Census_Release_9-18-14

The economic security of working families depends on reliable access
to
opportunities that offer good incomes and that allow workers to share
in the benefits of economic growth. Unfortunately, data made available
today by the U.S. Census Bureau show that four years into an economic
recovery many working families across the nation and in Massachusetts
have seen only very modest gains.


Today’s U.S. Census Bureau data show that real median
household income in Massachusetts stood at $66,768 in 2013. Since
bottoming out in Massachusetts in 2011, median household income grew at
an annual rate of about 1.3 percent through 2013 (or about $1,730 total
over two years).

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One of the effects of weak income growth is that many working families
cannot make meaningful headway toward raising their standard of living.
For some low-income families this means they cannot work their way out
of poverty. We see this dynamic revealed in today’s data:
during four years of economic recovery, the poverty rate in
Massachusetts has remained stubbornly high. Today’s Census
data show that the overall poverty rate in Massachusetts stood at 11.9
percent in 2013, a level that is statistically indistinguishable from
levels going back to 2010. The last year in which the data indicate a
clear difference in the poverty rate from 2013 levels is 2009, when the
Massachusetts rate stood at 10.3 percent.

image2


Still more troubling than the slow to stagnant income growth and the
intractability of the overall poverty rate in Massachusetts during the
last several years is what today’s Census data reveal about
childhood poverty in the Commonwealth. In 2013, 16.0 percent or almost
1 in 6 Massachusetts children lived below the poverty line. This is up
from a rate of 12.8 percent at the start of the national economic
recovery in 2009 and 13.9 percent in 2010 (there is no statistically
significant difference between the 2013 rate and the rates in 2012 or
2011).

image3


While the new data released today reflect some short term trends, they
also show patterns that we have seen for decades.  Throughout
the 1950s, 1960s, and much of the 1970s, workers’ wages rose
in lock-step with productivity gains. During the 1970s, this connection
was broken and as a consequence, both U.S and Massachusetts working
families have paid a steep economic price in the decades since. [For
more on the historical connection between wages and productivity gains,
see MassBudget’s Labor
Day release
.]

METHODOLOGY

Differences between the CPS and the ACS


The Census Bureau’s recent data on household income derive from two
main sources: the Current Population Survey (CPS) and the American
Community Survey (ACS). Today’s data come from the ACS. The
CPS is the older of the two surveys—dating back to the
1940s—and is therefore a more reliable source for making
comparisons over longer periods of time (though, due to sample size
constraints, data is best pooled over two or three years to do so). The
CPS is also the official source for national level poverty and income
data. However, the ACS is based on a larger sample and is thus able to
provide information on a state and sub-state basis that does not have
to be pooled over multiple years.

Measuring Income


Median household income is a statistical measure indicating the exact
middle of the range of all household incomes, such that half of all
households have incomes below the median and half have incomes above
the median. Under the Census Bureau’s methodology, income refers only
to before-tax money income and therefore does not include reductions
(or increases) in net, take-home income due to tax liabilities (or
credits), or the value of non-cash benefits such as Medicaid or food
stamps.

Measuring Poverty


To determine the poverty rate the Census Bureau counts all money income
earned by a family before taxes—in other words, non-cash
benefits such as Medicaid and Supplemental Nutrition Assistance Program
(SNAP) benefits are excluded, as are tax liabilities and credits. The
federal poverty threshold varies depending on the size and composition
of the family and is updated each year for inflation. For 2013, the
poverty threshold was just over $12,100 for a single person under the
age of 65 and just over $23,600 for a family of four (thresholds for
individuals and couples over the age of 65 are somewhat lower). The
poverty thresholds do not vary by geography and thus do not reflect
differences in cost of living among states. The Census Bureau has begun
to provide national-level data using an alternate poverty measure that
takes into account taxes (including the value of the Earned Income Tax
Credit) and non-cash support such as Supplemental Nutrition Assistance
Program (SNAP) benefits.

Note on Statistical Significance


The CPS and ACS data come from surveys of a random sample of households
and thus one cannot be certain that the estimates produced by the
sample reflect the actual rates for the entire population. To a certain
extent, results will vary from one sample to another, depending on
sample size and the particular characteristic that is being measured.

When comparing two measures—for instance, the poverty rate in
two different years or two different states—it is important
to consider how this sampling variability affects the difference
between the two measures. If the difference between the two rates would
occur due to sampling variability less than 10 times out of 100, then
we can say that we have a 90 percent level of confidence that the
difference between the two rates reflects a true difference and is not
due to this potential variation. In other words, the chance that the
difference between the two estimates is simply the result of random
chance is less than 10 percent.

While different levels of confidence (e.g., 95 or 99 percent) can be
used to measure significance, the 90 percent level is typically used
when analyzing CPS and ACS data, and that is the measure we use here
when defining a difference as significant. For more on calculating
levels of confidence and testing for significance, see Appendix
4 in
the ACS user guide
.


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