There are Fewer Poor Families
July 28, 2003
Every three years, the Federal Reserve does a survey of wealth distribution, known as the Survey of Consumer Finances (SCF), which is considered the most accurate data we have on this issue, says Bruce Bartlett.
The SCF study found that those lower down the wealth distribution ladder have done much better, because most of their net worth is tied up in housing rather than stocks. But even those that are not homeowners have done relatively well:
- Between 1989 and 2001, the percentage of all families with negative wealth (i.e., those with more debts than assets) fell from 7.3 percent to 6.9 percent.
- And those with a net worth less than $1,000 fell from 8 percent of the population to just 5.4 percent.
- In fact, the total number of people with less than $5,000 in assets in 1989 fell sharply by 2001, from 23 percent of all families to 18.2 percent.
At this point, it is important to remember that these people did not disappear from the ranks of the poor because they became worse off, explains Bartlett. The data include those with negative wealth, so if they became worse off they would still be in the database. Therefore, the decline in the number of those with low wealth must be because they became wealthier, rising up into the ranks of those with higher wealth.
In short, every wealth class became better off, says Bartlett.
Or, as the Fed study puts it, "Over the period from 1989 to 2001, the SCF data show that the distribution of wealth shifted up broadly in real terms -- another way of saying that in absolute terms there were fewer poor families and more families who were wealthier."
Source: Bruce Bartlett, "Federal Study Shows There Are Fewer Poor Families," National Center for Policy Analysis, July 28, 2003.
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