ANN ARBOR—A poor economy sends many women into poverty as they struggle to pay bills because their earnings fluctuate more so than if they were on welfare.

These findings from University of Michigan and University of California, Berkeley researchers also indicate the transition into poverty is frequent, but lasts a few months.

The researchers looked at the changing incidence and severity of poverty among adult women—mainly those living in single-headed households—between the early 1990s and early 2000s.

“This research shows a significant increase in income instability among single mothers over the 1990s, as women rely more on earnings rather than welfare income,” said Rebecca Blank, co-director of the National Poverty Center at U-M’s Gerald R. Ford School of Public Policy. “Unfortunately, earnings fluctuate much more from month to month.”

Blank, who is on sabbatical as a visiting fellow at the Brookings Institution in Washington D.C., collaborated in the research with lead author David Card, an economics professor at U-C Berkeley.

The researchers looked at movements into and out of poverty using the 1990 and 2001 Surveys of Income and Program Participation, which has 32 months of months of data on earnings and non-labor income for each family. The women were ages 18 to 62.

A family of three was considered below poverty when income fell below $14,630 in 2001.

When comparing data from the two periods, the probability of entering poverty in any month was 9.1 percent higher among single female-headed households in 2001 compared with 1990. Similar increases in entering poverty occurred in white, black and Hispanic households. This is true even though overall poverty rates were lower in 2001, the researchers said.

How can the rate of entry into poverty rise while overall probability of being poor falls? The length of a spell of poverty was significantly shorter in 2001?women experienced more frequent but shorter spells.

The changes did not appear to be due to shifts in education or age levels.

“We conclude that they reflect an increase in the (high frequency) volatility of family income, perhaps reflecting increased reliance on unstable employment among lower-skilled women,” the researchers said.

They also examined two key income sources—personal earnings and other family member earnings—to see how they contributed to the decline in family income associated with living below the federal poverty level. In each of the two years for single mothers, a drop in personal earnings caused at least 80 percent of the income decline.

In contrast, among married women, most of the income decline when they entered poverty came from a decline in other family members’ earnings. Married women typically began a spell of poverty when their spouse lost earnings; single mothers began a spell of poverty when their own earnings declined.

When analyzing race, the research showed that black and Hispanic women were poorer during the 1990s with lower income and higher risk of entering poverty. Black women were far more likely to be in single-headed households than white or Hispanic women.

By the early 2000s, women had higher but more variable family incomes than a decade earlier.

The newly released study is currently available in the online version of the American Economic Review at http://www.aeaweb.org/aer/contents/

For more on Blank, visit: http://fordschool.umich.edu/faculty/Rebecca_Blank

Ford School of Public Policy — http://www.fordschool.umich.edu/

Rebecca BlankFord School of Public Policy