The effect of working wives on the incidence of poverty (EXCERPT), Monthly Labor Review Online, Mar. 1998

The effect of working wives on the incidence of poverty

Peter Cattan

Families in which husbands and wives both work ("working-wife families") are much less likely to experience poverty than families in which only husbands work. However, there are wide variations in the likelihood of poverty among married-couple families for different race/ethnic groups. Also, there are wide variations in the extent to which wives’ earnings reduce poverty rates.
Previous detailed studies of economic hardship among Hispanic families, in particular, have tended to concentrate on families maintained by women (with no husband present). This article extends existing research by focusing on married-couple families and the extent to which working wives reduce the likelihood of poverty for Hispanic and non-Hispanic families.

Background

The Federal Government’s official definition of poverty was originally developed by Mollie Orshansky for the Social Security Administration in 1964 and revised by Federal interagency committees in 1969 and 1980. Orshansky developed a set of pre-tax levels of family income, based on the Department of Agriculture’s Economy Food Plan, which vary according to family size and presence and age of children. Families with incomes below the corresponding threshold are officially defined as poor. For example, in 1994, a family of four persons, with two children under 18 years, was below the poverty threshold if its income was less than $15,081.¹ The threshold was somewhat higher for a family of five persons with three children ($17,686). Adjusted to reflect inflation, the dollar amounts for poverty thresholds rise from year to year. These poverty thresholds are the basis for determining poverty rates, that is, percentages of persons or families living in poverty.
The importance of wives’ earner status. Annual averages for 1994, derived from the Current Population Survey (CPS), show that Hispanic and white working-wife families were approximately one-fourth as likely to be poor as those in which only husbands worked.² It is clear in table 1 that families with working wives markedly outnumbered families in which the husband was the only earner. This dampened the average poverty rate for married-couple families in each ethnic/race group.

These statistics also show that among married couples with a working husband, Hispanics had an overall poverty rate that was more than four times that for whites. To a small extent, this differential in poverty rates—the "ethnic gap"—results from the fact that these Hispanic families were somewhat more likely than whites to have only the husband employed. This "earner-composition effect" should not be overemphasized, however, because Hispanic households were much more likely than whites to be poor for each of the husband-wife earner combinations.

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Footnotes
¹ "Poverty Thresholds by Size of Family and Number of Related Children: 1994," in Income, Poverty, and Valuation of Noncash Benefits: 1994, Current Population Reports, series P60-189 (U.S. Department of Commerce, Bureau of the Census), table 8.

² "Work Experience of Family Members, by Poverty Status of Families: 1994, " unpublished tabulations from the Current Population Survey, Poverty in the United States series (U.S. Department of Commerce, Bureau of the Census), table 19.

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