2008 INCOME, POVERTYAND HEALTH INSURANCES ESTIMATES
FROM THE CURRENT POPULATION SURVEY
David S. Johnson, Ph.D.
Chief, Housing and Household Economic Statistics Division
September 10, 2009
Good morning and thank you for joining us today.
(Slide 1) Today we are releasing national income, poverty, and health insurance coverage estimates from the Annual Social and Economic Supplement of the Current Population Survey (or CPS). These data were collected in the spring of 2009 and represent estimates for the 2008 calendar year.
(Slide 2) Before I present the findings from the 2009 CPS, let me just mention that on September 22, 2009, the U.S. Census Bureau will be releasing data from the American Community Survey (or ACS). That release will include single-year subnational estimates from the 2008 ACS, including income and poverty estimates. Also, for the first time, ACS will release estimates of health insurance coverage. Estimates will be available for the nation, all 50 states, the District of Columbia, Puerto Rico, every congressional district and all counties, places and metropolitan areas with populations of 65,000 or more.
On October 27, 2009, the Census Bureau will release three-year estimates from the 2006-2008 ACS. Three-year estimates provide data for smaller geographic areas, specifically those areas with populations of 20,000 or more. They will include estimates for income and poverty, but not estimates of health insurance coverage.
The CPS is the survey used for the official poverty estimates and national income and health insurance estimates. The CPS is also the best source of data for trends of various demographic groups. The Census Bureau has been conducting the CPS since 1947. On the other hand, the ACS is the best data source for examining subnational estimates and differences by geography. The Census Bureau started conducting the ACS in 2000. On our website we have guidelines for using each of these data sets.1
Let me begin by summarizing the main findings about income, poverty, and health insurance coverage from the Current Population Survey.2 (Slide 3)
- Real median household money income for the nation fell 3.6 percent from 2007 to $50,300 in 2008. This decline in income coincides with the recession that started in December 2007.
- The 2008 official poverty rate for the nation was 13.2 percent, up from 12.5 percent in 2007. In 2008, 39.8 million people lived in poverty, an increase of 2.6 million since 2007.
- Real median earnings of both men and women who worked full-time, year-round declined between 2007 and 2008, and the female-to-male earnings ratio declined from 0.78 in 2007 to 0.77 in 2008.
- The number of people without health insurance coverage increased to 46.3 million in 2008 (from 45.7 million in 2007), and the uninsured rate was 15.4 percent, not statistically different from the rate in 2007.
Now let's take a closer look at each of the highlights. This slide (Slide 4) shows median household income from 1967 to 2008 in real (inflation adjusted) dollars. Recessions, as defined by the National Bureau of Economic Research, are depicted in this, and all time series charts, in light blue shading.3 Real median income declined by 3.6 percent from $52,200 to $50,300 between 2007 and 2008, offsetting the gain in income experienced over the past 3 years and coinciding with the recession that started in December 2007 – the NBER has not yet determined the end of this recession. Since 1967, the first year income of households was collected, household income has increased 24.9 percent.
This time series chart (Slide 5) on poverty shows that the number of people in poverty (39.8 million people) increased by 2.6 million in 2008 and the poverty rate increased from 12.5 percent in 2007 to 13.2 percent in 2008. This is the first statistically significant annual increase in the poverty rate since 2004. The poverty rate in 2008 was the highest poverty rate since 1997 but was 9.2 percentage points lower than in 1959, the first year estimates are available. The estimate of 39.8 million people in poverty was not statistically different from either the 1993 estimate of 39.3 million or the 1960 estimate of 39.9 million.4
This chart (Slide 6) shows the change in real median household income and the poverty rate since 1967, combined into one chart. As you can see, the time series for poverty is generally a mirror image of the series for median income, with the poverty rate usually increasing during periods of falling median income. The pink-shaded lines indicate the changes surrounding a recessionary period – basically, from peak to trough for household income.
As shown, the 3.6 percent income decline between 2007 and 2008 is not statistically different from the declines in the income years surrounding the two most recent recessions lasting from March 2001 to November 2001 and from July 1990 to March 19915. It is, however, the largest annual decline in real median household income since 1991.
And the 0.8 percentage point increase in the poverty rate between 2007 and 2008 is not statistically different from the percentage increase for the recession lasting from July 1990 to March 1991; and larger than the apparent change for the years surrounding the March 2001 to November 2001 recession.6
This chart (Slide 7) presents historical data on earnings of full-time, year-round workers from 1960 to 2008. Between 2007 and 2008, real median earnings of men declined 1 percent, from $46,800 to $46,400, and those of women declined 1.9 percent, from $36,500 to $35,700. The female-to-male earnings ratio declined from 78 percent in 2007 to 77 percent in 2008. Since 1960, the earnings of men have increased 35.8 percent and for women about twice as much, 72.5 percent. Consequently, the female-to-male earnings ratio has increased from 61 percent to 77 percent.
The next two charts (Slides 8 & 9) present the uninsured rate and the number of uninsured from 1987 to 2008.
(Slide 8) Looking at the percentage of the population without health insurance, the uninsured rate for the total population, 15.4 percent, was statistically unchanged from 2007. The percentage of children under 18 years old without health insurance (9.9 percent) was lower than in 2007 (11.0 percent). The uninsured rate for children was also the lowest since 1987, the first year that comparable health insurance data was collected.
(Slide 9) In 2008, the number of uninsured was 46.3 million, up from 45.7 million in 2007. The number of uninsured children fell from 8.1 million in 2007 to 7.3 million in 2008. Similar to the uninsured rate, this was the lowest number of children without health insurance since 1987.
Now that I have discussed the highlights, let me return to a more detailed discussion of household income. Although the decline in income was widespread (Slide 10), it was not uniform across all households. Specifically, the real median income of households maintained by a person 65 years and older remained statistically unchanged between 2007 and 2008, but declined for households maintained by people of all other age group categories.
(Slide 11) Differences also existed for households by number of earners. Households with no earners experienced a 2.6 percent increase in income between 2007 and 2008, while households with one earner or two or more earners experienced declines of about three percent.
The common thread between households with no earners and households with householders age 65 and over is that most of their income comes from non-earned sources, whereas for the other households, the majority of their income is earned income. Also, two thirds of the no-earner households have a householder 65 or older.
This chart (Slide 12) shows historical real median household income by race and Hispanic origin.7 The median income for households of each race category and those of Hispanic origin declined between 2007 and 2008. The income of non-Hispanic Whites declined 2.6 percent to $55,500; for Blacks, 2.8 percent to $34,200; Asians, 4.4 percent to $65,600; and Hispanics, 5.6 percent to $37,900.8
Among the race groups and Hispanics, Black households had the lowest median income in 2008, $34,200, which was 62 percent of the median for non-Hispanic White households, $55,500.9
(Slide 13) While the median represents one point on the distribution of household income – the point at which half of the households have income below it and half above it—other points along the distribution provide additional information about the nation’s household income disparity. For example, the 10th percentile, which was $12,200 in 2008, is the income level at which 10 percent of the households have income below it. The 90th percentile, which was $138,300 in 2008, is at the other end of the distribution. Between 2007 and 2008, income at the 10th percentile declined by 3.7 percent, compared with a 2.1 percent decline for income at the 90th percentile. While the 2007-2008 change for the 10th percentile looks flat, there was actually a decline of about $500 compared to a decline of $3,000 for households at the 90th percentile. Comparing the change in income at the 90th and 10th percentiles over the past four decades suggests that inequality is increasing. Between 1967 and 2008, the income at the 90th percentile increased 63.1 percent, while income at the 10th percentile increased by 32.4 percent.
Returning to poverty, this slide (Slide 14) demonstrates that there are disparities across demographic groups. Both the poverty rate and the number in poverty increased for people aged 18 to 64 years, to 11.7 percent and 22.1 million in 2008 (up from 10.9 percent and 20.4 million in 2007). For people 65 and older, both the poverty rate and the number in poverty remained statistically unchanged, at 9.7 percent and 3.7 million in 2008. In 2008, both the poverty rate and the number in poverty increased for children under 18 years old to 19.0 percent and 14.1 million (up from 18.0 percent and 13.3 million in 2007.)
For many years, the poverty rate for children has been higher than the rates for people 18 to 64 years old and those 65 and older. The 2008 poverty rate for people 65 and older (9.7 percent) was - for the sixth consecutive year - lower than the poverty rate for adults aged 18 to 64. (However, the poverty rates for children and adults are both higher in 2008 than their most recent pre-recessionary lows.)
(Slide 15) Here we see poverty rates by race and Hispanic origin from 1959 to 2008. Blacks were the only racial or ethnic group that did not show a statistically significant change in its poverty rate at 24.7 percent in 2008. The poverty rates increased for non-Hispanic Whites to 8.6 percent in 2008, for Asians to 11.8 percent in 2008, and for Hispanics to 23.2 percent in 2008.
(Slide 16) This chart presents the distribution from 1980 to 2008 of all children under 18 within five ranges of income-to-poverty ratios and presents a broader picture of the well-being of children.
One can see the diminishing share of children in the middle of the distribution – implying an increase in income inequality (as we have seen for the entire population).
Since 1980, the percentage of children living in families with incomes between 200 and 399 percent of their poverty thresholds (income between $44,050 and $88,100 for a family of four) has decreased from 41.1 percent to 31.5 percent. On the other hand, the percentage of children living in families with incomes greater than 400 percent of their poverty thresholds (income greater than $88,100 for a family of four) grew from 16.6 percent in 1980 to 27.9 percent in 2008.
This chart also shows the percentage of children living in extreme poverty, children living in family with incomes below 50 percent of their poverty thresholds. In 2008, 8.5 percent of children lived in families with incomes below 50 percent of their poverty thresholds (about $11,000 for a family of four), up from 7.8 percent in 2007 – which accounts for much of the increase in the overall child poverty rate. The percent of all children living in families with incomes between 50 percent and 100 percent of their poverty thresholds (income between $11,012 and $22,025 for a family of four) was 10.5 percent in 2008, statistically unchanged from 2007.
(Slide 17) The Census Bureau recognizes that measuring money income before taxes may not completely capture the economic well-being of individuals and families. Individuals also derive economic well-being from noncash benefits, such as food stamps and housing subsidies; pay federal, state and local taxes, and receive refundable tax credits. In 1995, the National Academy of Sciences (NAS) Panel on Poverty and Family Assistance also recommended a number of changes to the national poverty measure (including a new method to establish poverty thresholds and changes to the resource measure).
While the income and poverty estimates shown in today’s report are based solely on money income before taxes and do not include the value of noncash benefits, the Census Bureau computes a number of other measures of income and poverty that account for these factors. These alternative poverty and income measures fall into two categories:
- poverty measures based on the recommendations of the National Academy of Sciences which use different poverty thresholds and a different income definition;
- income and poverty estimates that continue to use the official poverty thresholds but that add or subtract resources from the income definition;
The Census Bureau also has a web-based tool, called Table Creator II, which allows one to explore alternative income and poverty measures.10 With this tool, one can examine the sensitivity of the poverty rate to changes in the resource definition and the poverty threshold definition; estimate relative poverty rates; and calculate poverty rates using the methods suggested by the NAS panel. Table Creator II allows one to see the incremental impact of the addition or subtraction of a single resource element.
This table (Slide 18) presents 2008 estimates similar to those that can be calculated using the web-based tool. The 2008 public data needed to calculate these alternatives using the web-based tool will be available to the public this fall.
- If the cash-value of food stamps were added to the resources of families, this would move 2.2 million people above the poverty line (from 39.8 million in poverty using money income only to 37.6 million in poverty including cash-value of food stamps with income).
- If estimates of income and payroll taxes were subtracted from money income and refundable credits like the Earned Income Tax Credit were added to income, then 1.5 million children would move above the poverty line (from 14.1 million in poverty using money income to 12.6 million in poverty using after-tax income).
- Finally, one can examine the effectiveness of Social Security income on the poverty of people age 65 and older. In 2008, the number of poor elderly people would be higher by 13.4 million people if Social Security payments were excluded from money income, more than quadrupling the number of poor elderly (from 3.7 million people using money income to 17.1 million people when excluding Social Security income from money income).
The Census Bureau will release the 2008 data on alternative measures at a later date.
Now let’s look a little more closely at the new health insurance estimates. This chart (Slide 19) presents the percentage of all people by health insurance coverage from 1987 to 2008. In 2008, the percentage of people covered by private health insurance and the percentage covered by employment-based health insurance decreased to 66.7 percent and 58.5 percent, respectively. The rates of coverage for both private and employment-based coverage have shown a downward trend for the last eight years. The percentage of people covered by government health insurance programs, which include Medicare, Medicaid, the Children’s Health Insurance Program, and military coverage increased for the second consecutive year to 29.0 percent in 2008. This increase in government coverage offset the fall in private coverage. Hence, the percentage of people without health insurance in 2008 was not statistically different from 2007 at 15.4 percent.
(Slide 20) This chart shows how the percent of the population not covered by health insurance varied by age, income and nativity. Children were less likely to be uninsured than nonelderly adults, with the uninsured rate for adults ages 18 to64 at 20.3 percent (which is an increase from the rate in 2007).
Uninsured rates decrease for each consecutive household income group. About 24.5 percent of people living in households with incomes below $25,000 are uninsured, while 8.2 percent of people living in households with incomes above $75,000 are uninsured. Almost 45 percent of noncitizens lacked health insurance while the uninsured rate for citizens was about 13 percent.
(Slide 21) While the previous charts showed the uninsured rates, this chart shows the age distribution of the uninsured in 2008 – the composition of the 45 million uninsured. While almost 18 percent of the uninsured were between 18 and 24 years of age, more than half the uninsured were older, between 25 and 64 years of age. The elderly make up only a tiny fraction of the uninsured while children constitute 15.9 percent of the uninsured.
The next chart (Slide 22) looks at the incomes of the uninsured. For both the 7.3 million uninsured children and the total uninsured population, about 30 percent live in households with incomes below $25,000; about a third live in households with incomes between $25,000 and $50,000 while about 20 percent live in households with incomes greater than $75,000. (And this composition has changed over time – ten years ago, in 1998, about 43 percent of uninsured children lived in households with incomes below 25000 and 10% lived in households with incomes greater than 75000.)
Finally, we can take a look at the nativity and citizenship status of the uninsured (Slide 23). Whether we are looking at the total uninsured population or just uninsured children, the vast majority of the uninsured are citizens, either native born or naturalized. About 21 percent of the uninsured are noncitizens. For children, only 11 percent of the uninsured are noncitizens.
(Slide 24) We have shown you just some of the data available from the Annual Social and Economic Supplement of the CPS. Much more data are available in the report and on the Census website, at www.census.gov and the links provided there.
That concludes my presentation. Thank you.
2As in all surveys, the data presented here and in the report being released today are estimates, subject to sampling variability and response errors. All statements in this briefing and the report meet the Census Bureau's standards for statistically significant differences, unless I note otherwise. All historical income data are expressed in 2008 dollars and were adjusted using the Consumer Price Index Research Series, which measured inflation at 3.8 percent between 2007 and 2008. The poverty thresholds are also updated each year for inflation. In 2008, the weighted average threshold for a family of four was $22,025; and for a family of three, $17,163.
3The National Bureau of Economic Research (NBER), a private research firm, is the source for defining recessions. The NBER has not yet determined the end of the recession that began in December 2007.
4The 2008 number in poverty is not significantly different from the number in poverty in 1993, 1962, 1961, 1960, and 1959.
5The income decline between 2007 and 2008 is larger than the 1.7 percent decline for the income years surrounding the December 1969 to November 1970 recession; and smaller than the declines for the income years surrounding the January 1980 to July 1980 and July 1981 to November 1982 combined recessions (6.0 percent), and the November 1973 to March 1975 recession (5.7 percent). The difference between the declines in income for the combined January 1980 to July 1980 and July 1981 to November 1982 recession and the November 1973-March 1975 recession was not statistically significant.
6The increase in the poverty rate between 2007 and 2008 is also not statistically different from the percentage increase for the recession lasting from November 1973 to March 1975 and the apparent difference in the recession lasting from December 1969 to November 1970. There was no statistically significant change in poverty for the December 1969 to November 1970 recession or for the March 2001 to November 2001 recession.
7Federal surveys give respondents the option of reporting more than one race. Therefore, two basic ways of defining a race group are possible. A group such as Asian may be defined as those who reported Asian and no other race (the race-alone concept) or as those who reported Asian regardless of whether they also reported another race. The results presented here use the first approach (race alone). The report upon which the data are based includes estimates using both approaches. Hispanics may be of any race.
8Except for the difference between the declines in income for non-Hispanic White and Hispanic households, all other differences between the declines were not statistically significant.
9Asian households had the highest median income, $65,600, about 118 percent of the median for non-Hispanic White households. The median income for Hispanic households was $37,900 in 2008, which was 68 percent of the median for non-Hispanic White households. The distribution of household income is influenced by many factors, such as the number of earners and household size.
10The tool, called CPS Table Creator II, is available in a link from the “Microdata Access” page on the poverty web site, <http://www.census.gov/hhes/www/poverty/poverty.html>.