Economic Patterns of Single Mothers Following Their Poverty Exits: Acknowledgments and Introduction. Summary of Key Findings

06/25/2007

Both poverty and poverty exits are common among single mothers. More than half of single mothers in 2001 experienced poverty for at least one month during the year, and, among those poor, more than half exited poverty by the end of the year. Single mothers who exited poverty in 2001 were more disadvantaged than single mothers who were never poor in 2001, but were somewhat less disadvantaged than poor single mothers who did not exit poverty in 2001.

The most common reason associated with exiting poverty for single mothers is an increase in their own employment or earnings. In 2001, about three-quarters of single mothers who exited poverty experienced an employment or earnings increase soon before their poverty exit. Changes in family composition and in the earnings of other adult relatives in the family are much less common events associated with poverty exits for this population.

Many single mothers who exit poverty soon return to poverty (in 2001, the median non-poverty spell duration was about eight months and about 60 percent of non-poverty spells ended within one year). However, subsequent poverty spells for these women tend to be even shorter, suggesting that many poor single mothers exit poverty again. Thus, we find considerable cycling in and out of poverty for this population.

Based on the duration of their non-poverty and poverty spells during a two-year follow-up period, we found that single mothers who exit poverty can be classified into one of three groups: (1) 28 percent who exit poverty and never return — poverty leavers; (2) 56 percent who cycle in and out of poverty — poverty cyclers; and (3) 16 percent who return to poverty and stay poor — poverty returners. Poverty dynamics differ markedly across these three distinct groups of single mothers at the time of their poverty exits and afterward.

At the time of their poverty exits, the poverty leavers tend to be less disadvantaged than the other two groups of single mothers in their basic demographic and human capital characteristics. For instance, they are more likely than the other two groups to be high school and college graduates and less likely to have health problems. Poverty leavers also have older and fewer children, and are more likely to live with other adult relatives. They are also less likely to receive public assistance. It is interesting, however, that in the months leading up to the poverty exits, there are no differences across the groups in their employment, earnings, and poverty levels.

The poverty leavers, however, are more likely than the other two groups to exit poverty because of an employment or earnings increase. Furthermore, the members of this more highly educated group tend to have substantially higher earnings gains when they exit poverty, primarily because they tend to work more than the other groups and to find higher-paying jobs. Thus, initial job quality at the time of poverty exit is associated with more successful outcomes for this population.

Differences across the three groups extend into the post-poverty-exit period. Poverty leavers tend to experience higher earnings growth over time than the other two groups, and move to better jobs with greater benefits. In contrast, the earnings of the poverty returners tend to diminish over time, and these women tend to become increasingly reliant on public assistance.

Overall, a mixed picture emerges about the economic success, in the medium term, of single mothers who exit poverty. Nearly 30 percent remain out of poverty, and only about 15 percent return to poverty and are unable to exit again. The majority of single mothers who exit poverty cycle in and out of poverty with short spells of non-poverty followed by even shorter spells of poverty. Over time, these cyclers experience some income growth, spend more time out of poverty than in poverty (nearly half stayed out of poverty for at least three-quarters of months over a two-year follow-up period), and become slightly less reliant on public assistance. However, their economic progress is slow.

Our key finding is that employment and earnings play a primary role in the economic outcomes for single mothers who exit poverty. Increases and decreases in single mothers' earnings are, by far, the most common reasons for their poverty exits and reentries. Education levels, health status, and the number of adult relatives in the family are important factors associated with economic success for this population, partly due to their effects on employment and earnings. Given that many single mothers are able to find jobs, but many are not able to sustain or advance in these jobs, policies providing employment support for single mothers who exit poverty could help improve their economic success.

In examining these findings, it should be kept in mind that the 2002-2003 period in which we track income and employment experiences of those who exited poverty was marked by weaker economic conditions than in earlier years. For instance, after a booming economy in the late 1990s and 2000, when the national unemployment rate was below four percent, the unemployment rate during the 2002-2003 period had crept close to six percent. The weaker economic conditions these single mothers faced could have affected their experiences, and made it more difficult for them to remain employed and stay out of poverty. The fact that the unemployment rate did not make a difference in our multivariate analyses, combined with the fact that the economic downturn was fairly mild, suggests that the poverty patterns for these single mothers might not differ much at other times. Furthermore, a thorough understanding of the issues raised in the study can provide insights into policy initiatives for single mothers, such as work supports for former welfare recipients, including the Earned Income Tax Credit, child care subsidies, and approaches to improve job retention and advancement.

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