Are the poor getting poorer? Yes and no.

Everybody knows the rich are getting richer. But are the poor getting poorer? It all depends on how far back you look.

Since the mid-1990s, the answer is no. Between 1995 and 1998, while the booming economy swelled the ranks of families earning $50,000 or more by about one-fifth, it also thinned the ranks of the poorest families (those earning less than $10,000) by one-sixth, according to a new study by the Federal Reserve. The rising economy has also brightened employment opportunities for even the least educated of young men. A study last fall for the National Bureau of Economic Research found that young men, including blacks, saw noticeable boosts to both employment and earnings in metropolitan areas with low unemployment.

But low-income families are worse off than they were in the late 1970s. According to a January report from the Economic Policy Institute and the Center on Budget and Policy Priorities, the poorest one-fifth of families earned an average $12,378 in 1997 - $560 below where they were in the late 1970s (adjusting for inflation).

Another point of debate is the impact of the gap between rich and poor. The last time the economy experienced such a prolonged boom - during the 1960s - the gap was narrowing. Today, it's rising, reminiscent of the boom during the 1920s, though not as exaggerated.

Some analysts point to the parallels between the two as a danger signal for today. But economists and historians disagree whether the income inequality of the 1920s triggered the stock market crash and the Great Depression. Historian Robert McElvaine of Millsaps College in Jackson, Miss., argues the income gap was the leading cause. "In the 1920s, we were becoming a mass-consumption society and you can't have a mass-consumption economy if the masses aren't getting enough," he says.

But John Weicher, former chief economist of the Office of Management and Budget, blames bad monetary policy for the crash and its aftermath. "It's not a good thing to have inequality by itself," he says. But if a booming economy can deliver a bigger piece of the pie to everyone, as it has in the last few years, the outlook isn't gloomy, he argues. "I'd combat poverty and let inequality worry about itself."

(c) Copyright 2000. The Christian Science Publishing Society

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