For Americans, the likelihood of experiencing relative poverty at least once in their lifetime is surprisingly high, finds a new analysis from noted poverty expert Mark Rank, PhD, professor at the Brown School at Washington University in St. Louis.
Rank’s latest study, conducted with Thomas Hirschl, PhD, professor of development sociology at Cornell University, finds that between the ages of 25 and 60, 61.8 percent of the American population will experience a year below the 20th percentile of the income distribution, and 42.1 percent will experience a year below the 10th percentile.
The results of the study, “The Likelihood of Experiencing Relative Poverty Over the Course of a Lifetime,” are published July 22 in the journal PLOS One.
“The numbers we found are higher than those we originally expected to find,” said Rank, the Herbert S. Hadley Professor of Social Welfare and co-author, with Hirschl, of the influential “Chasing the American Dream: Understanding What Shapes Our Fortunes.” The 2014 book analyzed social mobility at the lower end of America’s economic spectrum.
“Our previous work has shown that the typical American has a 1-in-9 chance of joining the wealthiest 1 percent of the income distribution for at least one year in her or his working life,” Rank said. “We knew that there would be a large number of Americans on the other end of the spectrum, but this research shows specifically how wide that income gap really is.”
Instead of using the generally accepted measure of the U.S. federal poverty line, Rank and Hirschl focused on a relative measurement for this study.
“Our use of relative poverty addresses a gap within the research literature — a gap that has arguably become more important to investigate given the emphasis upon income inequality,” Rank wrote in the study. “Whereas the logic of absolute poverty is derived from a needs standard, relative poverty measures relative depravation, a concept that has greater salience in the context of rising inequality.”
In order to assess the life course dynamics of relative poverty over time, Rank and Hirschl used the Panel Study of Income Dynamics (PSID). The PSID began in 1968 as an annual panel survey (biennial after 1997) and is nationally representative of the non-immigrant U.S. population.
In addition to the figures on the number of Americans falling below the 20th percentile, Rank and Hirschl also found that 24.9 percent of the population will encounter five or more years of poverty, and 11.4 percent will experience five or more years of extreme poverty.
“Relative poverty is an economic condition that will strike the majority of Americans,” Rank said.
Those who were younger, non-white, female, not married, with 12 years or less of education, and who have a work disability, were significantly more likely to encounter a year of poverty or extreme poverty.
“Just as there is a great deal of fluidity at the top of the income distribution — 70 percent of the American population will experience at least one year in the top 20th percentile of the income distribution — so too is there substantial fluidity at the bottom of the income distribution,” Rank wrote in the paper. “Taken together, these findings indicate that across the American life course there is a large amount of income volatility.
“Rather than a rigid class structure, the top and bottom ends of the income distribution are fairly porous. This finding provides an interesting and important caveat to the overall story of rising levels of income inequality across the past 40 years.”