[lg policy] Racial and Ethnic Disparities Among Low-Income Families

Wed Aug 12 14:33:58 UTC 2009

Racial and Ethnic Disparities Among Low-Income Families

Margaret Simms, Karina Fortuny, Everett Henderson
Publication Date: August 07, 2009

http://www.urban.org/url.cfm?ID=411936 The text below is an excerpt
from the complete document. Read the full fact sheet in PDF format.

Abstract

Low-income status in the United States varies significantly by race
and ethnicity. Of the more than 13.4 million families with children
living on incomes less than 200 percent of the federal poverty level,
30 percent are Hispanic, 22 percent are black or African American, and
6 percent are other nonwhites. This fact sheet provides statistics on
racial and ethnic differences in family structure, work effort,
nativity or immigration status, earnings, and education.

--------------------------------------------------------------------------------

Over the past decade, social policies have undergone significant
change. The main policy focus for nonelderly families has been toward
encouraging greater work effort, with the expectation that full-time
employment, along with some social supports, would enable families to
earn enough to provide for their families. Although self-sufficiency
can be an illusive concept, there is some consensus that families
would need to have incomes above 200 percent of the federal poverty
level in order to cover basic household expenses consistently (about
$42,000 for a family of four).1

U. S. Census reports on median income and poverty rates for households
and families commonly note racial and ethnic differences in economic
well-being. It is less common to discuss racial and ethnic differences
among families with incomes below 200 percent of the poverty level,
what we classify as low-income families. Possible income differences
across racial and ethnic groups assume some importance within the
policy context. With less emphasis on income supports and more on
increasing work effort, recent policy changes may have affected racial
disparities. In addition, if new policies aim to move people up to the
next rung on the economic ladder or improve families' well-being even
if their incomes do not increase substantially, then policymakers and
advocates need to understand racial differences that may affect the
impact of these policies and programs on different types of families.

Profile of Low-Income Families (Figure 1)

The Urban Institute used the 2008 Current Population Survey (which
provides income data for 2007) to assess the characteristics of
low-income families by race and ethnicity. Over 13.4 million families
with children in the United States fall into the low-income category.
Most of these families are racial or ethnic minorities. Four million
low-income families (or 30 percent of the total) are Hispanic, 2.9
million (22 percent) are black or African American, and about 800,000
(6 percent) are other nonwhites.

Work Effort (Table 1)

Approximately 72 percent of all low-income families with children have
at least one employed adult, though not all are working full time.
Another 8 percent of them have a self-employed adult in the household.
However, work effort varies considerably by race or ethnicity.2
Hispanic families are most likely to have an adult who is working full
time (55%), while black and white families are equally likely to have
a family member working full time (44% and 43%, respectively). Black
families are most likely to have no employed members (27%) and least
likely to have a self-employed member (4%).

Family Structure (Figures 2 and 3)

Some differences in employment may result from differences in family
structure. Low-income Hispanic and other-race families are most likely
to be in married-family households with or without other related
adults (53%). Forty-two percent of white families and only 18 percent
of black families are in married-family households. Thus, African
American families are the most likely to be single-headed (83%), which
might make it more difficult to balance work and family
responsibilities. Hispanic and other-race families are also most
likely to have additional related adults in their households
(single-parent and married-couple combined, 7% and 8%, respectively),
and white families are the least likely (3%). The presence of related
adults is more common among single-parent households across race and
ethnicity.3 Sometimes having additional related adults in the
household can alleviate problems especially for single parents because
these adults can provide child care or make monetary contributions to
the household. Although black families are about twice as likely as
white families to live in single-parent households with related adults
(5% versus 2%), the overall percentage of black households
(single-parent and married-couple combined) who do is about 6 percent.
Therefore, additional adults are unlikely to improve the well-being of
this group as a whole relative to other groups.

All low-income families are more likely to be single headed than
middle- and high-income families (59% versus 22%). But the difference
between families of different income groups varies by race. White
low-income families are three times as likely as their middle- and
high-income counterparts to be headed by single parents. Black and
Hispanic low-income families are only twice as likely to be single
headed as higher-income families of the same race.

Nativity (Table 2 and Figure 4)

Low-income families are more likely to be headed by an immigrant or
foreign-born adult than are middle- or high-income families (27%
versus 15%). The patterns differ by race and ethnicity. For whites,
the portion of families headed by immigrant parents differs little
between low-income and higher-income families (4–5% each). Among
Hispanics, low-income families are much more likely to be headed by
foreign-born adults. Nearly two-thirds of low-income Hispanic families
are headed by an immigrant, compared with half of middle- and
high-income Hispanic families. For black and other-race families, the
opposite is true: middle- and high-income families are more likely
than low-income families to be headed by an immigrant.

Another way to view the status of immigrant families with children is
to look at the proportion of all immigrant families that is low
income. Only one-quarter of all white and other-race immigrant
families fell into the low-income category in 2007. By comparison,
nearly half (46%) of black and almost two-thirds (63%) of Hispanic
immigrant families were low income. This contrasts with the proportion
of native-born families with low-income status among black (53%),
Hispanic (46%), and other-race families (36%). The proportion of white
households that is low income is similar among the foreign- and
native-born.

Earnings (Table 3, Figures 5 A–C)

The earnings of low-income married-couple families are generally
similar across racial and ethnic groups, ranging between $25,000 and
$27,000. They are also similar, but much lower ($10,000), across
racial and ethnic groups for single-parent families. However, because
of the differences in family structure across groups, black families
have the lowest median income ($12,500) while Hispanic families have
the highest ($18,700).

For all groups, earnings increase with educational attainment. While
Hispanic married-couple families whose household heads have high
school educations or more tend to have less income than other groups
with similar educational attainment, Hispanic household heads with
less than high school educations earn more than their counterparts in
other ethnic groups. Hispanic families generally appear to compensate
for their lack of education through greater work effort (see table 1),
making the gap between Hispanic families as a whole and families from
other racial and ethnic groups fairly small. Among single-parent
households, the effect of educational attainment is strong. Households
headed by someone without a high school education have lower earnings
than those headed by someone with a higher educational level.

When comparing families with the same level of educational attainment,
differences appear by race and ethnicity. Generally, Hispanic families
headed by adults with less than high school educations have much
higher earnings than white, black, and other families with similarly
educated heads. Although married-couple Hispanic families headed by
adults with high school diplomas earn slightly less than
married-couple families in other racial and ethnic groups, Hispanics
are still ahead of other families headed by high school graduates
because of their larger proportion of married-couple relative to
single-parent households compared with the other groups. There is a
larger gap among married-couple families where household heads have
more than high school educations, but Hispanics make up ground, again
because their families are more likely to be headed by married couples
than families in other racial or ethnic groups.

Education (Figures 6 and 7)

Over half of low-income Hispanic family heads lack high school
educations, compared with one-fifth of black and other-race (mostly
Asian) family heads and slightly less than one-sixth of white family
heads. Although few Hispanic family heads have more than high school
diplomas, over 40 percent of white and other-race family heads and 36
percent of black family heads have some postsecondary education.

While not all families headed by someone with a high school education
or more achieves middle-income status, education does increase a
family's chances of having an income above twice the federal poverty
level. The proportion of families headed by someone with less than a
high school education is much higher among low-income families than
among middle and high-income families. Conversely, the proportion of
family heads with more than high school educations is much higher
among middle- and high-income families than it is among those in the
low-income category.

Income Gap (Figure 8)

Low-income black families are more likely to be poor (family income
below the federal poverty level) than other families. More than half
of low-income black families (53%) are poor, compared with 39 percent
of non-Hispanic whites, 44 percent of Hispanics, and 42 percent of
other-race families. This means that there is a much larger income gap
between black families' current income and the self-sufficiency level.
Further, more than a quarter of low-income black families have incomes
below 50 percent of the poverty level and live in deep poverty,
compared with 16–17 percent of white and Hispanic low-income families.

Policy Implications

Given the relatively high labor force commitment of Hispanics and
their low educational attainment, policies to increase their economic
well-being might focus on education, training, and, perhaps, language
integration.

Given the large proportion of the black low-income population that is
not working at all, identifying the factors that prevent work—child
care problems, disability, other health problems—and developing
policies that reduce these barriers to work would be important.

(End of excerpt. The entire fact sheet is available in pdf format:
http://www.urban.org/uploadedpdf/411936_racialandethnic.pdf)

http://www.urban.org/publications/411936.html

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