39.4 39.5 39.5 39.7 39.5 39.6
Nonaged adults 42.5 39.5 45.1 50.7 49.7 50.3 49.9 49.7 49.9 49.9 50.9 50.8
Individuals\2\
In female-
headed fam. 26.3 36.0 47.4 49.5 52.6 52.9 52.4 53.4 54.0 52.6 52.4 52.8
In all
other fam. 73.7 64.0 52.6 50.5 47.4 47.1 47.6 46.6 46.0 47.4 47.6 47.2
Blacks 25.1 31.1 29.2 27.0 29.8 29.5 29.5 29.3 28.7 28.5 27.7 26.8
Whites 72.1 67.7 68.7 69.1 65.6 65.3 65.9 66.5 66.5 66.4 66.8 66.7
Other races 2.8 1.2 2.1 3.9 4.7 5.3 4.6 4.2 4.8 5.1 5.5 6.5
Hispanic origin
\3\. NA NA 11.6 15.8 16.9 16.9 17.2 17.9 17.8 20.0 20.7 22.1
Individuals
in fam.
with children
\4\ NA NA NA NA NA NA 67.9 68.0 68.4 68.4 68.7 68.0
Male present NA NA NA NA NA NA 31.3 30.7 30.3 31.4 32.0 31.2
Female-headed NA NA NA NA NA NA 36.6 37.2 38.1 37.0 36.7 36.9
Individuals in all
other fam. NA NA NA NA NA NA 32.1 32.0 31.6 31.6 31.3 32.0
\1\Data are for March of the following year.
\2\ Includes unrelated or single individuals.
\3\ Hispanic origin may be of any race; therefore numbers add to more than 100 percent.
\4\ Family includes related children under 18.
NA = Not available.
Note. Estimates for 1987-94 are not comparable to prior years due to processing changes in the Current Population Survey.
Source: Prepared by Congressional Research Service based on data from March Current Population Survey and U.S. Bureau of the
Census (1996 and various years).
TABLE 3. PERCENTAGE OF PERSONS IN POVERTY IN NONMETROPOLITAN AND
METROPOLITAN AREAS, 1978-94
Year Nonmetro Metro Central
Total cities only
1978 13.5 10.4 15.4
1979 13.8 10.7 15.7
1980 15.4 11.9 17.2
1981 17.0 12.6 18.0
1982 17.8 13.7 19.9
1983 18.3 13.8 19.8
1984 NA NA NA
1985 18.3 12.7 19.0
1986 18.1 12.3 18.0
1987 17.0 12.3 18.3
1988 16.0 12.2 18.1
1989 15.7 12.0 18.1
1990 16.3 12.7 19.0
1991 16.1 13.7 20.2
1992 \1\. 16.9 14.2 20.9
1993 17.2 14.6 21.5
1994 16.0 14.2 20.9
% incr., 1978-94 18.5 36.5 35.7
\1\ For 1992, figures are based on 1990 census population controls.
NA = Not available.
Source: U.S. Bureau of the Census (1996 and various years).
TABLE 4. PERSONS IN POVERTY, BY RACE AND BY METROPOLITAN AND NONMETROPOLITAN
RESIDENCE, 1994
Metro Central Cities
Race Nonmetro Total Only
All races 16.0 14.2 20.9
White 13.8 11.1 15.9
Black 35.4 29.8 34.2
Hispanic \1\ 39.7 29.8 35.0
\1\ Persons of Hispanic origin may be of any race.
Source: U.S. Bureau of the Census (1996).
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TABLE 5. POVERTY STATISTICS BY STATE, 1992-94
State
1992 1993 1994
Alabama 17.3 17.4 16.4
Alaska 10.2 9.1 10.2
Arizona 15.8 15.4 15.9
Arkansas 17.5 20.0 15.3
California 16.4 18.2 17.9
Colorado 10.8 9.9 9.0
Connecticut 9.8 8.5 10.8
Delaware 7.8 10.2 8.3
Distr. of
Columbia 20.3 26.4 21.2
Florida 15.6 17.8 14.9
Georgia 17.7 13.5 14.0
Hawaii 11.2 8.0 8.7
Idaho 15.2 13.1 12.0
Illinois 15.6 13.6 12.4
Indiana 11.8 12.2 13.7
Iowa 11.5 10.3 10.7
Kansas 11.1 13.1 14.9
Kentucky 19.7 20.4 18.5
Louisiana 24.5 26.4 25.7
Maine 13.5 15.4 9.4
Maryland 11.8 9.7 10.7
Massachusetts 10.3 10.7 9.7
Michigan 13.6 15.4 14.1
Minnesota 13.0 11.6 11.7
Mississippi 24.6 24.7 19.9
Missouri 15.7 16.1 15.6
Montana 13.8 14.9 11.5
Nebraska 10.6 10.3 8.8
Nevada 14.7 9.8 11.1
New Hampshire 8.7 9.9 7.7
New Jersey 10.3 10.9 9.2
New Mexico 21.6 17.4 21.1
New York 15.7 16.4 17.0
North Carolina 15.8 14.4 14.2
North Dakota 12.1 11.2 10.4
Ohio 12.5 13.0 14.1
Oklahoma 18.6 19.9 16.7
Oregon 11.4 11.8 11.8
Pennsylvania 11.9 13.2 12.5
Rhode Island 12.4 11.2 10.3
South Carolina 19.0 18.7 13.8
South Dakota 15.1 14.2 14.5
Tennessee 17.0 19.6 14.6
Texas 18.3 17.4 19.1
Utah 9.4 10.7 8.0
Vermont 10.5 10.0 7.6
Virginia 9.5 9.7 10.7
Washington 11.2 12.1 11.7
West Virginia 22.3 22.2 18.6
Wisconsin 10.9 12.6 9.0
Wyoming. 10.3 13.3 9.3
Source: U.S. Bureau of the Census (1996). For 1992, figures are based on 1990 Census population controls.
TABLE 6. INCOME TRENDS FOR ALL FAMILIES, BY DIFFERENT INCOME MEASURES
Income measure Years % change
(in 1989 dollars) 1973 1979 1989 1994 1973-89 1979-89 1989-94
Mean family cash income $30,341 $30,764 $32,978 $31,346 8.7 7.2 -5.0
Per capita\1\ 10,718 11,922 13,743 13,003 28.2 15.3 -4.7
Adjusted pretax income\2\ 19,096 20,592 23,025 22,004 20.6 11.8 -4.3
Adjusted posttax income\3\ NA 17,404 19,424 18,707 NA 11.6 -3.5
High adult male earner NA 4,111 5,633 5,896 NA 37.0 4.8
Other earners in family NA 923 894 710 NA -3.1 -19.2
Other private income NA 2,021 2,700 2,388 NA 33.6 -13.0
Cash transfer income
Not means-tested NA 1,190 1,429 1,548 NA 20.0 12.5
Means-tested NA 302 180 208 NA -40.4 15.4
Noncash transfer income NA 145 139 179 NA -4.0 26.2
Taxes NA -3,333 -3,740 -3,475 NA 12.2 -7.0
\1\ Family cash income divided by the number of persons in the family.
\2\ Pretax AFl (adjusted family income) is pretax family income divided by the poverty threshold. Thresholds are based on the 1989 distribution of
family sizes, with no adjustment for the age of the head of household or the number of children. In this table, pretax AFl is expressed in dollars by
multiplying adjusted family income by the one-person poverty threshold.
\3\ Posttax AFl (adjusted family income) is posttax family income, plus the cash value of noncash food and housing benefits, divided by the poverty
threshold. Adjustments are the same as for pretax AFI.
Source: Congressional Budget Office based on Current Population Survey data.
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Bibliography:
William M., Eppstein: Welfare in America, Madison, Wisconcin 1997 Gebhardt, Thomas: Arbeit gegen Armut, Wiesbaden 1998 Institute for Research on Poverty: http://www.ssc.wisc.edu/irp