Related BLS programs | Related articles
Income distribution of older Americans
November, 2000, Vol. 123, No. 11
Rose M. Rubin, Shelley I. White-Means,
and Luojia Mao Daniel
Although many older Americans are finacially comfortable, with a significant group being well off, the largest share of elderly (defined as persons aged 65 or older) households has low incomes. Income inequality among older households persists despite more than 30 years of growth of income transfer programs designed to reduce poverty and improve the economic status of elderly persons. This gap highlights the importance of analyzing the income distribution of the elderly to determine the nature and extent of any inequalities that appear in it. Although government transfer programs have substantially enhanced the well-being of many of the elderly, numerous older persons continue to suffer low incomes.
Measures of income inequality provide insight into the relative economic positions of households, which are generally reported for the population as a whole. For example, the Bureau of the Census reports a decrease in U.S. household income inequality following World War II, from 1947 to 1968, followed by increased income inequality up to the mid-1990s.1 This conclusion is reinforced by other studies of income inequality.2 For the elderly in particular, the income distribution through the 1980s remained more unequal than that of the nonelderly.3 Daniel B. Radner finds that income inequality declined for the elderly and rose for the nonelderly from 1967 to 1992. However, his findings are unclear, because "taking account of taxes and noncash income could, in actuality, affect the results of the comparisons made. Unfortunately, income data that cover taxes and noncash income do not exist for the full time period covered by this article."4 The same argument applies to the analysis set forth herein.
Differential patterns of change in household money income distributions for different age groups during the 1990s require an expansion of previous analyses. A clue to changes in the distributions of income can be gleaned from a brief review of changes in median income by age group. While median income for the group aged 45 to 54 years increased 22 percent from 1967 to 1977, it rose only 7 percent during the next decade and actually declined 1 percent from 1987 to 1997.5 For the group at preretirement age (55 to 64 years), median income increased 18 percent, 7 percent, and 6 percent during the same three decades. For elderly households (65 years and older), median income grew by almost a third (32 percent) from 1967 to 1977 and a further 27 percent from 1977 to 1987, but only 2 percent the following decade.6 As will be shown later, these changes in median income correspond closely to shifts in the distribution of income. Notably, the trend of relatively higher increases in median income slows during the 1990s. Interestingly, for that decade only, growth in median income for households aged 55 to 64 years is greater than that for households aged 45 to 54 and that for households aged 65 and older.
This excerpt is from an article published in the November 2000 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
Read abstract Download full article in PDF (116K)
1 Daniel H. Weinberg, A Brief Look at Postwar U.S. Income Inequality, Current Population Reports, Publication No. P60–191 (Bureau of the Census, June 1996).
2 See Nan L. Maxwell, "Demographic and Economic Determinants of United States Income Inequality," Social Science Quarterly, summer 1989, pp. 245–63; and Teresa Amott, "Re-slicing the Pie: Government Policy and Income Inequality," Dollars & Sense, May 1989, pp. 10–11.
3 See Michael D. Hurd, "Research on the Elderly: Economic Status, Retirement, and Consumption and Saving," Journal of Economic Literature, June 1990, pp. 565–637; and Stephen Crystal and Dennis Shea, "The Economic Well-Being of the Elderly," Review of Income and Wealth, September 1990, pp. 227–47.
4 Daniel E. Radner, "Incomes of the Elderly and Nonelderly, 1967–1992," Social Security Bulletin, winter 1995, pp. 82–97.
5 All median-income figures used in this article are in constant 1998 dollars.
6 Historical Income Tables, table H–15, "Age of Householder—Households by Median and Mean Income: 1967 to 1998," on the Internet at the Census Bureau home page, http://www.census.gov/hhes/income/histinc/h10.html.
Related Monthly Labor Review articles
Current Population Survey
Consumer Expenditure Survey
Related Monthly Labor Review articles
Elderly and nonelderly expenditures on necessities in the 1980s.—Sept. 1996.
Spending by older consumers: 1980 and 1990 compared.—May. 1993.
Spending patterns of elderly workers and nonworkers.—May. 1990.
Within Monthly Labor Review Online:
Welcome | Current Issue | Index | Subscribe | Archives
Exit Monthly Labor Review Online:
BLS Home | Publications & Research Papers