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US Census Bureau
September 24, 2002

2001 Income and Poverty Statistics


Poverty Rate Rises, Household Income Declines, Census Bureau Reports

After falling for four straight years, the nation's poverty rate rose from 11.3 percent in 2000 to 11.7 percent in 2001. Median household income declined 2.2 percent in real terms from its 2000 level to $42,228 in 2001, according to reports released today by the Commerce Department's Census Bureau.

"Like the last year-to-year increase in poverty in 1991-1992 and the last decrease in real household income in 1990-1991, these changes coincided with a recession," said Daniel Weinberg, chief of the Census Bureau's Housing and Household Economic Statistics Division.

The poverty rate and the number of poor increased among several population groups between 2000 and 2001, including all families, married-couple families, unrelated individuals, non-Hispanic Whites, people 18-to-64 years old and the native population.

"The real median earnings of women age 15 and older who worked full time, year-round increased for the fifth consecutive year, rising to $29,215 -- a 3.5 percent increase between 2000 and 2001," said Weinberg.

Men with similar work experience did not experience a statistical change in earnings ($38,275). As a result, the female-to-male earnings ratio reached an all-time high of 0.76. The previous high was 0.74, first recorded in 1996.

The reports, Poverty in the United States: 2001 and Money Income in the United States: 2001, are available on the Internet. The data were gathered in the 2002 Annual Demographic Supplement to the Current Population Survey. In addition, the reports discuss experimental measures of income and poverty that account for noncash benefits (such as food stamps) and taxes (such as the Earned Income Credit) in income.

Poverty

According to the poverty report, about 1.3 million more people were poor in 2001 than in 2000 -- 32.9 million versus 31.6 million. The number of poor families increased from 6.4 million in 2000 (or 8.7 percent of all families, a record low rate) to 6.8 million (or 9.2 percent) in 2001.

For non-Hispanic Whites, the poverty rate rose from 7.4 percent in 2000 to 7.8 percent in 2001. But poverty remained at historic lows for African Americans (22.7 percent), Hispanics (21.4 percent) and Asians and Pacific Islanders (10.2 percent). Among these groups, only non-Hispanic Whites (up 905,000 to 15.3 million) and Hispanics (up 250,000 to 8.0 million) saw an increase in the number of poor.

The three-year-average (1999-2001) poverty rate for American Indians and Alaska Natives was 24.5 percent, with an estimated 800,000 living in poverty. American Indians and Alaska Natives were the only group to show a decline in their poverty rate when the two-year 2000-2001 average was compared with the two-year 1999-2000 average. (The average was used because the American Indian and Alaska Native population is relatively small and multiyear averages provide more reliable estimates.)

The poverty rate for the population age 18 to 64 rose from 9.6 percent in 2000 to 10.1 percent in 2001. Children under 18 continued to have a higher poverty rate (16.3 percent) than people 18 to 64 or 65 and over; it was unchanged from 2000.

Increases in poverty were concentrated in metropolitan areas (particularly outside central cities) and in the South. The poverty rate for people living in the suburbs rose from 7.8 percent in 2000 to 8.2 percent in 2001, but did not change for those in central cities (16.5 percent) or in nonmetropolitan areas (14.2 percent). The South was the only region to have an increase in its poverty rate from 2000 to 2001. Its rate of 13.5 percent was the highest among all regions.

Averaging 1999 to 2001, poverty rates ranged from 6.2 percent in New Hampshire (whose rate was not statistically different from Minnesota, Maryland, Connecticut and Iowa) to 18.8 percent in New Mexico (whose rate did not differ from those in Arkansas, Mississippi and Louisiana). Based on comparisons of 1999-2000 and 2000-2001, two states (South Carolina and Utah) showed increases in poverty, while four states -- California, Delaware, Massachusetts and Nevada -- experienced declines.

The average poverty threshold for a family of four in 2001 was $18,104 in annual income; compared with $14,128 for a family of three; $11,569 for a family of two; and $9,039 for unrelated individuals.

Income

"Like the increase in poverty, the decline in real median household income between 2000 and 2001 coincided with the recession that started in March 2001," said Weinberg. "The decline was widespread. With the exception of the Northeast, where income was unchanged, all regions experienced a decline, as did each of the racial groups."

For non-Hispanic Whites, median household income declined 1.3 percent, in real terms, between 2000 and 2001 to $46,305. For African Americans and Asians and Pacific Islanders, the drops were 3.4 percent (a loss of $1,025) to $29,470 and 6.4 percent (a loss of $3,678) to $53,635, respectively. The percentage decline in median household income of African Americans did not differ from that of non-Hispanic Whites and Asian and Pacific Islanders. The real median income of Hispanics, however, remained unchanged at $33,565. This was the first annual decline for non-Hispanic Whites and Asians and Pacific Islanders since 1990-1991 and the first for African Americans since 1980-1981.

The three-year-average (1999-2001) median household income estimate for American Indians and Alaska Natives was $32,116. As with the poverty data, averages were used because the American Indian and Alaska Native population is relatively small and multiyear averages provide more reliable estimates. Based on comparisons of two-year-average medians (1999-2000 versus 2000-2001), the real median household income of American Indians and Alaska Natives did not change statistically.

The real median incomes of family households and of nonfamily households declined between 2000 and 2001. Family household income dropped 1.7 percent (from $53,155 to $52,275) and nonfamily household income declined 1.5 percent ($26,012 to $25,631). These percentage declines are not statistically different.

Real median household income did not change in the Northeast between 2000 and 2001, remaining at $45,716. It did, however, decline by 3.7 percent in the Midwest (to $43,834);

2.3 percent in the West (to $45,087); and 1.4 percent in the South (to $38,904). The South has the lowest median household income of all four regions. The percentage change in household income for the West was not statistically different from those for the South and the Midwest. The difference between the 2001 median household incomes for the Northeast and the West was not statistically significant.

Real median household income declined by 1.6 percent for households in metropolitan areas, falling to $45,219 between 2000 and 2001. Both those inside and outside the central cities of metropolitan areas experienced a decline. Households outside metropolitan areas did not experience a change between 2000 and 2001, remaining at $33,601.

Real per capita income was unchanged between 2000 and 2001 for the overall population ($22,851), each of the race groups and Hispanics. It was $26,134 for non-Hispanic Whites; $14,953 for African Americans; $24,277 for Asians and Pacific Islanders; and $13,003 for Hispanics.

Averaging 1999, 2000 and 2001, real median household income in Alaska, although not statistically different from the median incomes for Maryland, Connecticut and Minnesota, was higher than the values for the remaining 46 states and the District of Columbia. Conversely, median household income for West Virginia, although not statistically different from the median for Arkansas, was lower than the incomes of the remaining 48 states and the District of Columbia.

Based on comparisons of two-year-average medians (comparing 1999-2000 with 2000-2001), real median household income rose in three states (Arizona, Massachusetts and Pennsylvania) and declined in 12 (Illinois, Indiana, Iowa, Michigan and Wisconsin in the Midwest; Alabama, Florida, Mississippi and Tennessee in the South; Maine and Vermont in the Northeast; and Washington in the West).

Various measures of income inequality differ on whether inequality changed between 2000 and 2001. For example, using the Gini Index, overall household income inequality did not change on a year-to-year basis for the eighth consecutive year. However, the share of income going to the poorest fifth of households declined, from 3.6 percent to 3.5 percent. Almost all the measures examined in the report show inequality to be above its 1999 and earlier levels.

Experimental measures

The Census Bureau also produces a series of experimental estimates on how much noncash benefits and taxes -- which are not considered in the official measures -- affect income and poverty. The income report shows 14 experimental definitions of income.

Valuing noncash benefits and subtracting taxes also affects the estimated poverty rate. In response to a 1995 report issued by a panel from the National Academy of Sciences, the Census Bureau developed six experimental poverty measures, each of which accounts for benefits and taxes in income but differs by how they account for health care costs and the effect of geographic differences in the cost of living. Four of the six experimental measures showed a significant increase in poverty between 2000 and 2001, while two showed no change.

All of the alternative measures also present a different picture of who is poor than the official measure presents. Among the groups with lower experimental poverty rates are people in families with a female householder with no spouse present, children under 18 and African Americans.

Among the groups with higher poverty rates using the alternative measures are non-Hispanic Whites, people in married-couple families, people in male householder families, those age 65 and over and, when the effect of geographic differences on the cost of living are taken into account, people who live in areas with high housing costs (such as Hispanics).

The estimates in these reports are based on the 2000, 2001 and 2002 Current Population Survey Annual Demographic Supplements. These income and poverty estimates, the first to use population estimates based on Census 2000 results, also include the results of a sample expansion of 28,000 households. The larger sample was designed to improve the reliability of national and state estimates.

Because results presented in these reports were recalculated based on the expanded sample and Census 2000 results, they may differ from previously released estimates. All statements in the reports have undergone statistical testing, and all comparisons cited are statistically significant.

This document is not necessarily endorsed by the Almanac of Policy Issues. It is being preserved  in the Policy Archive for historic reasons.

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