Puerto Rico Family Incomes (August 1953)

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133 PAtHLY EíCCMES IN PUERTO RICO

The number of families at different levels of income is not only

the best measure of material wellbeing of the people and of levels of

living in general but it is an indication of the social justice vith •which income is distributed by the various private and govermental institutions that constitute the economy, Since the basic purpose of the economic de-

velopment program is to lift up the people of Puerto Rico to progressively higher levels of living, reliable statistice on family income are the best measure of the success of our efforts*

Statistics on the distribution of

fariily income, hovrever, are inherently difficult to obtain and consequently their use for pui^oses of economic planning has been much more limited than their basic significance would warrant,

In April of this year, the Bureau of Labor Statistics released a

preliminary analysis of family incomes during 1950 based on data collected in conjunction with its regular sample survey of the labor forcé. This

survey is conducted by trained enumerators and the 6,000 households covered are qTiite accvirately representative of all families in Puerto Rico, except the relatively email number in the top income brackets for which income tax data are available,

These new data on income distribution are the best

that will be available for a year or more and it is importapt that they

be analyzed as thoroughly as possible. The statistlcal analysis that follows, however, is at best a poor substitute for reliable original data on

income distribution collected at comparatively frequent intervals.

In analyzing these family income data, three of their inherent limi-

tations must be considerad, The first is the limitation arising from inac-

curacies in the "response" of the persona interviewed to the questions asVed

yn.ís[

2.

by the interviewer, This term "response" includes not only delibérate misstatements but also errors arising from lack of knowledge, from misunder-

standing of the questions, and from any "slaating" or bias that may exist in the question themselves.

The second limitation of these data is in their "coverage". Intensive

surveys of iacome and expenditure, such as that for wage eamers now under-

way, cover income "in kind" as well as money income but the 1950 BLS survey was limited to questions on money income, The figures, therefore, do not

include the valué of the home-grovm food families consume, the rental valué of the homes they own, ñor other similar sources of income in kind. Families

also benefit from many different kinds of social income such as the valué

of public schooling, housing, and other goods and services provided free of charge or on a subsidized basis, This social income is not covered

either by the 1950 survey or by the xisual type of more intensive income ejcpenditure studies.

The third limitation, which affects the usefxilness of the data for

analysis purposes, is that of "identiflcatlon". In the published BLS report, families in the various income brackets are separately identified as to two sepárate characteristics--"(7hether they lived in an urban or rural area and

whether the head of the family was a man or a woman, Four other character-

istics were specially tabulated for this study—size of family, number of workers per family, amount of income from wages, and the industrial attachment, if any, of the head. Hovever, the data so far tabulated provide no

description of secondary workers or of several other family characteristics

that are of some importance in analyzing family incomes and in planning practical mensures to raise incomes, particularly for families in the lowest brackets,

3.

The purpose of this study is to remedy these three liiaitations of

the data in so far as it is feasi"ble to do so and, thus, to provide a

reasonably firm basis for determining the extent to which the faTní i y income program

goals are consistent with the other goals of the econoinic developmenV and

a starting polnt for planning specific actions aimed to meet the family income ohjectives of the Commonwealth Govemment.

Adjustment for errors in "response"

The tendency of people to understate their money income is well

known, especially when they are heing asked to give one overall figure

for an entire year, Even early in the following year, small earnings from part-time Jobs, the income from small intermittant sales of farm products, gifts, small lottery winnings, or summer earnings of a boy in school are

likely to be forgotten--and comparatively few people keep records. People in the high bfackets usually do keep books but, if maintained for income

tax purposes, they too may be "forgetful". Moreover, there is an inherent

dovnward bias involved in asking people about income received a year or more in the past. The low incomes of new entrants into the labor forcé are reported but many of the higher incomes of people who retire or die

during the year are not covered. No means has yet been found to prevent underreporting in income surveys and its extent in the BLS sample survey for 1950 is about the same as in the Ceusus for 19'4-9,

The average of all the incomes reported by families and individuáis

in the BLS study for 1950 is $91?. Multiplied by 1^-55,500 (1^23,000 families and 32,500 individuáis) this yield a "reported" money income of persons

of about $418 million. Actually, however, money income of persone in I950 was much more than this, probably more than the $738 million shown in table 1.

4.

It should be noted also tbat the estiniated figure of ^55^500 familles and individuáis is subject to a possible error of as much as 20,000 in either direction.

Even using the highest figure, however, reportad money income

is far below the computed total, TABLE 1, MONEY INCOLffi OF PERSONE, 1950

(in millions of dollars)

Sources of income

Calculated total

Wages and salaries

ij-06,oi/

Business income

228,0

Profits and dividends Interest and rent

Other income of persons Other labor income

Transfers to persons

Transfers among persons Total

Note;

Reported to BLE

Percent reported

288,3

71.0

62.7

27.5

66.8

63.9

417.8

56,6

(200,2)|^

( 27,8)-V 104,5

( 7.6)W

( 46,9)1/ ( 50,0).^ 733,5

The calculated total of "money income of persone" differs from "personal income" in that it excludea income in kind but includes transfer payments among persons. Both differ from "Commonwealth Net Income" by including

transfer payments to persons and excluding undistributed corporate profits, eii5)loyer contributions to pensión funds, and other income produced but not paid out to individuáis, All iteras in the calculated total, except trans-

fers among persons, are averages of data for fiscal 1950 and fiscal 1951»

ly As reported to the State Insurance Fund plus adjustment made by EDA for amounts paid to workers not covered by insurance, 2/ Net income of \inincorporated business and dividend payments to individvials, Estimated by EDA on the basis of personal income tax returns and other data, 3/ Interest and rent paid to individuáis as estimated by EDA on the basis of personal income tax retums and other data,

U/ Corapensation for injuries paid by the State Insurance Fund, pay of military reservista, and employer contributions to private pensión funds, Corapiled

by EDA,

Veterana Administration and other Federal and Commonvealth govemment payments of relief, pensiona, and other benefits. Con^iled by EDA,

^ Lottery prizes (about $16,7 million) net valué of estates and gifts reported for tax purposes (about $7«6 million) based on fiscal year data reported by the Treasurer remittances from abroad (about $13,9 million) based on balance

of payments data, and a crude estímate of roughly $12 million for rinreported iteras of a similar nature.

5.

The ¿738 milllon total and all the individual Items shown in

table 1, except the two types of transfer payments, are probably below the

amounts of money income paid to and received by individuáis, Transfer payments to^ individuáis are believed to be substantially correct because the amounts are taken from the records of the govemment agencies making the payments.

The amount of transfer payments among individuáis is largely a matter of guess, except for the items mentioned in the footnote.

The Uro items of

labor income are based mainly on wage, salary, pensión, and disability payments to wrkers as reported by employers to the State Insurance Fund.

Since employers' insurance premiums are based on these reports, there is

a financiad incentive for underreporting but the amount of underreporting is not believed to be large. Income tax returns of individuáis filed with

the Bureau of Income Tax are a major source of data for coc^juting the busi ness income items, Here the financiad incentive to understate amounts is

very strong and it is believed that underreporting may be quite substantial,

However, since there are at present no satisfactory data for adjusting the

basic State Insurance Fund and income tax returns, money income of persons

is taken as having been $738.5 million in 1950,^/ While it is clear that total incomes should be adjusted upward

from the reported" BLS figure of $in8 million to the calculated figure

of .p738,5 million, it is not clear hov much adjustment should be made in

each in^m^lass, The preceding table shows that, on the average, people 1/ Theoreticalíy a downward adjustment should be made in this total to allow for amounts paid to the 20,000 individuáis not living in households (dwelling i^its) and so not covered by the BLS study. Since the calculated figure is already believed to be too low and since

most people outside households are inmates of institutions, students in rooming houses, or transiente in hotels who have little or no incomes or whose incomes vere probably reported in their households of origin, no such adjustment was made.

reported about 31Ío oí their income to BLS enumerators, It also shovrs that, among the various kinds of income, tlie greatesb degree oí underreporting was of business income, We do not know, hcvíever, how business income is distributed. Underreporting may have been greatest among sraall

farm oinaers, the proprietors oí small trade and service establishments, and peddlers who constitute the bulk of business income recipients, if not the recipiente of the bulk of business income, Thus knowledge of the extent to which various kinds of income are xonderreported does not

tell US much about the degree of xinderreporting in various income brackets, There is other evidence, however, that the greatest underreporting is at the two extremes,

In the top brackets this is partly a reflection

of the inadequacy of the sample. Individuáis with incomes of $8,000 and over in I950 reported about $36,8 million to the Bxireau of Income Tax and "reported" $16,3 million (on a sample basis) to BLS enumerators, Thus, a sample of these high-bracket people reported

as much income to BLS

enumerators as they did on their income tax retums, This is considerably less than tlie calcvilated 57^ reporting for the whole BLS sample, Moreover, as vas noted above, it is believed that the income tax retvirns themselves also substantially understate incomes received.,

To the e:ctent that this

is so, the vinderreporting of high-bracket people to BIS enumerators waa even greater than the

figure indicates,

At the very bottom of the scale there is also more than an average

amount of underreporting. Hearly lO;!» of all families and individuáis, the

equivalent of about i+U,000, reported losses or incomes of mder $100 a year for 19?0, During that year about $5,100^000 of cash public assistance was paid out to the totally Incapacitated and other relief cases, This amounts

7.

to an average of $ll6 for each of 4U,000 familias and individvials, A few families and individuáis with heavy capital or business losses have net

incomes under $100 but are not eligible for relief. Except for these, it is only to the extent that public assistance vas given to families and individvials having over $ll6 in ffloney income that there could have been any other families and individvials with incomes below $ll6.

Frirther indication of the very Incomplete reporting of income in

the lov brackets in the 1950 BLS survey is indicated by the following ad-

vance tabulation from the 1952 BLS survey of the income and expenditures of wage-eamer families,

Income ^ouj) Under $100 $100 - $199 $200 - $299 $300 - $399 $400 - $499

$500 - $999 $1,000 and over

of cases 0.0 0.1 2.1 5.3 7.0

^2.9 42.5

These data include the valué of relatively small amounts of home-grown

food and exelude families in which the principal vrage earner worked less

than 13 weeks, But they cover only families whose principal income vas

from wages (not salaries) and so their average income is probably quite far below that of the other families who depend mainly on salaries, biasiness, or other kinds of income.

Table 2 shows the distribution of family and individual money in comes as reported to BLS enumerators in 1950. It shows 49^3 of all fam

ilies as having incomes under $500 in contrast to the 14^3 shown in the

wage-earnei' study. Moreover, even in the latter study the reporting of income is probably not complete.

—J—

8.

TABLE 2.

REPQRTED DISTRIBOTION OF MONEY EíCOME OP

FMILIES AED UroiVIDUALS, 1950

Income group

(dollars)

Cases

Cases

%

(thousands)

Total income

.Averagé

(millions of $)

Income ($)

2.89 6.78

13.2 30.9

9.52 12.09

43.4 55.1

62 152 246

45.0

344

15.5

37.1

446

29.8 24.7

640

16.6 16.2 15.9

20.3 16.1

744

15.2

800 - 899

9.89 8.15 6.55 5.43 4.46 3.54

900 - 999

3.22

14.7

845 9^5

13.7 13.9

72.52

330.3

391

129.1

16,80

76.5 23.6

1,392

Loss

0- 99 100 - 199 200 - 299 300 - 399

kOO - hS9 500 - 599

600 - 699 TOO - 799

Under 1,000 1,000 - 1,999 2,000 - 2,999

3,000 - 3,999

4,000 - 4,999 5,000 and over All groups

5.19 2.19 1.39 1.91

10.0

6.3 8.7 455.5

1.9 6.6

13.6

541

106.5 56.6 34.2

(

2,398 3,416 4,430 7,296

t

27.9 1

63.5 417.8

On the basis of the foregoing the natiire and direction of some of

the adóxistments that must be made in the 1950 BLS data is clear. In general, the percentage of spending units must be pushed upward from the bottom toward the top of the distribution to xncrease "reported" total income

from $4l8 million to the calculated figure of $738.5 million. In par ticular, the reduction in the lowest income groups and the increases in

the highest should be greater than the changes in the groups in between,

While the nature and direction of some of the ad^ustments Is clear, there are no independent data that can be used to correct each Income class, Some generalized method must be found that adjusts the income distribution

in Buch a way that (1) the number of cases in the lowest brackets is sharply

reduced, (2) the number of cases in the hlgh brackets is sharply increased,

(■wimwnv* v*

9.

(3) the changes in the intermedíate braclcets appear reasonable, (4) the

total income implied by the distribution amounts to $738,5 million, and (5) the average income ($738,5 million for 455^500 families) amounts to $1,621, The key fact is that average money income for families and indivi

duáis was about $1,621 In 1950 rather than the $917 reported,

For this

reason an examination was made of different reported income distributions

assoclated with different average incomes,

All of those examined showed

the same general relationship as those appearing in Chart 1,

¥hen average incomes are nearly equal, the distribuíion of income

is very similar, even though the underlying populations are quite different, This is illustrated by comparing the distribution for rural families with

male heads with that for urban families with female heads.

Wot only are

these distributions very similar, but also nearly all the differences

between the two are consistent with the fact that the average for urban

families with female heads is a little higher. It has relatively fewer

cases in the lowest bracket ánd relatively more in all but one of the higher

brackets, The exception is probably an error resulting from the very small total number of cases (443) in the sample.

All the income distributions shoira on the chart and the others that

have been examined show comparatively regular and progressive differences

in shape associated with differences in their averages, This suggests that within an economy or economies having similar institutions affecting income

(job opportiinities, minimum vage laws, public assistance, tax structui'es, price controls, and the like) the distribution of income is deteimiined

'* j'F

CHART i.REPORTED INCOME DISTRIBUTIONS FAMILIES IN PUERTO RICO ANO THE UNITED STATES, 1950

PUERTO RICO RURAL MALE MEAD

PUERTO RICO URBAN

INCOME GROUPS

AVERAGE $ 752

FEMALE HEAD

AVERAGE $ 789

0.9%

$5,000 a OVER

1.3%

0.9%

$4,000- $4,999

0.5%

1.2%

$3,000-$3,999

2.3%

3.4%

$2,000- $2,999

14.2%

5.6%

$ 1,000- $ 1,999

UNOER

mKSñ

PUERTO RICO URBAN

II

$1,000

UNITED STATES RURAL NON-FARM

UNITED STATES

AVERAGE $1^14

UNITED STATES RURAL FARM

URBAN

INCOME

AVERAGE $ 2,489

AVERAGE $3,529

AVERAGE $ 4,270

GROUPS

$5,000 a OVER

4.9 %

10.3%

$4,000-$4,999

3.1 %

6.2%

INCOME GROUPS

$3,000-$3,999

MALE HEAD

4.5%

138%

1193'

$5,000 a OVER

$4,000-$4999

IÍ9T^

$3,000- $3,999 ?

'$2,000-$2,999

10.2%

i2r

$2,000-$2,999

$1,000-$1,999 $ 1,000-$ 1,999 UNOER

$ 1,000

EEEB

7.3%

UNDER $ 1,000

mi

11.

prlmarily hy the level of income. On this iDasis it seems likely that the income of all faiailies and individuáis in Puerto Rico, which averaged

$1,621 in 1950, was distributed similarly to the income of \irban families with male heads, which averaged $1,51^.

The method used to estimate the distribution of calculated total

income vas, in effect, interpolation between the reported income distri

bution for urban families with male heads (average $1,51^) and that for U« S. farm families, which averaged about $2,^+89, Chart 2 shows the inter polation method that was used, First the percentage of cases in each in

come group for each of the reported income disti-ibutions was plotted.

Then a smooth curve was drawn connecting the points for each income group,

(The significant property of tUese curves is that valúes read from all six of them for any single level of average income should add to 100í?>), Then the valué shown by each curve at the average income level of $1,621

was transcribed to the $1,000 income groups in the column in table 3 headed "estimated

of cases",

The estimated distribution of total money income paid to families N

and individuáis shown in table 3 can now be compared with the reported distribution sho-\m in table 2, The estimated distribution meets the re-

quirements of the known facts in that it implies a total money income of

$738.5 million, the under $1,000 group has been sharply reduced and the

$5*000 and over group sharply increased, and the intermedíate groups liave been changed in a way that is consistent with the changes shown by other reported distrlbutions for different levels of income, While this estimate

is the basis for vhat follows in this study, it should be emphasized that it is only an estimate. There is no doubt, however, that it corrects

CHART 2. INCOME DISTRIBUTIONS % OF total cases in each inoome group $ 752 RURAL FAMILIES

80

MALE HEAD REPORTED

$ 917

75

DISTRIBUTIONS

ALL FAMILIES

AND INDIVIDUALS 70

J

$1,268

INTERPOLATED

I

RURAL FAMILIES

DISTRIBUTIONS

65

1

$ 1,368

~¡

-| RURAL FAMILIES I I j

60

55

$ l,5!4 URBAN FAMILIES

MALE HEAD 50

ALL FAMILIES AND 45

INDIVIDUALS

$ 1,777 ALL FAMILIES

(SEE TABLE 7 ) 40 UNDEP

00

$ 2,489

35

$4,270

U.S.

FARM

U.S.

FAMILIES

URBAN

FAMILIES

30

$3,529 $ 1,000 -• $1,999 1,999

5,000 AND OVER

U.S. RURAL

NON-FARM FAMILIES

$3,000-$ 3,999 20

$4,999

$2,000-$2,999.

$2,000- $2,999

i5,000 AND (OVER

$3,000-$3,999.

$1,000-$1,999

UNDER $1,000

$4 4,000 -$4,999

700 1000

1300

1600

1900

2200 2500

2800

3100

3400

3700 4000 4300 4600 4900

AVERAGE INCOME OF THE DISTRIBUTION (DOLLARS)

13.

TABLE 3. ESTIMATED DISTBIBUTION OP TOTAL MQNEY HíCOME OP FAMILIES AKD IKDIVIDUALS, 1950

1

Reported cases

Income group '

(dollars) ' * Under 1,000 '

1,000 - 1,999' 2,000 - 2,999' 3,000 - 3,999 ♦

4,000 - 4,999 •

urban míe

headS'-'

•

casesS/

Estimated cases

(thousands)

Average .' Estimated

incomei/

lo

i

50,8 26,5

47.0

214.1

420

28,0 11,0

127.5 50,1

1,391

10,2

3.1

5.0 3.5 5.5

15.9 25.2

100Í&

i^55.5

5,000 and over* all groups

Estimated

IOO5Í

22,8

t;)

'total income

'(mil, of $) • '

89.9 177.

2,419 ' 3,Wt 4,444 ' 8,000 '

121,2

1,621

738.5

•

78.5 70,7

200,8

ly Cases and averages income as reported to BLS by urban families with male heads, except that average income in the over .^5#000 group vas raised from $7^239 to

$8,000 on the basis of income tax returns and average income in the under $1,000 grcrup, vas lowered from a reportad figure of $500 to {ÍUi-20 to yield the total figure of $738.5 million,

^ Percentages for $1,000 groupings estimated by inteírpolation between correspondin^ classes of the reported distribution for urban families with male heads and

that for tJ. S, farm families, (See Chart 2).

most of the original errors in responee and that it is far closer to the true figures than those reported by families and individuáis to the BLS in 1950.

Thus, while the reported figures showed nearly 90^j of all families

and individuáis as having money incomes under $2,000, the true number in 1950

vas probably about 755^. An even sharper difference appears in the group

under $1,000 in which about 73';^ of families and individuáis reported themselves but where only kjfj of them probably really were at the time, This

seems consistent vith the I952 BLS study which shows 57^S of wa^ge-eamer families vith incomes under $1,000, At the other end of the income dis

tribution, where there vas sample wealoiess as well as underreporting, only

about a third of the famllies and individuáis who probably had incomes of

$5,000 or more reported theinselves in those brackets,

Both tbe incomes and the income requirements of families are very

different from those of individuáis and, for this reason, attention is focussed in the rest of this study on families, The distribution of

family money income is shown in table i»- and separately for urban and rural families in table 5,

The breakdown of the estimated $738»5 million total income as between

families ($715.8) and individuáis ($22,7) is in the same proportion as that reported to BLS, The method used to distribute these totals to the various income groups vas first to distribute the total for families and

then to obtain the figures for individuáis by subtracting the total for families from the totals for families and individuáis sho^m in table 3,

The distribution for families vas obtained by applying to each income group

above $1,000 the ratio between the reported and estimated figures for all families and individuáis and then deriving the under $1,000 group as a residual, This method yielded practically the same resulta as would have been obtained by applying percentages read from Chart 2 for an income dis

tribution at the average level of $1,693. It should be noted that there is a considerable margin of error in these estimates even when different methods yield similar results,

The distribution for rural families shown in table 5 was obtained

by applying percentages read from chart 2 to the $336,0 million total in come figure, This total and the $379.8 million urban total are based on

10.0

•

•

•

4,000 - 4,999

5,000 and over

V

t

•

t

•

•

•

• •

•

455.5

•

212.^ 228.00

• •

1

t

1 t

t

• •

1

252.38 286.36

•

166.67

• • •

t

1

•

1

• 25.2 '

22.8 15.9

50.1

214.0 127.5

of

Reportad

"T

t

•

8.7

U33

lf22.9 1

' 1,693 1

•

t

•

t

•

• 8,000

,

•

2U.9

2,1»-19

•

t

•

,

«

' 1,391

1

($)

15.6

22.1

188.0 123.5 U8.8

•

69.3 715.8

199.2

•

•

t

•

•

•

* 1

7.16

.02

.02

t

»

1

•

•

6.40 • 171.8 .52 ' 118.0 ' .13 • 76.1 '. .07 '

6l.h

1

(mil. $) •

32.6

.1 .1

29.1 2.4 .6 .3

r

32.6

.3 .3

26.0 4.0 1.3 .7

(thds.)

•

•

1

• •

• »

I

22.7

1.6 1.6

3.2 2.3

5.6

8.4

• (mil. $)

Cases Z/ 'Income 1/

Estimated'Estimatad

coníbined. The error in these data is substantial partictileurly for tha groups abova $3,000.

7/ Estimated cases and estimatad income for individuáis obtainad by sübtracting corrasponding data for familias from totals for familias and individiaals

$323 for individuáis only.

ui

H

The resT2lting average income of $433 comparas vith the $420 for all familias and individuáis shovn in tabla 3 suid ie consistant vith a much lovar figura of

^ Estimated income for groups over $1,000 obtainad by multlplying estimated cases by average income. Income in the Under $1,000 group obtalned as a residual.

umer $1,000 group obtainad by dividíng total income by numbar of casas.

and ovar group basad on reportad figuras for income batvaan $5,000 and $10,000 and income tax data for incomes ovar $10,000. The $433 figure for the

2/ Average income for groups batveen $1,000 and $4,999 tha same as for all familias and individiaals as shovn in tabla 3* Tha $8,000 figura for tha $5,000

Estimatad cases vera obtainad in this vay only for the income grotqps for vhich thera is an entry in column 3* Estimated ccLsas for the Undar $1,000 group vas obtainad by subtracting the total of the other $1,000 groups from the reportad total of 422.9*

estimated of reportad acuses for familias and individuáis combinad cls sbovn in colTxme 3 abova.

1

92.8U ' U22.9

1.37 1.90

•

2.12 '

23.0 9.7 6.2

5.06 •

301.1

74.2

»

•

66.11 16.28

Reportad Casas

1

INDIVIDUALE

(thds.)

t

(thds.)

1

Estlnat^L'Average 'Estimated « Reportad « Cases 1/ • Income 5/' Income 2/ • Casas 2/ *

r

FAMILIES

'(thds.)

Casas J/'Casas

^ As reportad to BLS. ^ Obtalned by multlplying reportad cases for familias by the

\J Fram table 2, £/ From table 3,

8.8

' '^55.5

1

76.5 23.6

• •

6.3

330.3

1

1

1

f

*

• (thds.) • (thds.)

• Cases 1/ ♦ Casas 2/

•

AU groups

1

• Reported • Estimatedl < ^ Estünatad'Reportad • Reportad

FAMILIES AND'INDIVIDUALS 1 "T"

1,000 - 1,999 - 2,999 - 3,999

Under 1,000 2,000 3,000

(DoUars)

Income Group

t

TABLE 4. ESTIMATED DISTRIBUTION QF TOTAL MONEY INCCME, 1950

l6.

the relationships tetween the two zones found in the BLS svirvey, The •urban distribution was obtained by subtraction, It differs considerably from the distrlbution that would have been obtained by the other method of

applying percentages read from chart 2 at the $2,^02 average income level.

The principal difference between the two methods is that the distribution

shown in tabla 5 (the subtraction method) has more urban families in the

<^1,000 - $1,999 group and fewer in the $3,000 - $3^999 group than the dis tribution indicated in chart 2 for a distribution with a $2,402 average, At this point the data in chart 2 are primarily influenced by the reportad distribution for U, S, farm familias which may differ substantially from the actual distribution for urban families in Puerto Rico in spite of the

similarity in the averages of the two distributions, The subtraction method used relies on reported data for Puei-to Rican families which establish the levels of the curves in chart 2 at the rural family average

($1,268) and are the predominant influence on the curves at the all family ($1,693) average.

The foregoing suggests that the estimated urban-rural distributions

are somewhat less reliable than the all-family distribution, The differ

ence in results between the two methods is greatest for the under $1,000 group, Out of the estimated 188,000 families in this group there is a

difference of l6,600 in the urban-rural breakdown, vJith a possible error

of, say 105¿, in the under $1,000 group as a whole, it was decided that none of the estimated figures for $100 subgroups would be accurate enough to use, It is perfectly clear, however, that the great bulk of the families

with money incomes of under $1,000 are in the rural zone, regardless of

whether the actual number is 158,900 as shown in table 5 or the lii-2,300 ob tained by the other method, Even the addition of income in kind that is

1

1

t

1

•

715.8 100.0

•

« ' • • • • 264.8

9.3 6.6 9.3

21.2

59.5

158.9

1,268

2,419 3,444 4,444 8,000

417 1,391

1

t

•

t

• • • •

• •

336.0

74.4

51.3 32.0 29.3

66.2 82.8

é/

t

158.1

15.6

12.8 9.0

27.6

64.0

29.1

(thds.)

t

t

t

I

1

t

1

1

1

t

1

t

1

Average

2,402

2,419 3,444 4,444 8,000

1,391

522

i

Cases ^ Income 4/

Estlmated

379.8

44.1 40.0 124.8

residual.

By subtraction.

89.0 66.7

15.2

(mil. $)

Income 6/

Estlmated

FAMILIES

survey. Estimated income for groups over $1,000 obtained by multiplying estimated cases by average income. Estimated income for the under $1,000 group is the

ohtained by divlding estimated income by estimated cases.

i! Total estimated rural income ($33^*0 miUion) is the proportion of total famlly income shown in the

%

1

• 1,693

422.9

»

t

1

' 199.2

•

76.1 69.3

60.0 22.5 8.0 3.5 2.5 3.5

1

$ ^ . (mil. $T

Average ■ Estlmated Income 4/'Income ^

URBAH

By interpolatlon. Valúes read traní chart 2 at the $1^268 average Income level.

Total estlmated rural cases (2614-^800) Is the prqportlon of total famlly cases shown In the BL3 survey Average income for groizps ábove $1^000 are the same as for aU families shown in tahle Average income for the under $1^000 group

From táble ko

AU Groups

81.4

171.8

' 118.0

• 4,4^ ' 8,000 t

15.6 24.9

f

• •

kfOOO - k,999

•

»

2,419

• •

^33 1,391

1

.(mU. $T

Cases ^'Cases 3/ i (thds.T

$

Estimated' Estimated

FAMILIES

Income ^'Acorné ^

BURAL

* Estimated

1

FAMILIES

3,444

t • •

• 188.0 • 123.5 • U8.8 22.1

•

t

• Ceises 'U * • (thds.) »

'

5,000 and over

1

A L L

• Estimated * Average

1

1

3,000 - 3,999

2,000 - 2,999

Under 1,000 1,000 - 1,999

(Dollars)

Income Class

I

•

TABLE 5. ESrmXED OISTRIBOTIOR OF EAHILY NOHEY IHCOHE, 1950

18. estimated in the following section does not alter the fact that the bvilk

of the poorest people in Puerto Rico live in the coxantry,

It does not

follov, of cotirse, that elimination of poverty is exclusively or even mainly a rural or agricviltTiral problem,

Adjustments fox- non-money incomé

As indicated earlier, the BLS survey did not cover income in kind,

Families and individuáis receive non-money income from both private and goveminent sources, that from private sources usually being called "in come in kind" and that from government sources, "social income" or "valué

of government services", Direct public assistance, it should be noted, is money income covered by the BLS survey and it is included in the estimates of money income made above,

It is comparatively easy to impute money valúes to income in kind

because there are directly comparable or identical iteras of food, housing, etc., that have money valúes established in the commercial market. Many government services, however, have no directly comparable commercial counter-

parts. It is customary, therefore, to valué them at cost, even for a service like education that does have a quasi-commercial counterpart costing approximately twice as much,

In the case of income in kind, moreover, it is comparatively easy to identify the families or individuáis who receive the item and, with some margin of error, to determine the money income group in which they are included. A similar situation exists for a few of the social services

such as public housing and medical care all of vhich go to families with

incomes under $1,000 and fire and pólice protection which go for the most part to property owners who are mainly in the high brackets, This is not

19.

the case, however, for most social services, Their valúes are more diffused.

A new factory Taenefits the worker who get a job and also the storekeeper with whom he spends his paycheck,

A highway benefits the motorist and

also the man who rides a piíblico or buys goods delivered by truck, In such cases it is difficult to establish the money valué of the govermaent

service and to identify those who receive it, Even a service like education, which Ib provided without regard to family income, is probably not distri butad purely in proportion to the number of children per family, Some highincome families send their children to private schools and some families

with extremely low incomes live too far from school or ai-e unable to pró

vida clothing suitable for school wear,

For these reasons, income in kind from private sources ia given a

different treatment in the analysis that follows from that given to government services, Estimates are made both of the amount and the distribution

of income in kind and it is then added, to money income. No attempt is made,

however, to distribute the total valué of government services in 1950,

Instead, an estímate of the level pf these services in future years Is substracted. from the goals for total family income to yield more clearly definable goals for money income and inoome in kind.

The estloíátéd amounts of various types of income in kind recelved

by families and individuáis in I950 are j^^owü in table 6.

In distributing the total incocfe .s^ovhci in table 6 between families and individuáis it waá'deG^(iedj, somewh^^^^

to allocate two items

(the income 'in kind pai4;bo soldiers and^o domestic servants living in the household in,which they work) eáti'rély tó individuáis and to allocate

all oth'ér Items entirely to faMlíes^, "Jíiere are of course many exceptions

20.

TABLE 6. ESTIMATED INCOME IK KIKD, 1950 (in thousand of dollars)

Indivl,

Totali/ duals-/ Homes occupied rent free

Imputed rent, owner-occupied homes

2,200

17,648

To servants living in households To servants not in households Home-grown food Subsistence of soldiers

^

3,796

• -

ai 11 = =

Total

Urban

2,200 17,61^8 9,337^ 1,720^ 8,311-^ ^^-,302 3,227-^ 1,075^/

4,302 18,131

18,131

-

18,131

8,314

Imputed interest on bank deposits

1,927

Medical costs of S, I, F,

1,927

1,500

l.soo 1,500

Total

Rural

57,818

12,110

^82|/ 7sn2/ 750^

45,708 15,239

'T=^cSJ 750'

30,469

ly All estimates except that for homes occupied rent free, mde by EDA in computing Cominonwealth net income. Censúa of housing shows 31,000 nonfana houses oc cupied rent free, it is estimated that 24,000 farra houses are occupied rent free, The total of 55,000 rent free homes were estimated to have an average annraal rental valué of :,u40, making the total of ^'1)2,200,000, 2/ Arbitrary'allocations, see text,

12,000 urban and 43,000 rural based ott Censúa of Housing, both with assumed average annual rental valvie of $4o,

4/ Based on Census of Housing data for number and valué of owner-occupied homes, y Based on families reporting income of $5,000 and over to BLS, 75¿ urban and 25/j rural.

^ Based on SIF Annual Report for 1949-50 which ahowed that

of all accidenta

occurred in agricultura,

such as married enlisted men living at home and receiving some income in

kind and of husband and wife or mother and daughter both living in a liouse-

hold in which the:;- work as domestic servants, There are, on the other hand, some single domestic servants who live outside the household in which they work and a few individuáis who live alone in a house they orm, grow their own food, receive imputed interest on bank deposits, or get S.I.F, medical

care, There are no data, however, on which to base all these allocations

and the abova aaamption la ballevad to do laaa nolenca to tha facts than an alternative asstjmptlon of e per capita nature.

21.

The urban - rural "breakdown of income in kind is obvious in the case

of home-groim food and in the other cases it is based on the data shown in

the footnotes to table 6,

The distribution of income in kind to the different income groups and its addition to money income of urban and rural faaiilies is shown in

table 7 and table 8, The methods used are based on the followlng assumptions; 1, Imputed rent of OTOer-occupied bornes and the valué of home-grown food

consumed on farms vare disti-ibuted^in the^same'proportions'as moñey income.

This assumption seems" quite reasonábie for'^owñer-occupiéd homes because the valué of homes is closely associated with income. Consvunption of home-groTO food probably is relatively higher among low-income farm familias but there are no quantitative data on this point. The distribution of these two Ítems of income in kind is shorm in table 7.

Income in kind from homes occupied rent free, payments in kind to domes-Sgnvants not ílving in households, and SÍF medical costs ail"went

jo. famllles with^ PPney'Tncornes f'ar encpgh'belcay '$1,000 so that the Sá^L^JkQn of the inc^CTi^^n kind dí^ not ralVe the total above S31,00b. This seems to be a re'ásonable"assumption"for free" rent and" income in Hnd to domestic servante. For SIF medical costs, which accrue to the benefit of wage earners, it seems to be a somewhat better assumption than that they

yei-e distributad, in accordance with total money income. The addition of these Ítems of income in kind is shown in table 8.

3* JPP^ted ^ pn.bank depositsall went to familles with money inThis assumption is obviously not" entirely correct but it seems íikely that the great bulk of individual accounts are held by people in the top income brackets.

On the basis of the above assumptions, table 8 shows the distribution of total money income and income in kind to families in Puerto Rico in 1950, This total is the benchmark for the family income goals of the Commonwealth

Government and it indicates the tremendous advances that must be made, particularly in the incomes of families now living in rtiral areas, if those

goals are to be achieved, Money income and income in kind brings only about

half the families in Puerto Rico up to the $1,500 level and only about 29Í of them to $2,000,

1

•

100.0

6.2

422.9

461

<

• 172.9 130.9

81.9

(mil. $)

1,777

• 751.5

2,419 ' 3,444 • 84.7 4,444 • 71.5 8,000 • 209.6

1,391

$ 56.2

100.0

3.9

9.0 4.0 2.6

24.3

Cases ^

•

•

•

•

•

•

264.8

10.3

6.9

10.6

23.8

148.8 64.4

' (thds.)

Cases ^ * •

'

1,368

•

2,419 ' 3,444 • 4,444 • 8,000 '

1,391

441

362.4

82.4

30.7

65.6 89.6 57.6 36.5

Average 'Estimated Income 3/ * Income ^ $ • (mil. 1)

FAMILIES

Estimated • Estimated

RURAL

158.1

28.8 59.9 30.3 l4.0 9.2 15.9

(thds.)

Cases ^

Estimated

2,461

2,419 3,444 4,444 8,000

1,391

563

$

Income 3/

distribution accordlng to percentages in preceding column.

By subtraction.

Total estlmated Income ($751-5 mlUion) is total family money Income ($715-8 mllllon) plus ingjüted rent($17.6 mlUlon) and home-grown Í! food ($18.1 mlllion) as shown In table 6. Groups over $1,CX)0 obtained by multipllcation. The under $1,000 group obtalned as a residual.

Total obtained by addlng apprqprlate Items from table 6 to money Income shown in table 5. Distribution e« in note Jj/ above. %

See table 5, note ít.

Total from ta'ble

389.1

127.2

40.9

73.3 48.2

83.3

16.2

(mil. $)

Income ^

Estimated

F A M I LIES

Average

U R B A N

Valties read from chart 2 at the $1,777 average income level for all famlliea and at the $1,368 average Income level for rural familles.

All groups

'

5.8 3.8

'

24.6 16.1 26.2

12.8

•

5,000 and over

177.6 124.3 54.1

42.0

29.4

(thds.)

•

1

'Estimated W

Cases ^ Income 3/'Income

Average

FAMILIES

Estimated

ALL

•

'f,000 - 4,999

1,000 - 1,999 - 2,999 - 3,999

'Cases iV i

(Dollars)

Under 1,000 2,000 3,000

'Eetimated

Income Clase

t

I

t

—1

TABLE 7. DISTRIBUTION OF FAMILY MOHEY INCOÍE, IMPUTED KEBT, AHD HCME GROWN FOOD

ro ro

1,000 - 1,999 - 2,999 - 3,999

5/

ALL

» Cases ^

• '

t

'

422.9

24.6 16.1 26.2

1

177.6 124.3 54.1

• • '

1

' (thds.y

1,800

2,419 3,444 4,444 8,073

1,391

507

761.5

71.5 211.5

84.7

90.0 172.9 130.9

'

' 1,391

465

264.8

•

1,383

• 2,419 • 3,444 6.9 ' 4,444 10.3 • 8,039 10.6

23.8

148.8 64.4

(thds.) '

(mil. 1)

Income 2/ $

Cases ^ •

Income ^

Income ^ $

Estlmated ' Average

366.4

30.7 82.8

57.6 36.5

69.2 89.6

(mil. $)

Income W

Estlmated

F A M I LIES

Estlmated

HURA L

Average

F A M I L IES

158.1

28.8 59.9 30.3 14.0 9.2 15.9

(thds.)

Cases ^

Estlmated

I

FAMI LIES

•

•

1

83.3

20.7

' (mil. $)

1

2,499 ' 395.1

2,419 ' 73.3 3,444 • 48.2 4,444 » 40.9 8,094 • 128.7

1,391

719

$

Average 'Estlmated Income 2/' Income 5/

URBAN

By subtractlon.

As In table 7 plus approprlate Items from table 6.

household ($4.3 mllllon) and S.I.F. medical costa ($1.5 mllllon). $5,000 and over group amount In table 7 ($209.6 mllllon) plus Iraputed Interest on bank deposite ($1.9 mllllon).

Groups pom $1,000 to $4,999 as In table 7. Under $1,000 group amount In table 7 ($81.9 mllllon) plus free rent ($2.2 mllllon),

Groups from $1,000 to $^f999 as In table 7. Under $1,000 and $5,000 and over groxq)s by división.

From table 7.

All Groups

5,000 and over

4,000 - 4,999

Under 1,000 2,000 3,000

■

'Estlmated

1

•

r

TABLE 8. ESTIMATED DISTRIBOTION OF PAMILY MONEY INCOME AND INCOME IN KIND, I95O

23.

24.

These family income goals, hovever, do not reflect the valué of the govemment services that families vill be receiving in the years ahead, The

dxfficulty of evaluating and distributing the social services has already been mentioned, Many of them have no money valúes established in a market and for most of them distribution is so diffxised throughout the population

that the amount going to a particular income group can not be readily determined,

The most convenient assuniption about the valué of government services

is that each of them is worth its cost, Actually, however, their valué is

probably considerable greater, Public education, for example, costs about

$75 a year per student while prívate schools charge about $150, It is reasonable to suppose that functions are undertaken by the govemment pre-

cisely because they can be performed more efflciently by a public body than

if they were done by prívate organizations, This is particularly true in the case of functions like preventivo health where the máximum benefit to

all individuáis comes when the people who need the service most, not those

who can best afford to pay for it, are the direct recipiente, However, because of the inherent difficulty of assigning a monetary valué other than cost to the individual services and because of the inevitably controversia^

nature of the results of such an evaluation, it vas decided for the purposes of this study to regard cost as the equivalent of valué,

A detallad examination of goveinment expenditvires was then made to

see for which services the recipients could be identified, During calendar 1950* total Insular Government expenditures (including Federal grants in aid but excluding direct cash relief payments) amounted to about $115 million and municipal expenditures, excluding Insular contributions and direct

25.

relief, were probably about $12 million, Out of the total Insular Govern-

ment expenditure of approximately $115 million, about $26 million vas for Ítems within functions such as nutrition, curativa health, housing, rural electrification, and public welfare irhere practically all the direct recip-

ients had money income and income in kind of less than $1,000. Even these services, however, are of very substantial indirect benefit to familias and

individuáis vith highar incomes, About $10 million was spent for protective

services the benefits of vrhich are probably fairly closely correlated -vrith

income. About $33 million was spent for education which is distributed ap proximately according to the number of children of school age, The balance

of about $ii-6 million, including mainly direct development, highwa^/s, pre ventiva health and general administration is so diffiosed in its benefit

that the best assumption seemed to be equality for the adult population.

Out of the $115 million total, then, about $20 million went mostly to low

income families, $10 million to higher income farailies, and about $85 mil lion was distributed, more or less, on a per capita basis, Since there is undoubtedly considerable diffusion of benefit even of those services where

the direct recipiente can be identified, the most reasonable overall assump tion appeard to be that Commonwealth Government services as a whole are

distributed on a per capita basis. With direct cash relief payments ex-

cluded, the same assumption appeard to be reasonable for municipal expenditures.

This assumption of equal per capita distribution is obviously false in some instances, the most glaring being extremely low-income families in

isolated rural areas, Their footpath is not publically maintained, their

26.

children can not get to School, and they have no públic water supply, The

preceding estimates (table 8) show that there were about 150,000 rural families with incones from prívate sources under $1,000, Roughly 80,000

had incomes under $500, Possibly half of these, ii0,000 families, lived in such isolated communities and at such a low level of money income that they

could not avail themselves of their full share of social income. As roads, rural schools and other services are extended and as ¿ob opportunities open

up in less isolated areas this number will decrease, In 1950 roughly 10^ of all families were in this situation, Even if the proportion can be cut

in half by I960, the very low-income, isolated, rural family will continué to present a special and very difficult problem.

The asBumptlon of equal per capita distribution of social services

is thus modified by the foregoihg to mean equal for 90^^ of the population in 1950, perhaps 925¿ by 1955 end 95^3 by I96O, Apart from direct cash relief

and duplicating items. Insular and Municipal e3q)endltures were about $125

million in 1950, The following table, basad on the projections and goals outlined in the 1950 Economic Report to the Govemor, shows per family

public income, These figures are of course only very rough guides, The absoluta distlnction between those who receive social income and those who

do not is an obvlous oversimplification and no allovrance has been made for the share of government services received by the small number of in dividuáis outside families,

Restating the family income goals on the basis of table 9 and in

terms of money income and income in Icind alone, the minimum for 1955 would

be about $1,000 and the minimum for I960 would be about $1,260, Referring

27.

TABLS 9, ESTIivlATED SOCI/vL IHCavES OF FMILIES

Government

expenditiiresi/ (millions of

All

.

2/

families-'

(thousandg)

Recipiente of y social incoine¿/ Social income (thousands) per family

1950 1955

125

h23

211

455

381 UlT

1960

3^^

m

k6h

0328 506 Ikl

ij Estimated as having a constant (16,2'^) relationship with the goals for grose product,

2/ Based on population projections made in 1950, ^ 90^0 of familias in 1950, 92^ in 1955, and 95^ in I960, back to table 8, it can be seen that in 1950 there vere about 178,000

families, k2^ of the total, with incomes under $1,000, The nvunber under

$1,260 was roughly 220,000, Meeting these family income goals is obvioiisly a formidable task,

Comparison of family income and gross product goals

The gross product goals projected in the 1950 Econoraic Report to

the Governor and their relation to average family income and the family income goals is shotm in table 10,

The most significant fact shown in table 10 is that the I960 goal

for minimum family income wiH probably be sübstantiallfer met

the pro-

duction (gross product) goals of the program are achieved, According to the estímate, only lOva of all families (^9,000) would have money income

and income in kind below $1,260 and, consenuently, total incomes, including the valué of government services, below $2,000,

28.

TABLE 10.

GROSS PRODUCT AlíD FAiíILY INCOME GQ/iLS

(product and income figures in constant 1950 prices)

Familyi/

'GvosslJ Year'product

income

•Families^

'(millions (millions '(thousands) 'of dollars) of dollars)

Families with money income income

t

'.

Unde:.

¿a^pqo _

Under $lj.2o0 thou-'

thousands

1

1

and . income in kind

Average

sands'

''

$

I

t

423

1,282

'

455

2,092

'

488

1950'

773

762

1955'

1,300

1960' 2,122

$1,801 2,818 4,287

1

I

105

23V

t

49

5/

' 10 t

ij As estimated and proyectad in I950, 2/ Total money income and income in kind proyectad at a constant {9Q,6'p) relationship with gross product.

^ Based on population projections made in 1950.

V Interpolated valué read from cliart 2 at the $2,8l8 average income level. ^ Interpolated valué for the under $1,000 group plus 30'/j of the interpolated valué for the $1,000 - $1,999 Si-otip. Read from chart 2 at the $4,287 average income level,

Perhaps half of the 49,000 families wotild he those mentioned ahove

vho live in isolated rural areas and who, even hy 196O Trould he unahle to

avail themselves of government services, They V70uld have an average of

perhaps $500 of money income and income in kind, hut nothing more, unlesa it was provided by a special government pi-ogram. It would take an expenditure of ahout $36 milllon to hring all of them up to the $2,000 level, The other half of the 49,000 families would presvimahly consist of those

whose main hreadwinner was incapacitated, incompetent, or had a business

failure during the year. The former are properly recipiente of ptiblic welfare and the projected level of government resources vrould be ampie to care for them adequately. An expenditure of about $19 million could lift all

these families to the $2,000 level. Thus in I960 a total government expend iture of about $55 million in special lairal programs and in additional

29.

direct relief could Tjring all familias up to the $2,000 minimuiE, To have hrought all familias up to the $2,000 figure in 1950 would have required an additional government e:<penditure of roughly $2^1-1+ million, an obviously impossible figure.

As tabla 10 shows, however, achievement of the 1955 production goals

would fall considerable short of meeting the $1,500 family income goal, About 23;/3 (105,000) would have money income and income in l^ind of less than

Í3l,000 and, consequently, a total below the $1,500 objective, About 38,000 of the 105,000 familias would be unable, according to the estimates in table 9, to get any substantial amount of government services, They would

have an average money income and income in kind of about $500 and it would take additional programs amounting to about $38 million to lift their in-

comes to the $1,500 minimum. About $39 million more would be required to raise up the other 67,000 families, This makes a total of $77 million of

ad^tional government expendítu.-'es needed to meet the 1955 family income goal, even if the total income objective is achieved, It should be noted that the figures for projected government e:£penditm'es med in table 9 are based 011 the assumption that they have a con-

stant relationshlp to gross product, Tax collections, however, rise faster

than total income to the extent that the tax system as a whole is progressive. Indlvidiml income tax collections in 1950 from people with net in-

comes of over $5,000 amoxmted to about $10 million. l-íhile the I96O total income goal is less than three times the 1950 figure, achieving this goal

would multiply by about 6 the number of families with incomes over $5,000.

With the same tax rates as in 1950 the individual income tax yield would

thus be about $60 million in 1960, rather than the figure of about $30 mil lion that is obtained by assuming a constant relationship with total income.

30.

The individijal income tax would yield, in effect, an "extra" $30 million in 1960 toward the $5o million of additional government expendítiire needed. to meet in ftall the family income objective, The incidence of other taxes

might possibly be sxifficiently progressive to provide the balance vithout increases in ratea, This is in sharp contrast to the situation in 1950

when tax ratea irould have had to have been about tripled to provide the extra $24it- million that would have been needed to raise all families to

a $2,000 mínimum income, The central fact brought out by the foregoing analysis is that the

$2,000 family income goal is consistent with the total income and product goals set for I960, The $1,500 goal, while not consistent with the other overall objectives for 1955^ probably would fit by 1956 or 1957* This

consistency among the goals has a numbei- of important implications, some negative and some positive in nature,

First, neither the total income ñor the family income goal is in any sense a forecast and nothing in the foregoing suggests or implles that

they actually will be met, In fact, there are some indications, not yet

adequately analyzed, that suggest that they can be met only if the develop-^ ment program is accelerated and strengthened,

Second, the fact that the total income and family income goals are mutually consistent does not mean that progreos toward both of them must

necessarily be at the same rate ñor that if one is met the other necessarily will be, Changes in job opportunities, in tax structure, mínimum wage policy and many other government and prívate institutions affect the relationship between the two.

31.

Third, while the projected relationships "between average income and income dlstribution are based on e2:isting relationships here and iu the

States (chart 2), it is clear that, at any given level of average income, the distribution can be affected by changes in existing economic insti-

tutions, The family income goal, for example, might be met at a lower level of average income If the income distribution vere shifted by means of in come taxes and minimum wages higher than those applied in the States at

the corresponding level of average income, Fourth, the reverse of the third point above is not trae, There is

nothlng in the material so far analyzed to indícate that a shift in the dis

tribution of income, by whatever institutional means, would of itself cause

a change in the level of income, In the follovring section, however, an attenqpt is made to identify the families who had very lew incomes in 1950 and to analyze some of their economic characteristics. In this material there

are indications that some kinds of institutional measures would change both the level and the distribution of family income. íi^^cation and characteristics of low-income families

In this section, families are regarded as having a low income if

they reported in I950 a money income of less than ¿500 to the BLS, About

the equivalent of 198,300 families reported money incomes \inder $500, whereas the estimated number with money incomes vinder $1,000 is 188,000 and the number with money income and income in kind under $1,000 is 177,600, It is estimated that in I950 about 220,000 families had money income and income in kind below the I960 goal of $l,26o, Thus the data that follar

for the 198,300 families reporting under $500 to the BLS can be regarded as covering the bulk of the families that had in 1950 less than the $1,260 of

32.

money income and income in Mnd which, together with $7^0 of social income

voTold, in 1960, bring them up to the $2,000 goal, In 1950 nearly he,lf of the familles in Puerto Pvico (209,000) were

already at or above the $l,26o goal for money and in kind income, but ■ every one of the other 21^^,000 families plus perhaps 65,000 new familias will have to have more income. As indicated in the preceding section, it is estimated that achievement of the total income goals of the development

program would provide and distribute to these families the bulk, if not all,

of the additional income they need. It is evident from the x'ollcwing data regarding these low-income families, however, that this will involve basic

structirral changes in the economy and a large movement of population from rural areas to the cities,

TABLS 11, CHAR/^.CTEKISTICS OF LCW-IlJCQIffi FAMILIES Families reporting incomes Under $500 $500 or more

Living in urban areas

Llving in rural areas

With male head of family With female head of family Size of family

Employed workers per family With no labor income

Part of total income from wages or salaries Head of family

Unemployed or not in labor forcé Employed in

Other agriculture

Heme needlevork Subtotal Services Trade

Manufacturing Construction

Transportatlon Govemment and other

25íí 15'P

1% 22^

89f.

11^3

5.0

5.2

1.2

1.5

21^ m

10$

100'3

22Í¿

100$ 15$

P7f'

I/z -rM 'oA'

3oío

oí'?

-*?

^

1^

%

2/'

12fa

33.

The data in table 11 are based on speclal tabulations preparad by the BLS from the resulta of its I950 survey»

They show that the country

is the main site of poverty in Puerto Rico and that its main causes are tmemployment, vinderemployment, and the lew wages paid to agricultural workers, Three-quarters of the low-income families in Puerto Rico live in

rtiral areas and the heads of nearly all of these (70^ of the total) are unenrployed or working in agrictilture or home needlework. In contrast, the

higher-income families are about evenly divided between city and country and nearly two-thirds of tlie heads of these families have non-agricultural Jobs,

The lack of a male head is also a factor in poverty, The table

shows that 22^ of the low-income families have female heads compared with

llfj for these with higher incomes. More significant is the fact that €h^fO of all the families with female heads reportad less than $500 compared

with 44% of the families with male heads, Contrary to general impression, the low-income family is slightly

smaller and has an appreciably lower average number of employed workers, The small difference in size may reflect the fact that newly-formed families

tend to have lower incomes, The smaller number of workers per family is^ of coxjrse, a major causal factor, Families have low incomes when family members can not find work, Low income families derive a smaller part of their income from wages than do higher-income families,

In analyzing the data in table 11 showing the industrial attachment, if any, of the head of the family, care must be talcen not to asaume that

it is merely the low wage level of an industry and, therefore, of the family head that alone causes the low family income, Actually it appears

34. that a very large part of the higher-income fainilies reach these brackets

because they have secondary wage eamers vhose incomes supplemenfc and often

esceed that of the family head, For exan^le, most of the families above

$500 whose heads are employed in home needlework obvlously must have supplementary income of some kind,

It should be recalled that a reported income of tmder ¿500, after

adjustment for under-reporting, amounts to about $1,000, This is the

equivalent of about $20 a week, Only in transportation and in govemment is the median wage or salary as much as $20. For most people in other

industries the attainment of a $1,000 family income must be the result of supplementary earnings, other forms of income, or both, The foregoing indicates the very great extent to which lack of jobs causes poverty, One of the most important factors in rural poverty is the

lack of supplementary job opport-unities at any time of year for secondary workers and during the dead season for cañe workers, There are almost none apart from home needlework, This accounts for the fact that over two-thirds

of the families whose heads depend on agricvilture have low incomes, while ih service industries where the median wage is much lower ($8,70 a week dur

ing April, May and June 1952 compared with $11,70 for agriculture) only

about half the families have low incomes, Most service jobs are not highly seasonal and they are located in the city where there are many more opportunities for supplementary work,

Underemployment as well as unemployment tends to increase the burden

of poverty in the country, There, only about half the people who have ¿obs work as long as 35 houra a week, Moreover, many of those who report them-

selves as working full-time are self-employed farmers working on such poor

35.

or small farms that no possible amount of work would produce an adequate

income. In rorban areas, on the other hand, only about a third of the ■workers have part-time jobs eind, except for cigar makers and people in a few of the service industries, the self-employed generally fare at least well as employees.

During the paat 2 l/2 years, there have already been large enough changes in income and employment to alter the 1950 picttire considerably.

Betveen calendar 1950 and fiscal 1953 preliminary estimates show an increase

in real Commonwealth net income of ló^ó.

Famxly money income and

income in kind probably increased somewhat less than this because of declines in transfer payments (to veterans) not included in the net income data.

Assviming that the increase was 15^», family money income and income in kind

in fiscal 1953, at 1950 prices, amounted to about .^8^7 million compared with $762 million in calendar 1950.

substantial change in population.

Between the two periods there was no

Thus, measured in I950 prices, the

*^23,000 familias in Puerto Rico had an average income in fiscal 1953 of approximately $2,000.

At this average income level, about 375^ of the fauiilies (157,000) had ononey and in kind income

below $1,000 and 6y}¡ above.

In 1950 about 177»600 families were below $1,000.

(see chart 2)

This apparent decline

of about 20,000 in the number of low-income families and the corresponding increase in higher-income families during the period coincides \7ith changes in the economy and shifts in population of the same general nature as

those indicated above — marked declines in agricultural employment, unemplojTaent, and underemployment and relativa increases in most kinds of nou-

agricultural employment. This implies a continuation and probably an

36.

acceXeration of the movement of population to the cities shown by census

data for the 19^0 decade, There have just been released some prellminary data from the 1952 survey of the incomes and expenditures of vage«earner famllieB, Pood pro-

duced, as well as money income vas included and because of the nature of

the Btudy the response vas probably very much more complete than in the

1950 survey, perhaps covering 905& or more of the income actually received, The reported average income of vage-earner families (that is those whose

principal income vas from vages rather than salaries, bxisiness, or other sources) vas $1,058. The study shovs that half the vage-earner families

in 1952 vere belov $919» Alloving for about 10^ under-reporting, this woiild mean 50í¿ of vage eamer families under $1,000, a result that vould

seem to be reasonably consistent vith the above figure of 37>a for ^11 families.

This 1952 study for vage-earner families is directly comparable vith

a 19^1 study and it shovs an increase of 68^ in average real income during the 11 years. The increase in real per capita Commonvealth net income

dxiring the same period vas í+7^. Even alloving for considerable error in either pr both sets of data it can now be said for the first time vith as-

surance that vage-eamers have benefited at least as much as other people from the economic progresa of Puerto Rico.

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