Family Income Up--but Unevenly : Median Rose 20% Over 16 Years, Congressional Study Says

Median family income rose 20% from 1970 to 1986 when adjusted for inflation and family size, but the gains were uneven and families with children fared worse than other groups such as the elderly, according to a congressional study released Thursday.

The mixed news came from the nonpartisan Congressional Budget Office in an analysis that contradicts a widespread impression, based on other studies, that family income has stopped growing.

Sen. Pete Domenici (R-N.M.), one of those who sought the budget office report, said it suggests positive general trends in family income. But Rep. George Miller (D-Calif.), who made a separate request for the analysis, said it contained plenty of bad news as well.

Social Security Helped

“Even among those families for whom incomes rose, CBO found that the principal reason among the non-elderly was the increased number of workers per family. In many families, both parents must now work to maintain the standard of living,” said Miller, who released the report at a hearing of the House Select Committee on Children, Youth and Families, which he chairs.

Miller also cited budget office findings that young families, low-income families with children and poor single-parent families in 1986 were much poorer than their counterparts in 1970.

Nearly half the overall 20% increase in family income occurred between 1970 and 1973, according to an analysis of the data by Miller’s committee staff. The staff also said virtually all the remaining growth occurred since 1982.

Among the findings:

- Median adjusted family income for families headed by people over 65 grew by more than 50% over the 16-year period. But for married couples with children it grew only 26%; for single mothers with children, it rose 2%, and for families headed by people under 25, it dropped nearly 20%--with the entire decline coming since 1979.

- Median adjusted family income rose between 12% and 37% for all families with at least one full-time, year-round worker. For families with children and no such worker, it fell 10%.

- Median adjusted family income fell 13% for low-income single mothers with children, with one-fifth of such families having less than half the income needed to live at the poverty level in 1986.

The budget office said the elderly were most protected from the tides of the economy, while the fortunes of others rose and fell with recessions and upswings.

Much of the rapid growth of income among the elderly was because of higher Social Security payments, the office said. Income growth in other groups was spurred by a rise in two-worker families, which “offset the fact that earnings did not keep pace with inflation for some workers,” it said.

Domenici, ranking Republican on the Senate Budget Committee and a member of the new National Economic Commission, called the trends among single-parent families “disturbing but not surprising.” He said any deficit reduction plans will be carefully examined for their effects on households headed by young or single parents.

Different Adjustments

However, Domenici said the trends for some vulnerable family groups would have been less negative if the budget office had included non-cash benefit programs, such as food stamps, and the 1986 tax law, which took many low-income families off the tax rolls.

The office said its assessment differs from earlier, more pessimistic ones because it made adjustments for smaller family size and used a more accurate inflation index. Without those adjustments, the office said, the trend would have been a 4% drop in family income rather than a 20% increase.

The office said lack of family-level data precluded adjustments for non-cash programs, which have improved the situation of low-income families, and tax hikes before 1981, which shrank disposable income. It was impossible to project the net effect of either omission, the office said.