The Dynamics of Poverty
By David Henderson
Every year at this time, when the U.S. Census comes out with its report on incomes and poverty, there is a special section titled “The Dynamics of Poverty.” It always shows that there is mobility between income categories, even in the short run, and that poverty is temporary for most people in America who experience it. Virtually all reporters ignore it.
This year’s report is no exception, and I’m reprinting it here.
The Survey of Income and Program Participation (SIPP) provides monthly data about labor force participation and income sources and amounts. The data yield insights into the dynamic nature of these experiences and the economic mobility of U.S. residents. For example, the data demonstrate that using a longer time frame to measure poverty (e.g., 4 years) yields, on average, a lower poverty rate than the annual measures presented in this report, while using a shorter time frame (e.g., 2 months) yields higher poverty rates. Some specific findings include:
• Income data from the 2008 SIPP panel suggested that between 2009 and 2012 households experienced less economic mobility than found in earlier SIPP panels. Overall, 57.1 percent of households remained in the same income quintile between 2009 and 2012, while the remaining 42.9 percent of households experienced either an upward or downward movement across the income distribution.
• Households with householders [I believe this is the Census’s term for the old “head of household”] who had lower levels of education were more likely to remain in, or move into, a lower quintile than households whose householders had higher levels of education.
• During the 4-year period from 2009 to 2012, 34.5 percent of the population had at least one spell of poverty lasting 2 or more months.
• Chronic poverty over the 4-year period from 2009 to 2012 was relatively uncommon, with 2.7 percent of the population living in poverty all 48 months.