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Changes in the Economic Resources of Low-Income Households with Children 1 (September 19, 2007)

handle is hein.congrec/cbo0994 and id is 1 raw text is: Addendum to Changes in the Economic Resources of Low-Income Households with Children September 19, 2007 In Changes in the Economic Resources of Low-Income Households with Children, the Congressional Budget Office (CBO) reports, In 2005, inflation-adjusted income for low- income households with children averaged $16,800, 35 percent above what it had been in 1991. Only the highest-income households with children (those averaging $114,700 in 1991) saw larger percentage increases over the 15 years.1 That report examined money income, as defined by the Bureau of the Census, plus the earned income tax credit (EITC).2 This addendum analyzes five measures of income to examine the sensitivity of those results to choice of income measure. The first, money income, is more narrow than that used in the paper. The second, money income plus the EITC, is identical to that used in the paper. The third subtracts other federal and state income taxes and payroll taxes and adds net realized capital gains. The fourth adds the value of food stamps. And the fifth, the most comprehensive measure, adds the value of school lunch and housing subsidies.3 The addendum focuses on the years 1991 to 2005, the period covered in the paper. When income is defined broadly-the fifth measure described above-to include money income, the EITC, other taxes, net realized capital gains, the value of food stamps and school lunches, and the value of housing subsidies, low-income households with children had higher average income in 2005 ($18,700) than they did under the narrower definition of income used in the paper (see Addendum Table 1). For that broader definition of income, income growth over the 15-year period was lower, at 25 percent, than was income growth under the narrower definition used in the paper (35 percent). 1. Congressional Budget Office, Changes in the Economic Resources ofLow-Income Households with Children (May 2007), www.cbo.gov/ftpdocs/8lxx/doc8ll3/05-16-Low-Income.pdf, p. 2. 2. Money income includes earnings, unemployment compensation, workers' compensation, Social Security payments, Supplemental Security Income, public assistance payments, veterans' benefits, survivor benefits, disability benefits, pension or retirement income, interest, dividends, rents, royalties, estates and trusts, educational assistance, alimony, child support, financial assistance from outside the household, and money from other miscellaneous sources. See Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica Smith, Income, Poverty, and Health Insurance Coverage in the United States: 2006, Current Population Reports, P60-233 (Bureau of the Census, 2007), www.census.gov/prod/2007pubs/p60-233.pdf. 3. The data for each measure of income, for each year, for each quintile, from 1979 to 2005 are available in the Excel spreadsheet that constitutes the data supplement to this addendum. At the time of publication, the tax and noncash benefit data were unavailable for the 2007 CPS; only money income can be examined in calendar year 2006. This analysis is based on the U.S. Census Bureau's Current Population Surveys (CPS) from 1980 to 2007. The sample consists of children, age 17 or younger, who do not reside in group quarters. The analysis is child weighted. Children are ranked by household income, adjusted for household size. The adjustment is based on the poverty guidelines published by the Department of Health and Human Services, http://aspe.hhs.gov/poverty/figures-fed-reg.shtml.

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