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U.S. Department of Housing and Urban Development

Subject: Estimated Median Family Incomes for Fiscal Year 1999

This memorandum transmits median family income (MFI) and income distribution estimates for Fiscal Year 1999 (FY 1999). They are calculated for each metropolitan and nonmetropolitan area using the Fair Market Rent (FMR) area definitions applied in the Section 8 Housing Assistance Payments program. The estimated median family income for the United States for FY 1999 is $47,800.

The FY 1999 MFI estimates are based on 1990 Census median family income estimates updated to 1999 using a combination of Bureau of Labor Statistics earnings and employment data and Census Divisional P-60 median family income data. Attachment 1 provides an explanation of the methodology used to develop these estimates. Attachment 2 provides median income estimates for States, and Attachment 3 provides local estimates of median family incomes. Attachment 4 provides the area definitions used for income limits.

Please note that the use of the HUD median family income estimates and income limits is subject to individual program guidelines covering definitions of income and family, family size, effective dates, and other factors. If your have any questions concerning these matters, please refer them to your Office's economist. Public inquiries may be referred to the HUD USER reference service, whose toll-free number is 1-800-245-2691. HUD median family income estimates are also available at the Department's World Wide Web site, which provides a menu from which you may select the year and type of data of interest.

Xavier de Souza Briggs
Deputy Assistant Secretary for Research, Evaluation and Monitoring, RR

Previous Editions are Obsolete
Distribution: W-3-1
HUD 21B (3-80)
GPO 871 902

Attachments

Attachment 1

HUD METHODOLOGY FOR ESTIMATING FY 1999
MEDIAN FAMILY INCOMES
(ECONOMIC AND MARKET ANALYSIS DIVISION,
OFFICE OF ECONOMIC AFFAIRS, PD&R)

FY 1999 HUD estimates of median family income are based on 1990 Census data estimates updated with a combination of local Bureau of Labor Statistics data and Census Divisional data. Separate median family income estimates (MFIs) are calculated for all Metropolitan Statistical Areas (MSAs), Primary Metropolitan Statistical Areas (PMSAs), and nonmetropolitan counties.

The income adjustment factors used to update the 1990 Census-based estimates of MFIs are developed in several steps. Average wage data from the Bureau of Labor Statistics (BLS) were available for 1989 through the end of 1996 at a county level, and were aggregated to the metropolitan area level for multi-county metropolitan areas. Census Divisional level median family and household income estimates were available from the Current Population Report (CPS) March 1990-98 surveys, which measure incomes from mid-1989 through mid-1997. These data were then used to update mid-1989 income estimates from the 1990 Census to the middle of 1997. The mid-1997 estimates were trended forward to mid-FY 1999 using a factor based on past P-60 Series trends. The step-by-step normal procedures as well as the exception procedures used are as follows:

1. Estimate mid-1989 local median family incomes using 1990 Census data. (Current HUD Section 8 Fair Market Rent (FMR) program definitions are used to define metropolitan areas, which are normally the same as Office of Management and Budget metropolitan area definitions.)

2. Calculate the BLS wage change factors for each Census Division for the 1989-96 period as follows:

3. Calculate the change in median family and household incomes for the nine Census Divisions for the 1989-1997 period using Census P-60 series data, as follows:

4. Compare the BLS and P-60 series Census Divisional factors calculated in steps 2 and 3 to provide a means of adjusting local BLS wage factor changes so that they aggregate to the same change factor as P-60 changes in family incomes plus contain an added year of CPS trending.

5. Calculate the 1989-97 increase factors for the individual metropolitan areas and nonmetropolitan counties by applying the Census Divisional index factors from step 4 to local BLS data.

6. Convert 1989-97 step 5 change factor to a 1989-1999 change factor by applying an annual trending figure of 4.0percent to update the mid-1997 estimate to mid-1998, and applying a 3.0 percent factor (3/4ths of 4.0 percent) to the mid-1998 to April 1, 1999 period. (Use of a trending factor is necessary because of lags in Bureau of Labor Statistics and P-60 Series data availability; the 4.0 percent factor is based on national income change patterns in recent years.)

(Step 5 adj. factor) * 1.04 * 1.03 = 1989 to mid-FY 99 adjustment factor

7. Calculate median family incomes for FY 1999 by multiplying the step 1 Census estimate of median family income by the income adjustment factor derived in Step 6.

1990 Census Median Family Income * Step 6 factor = FY 1999 MFI est.

8. For American Housing Survey areas, compare the MFI estimates from step 7 with median family income estimates based on post-1989 American Housing Survey (AHS) estimates of median family income updated to 1999. Past analysis shows that there is 95 percent likelihood that the true local median family income is within 6 percent of the AHS-based estimate. For areas where an AHS-based estimate differs by more than 6 percent from the Census-based estimate, local MFI estimates are increased or decreased so that they are within 6 percent of the AHS-based estimate.

9. Compare the 1999 MFI estimate with the 1998 MFI estimate. If the 1998 estimate is higher, set the 1999 estimate at the 1998 level. (This policy is applied except when estimates are revised with decennial Census data, and serves to minimize disruption in program activities due to temporary decreases in income estimates.)

In addition to the above procedures, constraints are placed on annual changes in the Census Divisional and BLS change factors based on past experience. These guidelines constrain increases for a small number of areas with unusually high increases.