One-Half Median Four-Person Family Income

 

Dollar Amount

Percent of Official Threshold

Year

Before-Taxes

After-Taxes

Before-Taxes

After-Taxes

1989

23,062

18,990

162.1

133.5

1990

22,249

N.A.

156.4

N.A.

1991a

22,174

N.A.

155.8

N.A.

1992

22,308

18,018

156.8

126.6

NOTES: Data for one-half median four-person family before-tax and after-tax income values for 1947-1989 derived from Vaughan (1993: Table 1); one-half median four-person family income before-tax values for 1990-1992 from Bureau of the Census (1993b: Table 13); one-half median four-person family income after-tax value for 1992 from the March 1993 CPS. All dollar values were converted to constant 1992 dollars using the CPI-U from Bureau of the Census (1993c: Table A-2); all percentages were calculated relative to the constant 1992 dollar value of $14,228 for the official two-adult/two-child poverty threshold (Bureau of the Census, 1993c: Table A).

a Year contained the low point of a recession as determined by the National Bureau of Economic Research (see Bureau of the Census, 1993b:B-1).

b Values estimated by Vaughan on the basis of the relationship between median income for families with two children and four-person families, 1947-1952 and 1955-1960.

went from 73% of the official threshold in 1947 to 157% of that threshold in 1992; the after-tax series went from 68% to 127% of the official threshold over the same period.)30 These data indicate why the original 1963 threshold for a two-adult/two-child family was widely regarded as the right level for that time; such a figure, however, might well have been viewed as too high earlier in the post-World War II period, just as it has come under criticism by some as too low today.

Another clear finding is that relative thresholds are responsive to changes in the business cycle. In only one year over the entire period did the thresholds drop in current dollars (for the before-tax threshold in 1949). In real terms, however, they declined in most of the years that experienced recessionary conditions: for example, both the before-tax and the after-tax thresholds declined from 1979 to 1983, a period that included two recession years; they also declined during the most recent recession in 1990. In contrast, the before-tax and after-tax thresholds increased in real terms, sometimes to a considerable degree, in periods of economic growth.

30  

If the CPI-U-X1 is used to update the 1963 official threshold, then in 1992 the relative thresholds would exceed the official threshold by larger margins (the before-tax threshold would be about 171% and the after-tax threshold about 138% of the official threshold in 1992).



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