Lecture 5: Who are the poor?

Today’s readings:• Schiller Ch. 3: Counting the Poor, pp. 60-66

• Current Population Report, P60-235, pp. 12-18, 45-58• DeParle, Ch. 3: The Crossroads: Chicago, 1966-1991

Today’s Topics

• Calculating poverty rates

• Who are America’s poor?

• What we learn from studying poverty spells--the dynamics of poverty

Calculating Poverty Rates(People in Thousands,Table B-1, P60-235)

1 2 3 4 5 6

RaceTotal

NumberPercent of all

PersonsNumber

in PovertyPoverty Rate

(%)Percent of all Poor Persons

aWhite

Alone, Not Hispanic 196,583

196,583 /298,699=.658 x 100 =

65.8%16,032

16,032/196,583 = .082 x 100 =

8.2%

16,032/37,276 = .430 x 100 =

43.0%

b Black Alone 37,66536,802/ 298,699

=.122 x 100 = 12.2%

9,2379,237/ 37,665

= .245 x 100 = 24.5%

9,237 /37,276

= .248 x 100 = 24.8%

c Hispanic (Any Race)

45,93345,933/298,699 =.154 x 100 =

15.4%9,890

9,890/ 45,933

= .215 x 100= 21.5%

9,890 /37,276 = .26.5 x 100 =

26.5%

d All Persons 298,699298,699/298,699

=1.00 x 100= 100%

37,27637,276/ 298,699

=.125 x 100= 12.5%

37,276/ 37,276

=1.00 x 100=

100%

Over and Under-representation Among the Poor

• Which racial groups are over-represented among the poor? Which are under-represented?– Compare group’s poverty rate to overall poverty

rate. • If PRG > PRall, Group is over-represented.• If PRG < PRall, Group is under-represented.

– Compare columns (3) and (6) by row.– Conclusions:

• Blacks and Hispanics are over-represented.• Whites are under-represented.

Who are America’s Poor?Snapshots from the CPR

Use CPR P60-235 to answer the following questions for 2007:

a. Which age group has the highest poverty rates?b. Which family type has the highest poverty rates?c. Is the risk of poverty greater for noncitizens or

native-born Americans?d. Rank the following racial categories from highest

poverty rate to lowest poverty rate: American Indian/Alaskan Native, Asian, Black, Hispanic, White.

Who are America’s Poor?

Where are the poor most likely to live?

e. Northeast, Midwest, South, or West?

f. Central cities, suburbs, or outside metropolitan areas?

Who are America’s Poor?

g. How much greater is the risk of poverty for children living their mothers only than for children who live with married couples?

h. On average, how much income was needed to pull poor families out of poverty in 2007?

i. True or False: A majority of poor adults do not work.

Poverty Spells

Mary Jo Bane and David Ellwood,“Slipping into and Out of Poverty: The

Dynamics of Spells,” The Journal of Human Resources, Vol. 21, No.

1 (Winter, 1986), 1-23. (Source for the following 6 slides.)

1. What are poverty spells?

2. Why study poverty spells?

3. What is the distribution of poverty spells by length?

4. How do poverty spells begin?

5. How do poverty spells end?

6. What does the analysis of poverty spells tell us about welfare

dependency?

Bane and Ellwood “Slipping Into and Out of Poverty”

• What are poverty spells? – Continuous periods during which income falls below the

poverty line.

• Why study poverty spells? – Because we need to distinguish between the larger

population of people who are ever poor, and those who

are poor at a point in time if we are the understand the

effects of culture, dependency, and the allocation of

assistance.

Poverty Spells: Bane and EllwoodDistribution of Completed Spells of Poverty

0

10

20

30

40

50

60

1 2 3 4 5 6 7 8 9 9+

(1) Prospectivedistribution forspell beginners(2) Snap shot ofCompleted Spells

Poverty Spells: Bane and EllwoodDistribution of Completed and Uncompleted Spells of Poverty

0

10

20

30

40

50

60

1 2 3 4 5 6 7 8 9 9+

(1) Prospectivedistribution forspell beginners(2) Snap shot ofCompleted Spells

(3) Snap shot ofUncompletedSpells

Bane and EllwoodConclusions of “Slipping Into and Out of Poverty”

1. Most of those who ever become poor will have a short stay in poverty.

2. The majority of those who are poor at a given time will have very long spells of poverty.

3. Most people use aid programs briefly.4. The bulk of aid goes to a small group that has very long stays in

poverty.5. Changes in family structure and life cycle events explain nearly one-

half of spell beginnings.6. A fall in the head’s earnings explain a small minority of beginnings.7. Increase earnings of all household members is the primary route out

of poverty.8. The poverty population is extremely heterogeneous.

Poverty Spells

• Consequences of Bane and Ellwood’s Work

– Survey of Income and Program Participation (SIPP)--a longitudinal survey that allow the analyst to observe how the status of the same group of people changes over time; ie., to study the dynamics of poverty. http://www.census.gov/hhes/www/poverty/newguidance.html#sipphighlight

– Methodology applied to spells of welfare receipt