Household Economics

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For every 100 children born to a poor family in Iowa’s largest metropolitan area, Des Moines, about 11 will eventually reach the nation’s top quintile of income earners. In Indiana’s most populous metro area, Indianapolis, the rate is much less: Fewer than 5 of every 100 low-income children rise to the top rung of the income ladder.

These large variations in economic mobility occur across the country — among different cities, states and regions. What is the cause? 

Enrollment in the Supplemental Nutrition Assistance Program (SNAP) grew from 28 million in 2008 to 44.5 million in 2011 due to the economic fallout of the recession.

Despite the high drama surrounding the current federal government shutdown and debt ceiling negotiations, a recent poll showed that about 30 percent of Amercians are not really concerned about any fallout affecting their personal lives.

If state leaders want to know the effects of programs aimed at helping the poor, they can find the answers in alternative poverty measures. “States want to know what’s going on with the programs they are using to fight poverty and how well are they doing,” Timothy Smeeding, director of the Institute for Research on Poverty and professor of public affairs and economics at the University of Wisconsin-Madison, said during a CSG webinar.

Few changes have been made to the official federal poverty measure since it was adopted in 1969 despite growing concern over its accuracy and usefulness. To address these concerns, both governmental and nongovernmental organizations have developed alternative ways of measuring poverty.

The U.S. Census Bureau uses the federal poverty threshold to determine the poverty rate and count the number of people in poverty each year. That threshold, which has been calculated the same way for nearly 50 years, is often criticized for being outdated and inaccurate. 

<--break->The Economic Policy Institute offers an alternative measure of the income needed to afford an adequate standard of living. The...

The latest retail data from Wal-Mart and the federal government points to a mixed and at times paradoxical picture. However many analysts are positing that the picture seems to tell of two different consumers and that the economic recovery has not reached down to the lower rungs of the economy.

Discussion about income mobility in the United States usually revolves around the concept of upward mobility which is defined as a person’s chance to make it to a higher economic strata than the one they arrived in.  While the concept is controversial and subject to many debates, a similar concept called intergenerational mobility is less discussed. Intergenerational mobility is defined as how the economic status of children compare to their parents. If for instance children of poor parents are likely to remain poor then there is low intergenerational mobility.

Real median household income fell between 2010 and 2011 by 1.5 percent—the second consecutive annual drop—landing at $50,054 in 2011. Nevada saw the biggest drop from 2010 to 2011 in real median household income—10.9 percent—while Oklahoma saw the biggest year over year increase—9.0 percent. Median household income in 2011 ranged from a low of $39,856 in Kentucky to a high of $68,876 in Maryland. From 2010 to 2011, 28 states experienced a decrease in real median household income while 21 states saw an increase and one state—North Carolina—saw no year-over-year change.

The U.S. Department of Commerce’s Bureau of Economic Analysis recently released the state personal income levels for 2012. Based on this data, average state personal income growth slowed to 3.5 percent in 2012 from 5.2 percent in 2011. While North Dakota demonstrated the largest increase in state personal income growth (12.4 percent) among all the states, South Dakota’s -0.2 percent was the most anemic. In terms of inflation, as measured by the national price index for personal consumption expenditures, the rate fell to 1.8 percent in 2012 from 2.4 percent in 2011.