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The Times used the Panel Study of Income Dynamics for its analysis of income volatility among working families and for its examination of specific income-threatening events.
The panel study has followed a nationally representative sample of about 5,000 families and their offshoots for nearly 40 years and is the most comprehensive publicly available income and earnings database in the world. It is run by the University of Michigan and principally underwritten by the National Science Foundation.
The families' identities are kept confidential.
The Times based its analysis of income-threatening events on techniques developed during the 1980s by economists Richard V. Burkhauser of Cornell University and Greg J. Duncan of Northwestern University.
Their methods were modified for the newspaper by economists Ann Huff Stevens and Marianne E. Page at UC Davis. The paper employed a UC Davis graduate student, Sami T. Kitmitto, to help generate the findings. Stevens and Page supervised Kitmitto and advised the newspaper.
The Times chose to focus on seven types of events that people often experience in the ordinary course of a work life. They were: divorce or separation, a major decline in the work hours of a spouse, the death of a spouse, the birth of a child, a major decline in the work hours of the head of the household due to disability or retirement, a major spell of unemployment for the head of the household, and a major decline in the work hours of the head of the household because of illness.
Of families who experienced one or several of these events during a decade, the paper asked what fraction subsequently suffered a 50% or greater decline in annual income.
In examining these events, the paper faced certain constraints. The panel study was started during the 1960s, when most families had a single male earner. As a result, it has only limited information about the earnings, employment status and work hours of spouses during the early years, and to this day collects much more data about the head of the household than it does about any other family members.
Because of funding constraints, the study switched from annual data collection to an every-other-year schedule after 1996. This required the paper to examine events in two-year intervals in order to maintain a consistent approach both before and after 1996.
In addition, the paper could not make distinctions it would have liked to make between certain types of events - for example between drops in the work hours of the head of a household due to disability and due to retirement - because of the way that the panel study initially collected the information.
In cases of a decline in the work hours of the household head because of disability or retirement, as well as a decline in the work hours of a spouse, The Times defined "major" drops to be at least 520 hours - or the equivalent of three months of full-time work - in the course of a year.
In cases of unemployment of the household head, as well as a decrease in work hours of the head because of illness, "major" drops were defined to be at least 320 hours - or the equivalent of two months of full-time work - in the course of a year.
The newspaper took a number of steps to ensure that its examination was not distorted by data problems with the panel study.
For instance, it made certain adjustments to avoid double-counting events such as divorce. It also eliminated a sub-sample of Latino families that were added to the panel study in the early 1990s. Independent researchers have concluded that the sub-sample was poorly designed and that its inclusion could skew results.
In addition, the newspaper excluded the 2% of panel-study families with the biggest upward swings in incomes and the 2% with the biggest downward swings to ensure that those with extremely volatile situations did not throw off the results.
The paper also sought to test whether the declines in income of 50% or more truly threatened a families' living standards or - as with a drop from, say, $400,000 to $200,000 - were big but of comparatively little consequence. It did this by measuring the percentage of panel-study families that not only experienced income declines of 50% or more in each of the last three decades, but whose declines brought them to within 150% of the government's official poverty line ($28,215 today for a family of four).
The paper concluded that the percentage of families suffering this kind of life-altering hit jumped sharply and in tandem with the overall increase in families experiencing 50%-plus income declines.
To zero in on working families, The Times focused on men and women 25 to 64 years old whose households had some income.
The analysis looked at pretax income of all family members from all sources, including workplace earnings, investments, public transfers such as jobless benefits, food stamps and cash welfare, and private transfers such as inheritances.
The panel study has followed a nationally representative sample of about 5,000 families and their offshoots for nearly 40 years and is the most comprehensive publicly available income and earnings database in the world. It is run by the University of Michigan and principally underwritten by the National Science Foundation.
The Times based its analysis of income-threatening events on techniques developed during the 1980s by economists Richard V. Burkhauser of Cornell University and Greg J. Duncan of Northwestern University.
Their methods were modified for the newspaper by economists Ann Huff Stevens and Marianne E. Page at UC Davis. The paper employed a UC Davis graduate student, Sami T. Kitmitto, to help generate the findings. Stevens and Page supervised Kitmitto and advised the newspaper.
The Times chose to focus on seven types of events that people often experience in the ordinary course of a work life. They were: divorce or separation, a major decline in the work hours of a spouse, the death of a spouse, the birth of a child, a major decline in the work hours of the head of the household due to disability or retirement, a major spell of unemployment for the head of the household, and a major decline in the work hours of the head of the household because of illness.
Of families who experienced one or several of these events during a decade, the paper asked what fraction subsequently suffered a 50% or greater decline in annual income.
In examining these events, the paper faced certain constraints. The panel study was started during the 1960s, when most families had a single male earner. As a result, it has only limited information about the earnings, employment status and work hours of spouses during the early years, and to this day collects much more data about the head of the household than it does about any other family members.
Because of funding constraints, the study switched from annual data collection to an every-other-year schedule after 1996. This required the paper to examine events in two-year intervals in order to maintain a consistent approach both before and after 1996.
In addition, the paper could not make distinctions it would have liked to make between certain types of events - for example between drops in the work hours of the head of a household due to disability and due to retirement - because of the way that the panel study initially collected the information.
In cases of a decline in the work hours of the household head because of disability or retirement, as well as a decline in the work hours of a spouse, The Times defined "major" drops to be at least 520 hours - or the equivalent of three months of full-time work - in the course of a year.
In cases of unemployment of the household head, as well as a decrease in work hours of the head because of illness, "major" drops were defined to be at least 320 hours - or the equivalent of two months of full-time work - in the course of a year.
The newspaper took a number of steps to ensure that its examination was not distorted by data problems with the panel study.
For instance, it made certain adjustments to avoid double-counting events such as divorce. It also eliminated a sub-sample of Latino families that were added to the panel study in the early 1990s. Independent researchers have concluded that the sub-sample was poorly designed and that its inclusion could skew results.
In addition, the newspaper excluded the 2% of panel-study families with the biggest upward swings in incomes and the 2% with the biggest downward swings to ensure that those with extremely volatile situations did not throw off the results.
The paper also sought to test whether the declines in income of 50% or more truly threatened a families' living standards or - as with a drop from, say, $400,000 to $200,000 - were big but of comparatively little consequence. It did this by measuring the percentage of panel-study families that not only experienced income declines of 50% or more in each of the last three decades, but whose declines brought them to within 150% of the government's official poverty line ($28,215 today for a family of four).
The paper concluded that the percentage of families suffering this kind of life-altering hit jumped sharply and in tandem with the overall increase in families experiencing 50%-plus income declines.
To zero in on working families, The Times focused on men and women 25 to 64 years old whose households had some income.
The analysis looked at pretax income of all family members from all sources, including workplace earnings, investments, public transfers such as jobless benefits, food stamps and cash welfare, and private transfers such as inheritances.
