Income and Poverty 1996
PRESS BRIEFING ON 1996 INCOME, POVERTY, AND HEALTH INSURANCE ESTIMATES
Daniel H. Weinberg
Chief, Housing and Household Economic Statistics Division U.S. Census Bureau
September 29, 1997
Welcome to the press briefing on the 1996 income, poverty, and health insurance coverage
estimates. Your press packets contain a press release, a copy of my remarks, a copy of the
charts I will be using today, and the three reports we are releasing today. Additional
unpublished detailed tables can be obtained from the Census Bureau directly or on our web
site.
Let me introduce some of the analysts who worked on the reports; they will be available to
answer your questions after the briefing: Charles Nelson (Assistant Division Chief),
Kathleen Short (Chief of the Poverty and Health Statistics Branch), Edward Welniak (Chief
of the Income Statistics Branch), and the primary authors of the reports, Robert
Bennefield, Robert Cleveland, Carmen DeNavas-Walt, and Leatha Lamison-White. Please hold
your questions unless it's a technical clarification. The main presentation should take
less than 30 minutes.
Let me first summarize the main findings. For the second consecutive year, households in
the United States experienced an annual increase in their real median income. Between 1995
and 1996, median household income adjusted for inflation increased 1.2 percent, to
$35,492. Despite this increase in income, the number of poor and the poverty rate remained
statistically unchanged -- the number of poor in 1996 was 36.5 million people, a poverty
rate of 13.7 percent. Finally, 41.7 million people lacked health insurance coverage in
1996, up 1.1 million from 1995, but the percentage without health insurance remained
statistically unchanged at 15.6 percent.
Data from the March Supplement to the Current Population Survey or CPS are the basis for
these statistics. The CPS is a sample survey of approximately 50,000 households
nationwide, conducted each month for the Bureau of Labor Statistics. These data reflect
1996 and not current conditions. As in all surveys, the data in these reports are
estimates, subject to sampling variability and response errors. All statements made in the
reports and in this briefing have been tested statistically.
All historical income data are expressed in 1996 dollars using the Consumer Price Index;
inflation was 3.0 percent between 1995 and 1996.
The poverty thresholds are updated each year for inflation as well; for a family of four
in 1996 the threshold was $16,036, for a family of three, $12,516.
As I noted earlier, median income for all U.S. households rose 1.2 percent or $410 between
1995 and 1996 to $35,492.
The South was however the only region where households experienced a significant increase
in income -- 1.8 percent./1/
After adjusting for inflation, median household income is now only 2.7 percent below its
1989 level, the most recent business cycle peak.
Overall, median household income has risen 15 percent since 1967, the first year household
median income was computed. As was true last year, the increase in income was broad-based,
covering both family and nonfamily households.
The poverty rate for all persons did not change statistically from 1995 to 1996 nor did
the number of poor. The poverty rate was 13.7 percent in 1996, and the number of poor was
36.5 million. Nor was there any change in any region. The number of poor is still 4.1
million above the 1989 level when 32.4 million people were poor and the poverty rate was
13.1 perc- ent. However, the number of poor is now 2.7 million people below its most
recent peak of 39.3 million in 1993.
The explanation for why the poverty rate did not change while median income increased
significantly lies in the distribution of income changes.
Average income in the lowest quintile fell 1.8 percent, while the average income in the
middle income quintile rose 1.5 percent, and average income in the top quintile rose 2.2
percent./2/
Focusing in on those at the bottom end -- those with incomes less than half their poverty
thresholds -- we see that there was an increase in the number of these "very
poor".
In 1996, 40 percent of all poor people, or 14.4 million people, had incomes less than half
their threshold, compared to 13.9 million people in 1995 (the percentage very poor did not
change; in 1996 it was 5.4 percent).
Changes in income by race and ethnicity.
The only significant change was an increase of 5.8 percent for Hispanic households, almost
exactly counteracting the 5.1 percent decrease we observed between 1994 and 1995.
Per capita income shows an increase between 1995 and 1996 for all racial and ethnic groups
(except Asian and Pacific Islanders, whose percentage change was actually not different
from the other groups but whose small sample size prevents a definitive statement).
There were no changes in poverty for any racial or ethnic groups. Blacks and Hispanics
still had much higher poverty rates and lower incomes than Whites and Asian and Pacific
Islanders.
Nevertheless, as this pie chart shows, two-thirds of all poor are White and 45 percent of
all poor are non-Hispanic Whites.
Children are 40 percent of the poor though they are but 27 percent of the total
population. Their poverty rate is higher than for any other age group, 20.5 percent in
1996, unchanged from 1995. Poverty for children has been at or above 20 percent since the
early 1980's.
The real median earnings of women who worked full time, year round increased by 2.4
percent between 1995 and 1996, while that for comparable men fell by 0.9 percent. As a
consequence, the ratio of female-to-male earnings for full-time year-round workers reached
a new all-time high, of 74 percent. The last time year-round full-time male workers
experienced an increase in their median earnings was in 1991.
This is the third consecutive year in which there was no year-to-year change in overall
income inequality -- there was no statistically significant change in quintile income
shares between 1995 and 1996 nor did the Gini index, a second measure of income
inequality, show a change between 1995 and 1996.
However, the long-term trend in the U.S. has been toward increasing income inequality. The
data shows the increasing share of household income received by the highest income
quintile -- 49.0 percent in 1996 but only 43.8 percent in 1967. It also illustrates the
declining share of those in the bottom quintile -- 4.0 percent in 1967 down to 3.7 percent
in 1996.
These changes together mean that the middle 60 percent of the income distribution (roughly
those households with incomes between $15,000 and $68,000 in 1996) has received a
declining share over this period -- from 52.3 percent of income in 1967 down to 47.4
percent in 1996.
The Gini index is now 14 percent above its 1967 level.
Based on a comparison of two-year moving averages, real median household income grew
between 1994 and 1996 for nine states and fell for three. In the same period, five states
had a drop in their poverty rate while three showed an increase.
The Census Bureau also produces a series of experimental estimates of income, in an
attempt to gauge the effect on income and poverty of noncash benefits and taxes, which are
not considered in the official measures. Seventeen experimental definitions of income are
computed, and tables based on those results are presented in the reports. The Bureau's
research in this area has shown that the distribution of income is more equal under a
broadened definition that takes into account the effects of taxes and noncash benefits
than under the official cash income definition.
Government benefits play a much more equalizing role on income than do taxes. Valuing
noncash benefits and subtracting taxes also affects the estimated poverty rate. Under the
broadened definition of income, the estimated poverty rate was 10.2 percent or 27.1
million people, compared to 13.7 percent and 36.5 million people under the official income
definition.
Regardless of the method chosen to measure income, as you can see in this chart, the
pattern of poverty change over time is similar.
Research is underway at the Census Bureau and the Bureau of Labor Statistics to examine
recent recommendations of the National Academy of Sciences for changing the official
poverty definition. We have a special Internet web site that presents research to date.
The remaining topic I will cover today is health insurance coverage.
The number of people without health insurance coverage in 1996 was 41.7 million, 1.1
million more people than in 1995, or 15.6 percent of the population, a proportion
unchanged from 1995.
The proportion of poor people without health insurance coverage was 30.8 percent, also not
different from last year and about double the rate for all persons. Young adults, those
with low educational attainment, and Hispanics were the demographic groups most likely to
lack coverage. Coverage rates rose in two states and fell in six states.
The number of uninsured children grew to 10.6 million (14.8 percent of all children) in
1996; both the number and percentage were higher than in 1995. The number of poor children
without health insurance was 3.4 million (23.3 percent of all poor children), both
statistically unchanged from 1995. More than one-fifth (21.8 percent) of all children were
covered by medicaid.
Let me again summarize the main findings. For the second consecutive year, households in
the United States experienced an annual increase in their real median income. Between 1995
and 1996, median household income adjusted for inflation increased 1.2 percent, to
$35,492.
Despite this increase in income, the number of poor and the poverty rate remained
statistically unchanged -- the number of poor in 1996 was 36.5 million people, a poverty
rate of 13.7 percent.
Finally, 41.7 million people lacked health insurance coverage in 1996, up 1.1 million from
1995, but the percentage without health insurance remained statistically unchanged at 15.6
percent.
I'll be glad to answer your questions. Please identify yourself and your affiliation.
NOTES
1. The difference between the 1995-1996 percent changes in median household income for the
United States and the South was not statistically significant.
2. The difference between the 1995-1996 percent increase for the middle and top quintiles
was not statistically significant. |
Contact the Housing and Household Economic Statistics Division
at 301-457-3242 or mail to hhes-info@census.gov for further information.
Go to Income 1996
Go to Poverty 1996
Go to Income Statistics
Go to Poverty Statistics
Last Revised: Wednesday, 03-Feb-99 08:16:22
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