Income inequality is growing in the United States. The poor are getting poorer, and the rich, richer. But that’s only part of the story: A new study shows that three out of every five Americans will spend at least one of their prime working years in poverty.
“There’s a great deal of fluidity in the income distribution,” says study co-author Thomas Hirschl, a professor of development sociology at Cornell University.
Most studies of income, Hirschl says, focus on just a few moments in time, but to understand how individuals’ incomes change over time takes more detailed data. For this new study, Hirschl and frequent collaborator Mark Rank analyzed data from the Panel Study of Income Dynamics, which first interviewed members of about 4,800 households in 1968, and has been following them and their descendants ever since. Earlier this year, Hirschl and Rank published a study showing that a substantial portion (one in nine) of Americans spent at least a year earning incomes in the top one percent. Now, they wanted to know more about who was at the bottom.
Sixty-two percent of the people interviewed had spent at least one year in poverty—that is, below the 20th percentile for income.
“This group at the top is buying bigger houses and more expensive things,” Hirschl says, but “how many people are disadvantaged?”
Quite a few, at one time or another. Sixty-two percent of the people interviewed as part of the PSID study had spent at least one year in poverty—that is, below the 20th percentile for income—and 42 percent had spent at least a year in extreme poverty, below the 10th percentile. Many of those Americans lived in poverty as young adults—by age 30, 42 percent had spent a year or more in poverty, and 23 percent had spent a year in extreme poverty—but some experienced low incomes for the first time when they were well into their 50s.
The experience of poverty “looks like a lot of different things,” Hirschl says. Some become homeless, while others have savings or wealthy parents who can help them ride out a hard year or two. For many of those people, poverty is a short-lived experience—Hirschl says he knows successful professors who relied on food stamps as graduate students—but long-term poverty is far from uncommon. Roughly 12 percent of Americans, the study found, had annual earnings below the 20th percentile for a decade or more.
“People have a chance to do well, and people have a chance to do poorly,” Hirschl says. But for those at the bottom—who, by the way, are disproportionately non-white, women, less-educated, unmarried, and more likely to have a disability that prevents them from working, according to Hirschl and Rank—things may be getting harder.
“Economic insecurity—this is not a small effect,” Hirschl says, noting that the burden of poverty leads to stress, poor health, failed marriages, and other negative consequences. “We have a tough road ahead of us.”
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