CHAPTER 5
MONEY, INCOME, AND POVERTY STATUS

Income greatly influences where people live, what they eat, how they dress, what they drive, and what schools their children can attend. How much money and income they have is usually determined by their occupation, which is often directly related to their level of education. Racial and ethnic backgrounds can play a big role in all these factors.

CHANGE IN METHODOLOGY

Historically, U.S. Census questionnaires asked respondents to identify themselves by only one racial group, making no allowances for multiracial individuals. However, beginning with the 2000 census, respondents were able to report more than one race if applicable. In 2002 the Census Bureau began tracking information for ten racial and ethnic groups: White alone; White alone or in combination; White alone, not Hispanic; Hispanic origin (of any race); African-American alone or in combination; African-American alone; Asian alone or in combination; Asian alone; Asian, Native Hawaiian, and other Pacific Islander, alone or in combination; and Asian and/or Native Hawaiian, and other Pacific Islander. As a result of this change in approach, comparison between current and past data becomes difficult in some cases.

INCOME DIFFERENCES

In 2002 the median income, which includes money income before taxes and not including the value of such noncash benefits as food stamps, Medicare, Medicaid, public housing, and employer-provided benefits, of American households for all races was $42,409. A household consists of a person or persons who occupy the same housing unit and may have just one person (the householder who owns or rents the house). It may also consist of related family members (family household) or unrelated persons (nonfamily household). The median income of non-Hispanic white households (meaning half of such households earned more and half earned less) was $46,900, considerably higher than that of Hispanic ($33,103) and African-American alone ($29,026) and African-American alone or in combination ($29,177) households. However, non-Hispanic white income was significantly less than the median household income of Asians alone ($52,626); Asians alone or in combination ($52,285); Asian, Native Hawaiian, and other Pacific Islander, alone or in combination ($52,018), and the category of Asian and/or Native Hawaiian, and other Pacific Islander ($52,291). (See Table 5.1.)

Married-Couple Households

In 2002, 75.8 percent of all families were married-couple families with a median income of $61,254. The median income for female-headed households with no husband present was substantially lower, at $29,001. The median income for male-headed households with no wife present was also lower than the married-couple median, at $41,711. (See Table 5.2.)

Married couples tend to have a higher income than single householders do. Because of their low marriage rates, African-Americans are at a disadvantage. Among those over age fifteen, African-Americans are far more likely than whites, Hispanics, or Asians and Pacific Islanders (APIs) to have never married. In March 2000, 43.5 percent of African-Americans had never been married, compared to 25.5 percent of whites, 33.2 percent of Hispanics, and 33.1 percent of APIs. (See Table 2.1 in Chapter 2.)

Per Capita Income

Per capita income is figured by dividing the total (aggregate or composite) national income by the total population. This means that if all the nation's earnings were divided equally among every man, woman, and

child, each person would receive this amount. The per capita figure is often used to compare the wealth of countries or groups within countries. In 2002 the per capita income for non-Hispanic whites was $26,128; white alone, $24,142; whites alone or in combination, $23,962; Hispanics (of any race), $13,487; African-Americans

alone, $15,411; African-Americans alone or in combination, $15,269; Asians alone, $24,131; Asians alone or in combination, $23,252; Asians, Native Hawaiians, and other Pacific Islanders, alone or in combination, $22,810; and Asians and/or Native Hawaiians, and other Pacific Islanders, $23,792. (See Table 5.3.)

Minority Incomes

WOMEN STILL EARNING LESS.

The U.S. Census Bureau reported that women earned considerably less than men in all races and groups. In 2002 the median earning for men working full time, year-round was $39,429. For women working full time, year-round, the median income was $30,203. (See Figure 5.1.)

HISPANIC INCOME.

In 2002 non-Hispanic white families earned a median income of $46,900, compared to $33,103 for Hispanic families. (See Table 5.1.) The financial situation among Hispanic subgroups, however, tends to vary. In 2001, 26.3 percent of Hispanics working full-time, year-round earned $35,000 or more, compared with 53.8 percent of non-Hispanic whites who earned $35,000 or more. Among the Hispanic subgroups, Puerto Ricans who earned $35,000 or more in 2001 totaled 34.8 percent, followed by Cubans (34.3 percent), Central and South American Hispanics (28 percent), and Mexican-origin Hispanics (23.6 percent). (See Figure 5.2.)

NATIVE AMERICAN POPULATION.

Between 1998 and 2000, Native Americans and Alaska Natives had lower income averages than APIs and non-Hispanic whites, but had higher

income averages than African-Americans and Hispanics. Native Americans and Alaska Natives had an average income between 1998 and 2000 of $31,800, compared to $52,600 for APIs, $45,500 for non-Hispanic whites, $31,700 for Hispanics, and $28,700 for African-Americans. (See Table 5.4.)

POVERTY STATUS OF MINORITIES

Despite the fact that Native Americans and Alaska Natives had higher average incomes than African-Americans and Hispanics, the group had higher poverty rates than African-Americans and Hispanics as well. Native Americans and Alaska Natives had a 25.9 percent poverty rate between 1998 and 2000, compared to 23.9 percent for African-Americans and 23.1 percent for Hispanics. On the other end of the spectrum, APIs had a poverty rate of 11.3 percent, and non-Hispanic whites had the lowest poverty rate at 7.8 percent. (See Table 5.4.)

Every year the Census Bureau establishes poverty thresholds that determine the distribution of different welfare benefits. A family of four was considered poor in 2002 if it had an income below the poverty threshold of $18,556. The average poverty threshold ranged from $8,628 for a person aged sixty-five or over who lived alone, to $39,843 for a family with nine or more members. (See Table 5.5.)

In Poverty in the United States: 2002 (Washington, DC, 2003), the Census Bureau reported that about 34.6 million persons—12.1 percent of the nation's population—were living below the official poverty level in 2002. (See Table 5.6.) The poverty rate in 2002 was lower than the rate of 15.2 percent reached in 1983 after the recession of the early 1980s. (See Figure 5.3 for 1959 to 2002 rates.) It was also lower than the 12.7 percent rate in 1998. In 2002 the poverty rate among some minorities was significantly higher than the overall rate, with an African-American alone poverty rate of 24.1 percent and a Hispanic rate of 21.8 percent. The non-Hispanic white rate of 8 percent and the Asian alone rate of 10 percent were lower than the overall rate. (See Table 5.6.)

Although non-Hispanic whites had a much lower poverty rate than other groups, they made up the biggest portion (45 percent) of poor persons in 2002. Individuals who identified themselves as "African-American alone" accounted for 24.9 percent of all persons below the poverty level. About 24.7 percent of all poor persons were Hispanics, who may be of any race. Asians, Native Hawaiians, and other Pacific Islanders, either alone or in combination, made up 4 percent of the nation's poor. (See Table 5.6.) Among Hispanic subgroups, 26.1 percent of Puerto Ricans lived below the poverty level in 2001, compared to 22.8 percent of Mexicans, and 16.5 percent of Cubans. Central and South Americans had the lowest poverty rate with 15.2 percent. (See Figure 5.4.)

CHILDREN LIVING IN POVERTY

Although there are various ways to define a poor household, the federal government's definition is having an income below the U.S. poverty threshold. (See Table 5.5, which shows poverty thresholds for 2002.)

In 2001 Hispanic and African-American children were more than three times as likely to live in poverty than non-Hispanic white children. Approximately 30 percent of African-American children lived in poverty, compared to 27 percent of Hispanic children and 9 percent of white, non-Hispanic children. Children in households headed by a female without a spouse present were far more likely to live in poverty than children in married-couple families. In households headed by a female with no husband present, 49 percent of Hispanic children and 47 percent of African-American children lived below the poverty level. (See Table 5.7.)

ELDERLY POOR

In the years prior to and including 1973, the poverty rate of the elderly (16.3 percent) exceeded that of children (14.4 percent). Since then, however, with the growth in Social Security and Medicaid, the rate for the elderly has decreased. In 2002 the poverty rate for children under eighteen years was 16.7 percent, while that for the elderly sixty-five and over was 10.4 percent. (See Table 5.8.)

GOVERNMENT PROGRAMS

The U.S. government offers various forms of assistance to the poverty-stricken. These include means-tested (based on income) programs, such as Supplementary Security Income and General Assistance (cash assistance programs in which recipients receive monthly checks from the government), Medicaid, food stamps, the school lunch program, and rent subsidies.

WELFARE REFORM

Minorities have long accounted for a major portion of the welfare rolls across the United States. Over the years, the welfare system grew into a major political issue, especially during presidential election years. In 1996 a Republican-led House of Representatives passed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PL 104-193), which was signed into law by President Bill Clinton. The purpose of the legislation was to cut the welfare rolls by moving recipients into the work force, thereby improving the standard of living of poor children. Because welfare generally serves poor families with young children, the new welfare-to-work programs required support in such areas as childcare and transportation.

In some respects welfare-to-work has been successful, as reflected in a major drop in welfare caseloads across the country and an initial drop in child poverty. However, critics maintain that the success is deceptive. One reason caseloads decreased was simply that the eligibility requirements were stiffened. As a result, many legal immigrants, especially Hispanics who were working poor, were denied aid, adversely affecting their children, who were U.S. citizens. Furthermore, many Hispanics who were eligible for aid were intimidated or confused by the new regulations. The economic boom of the late 1990s was also responsible for much of the gains, according to critics, and a subsequent recession brought an increase to poverty rates and unemployment. Moreover, the type of work available to families on welfare was generally low paying, offering no health insurance or other benefits and doing little to lift welfare-to-work participants above the poverty level. Very often the work was not accommodating to the needs of single mothers, resulting in a number of adverse consequences attributed to welfare reform. For instance, there was a rise in the number of African-American children who lived with neither parent and were raised instead by grandparents, other relatives, or in foster homes. Such children fared far worse than children from single-parent homes in terms of delinquency, school dropout rates, and mental health problems. According to Harvard University welfare analysts, cited by Nina Bernstein in "Side Effects of Welfare Law: The No-Parent Family" (New York Times, July 29, 2002), the percentage of urban African-American children "living without their parents more than doubled on average, to 16.1 percent from 7.5 percent" since the late 1990s. Bernstein further reported, however, that, according to economists at the University of California and the Rand Corporation, "Hispanic mothers were more likely to be married after welfare changes, and Hispanic children somewhat less likely

to live in a single-parent home but no more likely to live without their own parents."

COMPUTER ACCESS

In the area of communications, the term "universal service" refers to the goal that all Americans should have affordable telephone service. Because today's society dictates that people have to access, accumulate, and assimilate information, the federal government has expanded the measure of universal service to include computers and modems.

Computer and Internet use rose among most racial groups between 1997 and 2001. Asians and Pacific Islanders (APIs) had the highest computer usage rate in 2001, with 71.2 percent using computers. Whites had the second highest rate with 70.7 percent, followed by African-Americans with 55.7 percent. Hispanics had a less than 50 percent rate. Approximately 60.4 percent of APIs used the Internet, compared with 59.9 percent of whites, 39.8 percent of African-Americans, and 31.6 percent of Hispanics. (See Figure 5.5 and Table 5.9.)

The annual growth rate of the number of Hispanics who used computers between 1997 and 2001 was 6.6 percent. For African-Americans, the annual growth rate was 6.5 percent, while the rates for APIs and whites were lower, at 5.6 percent and 5.2 percent, respectively. A possible reason for the slower rate of growth among whites and APIs is the larger proportion of these demographics using computers already. (See Table 5.10.)

African-Americans had the highest growth rate of people logging onto the Internet between 1998 and 2001, at 31 percent. Hispanics had the second highest growth rate with 26 percent, followed by APIs with 21 percent and whites with 19 percent. (See Table 5.11.)

In 2001 most Americans who used the Internet used it to send e-mail—86.4 percent of whites, 86.8 percent of APIs, 72.9 percent of African-Americans, and 71.2 percent of Hispanics. Besides e-mail, however, Americans differed in the other ways they used the Internet. Whites (42 percent) and APIs (39.8 percent) were more likely than African-Americans (24.7 percent) and Hispanics (26.2 percent) to buy products and services online. (See Figure 5.6.)