The Panel for the Study of Income Dynamics has shown that the number of people who enter and leave poverty each year from the mid-1970s through the mid-1990s was about 8 million. Sometimes this number rose to nearly 20 million people entering and rising out of poverty in a single year. The description of a stable group of people who are poor, with a few becoming poor and a few rising out of poverty each year, is wildly wrong.
Every five years during the past three decades, between 30 million and 40 million Americans have risen out of poverty. This is an enormous accomplishment for the individuals, their families, and the caring society that has supported them. Unfortunately, every five years during the past three decades almost as many people have entered poverty for one or more reasons. But unlike most other developed nations, poverty in America is a transitional process - from acceptable income levels into poverty and back to acceptable income again. Typically, this is a quick transition.
In a 1998 report, the Census Bureau carefully studied a sample of individuals who were poor from October 1992 through 1995. During this time, the overall annual poverty rate was 12.6 percent to 12.9 percent, almost identical to the 12.7 percent annual poverty rate in 2004. In 1994, 6.9 million people who were not poor in 1993 became poor sometime during the year. During the same year, 7.6 million people who were poor at the end of 1993 rose out of poverty during 1994. The net change was 700,000 fewer people in poverty at the end of 1994 than at the end of 1993, resulting in a small reduction in the annual poverty rate.