Poverty and Social Mobility in Houston

Too many Houston-area families are stuck in the cycle of intergenerational poverty, preventing economic mobility

Despite a slight decline in poverty rates over the last decade, one million households in Houston’s three-county region struggle to afford basic necessities.

Why poverty and social mobility matter to Houston

Poverty has devastating consequences for individuals and families, entire communities, and our collective future. People who live in communities with high concentrations of poverty are at higher risk for cognitive1 2 and mental/ behavioral health challenges,3 chronic disease,4 higher mortality,5 and lower life expectancy.6 7 Children that grow up in poverty have higher prevalence of developmental delays,8 9 toxic stress,10 and chronic illness;11 they are also more likely to leave high school without a diploma,12 have fewer job prospects,13 or interact with the criminal system.14 Individuals who experience poverty as a child are more likely to experience poverty into adulthood, which contributes to intergenerational cycles of poverty.15 Intergenerational poverty not only prevents many from achieving their full potential, but also it holds back our collective society because we can’t benefit from the full talents and participation of our region’s most valuable asset — our people.

By working together to lift our neighbors out of poverty and into economic security, we can build a more vibrant Houston region with opportunity for all.

The data

Despite declining poverty rates over the last decade, 31,000 more Houstonians live in poverty

The Official Poverty Measure was developed in the mid-1960s by Mollie Orshansky, an economist at the Social Security Administration, to measure the Lyndon B. Johnson Administration’s success in its “War on Poverty.” Her formula was derived from the cost of a minimum food diet for different family sizes, which she believed accounted for a third of a family’s overall budget. Orshansky concluded, if a family earned less than three times the cost of food, then they lived below the poverty threshold. Today’s measure is still based on this original calculation and is updated annually for inflation. 

This measure, while consistent over decades, has limitations: This measure does not account for geographic cost-of-living differences — the threshold is the same regardless of where one lives in the continental United States; supplemental income such as tax credits, housing vouchers, or Medicare is not considered part of income; and the definition of a “family” is narrowly defined.16 According to the U.S. Census Bureau, “The official poverty measure is based on pretax cash income, while the Supplemental Poverty Measure (SPM) includes noncash benefits such as the Supplemental Nutrition Assistance Program (SNAP) and housing subsidies as well as net income after payroll taxes, tax credits and other necessary expenses.” 

In 2021, the Federal Poverty Line, or poverty threshold, was $13,788 for an individual and $27,740 for a family of four. Based on this definition, 41.4 million Americans lived below the poverty level. Comprising 13% of the population, 1 out of 8 Americans live in poverty, according to the official measure.

1 out of 8

Americans live in poverty.

In 2021, the poverty rate was 6.8% in Fort Bend, 16.4% in Harris, and 11.4% in Montgomery County. In Houston’s three-county region, the poverty rate is consistently lowest in Fort Bend County and highest in Harris County.

Over the last decade, poverty rates in each Houston-area county steadily declined from 2010 to a decade-low in 2019, before ticking back up in 2021. Between 2010 and 2019, the share of people living below the poverty line fell by 2.8 percentage points in Fort Bend, 5.6 points in Harris, and 2.6 points in Montgomery counties. However, between 2019 and 2021, poverty rates increased by half a percentage-point in Fort Bend, 1.3 points in Harris, and 2.3 points in Montgomery counties.

While the percentage of Houston-area residents who live in poverty is lower in 2021 than in 2010, the number of people living in poverty has increased during this period. The number of people living in poverty increased by 4,421 (8%) in Fort Bend County, 6,126 (1%) in Harris County, and 20,386 (38%) in Montgomery County. Nearly 900,000 Houston-area residents lived below the poverty line in 2021.

900,000

Houston-area residents live below the poverty line.

Racial characteristics of poverty in Houston’s three county region

In the United States, poverty and race are strongly connected,17 with poverty rates generally highest among the Black population and lowest among the white population (among the four largest racial/ethnic groups). That this disparity exists in nearly every state and county in the nation, suggests this inequity can be attributed more to the institutional disadvantages and discrimination that has been embedded into the various systems that guide American life — education, healthcare, housing, employment — than to individual characteristics.18

People of color, especially Black and Hispanic/Latino people, are more likely to live in neighborhoods with concentrated poverty due to our nation’s long history of racial segregation.19 According to National Equity Atlas, 22% of Latino and 20% of Black Harris County residents lived in “high-poverty” neighborhoods (i.e., poverty rate of 30 percent or higher) in 2020 compared to 3% of white people. People who live in high-poverty neighborhoods have less access to jobs, services, high-quality education, parks, safe streets, and other essential ingredients of economic and social success.20

Exacerbating racial/ethnic disparities, Black families are 16 times more likely to have lived in poverty for at least three generations compared to white families, according to an analysis from Brookings Institution. One in five Black Americans (21.3%) are experiencing poverty for the third consecutive generation, compared to one in a hundred white Americans (1.2%). This same analysis found that not only do Black families experience higher rates of poverty, but also they experience lower rates of upward mobility and higher rates of downward social mobility, which makes the ability to improve one’s economic standing much harder and less likely.21

Black families in the U.S. are 16 times more likely to have lived in poverty for at least three generations compared to white families.

In 2021, 9.5% of white Americans nationwide lived in poverty, while the figures were 21.8% for the Black population, 17.5% for the Hispanic population, and 10.2% for Asian Americans. Poverty rates in Harris County and Texas closely mirror these national statistics.

In Fort Bend County, the poverty rate is highest among the Hispanic population (9.0%) and lowest among Asian Americans (4.9%). In Harris County, Black residents experience the highest poverty rate (23.1%), which is nearly triple the rate for white residents (8.3%), followed by Hispanics (19.6%). In Montgomery County, 21.9% of Hispanics live below the poverty threshold, which is nearly triple the rate for both Black (7.9%) and white (7.1%) residents in the county.

<8%

Poverty rate among Black residents in Fort Bend and Montgomery counties.

In Fort Bend County, the proportion of the Hispanic population living below the poverty threshold fell by 6.5 percentage points between 2010 and 2021 — the greatest decline among racial/ethnic groups in the county. In Harris County, Hispanic residents experienced the greatest declines in poverty rates (6.8 percentage points), followed by Asian Americans (5.1-percentage-point decline). In Montgomery County, the poverty rate among Black residents was cut in half over the last decade.

Single-parent families and poverty in Houston’s three-county region

Across the United States, the percent of families led by single parents declined from around 15% in 2010 to 13% in 2021. Locally, the share of families led by single parents in 2021 was 8% in Fort Bend County, 16% in Harris County, and 11% in Montgomery County. However, despite the declining rates, the number of single-parent led families in Houston’s three-county area has increased in the last decade because of the area’s growing population. The increase in this family structure is a concern because families led by single parents are five times more likely to live below the poverty threshold than two-parent-households. In the United States, 1 in 3 (33.7%) households led by single-moms lives in poverty compared to 1 in 16 (6.2%) households led by married couples.

In Harris County, over 40% of single-mom families with children under 18 live in poverty, compared to around 36% in Montgomery County and less than 20% in Fort Bend County. In Harris and Montgomery counties, single moms are four times as likely to earn less than the poverty threshold, and even the lowest rate in Fort Bend County is more than three times the poverty rate of married-couple families.

One out of four children in Harris County lives in poverty

Research has shown that children growing up in poverty are more likely to face chronic stress and conditions that leave permanent changes in their brains, with implications for learning, health and behavior.22 Children who have lived many years in poverty are 90% more likely than their peers who never lived in poverty to enter their 20s without completing high school and, for girls, are four times more likely to become a teen mother setting the stage for the intergenerational transmission of disadvantage and onset of chronic poverty.23

Poverty rates for children are typically higher than for adults. The proportion of children under 18 living in poverty in 2021 was 7.5% in Fort Bend, 23.8% in Harris, and 17.3% in Montgomery County. Across Texas, 1 out of 5 children lives in poverty — a higher rate than the nation (16.9%).

1 out 5

Children in Texas lives in poverty

Over the last decade, poverty rates for children under 18 have declined nearly 5 percentage points across the nation, with the greatest declines occurring between 2010 and 2019. Between 2019 and 2021, poverty rates ticked back up in each county, the state, and nation — and in the case of Montgomery County, reversed all gains from the previous decade. 

Poverty rates for children 5 and under are even higher than they are for all children. The proportion of children 5 and under living in poverty in 2021 was 8.9% in Fort Bend, 24.2% in Harris, and 20.9% in Montgomery County. Poverty trends for children 5 and under steadily declined between 2010 and 2019, but then ticked up during the pandemic, according to 2021 data. Over the last decade, poverty rates for children 5 and under fell 6 percentage points in Fort Bend and Harris counties and 2 points in Montgomery County.

In 2021, 10.6% of white children under 18 were experiencing poverty across the nation, compared to 31.0% of Black children, 23.2% of Hispanic children and 10.3% of Asian-American children. The poverty rate for Black, Indigenous, and other people of color (BIPOC) children under 18 in Harris County exceeds both national and state levels. Poverty levels for white children in Harris County were similar to the national and state levels. Montgomery County has a large percentage of Hispanic children under 18 (32%) and under 6 (38%) experiencing poverty.

Nearly 2 out of 5

Black children under 6 in Harris County and Hispanic children under 6 in Montgomery County live in poverty.

10% of youth aged 16 to 19 in Harris County are neither working nor pursuing education

Young people between the ages of 16 and 24 who are not enrolled in school or not working are classified as “opportunity youth.” Once a young person becomes disengaged from school or work, it becomes increasingly difficult to reconnect them to opportunities in education and skill development.24 Being disconnected is both a consequence and a cause of poverty, and opportunity youth are twice as likely to live in poverty as their connected peers and are less likely to be employed, own a home, or report good health when they reach their thirties.25

Approximately 8% of the 16-to-19-year-old population are neither working nor attending school in Texas, a higher share compared to the national average (6.9%). In Fort Bend and Montgomery counties, about 5% of 16- to-19-year-olds are considered opportunity youth, compared to 8.3% in Harris County. Between 2016 and 2021, the proportion of youth neither in school nor working remained flat in Fort Bend and Harris counties, but fell by nearly 3 percentage points in Montgomery County.

One out of three Houston-area households experience ALICE

Because the Official Poverty Measure has such a low financial threshold, it is not a strong indicator to assess a population’s overall level of economic security. Although many believe that having a full-time job with a steady income allows someone to overcome poverty, the reality is that many full-time workers struggle to make ends meet. Indicators that take into consideration more realistic costs of living show that many working families are struggling. 

The acronym ALICE stands for Asset Limited, Income Constrained, and Employed. It represents families that are working but unable to afford all their basic necessities like housing, food, childcare, health care and transportation. ALICE income thresholds include a more realistic cost of living than federal poverty guidelines.

To put things in perspective, the Texas cost-of-living in 2021 was $60,660 for a family of four and $24,528 for a single adult, which are both significantly higher than the Federal Poverty Level of $24,528 for a family of four and $12,880 for a single adult. ALICE income thresholds across all three counties indicate that a more realistic “survival budget” for a family of four is at least $74,508. With Harris County’s median household income below this threshold, it is no surprise we see higher portions of ALICE households in Harris County than in either Montgomery or Fort Bend counties.

Nearly one in three Houston-area households were classified as ALICE (Asset Limited, Income Constrained, Employed) in 2021, which is slightly higher than the state (29%) and national rate (29%). The proportion of households classified as ALICE was 31% in Fort Bend, 32% in Harris, and 24% in Montgomery counties. This is on top of the percentage of households that live below the Federal Poverty Line.

45%

of Houston-area households struggle to afford their basic needs.

One million households (45%) in Houston’s three-county region either live below the poverty threshold or experience ALICE. While the number of households in poverty has stayed relatively flat over the last decade, the number of ALICE households has continued to increase, primarily as a result of rising costs and stagnant wages.

Social mobility in the Houston area

Social mobility, or intergenerational mobility, measures the percentage of children who grow up to earn more than their parents. To a great extent, it is a central component of the “American Dream.” It reflects the aspiration that through hard work and determination anyone can achieve their highest goals and fullest potential.

Per Opportunity Insights, more than 90% of children born nationally in the 1940s grew up to earn more than their parents. But over the past 50 years, this rate has been in decline, and is now only 50%, contributing to growing income inequality across the country. Research from Opportunity Insights shows upward social mobility largely depends upon where one lives during childhood and the type of resources their family possesses. Children raised in low-income families have a much harder time securing higher incomes in adulthood. 

In Harris County, for example, the average child born between 1978 and 1983 from a low-income family (defined as families at the 25th percentile of household income) earns a household income of $33,000 at age 35. A low-income child of the same birth cohort in Fort Bend County earns $35,000 a year, and in Montgomery County earns $36,000 a year. In all three cases, the average child barely improves upon the income of the household in which they grew up.

Within each county, one’s childhood ZIP code can tell a great deal about expected outcomes. On average, a child from a low-income family raised in Bellaire surrounded by a peer group from a higher-income bracket has a much greater chance of earning a higher household income (over $40,000) than a low-income child raised in Fifth Ward ($23,000). Similarly, a child from a low-income family who grew up in New Caney, between I-45 and I-59, earns a household income of $33,000 as an adult, compared to a low-income child from The Woodlands making around $50,000. About 40% of women who grew up in low-income families in Rosenberg reported being a teenage mom, compared to less than 10% of those growing up in low-income families in Sugar Land. 

Household income at age 35 for children of low-income parents by neighborhood/census tract where they grew up in Harris County.

Household income at age 35 for children of low-income parents by neighborhood/census tract where they grew up in Harris County
Source: Opportunity Atlas

Household income at age 35 for children of low-income parents by neighborhood/census tract where they grew up in Fort Bend County.

Household income at age 35 for children of low-income parents by neighborhood/census tract where they grew up in Fort Bend County.
Source: Opportunity Atlas

Household income at age 35 for children of low-income parents by neighborhood/census tract where they grew up in Montgomery County.

Household income at age 35 for children of low-income parents by neighborhood/census tract where they grew up in Montgomery County.
Source: Opportunity Atlas

A child from a low-income family, defined as families in the 25th percentile of household income, raised in Greater Third Ward and a child raised in North Forest have equal chances of earning a household income of $20,000 in adulthood. In addition to having a similar chance of being low earners, these areas also share having a higher chance of being involved with the criminal legal system.

Race and social mobility

Social mobility can affect subgroups in the same neighborhood in different ways, shedding light on some racial and class-based disparities. For example, the average Black child from a low-income family in Fort Bend County earns a household income of $27,000 in adulthood, compared to $44,000 for the average white child from a low-income family. Similarly, a Black child from a low-income family raised in Montgomery County earns a household income of $25,000, compared to a white child from a low-income family making $39,000.

Household income at age 35 for black children of low-income parents by neighborhood/census tract where they grew up in Fort Bend County.
Source: Opportunity Atlas
Household income at age 35 for white children of low-income parents by neighborhood/census tract where they grew up in Fort Bend County.
Source: Opportunity Atlas

This dataset has also shown downward mobility varies by race. Black boys who grow up in America, even from an affluent family and live in a high-income neighborhood, still earn less in adulthood than white boys with similar backgrounds.26 Moreover, white boys from affluent families are more likely to stay wealthy in adulthood while Black boys from similar families are more likely to become poor rather than retain their socioeconomic status as adults. 

The discrepancies illustrated by the Opportunity Atlas tool help to shed light on how different neighborhoods shape the development of human capital and support economic growth.27 A rigorous study found that the longer a child lived in a lower-poverty environment (defined as having a poverty rate below 10%) during childhood, the higher their chance to have better long-term outcomes.28 By moving families to a high mobility neighborhood that has a low poverty rate, more stable family structures, greater social capital, and better school quality, children from those families can make income gains in adulthood. The research suggests the need for a holistic approach to reduce racial disparities and improve upward mobility for all.

Helpful Articles from Understanding Houston

Resources

References:

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  13. National Academies of Sciences, Engineering, and Medicine; Division of Behavioral and Social Sciences and Education; Committee on National Statistics; Board on Children, Youth, and Families; Committee on Building an Agenda to Reduce the Number of Children in Poverty by Half in 10 Years; Le Menestrel S, Duncan G, editors. A Roadmap to Reducing Child Poverty. Washington (DC): National Academies Press (US); 2019 Feb 28. 3, Consequences of Child Poverty. Available from: https://www.ncbi.nlm.nih.gov/books/NBK547371/
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  26. Badger, Emily, et al., “Extensive Data shows Punishing Reach of Racism for Black Boys,” The New York Times, March 19, 2018.
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