Family Economics Review [1989, Volume 2, Number 2]

              Editor
Joan C. Courtless
Managing Editor
Sherry Lowe
Editorial Assistant
Francena A . Phillips
Family Economics Reyjewiswritten and
published each quarter by the Family
Economics Research Group, Beltsville
Human Nutrition Research Center,
Agricultural Research Service, United
States Department of Agriculture,
Washington, DC.
The Secretary of Agriculture has deter­mined
that the publication of this peri­odical
is necessary in the transaction of
the public business required by law of
this Department.
Contents maybe reprinted without per­mission,
but credit to family Economics
~ would be appreciated. Use of
commercial or trade names does not
imply approval or constitute endorse­ment
by USDA.
Family Economics Reyjew is for sale by
the Superintendent of Documents, U.S.
Government Printing Office. Subscrip­tion
price is $5 per year ($6.25 for
foreign addresses). Single issues cost $2
each ($2.50 foreign). Send subscription
orders, change of address, and single
copy requests to Superintendeni of
Documents, U.S. Government Printing
Office, Washington, DC 20402. (See
subscription form in back of this issue.)
Suggestions or comments concerning
this publication should be addressed to:
Joan C. Courtless, Editor, Eamily
Economics Reyjew, Family Economics
Research Group, USDNARS, Federal
Building, Room 439A, Hyattsville, MD
20782.
Famil
Econ
y .
OmlCS
Review
Vol. 2 No.2
To Our Readers:
Lydia Scoon's first article for Family Economics Review, "Utility
Expenditures of Homeowners," is found on pages 2-6 of this issue.
Ms. Scoon joined the Family Economics Research Group full time in
July 1986, after having served with us as an intern while pursuing her
degree in home economics at Howard University.
The other two articles are based on papers presented at the Outlook
for Families session of the 1989 Agricultural Outlook Conference:
Jeanette Brandt's paper, "Housing and Community Preferences: Will
They Change in Retirement?", pages 7-12, describes selected findings
from a Western Regional project- "Housing and Locational Decisions
of the Maturing Population: Opportunities for the Western Region."
Dr. Brandt is an Associate Professor at Oregon State University.
Jeanne Hogarth reports on findings from the Longitudinal Retirement
History Survey (U.S. Department of Health and Human Services) that
focus on the characteristics of households that are savers and dissavers
in retirement. The article, "Saving and Dissaving in Retirement," is
found on pages 13-17. Dr. Hogarth is an Associate Professor at
Cornell University.
Joan C. Courtless
Editor
Sherry Lowe
Managing Editor
May 1989
Contents
Features
2 Utility Expenditures of Homeowners
Lydia M. Scoon
7 Housing and Community Preferences: Will They Change in Retirement?
Jeanette A. Brandt
13 Saving and Dissaving in Retirement
Jeanne M. Hogarth
For Building u~·~ v!~,,..,.z,, ..... ._ • ·.J
Research Summaries
18 Child Care Benefits Provided by Employers
21 Education Level of U.S. Labor Force
21 Population Growth of the Middle Aged and Elderly
22 Rural and Farm Population
Regular Items
12 New Publications
24
PROPERTY OF THE
Updated Estimates of the Cost of Raising a Child LIBRARY
26 Cost of Food at Home
27 Consumer Prices
Vol. 2 No. 2 Family Economics Review
JUL 10 1989
University of North Carolina ·
at Greensboro
1
Utility Expenditures of
Homeowners
ByLydiaM. Scoon
Social Science Analyst
Family Economics Research Group
Household utility expenditures for U.S. home­owners
increased by 160% between 1973 and
1983. Because prices for utilities had increased
by 193% during this period, expenditures~
1l:rmS. were higher in 1973 than in 1983. Con­sumption
levels were down, and energy conser­vation
was being practiced. Utility expenditures
in 1983were highest among households with in­comes
of $40,000 or more, a homeowner be­tween
45 and 54 years of age, and a household
size of five or more. Electricity comprised the
largest share, 37%, of the utility dollar. The
various utility components differed in impor­tance
among subgroups of U.S. homeowners.
Findings that are related to patterns of con­sumption
can guide professionals who advise
families on managing their resources.
Department of Labor. Findings
reported here are based on
responses from over 11,000 urban
homeowners who reported positive
income, were complete income
reporters, and participated in the
Interview portion of the Survey in
1983. Renters were excluded from
this analysis because their utility ex­penses
were frequently embedded
in, and indistinguishable from, their
rental payments. Household expendi­tures
for total utilities and the five
components of this total (electricity;
natural gas; fuel oil and other fuels;
All Items and Utility Prices
[CPI-W 1967=100]
telephone services; and water, sewer­age,
and other services) 1 were
studied for a weighted sample.
Expenditures for All
Homeowners and
Subgroups
In 1983 the average utility expen­diture
by homeowners was $1,938,
9% of total expenditures (see table).
The largest portion of the utility
budget was allocated to electricity
(37%), followed by telephone ser­vices
(23%), natural gas (21%),
water (10%), and fuel oil (9%).
Variation in spending for total
utilities was found for households
with different socioeconomic charac­teristics
such as income, age of
householder, race, household size,
1Under "fuel oil and other fuels," BLS in­cludes
fuel oil, kerosene, bottled or tank gas,
wood, coal, and other fuels. Similarly, "water,
sewerage, and other services" includes piped­in
water, trash and garbage collection,
sewerage maintenance, water softening, septic
tank cleaning, and community antenna or
cable television services. Utility expenditures of U.S.
homeowners, as a share of total ex­penditures,
increased gradually over
the 1973-83 decade (from 7% to
9%) (5-9), despite dramatic price in­creases
in fuel oil and natural gas
(see figure). Utility prices increased
by 193% between 1973 and 1983-
faster than prices of all items
(123%)- in part, spurred on by the
oil embargo of 1973. In constant
1988 dollars, however, expenditures
for utilities were larger in 1973
($2,263) than in 1983 ($2,012). This
article examines utility expenditures
for U.S. homeowners and describes
how households adjusted to chang­ing
utility prices in the 1973-83
decade.
700,---------------------------------------------------~
600
500
400
300
Source of Expenditure Data 2oo
Data are from the 1982-83 Con-sumer
Expenditure Survey (CEX), a
continuing survey conducted by the
Bureau of the Census, U.S. Depart­ment
of Commerce, for the Bureau
100~~--~--~--L-~L-~--~--L---L_~ _ _L __ J_ __ L_~ _ _J
1973 76 79 82 85 88
of Labor Statistics (BLS), U.S.
2 Vol. 2 No. 2 Family Economics Review
Utility expenditures of homeowners, by household characteristics, 1983
Household charactertistics Mean utility Utilities as a Utility components (percent of utility expenditures)
expenditures percent of total
expenditures
Electricity Telephone Natural Water1 Fuel oil2
services gas
All households ......... .......... $1,938 9% 37% 23% 21% 10% 9%
Income level:
Under $10,000 • • ••• 0 ••••••••••••••• 1,549 14 33 22 23 11 11
$10,()()()-$19,999 ................... 1,747 11 37 22 21 10 10
$20,()()()-$29,999 •••••••••••••••••• 0 1,940 10 37 22 22 10 9
$30,()()()-39,999 .................... 2,049 9 38 24 20 11 7
$40,000 and over .............. ... .. 2,356 7 39 25 19 10 7
Age of householder (years):
Under 25 .. ... ...... .......... ..... 1,541 9 42 25 16 9 8
25--34 ••• ••• 0 ••• 0 ••••••••••••••••• 1,764 8 38 26 18 11 7
35--44 ••••••••••• 0 •••••• 0 •• ••••••• 2,112 8 39 23 20 11 7
45--54 ••••••••••••• 0 0 0 •••••••••••• 2,306 9 37 25 20 11 7
55-64 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,957 10 35 23 22 10 10
65 and older ........ .. ............. 1,682 12 33 20 23 10 14
Race:
White and other •• 0 0 •••••••••• 0 ••••• 1,924 9 37 23 21 10 9
Black ................ ...... .. ..... 2,103 13 34 25 24 10 7
Household size (members):
1 0 . 0 •• 0 ••• 0 •••••• •• • 0 •• ••••• •• 0 •• 1,435 11 31 23 26 10 10
2 ••• •• • •• ••• 0 0 ••••••••••• 0 ••••••• 1,779 9 35 23 21 10 11
3 •••••••• 0. 0. 0 ••••••• • •• ••• ••••• • 2,097 9 39 23 20 10 8
4 ••••••••••••••••••• •• 0 •••••••••• 2,207 8 40 23 20 11 6
5 0 ••• • •• • 0 ••••• •••••••••••••••••• 2,369 8 37 23 20 11 9
)3 or more • 0 •••• ••••••••••••• • ••••• 2,463 10 40 23 20 11 6
Region of residence:
Northeast • ••• ••• • 0 0 •• •• •• 0 ••• •• 0 •• 2,163 9 31 21 21 7 20
Midwest •• ••• •• ••• 0 •••••••••• •• ••• 2,006 10 33 21 32 10 4
South 0 • •• 0 ••••• 0 0 0 • ••••••• •• •• ••• 1,947 9 46 25 12 12 5
West ••• •• ••• •• •••••• ••• • 0 • •• 0 •• •• 1,612 7 32 28 23 15 2
1 Water includes water, sewerage maintenance, water softening, septic tank cleaning, and community antenna or cable television.
2 Fuel oil includes fuel oil kerosene, bottled or tank gas, wood, coal, and other fuels.
and region of residence. Higher­than-
average expenditures were
reported by households:
• with incomes over $30,000
• with a homeowner 35 to 54 years of
age
• with a black homeowner
• with three or more members
• with a residence in the Northeast or
Midwest
When considering utility budget
shares allocated for individual
utilities, electricity comprised the
largest portion (31% to 46%) for all
subgroups. Variation was greatest
for natural gas, which accounted for
12% of the utility budget in Southern
Vol. 2 No. 2 Family Economics Review
households and 32% in Midwestern
households. The share allocated to
water remained relatively constant
(9% to 11%) among all subgroups
except for region of the country.
Income. As income increased, so
did the total utility expenditure.
Households with before-tax income
of $40,000 and above had average
utility expenditures that were 50%
higher than households with income
less than $10,000. However, the per­centage
of the total budget allocated
to utilities decreased as income level
increased (14% to 7%). Income af­fected
individual utility expenditures
similarly, that is, expenditures gener­ally
increased as income increased.
Utility budget shares for natural gas
and fuel oil tended to decrease with
increasing income levels. Budget
shares for electricity and telephone
services were somewhat larger at the
higher income levels.
Age of householder. Households
headed by an individual between 45
and 54 years of age had the highest
income, total expenditures, and total
utility expenditures. This pattern
reflects the increased familial and
financial responsibilities carried in
the middle years, and contrasts with
the young householder with an entry­level
job and a burgeoning house­hold
and the older householder with
a fixed income and independent
children. The only individual utility
expenditure that increased with age
was fuel oil. Fuel oil is more com­monly
used in older housing, and
older householders are more likely
3
than younger householders to own
these older homes.
Older households, compared with
younger households, tended to
devote a greater share of their total
expenditures to utilities. Older
households allocated a larger share
of their utility budget to natural gas
and fuel oil, and a smaller share to
electricity and telephone services. In
contrast, households with a refer­ence
person under 25 years of age
had the largest utility budget share
for electricity ( 42%) and the
smallest shares for natural gas and
fuel oil. The younger homeowners
may be more likely to purchase new
homes that are more commonly
fueled by electricity.
Race. Utility expenditures in
black households averaged 9%
higher than in white households
($2,103, compared with $1,924), al­though
black households had 28%
lower income and 33% lower expen­ditures
for shelter than white house­holds.
Spending on utilities
comprised a larger share of total ex­penditures
in black households.
Black households allocated a greater
portion of their utility budget to
natural gas and telephone services
than did white households, whereas
white households allocated a greater
portion of their utility budget to
electricity and fuel oil than did black
households.
Household size. Utility expendi­tures
increased as the number of per­sons
in the household increased.
However, per capita utility expendi­tures
decreased as number in house­hold
increased, reflecting economies
of scale. The shares of the utility
budget allocated to telephone ser­vices
and water were relatively .
constant among families of all sizes.
Region of residence. Households
in the Northeast and Midwest spent
the most on total utilities ($2,163 and
$2,006, respectively). According to
the 1984 Residential Energy Con­sumption
Survey conducted by the
U.S. Department of Energy between
April1984 and March 1985, fuel con­sumption
levels per household were
47% to 52% greater in the Northeast
and Midwest than in the South and
4
West (4). Average prices for fuels
were higher in the Northeast and
South than in the Midwest and West.
The share of the utility expenditure
allocated to each utility varied by
region. For the electricity com­ponent,
the region with the largest
share was the South; for natural gas,
it was the Midwest; for fuel oil, it
was the Northeast; and for both
~elephone and water, the region
having the largest share was the
West.
Prices, Expenditures, and
Consumption Over Time
During the 1972-73 and 1980-83
periods, households responded to
changes in utility prices with changes
in consumption. When utility prices
rose slowly, annual expenditure in­creases
outpaced annual price in­creases,
an indication that increased
consumption was taking place. For
example, in 1973 and in 1983, prices
for utilities rose by 6% over preced­ing
years and expenditures increased
by 8% and 7%, respectively; thus,
consumption of utilities increased.
In contrast, in 1981 and in 1982,
years with double-digit inflation for
utilities, expenditures increased but
not as rapidly as prices. This would
suggest that consumption was
suppressed during, years of high
inflation. Most annual price changes
for individual utilities affected
consumption similarly.
When utility prices are rising,
homeowners may look for ways to
conserve energy and lower utility
consumption. Two of the most com­mon
fuel conservation strategies
have been to add insulation and
weather stripping (see "Energy
conservation improvements,"
(box, p. 5). Additionally, the use of
"energy-efficient mortgages" has
allowed some homeowners to
achieve energy savings and improve
the quality of their home. Related
legislation that could affect
household energy consumption and
expenditures is described in the box
onp.6.
REFERENCES
1. Geller, HowardS. 1987. National
Appliance Efficiency Standards:
Utility and Consumer Impacts. Paper
presented at the meeting of Utility
Demand-Side Management Pro­grams.
[Houston, TX, June 1987.]
2. Spirer, Janet E. 1988. Energy Effi­cient
Mortgage Programs: A Research
Study Prepared for American Gas
Association and National Propane
Gas Association.
3. U.S. Congress, lOOth Cong., lOth
sess., 1987. National Appliance
Energy Conservation Act of 1987.
Public Law 100"12, 101 Stat. 103.
[Approved March 17, 1987.]
4. U.S. Department of Commerce,
Bureau of the Census. Statistical
Abstract of the United States. [107th
ed.]
5. U.S. Department of Labor,
Bureau of Labor Statistics. CPI
Detailed Report. (January 1974
through January 1984, and January
1988.)
6. . 1986. Consumer
Expenditure Survey: Interview Survey,
1982-83. Bulletin 2246.
7. .1985. Consumer
Expenditure Survey: Interview Survey,
1980-81. Bulletin 2225.
8. . 1978. Consumer
Expenditure Survey Series: Interview
Survey, 1972 and 1973. Report 455-3.
9. . 1985. 1982-83
Interview Survey Public Use Tape
Documentation.
10. U.S. Department of Energy,
Energy Information Administration.
1987. Residential Energy Consump­tion
Survey: Consumption and Expen­ditures,
April I984 Through March
1985, Part 1: National Data.
11. . 1986. Residential
Energy Consumption Survey: Housing
Characteristics 1984. fS
Vol. 2 No. 2 Family Economics Review
Energy Consumption and
Conservation
U.S. Department of Energy's
Fuel Expenditure Data
The Residential Energy
Consumption Survey (RECS),
conducted periodically by the
Department of Energy since 1978,
provides consumption levels and ex­penditures
of major fuels used by
households (natural gas, electricity,
fuel oil, wood or kerosene, and
liquefied petroleum gas) by demo­graphic
characteristics. Data, ex­cept
for kerosene and wood fuel,
are based on actual bills, obtained
with permission of the households,
from the companies supplying the
energy. (Data for kerosene and
wood fuel are based on respondent
recall.) Estimations of consumption
and expenditures are made for
households that pay for fuels in­directly
in rental fees. Results from
the study undertaken between April
1984 and March 1985 (10, 11) are
highlighted below.
• Consumption over time. In 1984,
average household consumption
of major fuels varied little from
the 5-year-low level reached in
1982.
• Electricity and appliances.
Household use of electricity
declined even though the use of
major electrical appliances in­creased.
Improvements in the ef­ficiency
of major appliances and
technological breakthroughs,
such as low-energy microwave
ovens, were contributing factors.
• Home heating fuels. Between
1978 and 1984, there was a
decrease in the percentage of
homes heated with fuel oil or
kerosene (from 22% to 14%).
The preferred heating fuels in
Vol. 2 No. 2 Family Economics Review
homes built in 1980 or later were
natural gas (36%) and electricity
(40%). In 1984,55% of all house­holds
used natural gas as the
main heating fuel, 17% used
electricity, 14% used fuel oil or
kerosene, 8% used wood, 4%
used liquid petroleum gas, and
2% used another fuel (or none).
The number of households with
one or more kerosene space­heating
units increased from
3 million in 1982 to 5 million in
1984.
• Air-conditioning. In 1984, 60%
of all households had air­conditioning,
up from 56% in
1978. About 50% of air­conditioned
homes were being
cooled by central air-conditioning
equipment in 1984, compared
with 41% in 1978. Also in 1984,
heat pumps were in 12% of all
homes, up from 6% in 1978.
There is no evidence that higher
income families keep their air­conditioned
homes cooler than
lower income families. However,
affluent families had their air­conditioners
operating more
often than less affluent families.
Households in warmer regions of
the country maintained an
average air-conditioned tempera­ture
of 75 degrees Fahrenheit,
compared with 71 degrees
Fahrenheit for households in
colder regions.
• Energy conservation improve­ments.
The two most common
conservation features found in
single-family housing units in
1984 were ceiling or roof insula­tion
(79% of units) and caulking
or weatherstripping (70% of
units). Fewer than 50% of these
housing units had storm windows
on most of their windows, and
even fewer (39%) had storm
doors on most of their doors. The
incidence of conservation
improvements tends to increase
with age of householders, peak­ing
at 35 to 44 years, and then
declining for householders age 45
and older. Also, the percentage
of homes having conservation im­provements
increased as family
income increased. Conservation
measures were less prevalent
among nonwhite than white
householders and among those
who failed to fmish high school
than those who did finish.
• Budget plans. Few householders
used the budget plans that are
available from utility companies
to balance out payments during
seasonal surges. In 1984, budget
plans were employed by 17% of
households using natural gas,
15% of households using fuel oil,
9% of households using liquid
petroleum gas, and 6% of house­holds
using electricity for heating
or cooling.
• Housing structure. The younger
the structure, the less fuel was
consumed. Households living in
houses built in the eighties spent
approximately $900 for fuel, com­pared
with $1,100 to $1,200 spent
by households living in older
houses. Households in single­family
dwellings (attached and
detached) consumed more fuel
than households in multiple­family
dwellings or mobile homes.
Energy-Efficient Mortgages and
Improvement Loans
In a climate of rising energy
prices, owning or obtaining an
energy-efficient home may result in
savings to the consumer in the form
of lower energy bills and an
increased market value of the home.
Several secondary mortgage
lenders, such as the Federal Home
5
6
Loan Mortgage Association
(Fannie Mae) and the Federal
Home Loan Mortgage Corpora­tion
(Freddie Mac), are facilitating
consumers' efforts toward energy
improvements by buying_ energy­efficient
mortgages and Improve­ment
loans from primary lenders.
The energy-efficient mortgage is a
mortgage based upon the assump­tion
that by reducing one of the
homeowner's major, fiXed operat­ing
expenses- energy costs­homeowners
may transfer the
savings to other fiXed expenses,
such as the mortgage payment.
Lenders may allow a borrower
12% more mortgage dollars and
thus enable the homeowner to
purchase a larger home or qualify
for a first home. The Federal
Housing Administration and the
Veterans' Administration (2) also
are involved in buying these
energy-improvement loans.
The energy-efficient mortgage
has not yet gained wide accep­tance
among all participants in the
mortgage loan process. Primary
lenders profit little from it, and
appraisers and real estate agents
need to become more aware of the
implications for energy efficiency
and energy savings. Several State­level
programs have achieved
some success (2). The Alliance to
Save Energy (a nonprofit,
bipartisan coalition of business,
labor, government, and consumer
representatives) has con~ucted
research and demonstration pro­jects,
and has carried out p~licy
advocacy and public education
programs in efforts to increase the
effic.i ent use o f energy. 2
Energy Legislation Concerning
Consumers
The National Appliance Energy
Conservation Act (3) was passed
into law in March 1987 following a
decade of legislative debate
prompted by the energy shortage
of the seventies. The 1987 law
places energy conservation sta~­dards
on most of the large appli­ances
manufactured and sold in
the United States. These standards
take effect between 1988 and 1993
and cover refrigerators and
freezers, central air-conditioners
and heat pumps, clothes washers
and dryers, direct heating equip­ment,
dishwashers, furnaces,
kitchen ovens and ranges, pool
heaters, and television sets.
Appliances designed solely for use
in recreational vehicles and other
mobile equipment are excluded.
Affected appliances must
demonstrate a 15% to 25%
improvement in energy efficiency.
As a result of the legislation,
appliance prices may increase,
making benefits to the consume~
not readily apparent. However, 10
the long run, higher appliance
prices should be offset by lower
gas and electricity expenses. The
American Council for an Energy-
Znte publication "Your Home Energy
Portfolio" (a pamphlet with a home ene~gy
efficiency checklist and sectio?s concemtng
auditing and benefits of creattng an energy·
efficient property) is available free upon
request from Alliance to Save Energy, P.O.
Box 57200, Washington, DC 20037.
Efficient Economy, an organiza­tion
of conservation economists,
projects reduced operating costs
at about three times the increased
cost of the product. It is estimated
that by the year 2000, appro~ate­ly
$3.8 billion in energy costs will
be saved annually, or $300 per
houseghbhold (1). Peak electricity
demand should decrease, because
appliances account for 2~% of
U.S. electricity consumption.
The Tax Reform Act of 1986
indirectly yields savings to consu­mers
on utility bills for gas,
electricity, water, and telephone
service. Utility companies have
received the following two conces­sions
through this legislation:
(1) utility tax rates for these
companies decreased fro~ 46% to
40% in 1987, and to 34% 10 1988;
and (2) in 1987, funds previously
set aside to pay taxes at the old
rate of 46% (a total of $15 billion
nationwide) were released to the
utility companies. Balanc~d
against the withdrawal of IOVest­ment
tax credits and the slowed
rate of property depreciation (two
tax loopholes the industry pre­viously
enjoyed), the net effect of
these tax changes to utility com­panies
will be a savings that must
be passed on to consur.ne.rs. .
Public utility commiSSions 10
nearly every State are contempl_a_t­ing
adjustments in consum~r utihty
rates. Some utility compames have
suggested using the savings from
the Tax Reform Act of 1986 for
capital improvements or as a fund
reserved for postponing future
rate hikes.
Vol. 2 No. 2 Family Economics Review
Housing and Community
Preferences: Will They Change
in Retirement?
By Jeanette A. Brandt 1
Associate Professor
Oregon State University
Most persons approaching retirement have a
choice- to remain in their current residence or
to make a change in housing or in the com­munity
in which they live. A Western Regional
survey of over 5,000 maturing men and women
was undertaken to determine if housing and
community characteristics preferred for the
first 10 years of retirement are different from
the current location. Most respondents
preferred to own a single-family detached
house in the community and State where they
currently live. Although 87% currently owned
their home, 92% wanted to own their home in
retirement. In contrast, 84% currently lived in
a single-family detached home, compared with
74% who expressed a preference for this type
of structure in retirement. As length of
residence in a community increased, the per­centage
preferring to remain there in retire­ment
also increased. The majority of
respondents preferred to retire in their respec­tive
States; over three-quarters of those in
Oregon and Arizona wanted to remain there.
Professionals who advise families need to be
aware of the housing and community options
most likely to be preferred by those nearing
retirement.
Introduction
The elderly population, previously
treated as one market ( 4), is now
looked at as three distinct markets:
The young-old (65 to 74 years) are
generally active retirees who are still
married; the old (75 to 84 years) are
slowing down and often widowed;
and the very old (age 85 and older)
frequently need help in daily
functioning. Impact from the
1This article is adapted from a paper
presented at the Annual Agricultural Outlook
Conference in November 1988 in Washington,
DC.
Vol. 2 No. 2 Family Economics Review
young-old segment has been
strongest because there are more of
them and they have substantial in­come
with which to carve out new,
independent lifestyles. Currently, no
role models are available to guide
these people in their decision
making (6). Litwak (3) suggests that
the young-old experience some
social pressure to relocate at retire­ment
if they are married, in good
health, and have enough retirement
mcome.
What are maturing Americans'
housing and community preferences
for their first 10 years of retirement?
How do their current housing and
community characteristics compare
with their retirement preferences?
Will they prefer to relocate or to age
"in place"? To address these ques­tions,
a survey was conducted as part
of a Western Regional project titled
"Housing and Locational Decisions
of the Maturing Population: Oppor­tunities
for the Western Region."
Eight Western States (Arizona,
Colorado, Idaho, Nevada, Oregon,
Utah, Washington, and Wyoming)
and Missouri participated in the sur­vey.
Regional data from the nine
States were used in the analyses.
Methodology
Description of the questionnaire.
The Western Regional W-176 Tech­nical
Committee developed a 10-
page mail questionnaire based on a
review of previous retirement litera­ture.
The Total Design Method for
Mail Surveys by Dillman (1), a sur­vey
method used to elicit a higher
response rate, was employed in
designing the questionnaire and in
collecting the data.
Sample selection. Land-grant
university employees age 40 and
older were selected as the popula­tion.
The sample was selected from
two age strata- 40 through 49 years
of age and 50 years of age and older.
One-third of the sample was random­ly
selected from the younger age
stratum and two-thirds from the
older age stratum. A higher propor­tion
of the older age group was
sampled because they were closer to
retirement and may have developed
a better defined set of criteria to use
in making retirement decisions.
Data collection. In October 1987
the questionnaire was distributed
through campus mail; off-campus
employees received their question­naires
in postpaid envelopes. A
followup letter was sent 1 week after
the initial mailing to everyone in the
sample who had not responded. A
second followup letter and replace­ment
questionnaire were sent
2 weeks later to persons who had not
yet responded. Response rates by
States ranged from 71% to 84%, and
a total of 5,662 questionnaires were
returned from the nine States.
Analysis. Housing and com­munity
characteristics as defined in
this study can be found in the box on
page 8. Frequency distributions were
used to describe the respondents
and current and preferred housing
and community characteristics. Two­way
crosstabs with the chi-square
statistic were used to determine
relationships between current and
preferred housing and community
characteristics. Three-way crosstabs
involving demographic characteris­tics,
current housing and community
characteristics, and preferred hous­ing
and community characteristics
were also employed. The level of
significance was set at .05.
7
Housing and community characteristics
For current location and preferred location 1
Tenure:
Rent or own
Structure type:
Single-family house (detached from any other) or other structure type (town house; apart­ment;
mobile home on owned or rented lot; buildings of duplexes, triplexes, or quadplexes).
(Preferred retirement choice included recreational vehicles.)
County by size of largest city:
500,000 or more
150,000 to 499,999
50,000 to 149,999
10,000 to 49,999
2,500 to 9,999
Less than 2,500
(Zip codes determined county of residence, then county was classified by size of largest city.)
State:
Arizona
Colorado
Idaho
Nevada
Oregon
Utah
Washington
Wyoming
Missouri
(Preferred retirement choice also included "other.")
For current location only
Number of years in present county:
Years lived in or near the county in which current home is located.
For preferred location only 1
Retire in or near present community:
Strongly prefer present community
Somewhat prefer present community
Somewhat prefer somewhere else
Strongly prefer somewhere else
1 For the first 10 years of retirement.
Findings
Description of respondents.
Median age of the respondents was
52 years, with a range of 40 to 80
years. The majority were male, mar­ried,
and highly educated (table 1).
More than half of the respondents
held masters or doctorate degrees.
Two-thirds reported total family in­come
above $35,000. Therefore, the
8
sample has above-average socio­economic
characteristics. Findings
reported here reflect current hous­ing
and future preferences for a
select population, not necessarily
attributable to older Americans in
general.
Current housing and community
characteristics. Most homes were
owner-occupied and single-family
detached houses (table 2). The
current county of residence has been
home to the respondents for a mean
of 21 years, with a range from less
than 1 year to 70 years. Each of the
nine States is represented, compris­ing
between 9.5% and 13.3% of the
sample. Most respondents currently
lived in counties with the largest city
having a population of 10,000 to
49,999.
Preferred retirement housing
and community characteristics.
Home ownership and single-family
detached houses were preferred for
the first 10 years of retirement
(table 2). Over 60% of the respon­dents
preferred to live in counties
with the largest city having a popula­tion
of 10,000 to 149,999. This com­pares
with over 80% currently
residing in such communities. Of the
nine States in the survey, only
Oregon and Arizona were preferred
by a percentage greater than that
currently residing in the State. Other
States, not included in the survey,
were preferred for retirement by
23% of the respondents.
Current housing tenure and
tenure preference. Current home­owners
and renters both preferred
to own their homes during the first
10 years of retirement (table 3, p.10).
The two groups differed (p < .05) in
that current renters are more likely
than current owners to prefer
renting their retirement housing.
In addition, owners and renters
differed in their retirement tenure
preferences when controlled for age,
sex, marital status, educational level,
or income (each p< .05). As age in­creased,
current renters' ownership
preference decreased (88.7% to
62.0% ), whereas current home­owners'
ownership preference
remained relatively stable (96.5% to
95.1%). More male renters than
female renters preferred ownership;
however, both male and female
owners preferred home ownership
during the first 10 years of retire­ment.
Home ownership was
preferred by both married and un­married
owners; whereas among
renters, more married than unmar­ried
respondents preferred home
ownership.
Vol. 2 No. 2 Family Economics Review
Table 1. Demographic characteristics of preretirement men and
women
1
(5,662 respondents]
Characteristic
Age (years):
Percent Characteristic
Education:
40-44 ... ..... .. . . .... . 18.6
18.1
24.2
20.2
17.9
High school or less . .... . .
45-49 ..... . .. . ... . . .. . Beyond high school ..... .
50-54 . .. ...... . ... ... . Bachelor's degree . ... . .. .
55-59 .. .. . . . .. ...... . . Masters degree ....... .. .
60 and over . . .... . . . . .. . Doctorate degree . . ... .. .
Sex: Income:
Male . . .. .. . .. . .... . . .. . 58.6
38.9
Less than $25,000 . .. .... .
Female .. ...... . ....... . $25,000 - $34,999 .. . . . .. .
Marital status: $35,000- $49,999 ..... . . .
Married . .... . . . .... . .. . . 78.6
20.3
$50,000 - $64,999 ....... .
Unmarried 2
........... • • $65,000 or more .. . ..... .
1 Not all respondents reported each characteristic.
2 Includes never married, separated, divorced, and widowed.
Table 2. Housing and community characteristics, current and
preferred for retirement
1
(5,662 respondents]
Characteristic
Tenure:
Own . ......... .. ..... . ........... ......... .. .
Rent . . . ... . ... . .. ....... . .. ....... . . . ... .... .
Structure:
Single-family houses .... ......... . ......... ... .
Other structure types . .......... ... .... . .. ..... .
Number of years in present county:
Less than 2 .. ... . ... . ..... . . .... ........ . . ... .
2-5 ...... .. .. .. . .... . . ... .. . . . .......... . . . .
6-10 . .... .. ..... . . .... .. . . ........ . ....... . .
11 - 15 ... .. . ..... . . . . . .. . ........ .. ...... . . . .
Over 15 .... . .... . . .... . . .. . . . .. . ... . . . . .. ... .
Retire in or near present community:
Strongly prefer present community .... ... . .. ... .. .
Somewhat prefer present community ..... .. .. . .. .
Somewhat prefer somewhere else . . . ... ... .. .... .
Strongly prefer somewhere else ... ........... ... .
County by size of largest city:
500,000 or more ........ . .... ............. .... .
150,000- 499,999 ... . . ... .. .... . .... . ....... .. .
50,000- 149,999 ...... .. . .. ... ... . .. . . ........ .
10,000-49,999 ...... ...... . . . ... .. . . .. . .. .... .
2,500 - 9,999 .......... . ..... . . . ......... . . . .. .
Less than 2,500 .. . ...... . . . . . . . . .. . . .. ..... . . . .
State:
Arizona ... . .. . ... . .. ... . .... . . . .. ... . . . ..... .
Colorado ... ...... . .. ..... . ........ .. . . .... . . .
Idaho . ..... . ... . . . ..... ..... .. ............. . .
Nevada . . ....... .. .... .... . ... . .. . ... .. . .... .
Oregon .... .. .. ........ . ... ....... . . .. .. .. .. .
Utah ............... .. ... . . . ......... .. ..... . .
Washington . .... . ....... . .. .... . ............. .
Wyoming ... . ... . ... ......... . ..... ... .. . . ... .
Missouri ..... ... . . . ... . . . . ..... .... ....... . .. .
Other State . . ... . ...... ..... .. . ... ........... .
1 Not all respondents reported each characteristic.
2 Not applicable.
Vol. 2 No. 2 Family Economics Review
Current
~
87.2
9.4
84.3
14.7
2.2
8.2
11 .7
15.4
62.2
(2)
(2)
(2)
(2)
.2
11 .9
27.1
54.6
2.7
1.1
9.5
11.1
10.9
10.5
11 .6
11.2
13.3
10.6
11.3
(2)
Percent
14.1
18.7
11 .9
17.1
35.0
16.5
16.5
26.1
19.8
17.8
Retirement
preference
92.3
6.0
74.2
22.0
(2)
(2)
(2)
(2)
(2)
34.9
31.0
18.5
14.6
9.7
14.3
30.5
31.6
4.9
3.7
11 .2
9.9
8.6
6.0
12.5
7.5
10.3
5.0
6.1
22.9
As educational level increased,
current renters were more likely to
prefer ownership during the first 10
years of retirement (table 3). In con­trast,
retirement tenure preferences
expressed by current owners were
similar regardless of educational
level.
Current housing structure type
and structure type preference.
Respondents currently living in
single-family detached houses
preferred to live in single-family
detached houses during the first 10
years of retirement, and those living
in other structure types preferred to
live in other structure types (table 4,
p.lO). When the groups were con­trolled
for age, sex, marital status,
educational level, or income level,
there were the following exceptions:
(1) When those who currently
resided in other structure types were
controlled for age, those in the
youngest age category indicated a
slight preference for living in single­family
houses. This preference
steadily decreased with age, until
only about one in four respondents
60 years and older currently living in
other structures would have
preferred to live in a single-family
detached house during their first 10
years of retirement. (2) When those
who currently resided in other
structure types were controlled by
income, slightly over half of those in
the fourth highest category ($50,000
to $64,999) preferred a single-family
house for retirement. When those
who currently resided in single­family
houses were controlled for
education, the preference toward
single-family houses increased with
educational level (79.4% to 85.8%).
Overall, those currently residing in
single-family houses were more like­ly
to prefer a similar type structure
for retirement than those currently
living in other structure types.
Number of years in county where
present home is located and
preference to retire in or near
present community. Respondents'
preferences to retire in or near the
present community differed (p < .05)
by their length of residency in or
near the current county. Most of
9
Table 3. Tenure preference, by current housing tenure
Preference for ownership during
first 10 years of retirement
Characteristic Number of Current owners Current renters
respondents
All respondents .... . ..... 5,490 96.0% 78.4%
Age (years):
40-44 ··· ···· ·· ··· ·· ·· ···· · 1,235 96.5 88.7
45-49 .... .... ...... .. ... .. 1,071 96.9 83.2
50-54 .... ... ...... .... .... 1,286 95.3 77.7
55-59 ......... ..... .... ... 1,116 95.9 65.1
60and over .... .... ..... ... . 750 95.1 62.0
Sex:
Male .... .. ........ . .... . .. . 3,234 96.2 82.1
Female . . .... .. ... . .... .. ... 2,140 95.6 75.3
Marital status:
Married .... .. ........ .. .. .. 4,344 96.0 84.7
Unmarried ........ . . . ....... 1,111 95.9 72.9
Education:
High school or less ... . ...... . 777 95.1 71.7
Beyond high school .... .... .. 1,025 95.8 75.6
Bachelors degree .. ....... .. . 661 95.6 82.0
Masters degree .. . ... .. .. . . . . 949 96.8 78.1
Doctorate ..... .. ... .... ... . 1,929 96.0 86.3
Income:
Less than $25,000 . .. . .. •. ... . 911 94.0 73.7
$25,000- $34,999 .. ......... . 912 95.9 79.0
$35,000- $49,999 .. .. ... .... . 1,439 97.3 77.5
$50,000 - $64,999 .. .. ... .. ... 1,098 95.7 88.2
$65,000 or more .. ... .. ... ... 990 95.9 92.7
Table 4. Structure type preference, by current housing structure
Characteristic
All respondents . ... ...
Age (years):
40-44 ....... ... ..... ...
45-49 .... ......... .. ...
50-54 .... ..... ... ... ...
55-59 ... .. ..... .. ..... .
60 and over ...... ... .....
Sex:
Male ......... ... ........
Female .... . .... . ... . .. . .
Marital status:
Married ... ............ ..
Unmarried .. . ... .. ... . . . .
Education:
High school or less .... . . ..
Beyond high school ... ....
Bachelors degree .... ... ..
Masters degree .. . .... . ...
Doctorate .. .. .. .. .... ...
Income:
Less than $25,000 . .. ... .. .
$25,000- $34,999
$35,000- $49,999 ..... .. ..
$50,000 - $64,999 .. ... .. ..
$65,000 or more .... ......
Number of
respondents
5,387
1,230
1,053
1,264
1,091
716
3,185
2,093
4,262
1,092
744
1,011
650
941
1,906
884
895
1,413
1,085
973
Preference for living in single-family structure
during first 10 years of retirement
Currently living in-
Single-family Other2
structure 1
83.5% 40.0%
83.5 51.7
82.0 45.7
83.3 38.1
84.4 33.1
85.2 26.4
86.8 44.8
78.3 35.3
85.1 42.9
74.9 36.8
79.4 31.8
79.9 41.7
84.1 45.0
85.0 39.3
85.8 44.5
76.7 40.0
82.7 35.8
85.6 40.8
85.7 50.8
83.6 35.4
1 Single-family house detached from any other house.
2 Other structure types, Including town house, apartment, mobile home on owned or rented lot, buildings of duplexes,
triplexes, or quadplexes.
10
those reporting "less than 2 years in
the present county'' stated a prefe­rence
for retiring elsewhere. As
respondents' residency in the
present county increased, their
preference for remaining there in
retirement increased:
Number of years in
present county
Prefer to retire in
or near present
community
Less than 2 . ..... .. .
2to5 .. .. ....... ..
6to 10 ..... .. . .. ..
11 to 15 .. .. . .... ..
Over 15 ... . ... . .. . .
44.4%
51.3
58.0
60.7
72.5
When respondents' length of
residency in the present county and
their preference for remaining there
or moving away were controlled for
age, sex, marital status, educational
level, or income level, there were a
few variations to this general pat­tern.
The most consistent variation
was observed with regard to marital
status. Regardless of number of
years in current county, a higher per­centage
of unmarried than married
persons preferred to relocate to
another county after retirement.
Current State and State
preference. The majority of the
respondents in eight of the nine
States preferred to retire in their
respective States. Only in Wyoming
did a majority hope to retire out of
State. Considerable variation in the
percentages of respondents who
want to retire in their own States was
reported, as follows:
Oregon ... . ....... .. . . . .
Arizona . .... . . . . .. ... . .. .
Colorado . .. ...... . ... . . .
Utah .. .. . .... .. . ....... .
Idaho ..... .. ...... ..... .
Washington ....... . . . ... .
Nevada .... ............ .
Missouri . .. . ... . ... . .... .
Wyoming . . . ............ .
78.4%
75.7
69.0
63.6
60.2
57.0
53.7
53.3
44.9
Respondents varied in their retire­ment
State preferences when con­trolled
for age, sex, marital status,
educational level, or income, but no
consistent patterns of preference are
apparent.
Vol. 2 No. 2 Family Economics Review
Discussion
During the first 10 years of retire­ment
most maturing respondents in
this study preferred to own their
single-family detached houses in the
communities and States in which
they currently resided. Therefore, it
would seem that business entre­preneurs
targeting retirees in the
first 10 years of retirement should
direct their strategies toward local
markets. Riche ( 6) reported that the
major reason for business " ... failure
to capture a large share of a bur­geoning
[retirement] market lies in
the preferences of the elderly: most
of them want to stay in their current
homes or at least in their com­muniti~
s." Smart (8) also believed
the retirement market to be complex
and diverse. There are a wide variety
of data sources that can be used to
develop additional specific findings
regarding the maturing markets (2).
In examining the retirement
preferences of the respondents
studied here, it becomes apparent
that instead of one homogeneous
market segment for the 65- to 74-
year-old age group, there are several
submarkets with housing and com­munity
retirement preferences that
can be targeted. Maturing
homeowners want to own their
retirement housing, regardless of
age, sex, marital status, educati~nal
level, or income. They have achteved
America's cultural housing norm (5)
and prefer to keep it during those
early years of retirement. Renters
(even though 78.4% preferred to
own their retirement housing) ex­hibit
additional differences that need
further investigation. Renters who
are younger, male, married, and
more educated seem to express
stronger preferences for home
ownership.
Another American cultural hous­ing
norm, that of living in single­family
detached houses, has the
retirement preference vote of those
who currently reside in them
(83.5%). Interestingly, females, the
unmarried, and those with incomes
Vol. 2 No. 2 Family Economics Review
below $25,000 who currently live in
single-family houses show less pref­erence
for them in retirement than
others who have achieved this norm.
Respondents currently residing in
other structure types, for the most
part, prefer them for retirement.
Respondents with a longer
residency in a community and State
are more likely to prefer that same
community and State for their retire­ment
location. Community prefer­ence
becomes consistently greater as
length of residency increases, reg~rd­less
of respondent's age, sex, mantal
status, educational level, or income.
Demographic characteristics are of
little use in explaining State retire­ment
preferences because few con­sistent
patterns emerged among the
States. Respondents' retirement
State preferences may reflect a
general trend. Scattered locations in
western Oregon and Arizona have
been defined as destination retire­ment
counties," ... counties in which
the net in-migration (1970 to 1980)
of people aged 60 and over equaled
at least 15% of the people in the
county of that age in 1980" (7).
Respondents in two States, Oregon
and Arizona, show greater prefer­ence
to retire in-State, and Oregon
and Arizona are the two most
preferred retirement States of the
respondents in this study.
In conclusion, retirees can be
dichotomized as owners or renters,
residents of single-family houses or
residents of other structure types,
and stayers or movers. Researchers
need to combine demographic
characteristics to reveal more
descriptive, encompassing sub­market
information. Who wants to
own single-family houses, other
structure types? Who wants to rent
single-family houses, other structure
types? What are the preferences of
those who plan to relocate within the
same State, move to another State?
Do those who plan to retire in the
same community plan to move, and,
if so, what are their housing
preferences?
References
1. Dillman, Don A. 1978. Mail and
Telephone Surveys. The Total Design
Method. John Wiley and Sons,
New York.
2. Galant, Stephen M. 1980. Future
directions for elderly migration
research. Research on Aging 2(2):271-
280.
3. Litwak, Eugene. 1985. Helping
the Elderly: The Complementary
Roles of Infonna/ Networks and
Fonnal Systems. The Guildord
Press, New York.
4. Meyer, Judith W. 1987. County
characteristics and elderly net
migration rates. Research on Aging
9(3):441-452.
5. Morris, Earl W., and Mary
Winter. 1978. Housing, Family, and
Society. John Wiley and Sons, New
York.
6. Riche, Martha F. 1986. Retire­ment's
lifestyle pioneers. American
Demographics 8(1):42-52.
7. Rural retirement areas. 1986.
Urban/and 45(1 1):32-33.
8. Smart, Eric. 1983. With a matur­ing
population, age is only part of
the picture. Urban/and 45(5):32-33. ~
11
New Publications
The following publications are for
sale from the Superintendent of
Documents, U.S. Government Print­ing
Office, Washington, DC 20402.
(202) 783-3238:
• Who's Helping Out: Support Net­works
Among American Families.
SN803-044-00001-5. October 1988.
$2.25 (44 pp.)
This report from the Census Bureau
gives data on how millions of us
receive cash support payments from
persons living outside our immediate
households. It includes formal and in­formal
support networks, and it covers
regular cash payments, including
court-ordered alimony and support
payments to children and ex-spouses,
as well as voluntary, regular payments
to children living outside the
provider's household.
• Composition of Foods: Fast
Foods-Raw, Processed, Prepared.
SN516-000-8108-7. AH 8-21.
September 1988. $11.00 (194 pp.)
This is a Human Nutrition Informa­tion
Service publication, which serves
as a basic reference for data on the
nutrients in fast foods. Data are
presented for 166 fast foods and re­lated
products. Most fast-food items
are given in the ready-to-eat form as
served by fast-food establishments.
A single copy of the following is
available free from the Consumer In­formation
Center. Write to S. James,
Consumer Information Center-F
P.O. Box 100, Pueblo, CO 81002.
• Guide to Health Insurance for
People With Medicare.
512V. 1989 (34 pp.)
Medicare information in this booklet
was mandated by the Medicare
Catastrophic Coverage Act of 1988.
12
Because these changes are to be
phased in over the next few years, the
guide will be updated annually to
reflect changes in the program as they
occur. Included are hints on shopping
for private health insurance, types of
private health insurance, and what
Medicare pays and doesn't pay. Listed
in the back of this guide are the ad­dresses
and telephone numbers of
each of the State agencies on aging,
and the State insurance departments.
It was developed jointly by the
National Association of Insurance
Commissioners and the Health Care
Financing Administration of the U.s·.
Department of Health and Human
Services.
A single copy of the following is
available free from the Economic Re­search
Service. Write to Information
Staff, Economic Research Service,
USDA, Room 208, 1301 New York
Avenue NW, Washington, DC 20005-
4788.
• Agricultural Workforce House­holds:
How Much Do They Depend
on Farming?
AlB 547. July 1988. (4 pp.)
This is an Economic Research Service
agricultural background report, which
includes who is affected and how by
agricultural policy. The report iden­tifies
the number of households and
individuals most affected by changes
in farm employment and income. It is
aimed at informing those debating
farm policy about the highly interre­lated
nature of policymaking.
Vol. 2 No. 2 Family Economics Review
Saving and Dissaving in
Retirement 1
By leanne M. Hogarth
Associate Professor
Cornell University
There is evidence that retirees dissave during
retirement, although levels of dissaving appear
to be low. Saving and dissaving behaviors of 450
persons with life expectancies of 17 to 26 years
were studied during the first 8 years of retire­ment
(1971-79). Almost half (46%) of these
respondents were savers who maintained or
added to the value of their financial assets.
Savers were less likely to live in an urban area
but more likely to have higher income, have
higher amounts of appreciation in the market
value of their homes, be married, and be male.
Nearly one-fifth (18%) of the respondents were
dissaving at rates that could not be supported
over their expected lifetimes. These severe dis­savers
had lower annual incomes, lower
amounts of appreciation in the market value of
their homes, and less education; they were less
likely to be married, but were more likely to live
in an urban area and be female. Studies on con­sumption
and expenditure patterns could sup­plement
these findings on dissaving practices to
provide needed information on appropriate
financial management techniques in retirement.
The life cycle hypothesis posits
that households will attempt to main­tain
a constant level of consumption
during their lifetimes. To do this,
they borrow during the early years of
household formation, repay debts
and save during peak earning years,
and then dissave during retirement
years. It follows that households an­nuitize
assets at retirement and draw
down their assets in proportion to
their life expectancy.
Although this approach is intui­tively
appealing, it has been shown
that households do not behave
exactly according to this hypothesis.
Many researchers have found that al­though
dissaving does occur during
retirement, it is at a lower level than
1 This article is adapted from a paper
presented at the Annual Agricultural
Outlook Conference in November 1988 in
Washington, DC.
Vol. 2 No. 2 Family Economics Review
expected, given the life cycle
hypothesis predictions.
Dissaving in retirement does not
represent "bad" financial manage­ment.
Judicious liquidation of finan­cial
assets, along with skillful
management of remaining assets to
generate income, is appropriate for
retired households. However, dissav­ing
at rates that cannot support the
household for its expected lifetime is
a dangerous practice.
Evidence From Life Cycle
Research
Numerous researchers have
studied the life cycle hypothesis
(1, 8, 11), focusing on the "savings"
portion (5, 10, 12) as well as the
"dissaving" portion (2, 3, 9).
Empirical evidence using "macro"
data (i.e., data aggregated at the
national level) shows some support
for this dissaving-at -retirement
hypothesis, albeit at low levels.
Davies (3) found that persons 65
to 85 years of age dissaved at a rate
of 2.9% to 3.7% per year, a rate sig­nificantly
lower than the rate of 7%
to 9% predicted by the life cycle
hypothesis. Similarly, Mirer (9)
found a median dissavings rate of
1.2%.
Bernheim (2) used the 1969-79
Longitudinal Retirement History
Survey (LRHS)2 to study bequeath­able
wealth. He determined that
wealth declined at rates of 3% to 4%
per year for single persons and at
rates of about 1% to 2% for married
couples. He concluded that indivi­duals
and couples of retirement age
2u.s. Department of Health and Human
Services, Social Security Administration.
dissaved an insignificant fraction of
their total resources. Housing,
however, was included in the wealth
measure. Although this is a be­queathable
asset, it is not an asset
retirees usually manage in the same
sense that they manage financial as­sets.
Also, during the time of data
collection, real estate values esca­lated.
The low rate of wealth decline
may be attributed, in part, to these
higher housing values.
Since the life cycle hypothesis
combines saving and consumption
patterns, another way to approach
life cycle research is to look at con­sumption.
Kotlikoff, Spivak, and
Summers (7), also using data from
the LRHS, studied the ratio of con­sumption
during old age to lifetime
consumption as a measure of the
adequacy of lifetime savings. Their
results indicate that over 90% of
married couples can afford old-age
consumption levels of at least 80%
of their lifetime consumption level,
and that 73% of couples could
afford to consume at a higher level
than their lifetime consumption
level, but only until age 88.
Life cycle theory posits that per­sons
will consume less and work
more if they expect to live longer.
Hammermesh ( 4) examined the
effects of life expectancy on the
timing of retirement and consump­tion
during retirement. He found
that increased longevity had not
brought about spending cuts that
would enable people to maintain
their real consumption over longer
lifetimes. If such is the case, then
asset "de-cumulation" should take
place at a more rapid rate as a
person ages.
In summary, some evidence exists
that retirees dissave during retire­ment,
although levels of dissaving ap­pear
to be low. The LRHS provides
a wealth of information for studying
changes in a set of retirement-age
households over a 10-year period
from 1969 to 1979. The LRHS in­cluded
men and unmarried women
(single, widowed, divorced, or
separated) who were ages 58 to 63 in
1969; initially, there were 11,153
respondents. This article reports
13
findings from the LRHS that focus
on the characteristics of households
that are savers and disssavers in
retirement.
Characteristics of savers
and Dissavers
In order to control for the length
of retirement, respondents were
studied who were working in 1969
but who reported themselves retired
in 1971. (The potential age range in
1971 was 60 to 65 years.) Data from
1979 were used to determine savings
or dissavings during retirement. Be­cause
data from both time periods
were needed, only respondents with
data from 1969 through 1979 were in­cluded.
Of necessity, this report is
on surVIvors.
Savers were those households
that maintained or added to the
value of their financial assets from
1971 to 1979. Financial assets in­clude
the value of savings bonds,
stocks and bonds, savings accounts,
checking accounts, and cash value of
life insurance. Dissavers were those
households for which the value of
financial assets in 1979 was less than
the value in 1971.
Over half of the households
studied (54%) were dissavers. On
average, dissavers had lower in­comes
than savers, $7,900 and
$9,356, respectively (see table 1).
However, dissavers started retire­ment
with about $7,000 more in
financial assets than savers. Among
retirees who owned their homes, dis­savers
reported lower amounts of
appreciation in the market value of
their homes. Dissavers were more
likely to be single and more likely to
have experienced the death of a
spouse. Nearly equal proportions of
savers and dissavers reported them­selves
in good health, so it seems
that medical expenses may not have
been the major cause of dissaving.
Dissavers were more likely to live in
an urban area and were more likely
to be female. They had slightly less
education than savers and were
slightly younger. Nearly equal
proportions of savers and dissavers
were white.
14
Disproportionate Dissavers
As stated earlier, dissaving in and
of itself is not considered poor finan­cial
management if it is done in
proportion to remaining life expec­tancy.
To determine if households
were dissaving faster than expected
actuarially, values of financial assets
in 1979 were calculated by estimat­ing
the household's life expectancy
based on age of head, using actuarial
tables. Life expectancy was used to
create an annuity factor, which was
applied to the value of financial
assets in 1971. The actual value of
financial assets in 1979 and the calcu­lated
expected value were then com­pared.
For example, if a household
head was 62 years old in 1971, his
life expectancy would be about 21
years (actuarial values based on age
and sex were used to determine life
expectancy). By 1979, the household
should have spent down or dissaved
8/21sts (38%) of their financial as­sets
if they were annuitizing them,
leaving 13/2lsts ( 62%) of the
Table 1. Savers vs. dissavers, 1971-79
Variable1
Number of respondents ........... . .
Income . . . ... ..... . . . . .. .. . . . .... .
Initial value of assets in 1971 . .. .. ... .
House appreciation (1971-79) ....... .
Marital status (1 =married) . . . .. .. . .. .
Widow (1 =widowed) .... . ......... .
Health (1 =good) ........ . ... . ..... .
Residence (1 =urban) ... . ..... . . . . . .
Sex (1 =male) . . ...... . ... . .... . . . .
Race (1 = white) ..... .. ... . . . ...... .
Proportion saving ... . . .. . .... ..... .
Education (years) ... . ... . ...... . . . .
Age (years) ....................... .
1 For the year 1979 unless otherwise noted.
Saver
218
$9,356
21,298
20,888
0.89%
.18
.68
.43
.94
.94
.46
10.12
71 .37
Table 2. Disproportionate dissavers, 1971-79
Variable1
Number of respondents . ....... . .. .
Income ... . ..... ...... .. . . .. .... .
Initial value of assets in 1971 .. .... . .
House appreciation (1971-79) . . .... ·.
Marital status (1 =married) . ........ .
Widow (1 =widowed) ... . .. .. ..... .
Health (1 =good) . . ...... . . . . . . . .. .
Residence (1 =urban) . ..... .. .. . . . .
Sex (1 =male) .. ............ . .... .
Race (1 =white) .. . ... .... . . ...... .
Proportion with severe dissaving . .. . .
Education (years) . . . .. . ...... . . .. .
Age (years) .......... . . .... .. . .. . .
Severe dissavers2
87
$6,438
33,545
8,606
0.49%
.21
.66
.78
.74
.91
.18
9.50
71.14
1 For the year 1979 unless otherwise noted.
21ncludes dissavers who spend down assets faster than expected actuarlally.
31ncludes savers and dlssavers spending down assets at expected rate or slower.
Dissaver
253
$7,900
28,887
8,495
0.64%
.25
.69
.71
.84
.96
10.01
71 .20
384
$9,058
23,523
15,506
0.81%
.22
.69
.54
.89
.95
10.19
71 .31
Vol. 2 No. 2 Family Economics Review
original amount in 1971. The ex­pected
value of the assets (in the
example, 62% of financial assets in
1971) was then compared to the
reported value in 1979 to determine
if dissavings had occurred at rates
slower or faster than expected.
Nearly one of five households
were dissaving at rates that could not
be supported over their expected
lifetime. Severe dissavers (those
spending down assets faster than
expected) had lower annual incomes
than others ($6,438 vs. $9,058) but
started retirement with about
$10,000 more in financial assets
(see table 2, p. 14). Among home­owners,
severe dissavers reported
lower amounts of appreciation in the
market value of their homes. Over
half of those households reporting
disproportionate dissaving were
single-person households. In con­trast,
only one of five households
reporting saving or appropriate rates
of dissaving was a single-person
household. Nearly equal proportions
were widowed, and nearly equal
proportions reported being in good
health. Severe dissavers were more
likely to live in urban areas and to be
female. They were also likely to have
fewer years of schooling and to be
younger than those not dissaving at
disproportionate rates. Severe dis­savers
were slightly more likely to be
of a minority race.
Changes Among Financial
Assets in Retirement
Managing assets in retirement re­quires
a combination of liquidation
and portfolio adjustment to generate
interest and dividend income. Asset
management becomes an especially
important issue for households that
are asset-rich and cash-poor (e.g.,
those holding a large proportion of
their wealth in nonfinancial assets
such as real estate). The ability of a
retired household to generate in­come
from assets depends, among
other things, on the type of assets
held and the household's risk
preferences, knowledge of financial
products and markets, and general
skill in financial management.
Mean values of financial and
other assets held in 1971 and 1979,
and mean differences of these
values, are reported in table 3. The
aggregate data in columns 1 and 2
suggest that, on average, the nominal
dollar value of assets held in savings
bonds and the cash value of life in­surance
declined, whereas the value
of assets in stocks, checking and
savings accounts, and the value of
owned housing rose. In the aggre­gate,
the values of total financial
assets and total assets rose.
Information on the mean dif­ference
between the value of assets
in 1979 and 1971 is presented in
column 3, table 3. Over the 8 years
studied, on average, balances in
Table 3. Mean value of assets, 1971 and 1979
[in nominal dollars]
Item
U.S. savings bonds ...... .. ... .
Stocks and bonds ............ .
Savings accounts ............ .
Checking accounts ........... .
Life insurance (cash value) ..... .
Total financial assets .. .... .. . .
House ... . .. . . . .. . .. ... .... . .
Total assets .. .... ..... . . .. . .
1971
$1,252.27
6,253.86
6,949.65
839.10
7,338.35
23,903.60
15,336.44
39,078.40
Vol. 2 No. 2 Family Economics Review
1979
$935.68
7,529.37
13,248.00
1,005.06
5,809.26
25,862.40
29,415.10
55,086.63
Mean
difference
-$305.23
1,269.65
-83.19
267.15
-1,490.70
-529.66
14,219.36
13,636.89
checking accounts rose, as did the
value of owned housing, stocks, and
the value of total assets. Assets held
in savings bonds, savings accounts,
and life insurance declined on
average, as did the value of total
financial assets.
The decline in the value of held
savings bonds may be a reflection of
the difference between the rate of
return on these bonds and the rate
of inflation. As inflation eroded the
value of the accruing interest,
retirees may have decided to cash in
these bonds and use or reinvest the
proceeds. The decline in the value of
life insurance might be expected,
since the elderly may feel less of a
need for life insurance to support de­pendents
and since life insurance
paid very low rates of return relative
to inflation in the midseventies. The
decline also may reflect beneficiary
payments.
Savings balances were lower, on
average, but only by $83. The distri­bution
of this variable was skewed;
approximately 28% of households
reported a lower savings balance in
1979 than in 1971. In some cases,
the difference was quite large; in
about 10% of the cases, the savings
balances dropped over $30,000
during the 8-year period.
Total financial assets dropped
about $530 over the 8-year period.
This dissavings is consistent with the
life cycle theory, but the magnitude
is too small to represent any signifi­cant
dissaving. Given the average
age of the sample in 1971 (63 years)
and an average life expectancy of 20
years, the life cycle hypothesis would
predict that the average individual
would have spent down 8/20ths of
her or his assets during the period
under study. At the mean, this would
translate into spending down about
$9,500 of the $23,900 in financial
assets reported in 1971. The increase
in the average value of total assets
($13,637) most probably reflects the
rise in housing values over the
8 years.
The higher balances held in
checking accounts can be inter­preted
as an indication of the high
liquidity preferences of retirees. It is
15
important to note that during the
period under study (1971-79),
checking accounts were interest­free.
It was not until the Monetary
Control Act of 1980 that "NOW" and
"interest checking" accounts came on
the scene. Thus, these retirees were
choosing to forego interest in order
to remain more liquid.
The higher amounts of stocks
held in 1979 versus 1971 may reflect
a choice by retirees to participate in
a dividend reinvestment program
and/or postpone cashing in on their
capital gains. Ordinarily, retirees
might be expected to end such rein­vestment
programs and take the
dividends as cash income. However,
in the early years of retirement,
retirees rationally may decide to
have an investment goal of con­tinued
growth in order to buffer
their future income, in 15 or 20
years, against the effects of inflation.
The shift out of reinvestment
programs and/or out of growth­oriented
stocks and into income­producing
investments may occur
later on in retirement.
The increase in the value of the
house is expected because these
households could not, or did not, tap
the equity in their homes. It is also
interesting to note that the value of
housing for persons in this sample in­creased
by a factor of 1.92 from 1971
to 1979. Over the same time period,
the CPI for housing rose by a factor
of 1.84.
As seen in table 4, retirees' asset
portfolios vary depending on
whether or not the house is included
as an asset. In 1971, 81% of retired
households in the LRHS subsample
were homeowners; by 1979, 77%
were homeowners. Since most
retired households do not use their
homes to generate income, the fol­lowing
discussion will focus on the
portfolios excluding the value of the
home. Over the 8 years studied,
retirees increased the proportion of
assets they held in savings accounts
and decreased the proportions of
assets held in other investments
(table 4). This could be interpreted
as a strong preference for safety and
liquidity, at the expense of higher
rates of return. However, "savings
accounts" also include certificates of
deposit, which in the late seventies
were paying double-digit rates of
return. Unfortunately, it is not
known what proportions of savings
were in passbook accounts versus
other, higher yield, savings
instruments.
Table 4. Asset holdings of retired households
Item
Mean value .... . .. . .... . .. .
Median value . ... . ..... ... .
U.S. savings bonds . . ..... . .
Stocks and bonds .. ... .. .. .
Savings accounts . . ..... . . .
Checking accounts ...... . . .
Ufe insurance (cash value) . . .
House •••• • • 0 •• • • 0 •• • •• •••
16
At retirement {1971) 8 years later {1979)
Including Excluding Including Excluding
housein house housein house
portfolio portfolio
Nominal dollars
$44,775
33,342
3.2
6.5
28.3
4.6
18.2
39.2
$28,372
15,107
4.7
8.5
49.3
8.2
29.3
$66,630
50,103
1.8
5.6
34.8
3.8
9.8
44.2
$34,208
18,528
2.6
7.8
66.1
6.6
16.9
Discussion
The findings reported here focus
on saving and dissaving behaviors
during the first 8 years of retirement.
Since life expectancies ranged from
17 to 26 years after retirement, the
first 8 years may not provide enough
evidence to capture all the factors
affecting saving and dissaving
behaviors. With 5% of persons 65
years and over in nursing-care
facilities, compared with 22% of per­sons
85 years and over, dissaving
may be better studied at later ages in
retirement.
Nearly half of the retired
households continued to save and
build assets in retirement. Con­sidering
that this study covered the
the first 8 years of retirement,
households may have continued to
save in response to uncertainty
regarding future health expenses
and longevity. Given that this cohort
was in their twenties during the
Great Depression of the thirties, the
value and importance of the "nest
egg" and of savings may be quite
high. These cohort effects may
preclude generalizing these results
to future generations of retirees.
On the other hand, nearly one­fifth
of the sample were dissaving at
rates that could not be sustained
during their expected lifetimes.
Health was not a significant deter­minant
of severe dissaving, nor was
becoming widowed. Income,
however, was found to be a signifi­cant
determinant of dissaving and
dissaving at disproportionate rates.
If retired households could increase
the income generated by their assets,
there is less likelihood that they
would need to dissave, or at least
would be able to dissave at rates that
would not totally deplete their
resources. Although retirement
savings are not venture capital, there
are safer and higher return alterna­tives
to passbook savings accounts.
Retirees may benefit from exposure
to and education about these
alternatives.
The findings regarding initial
value of assets have some policy
implications. Higher initial values of
Vol. 2 No. 2 Family Economics Review
assets are associated with lower
probabilities of saving during retire­ment
but with positive increases in
the differences betWeen actual and
expected values of assets. That is,
although households may not be
actively saving, they are spending
down at an appropriate rate. There­fore,
policies should be developed
that would provide incentives for
building savings for retirement, such
as continued support of tax-deferred
savings plans.
The large proportion of assets
held in owner-occupied housing
( 44% of total assets in 1979) may be
a problem during the later years of
retirement when more liquid assets
have been spent down. It is likely
that consideration of owner­occupied
housing as an asset to be
managed will become more impor­tant,
especially in later years of
retirement. The appreciation rates
for well-maintained houses have
tended to keep pace with inflation,
making owned housing a "growth
investment." At the time of the
LRHS (in the seventies), tapping
home equity through reverse annuity
mortgages or sale and lease-back
arrangements was impossible (if not
unthinkable). In the eighties,
however, the choice set for making
housing a more "manageable" asset
has expanded. Although equity con­version
is one way to manage this
asset, there are other options for
older homeowners that may provide
alternative streams of income,
services, or a shifting of resources
and/or expenditures (e.g., accessory
apartments and home sharing). The
feasibility of these options is depen­dent
in part upon the attitudes of the
retirees and in part on Federal,
State, and local policies and regula­tions
with regard to shared
appreciation, zoning, and other
issues.
Given some of the limitations of
the LRHS data, it is not possible to
determine exact patterns of asset
"decumulation" during retirement.
However, the data give some clues
as to how retirees use their assets.
First, retirees seem to have shifted
money out of low-return, fixed-
Vol. 2 No. 2 Family Economics Review
income assets, such as savings bonds
and life insurance. This finding with
regard to life insurance may reflect
the collection of beneficiary pay­ments
more than the re-arrangement
of assets. Second, retirees have
strong preferences for safety and
liquidity as evidenced by their
holdings in checking and savings
accounts. However, there is no way
to spot movement within categories.
For example, retirees could have
moved money out of passbook
savings accounts and into certificates
of deposit, which paid better-than­inflation
interest rates in the late
seventies. There is no way to know if
the proceeds from life insurance
were reinvested or used for con­sumption,
although there is evidence
that a decline in life insurance is as­sociated
with an increase in savings.
Similarly, there is no way to know to
what degree retirees adjusted their
stock portfolio to provide for
desired levels of risk, income, and
growth.
It would be interesting to know if
these households experienced any
lifestyle or level-of-living changes in
order to maintain some savings. Con­sumption
and expenditure patterns
of retired households need to be
studied in conjunction with dissaving
practices in order to determine if
lifestyle changes are occurring.
Finally, the findings point to a
need for additional information on
appropriate financial management
techniques in retirement, including
information on dissaving strategies.
Unfortunately, little research has
been done to clarify appropriate
liquidation and other dissaving
strategies.
References
1. Ando, Albert, and Franco
Modigliani. 1963. The "life cycle"
hypothesis of saving: Aggregate im­plications
and tests. American
Economic Review 53(1):55-84.
2. Bernheim, B. Douglas. 1987.
Dissavings after retirement: Testing
the pure life cycle hypothesis. In Svi,
Bodie, John B. Shaven, and David
A Wise, editors. Issues in Pension
Economics. University of Chicago
Press, Chicago, IL.
3. Davies, James B. 1981. Uncer­tain
lifetime, consumption, and dis­saving
in retirement. Journal of
Political Economy 89(3):561-577.
4. Hammermesh, Daniel S. 1982.
Life Cycle Effects on Consumption
and Retirement. National Bureau of
Economic Research Working Paper
Series, No. 976; Cambridge, MA.
5. Hemming, R.C.L. 1977. The ef­fect
of state and private pensions on
retirement behavior and personal
capital accumulation. Review of
Economic Studies 44(1):169-172.
6. Hogarth, Jeanne M. 1988. Saving
and dissaving in retirement, In Vicki
Hampton, editor. Proceedings of the
34th Annual Conference of the
American Council on Consumer
Interests, pp. 19-25. [University of
Missouri, Columbia, MO.]
7. Kotlikoff, Laurence, A via
Spivak, and Lawrence Summers.
1982. The adequacy of savings.
American Economic Review
72(5):1056-1069.
8. Lydall, Harold F. 1955. The life
cycle in income, saving and asset
ownership. Econometrica 23(2):131-
150.
9. Mirer, Thad. 1980. The dissaving
behavior of the retired aged.
Southern Economic Journal
46(4):1197-1205.
10. Munnell, Alicia H.1976.
Private pensions and savings: New
evidence. Journal of Political
Economy 84(5):1013-1032.
11. Shorrocks, A.F. 1975. The
age-wealth relationship: A cross
section and cohort analysis. Review
of Economics and Statistics
57(2):155-163.
12. Sobol, Marion Gross. 1979.
Factors influencing private capital
accumulation on the "Eve of retire­ment."
Review of Economics and
Statistics 61(8):585-593.l6
17
Research Summaries
Child Care Benefits
Provided by
Employers
In March 1987, 26.1 miilion
children under age 14lived in homes
where the lone parent or both
parents were in the labor force. With
mothers becoming a more important
part of the work force, the potential
demand for child care is immense.
Although most American employers
still do not play an active role in the
care of their workers' children, some
employers are becoming aware that
the difficulties their employees face
in making child care arrangements
may result in absenteeism, tardiness,
low morale, and productivity
problems.
To determine what employers
were doing to help their employees
who are parents, the Bureau of
Labor Statistics conducted a special
nationwide survey (Survey of
Employer-Provided Child Care
Benefits) of approximately 10,000
business establishments and govern­ment
agencies in the summer of
1987. The sample was weighted to
represent the Nation's 1.2 million
nonagricultural establishments with
10 or more employees. The Survey
measured direct and indirect child
care benefits or services provided by
employers. Direct benefits consisted
of employer-sponsored day care, as­sistance
with child care expenses,
child care information and referral
services, counseling services, and
18
other child care benefits. Indirect
benefits consisted of work schedule
or leave policies that can aid child
care - flextime, voluntary part time,
job sharing, work at home, flexible
leave, and other such policies.
Overall Benefits
Approximately 11% of employers
reported providing at least some
employees with direct child care
benefits (table 1). Large establish­ments
(250 employees or more)
were far more likely than small ones
to offer such benefits to their
employees; government agencies
were much more likely than private
employers to do so.
About three-fifths of employers
reported that at least some of their
workers could take advantage of in­direct
benefits (work schedule or
leave policies) related to child care.
Such policies may or may not have
been initiated with child care in
mind. Small establishments were just
as likely as large ones to provide
liberal work schedule and leave
policies. Private, service-sector firms
were more likely than either goods­producing
firms or government
agencies to have indirect benefits
available to employees.
T~~le 1. ~rovision of child care benefits and work schedule policies
a1dmg ch1ld care, by establishment size and industry, summer 1987
Percent providing:
Characteristic of establishment Child care Work
benefits or schedule Neither
services policies
Total •••••• • • • • • ••• • ••• • ••••• • •••• 0 0 11 61 37
Size:
10-49 employees • • ••••• •• ••• 0 0 ••• 9 62 37
50- 249 employees • 0 •• ••• •••••••• • 15 58 38
250 employees or more 0 0 •••• •• ••• • • 32 59 32
Industry:
Private (total) .... . ..... .... .... .... 10 61 37
Goods-producing ....... .. . . .. . .. . 6 51 46
Service-producing •• • •• ••• ••••• 0 • • 11 65 34
Government • 0 ••••• • •••••• •••• •• •• • 26 57 40
Source: Hayghe, Howard, 1988, Employers and child care: what roles do they play? Monthly Labor Review 11 t (a) :38·44,
U.S. Department of Labor, Bureau of Labor Statistics.
Vol. 2 No. 2 Family Economics Review
Direct Benefits
Direct child care benefits most
frequently provided by employers
were child care information and
referral services (ranging from main­taining
a list of child care providers
to providing staff assistance in locat­ing
and evaluating the providers)
and counseling services (table 2).
Only 2% of establishments pr?vided
day-care facilities, either on-stte or
at a nearby location; this percentage
included day care businesses that
made their facilities available to the
children of their employees. An addi­tional
3% of employers assisted with
child care expenses (flexible spend­ing
accounts, contractual.agree­ments
with day care provtders that
allocate space for employees'
children or give them discounts,
vouchers to defray child care
expenses, etc.).
Type and frequency of child care
benefits varied by firm size. Rela­tively
few establishments with 10 to
49 employees offered any benefits:
2% sponsored day care, 4% pro­vided
information and referrals, and
4% offered counseling services. In
contrast, 5% of firms with at least
250 employees sponsored day care,
9% provided financial assistance,
14% provided information an? refer­rals,
and 17% offered counselmg
services.
Direct child care support benefits
were reported by very few employers
in goods-producing establish~ents.
This reflects the fact that relatively
few women work in these industries.
In the summer of 1987, 28% of
payroll employees in private goods­producing
establishments were
women, compared with 53% in
private service-producing estab­lishments
and 51% in government
agencies. .
Among government agenctes
(Federal, State, and local), the
proportion supporting some form of
day care and information, referral,
or counseling services was much .
higher than in private industry. Legts­lative
and executive initiatives have
promoted this support. For instance,
Michigan has established a pilot day
care program to serve the children
of State employees, and Californi~
has mandated its agencies to provtde
information and referral services to
State employees, as well as the
general public.
Indirect Benefits
Work schedule policies that can
aid parents in meeting their child
care responsibilities are far more
common than child care support
benefits. Not only is the cost per­ceived
as less, but such policie~ do
not involve the legal and techmcal
complexities of establishing and
maintaining day care centers or
financial assistance benefits.
Flextime and flexible leave are
the most common forms of work
schedule and leave policies cited by
employers as being of possible aid to
workers with child care problems
(table 3, p. 20). A~out.43% oft~e
establishments mamtamed flexttme
policies, and an equal proportion
had flexible leave arrangements.
Flextime was more common in
smaller establishments (10 to 49
employees) and service-pro~~cing
establishments. The avatlabthty of
flexible leave varied little by size of
establishment but was higher in
service-producing establishments.
About 35% of employers allowed
full-time employees to shift tempo­rarily
to part-time jobs on~ volun- .
tary basis, with correspondmg cuts m
Table 2. Provision of type of child care benefit or service, by establishment size and industry, summer 1987
Percent providing:
Characteristic of establishment Employer- Assistance Child care Counseling
sponsored with child care information services Other1
day care expenses and referral
Total . . .. . .... ... . ... . ... . ... · · · · · · · · · · · · 2 3 5 5
Size:
10-49 employees ... . ......... ... . . · · · · 2 2 4 4 1
50- 249 employees . ... · · · · · · · · · · · · · · · · · 2 5 6 8 2
250 employees or more . . . ............ .. . 5 9 14 17 3
Industry:
Private (total) . ... ........ . . ......... · · · · 2 3 4 4 1
Goods-producing ... . ... ........... · · · · 0 2 2 3 1
Service-producing .... .... .......... · · · 2 4 5 5 1
Government . . . .. · · · · · · · · · · · · · · · · · · · · · · 9 3 16 18 2
· cause of overtime or illness of the child and bringing the child to work. . .
!Includes payments for extra child care eKpenses Incurred be Be I tttto\·38-44 US Department of Labor Bureau of Labor Statistics.
Source: Hayghe, Howard, 1988, Employers and child care: what roles d o th ey P1 a y ? Monlhl~ Labor yew ...., . , · · '
Vol. 2 No. 2 Family Economics Review 19
Table 3. Provision of type of work schedule or leave policy aiding child care, by establishment size and
industry, summer 1987
Percent providing:
Characteristic of establishment Flextime Voluntary Job Work at Flexible Other1
part time sharing home leave
Total ••••• 0 •••••• • 0 •••••• 0 0 •• • • •• 0 0. 0 0. 43 35 16 8 43 2
Size:
10-49 employees ••• 0 ••• 0. 0 •• • ••••• 0 0 45 36 16 9 44 2
50- 249 employees •• •••• 0 0 0 •••••••••• 38 32 14 6 40 3
250 employees or more • 0 •••• •••• •• 0 ••• 35 25 16 4 40 3
Industry:
Private (total) ......................... 44 35 15 9 43 2
Goods-producing ............ ..... ... 31 22 9 8 37 1
Service-producing 0 •• 0 0 ••••••• 0 ••••• 0 48 39 17 9 45 2
Government 0 •• • •••• • • ••• 0. 0 ••• 0 ••• 0 0 38 27 24 4 44 7
11ncludes ad hoc policies specific to an establishment or agency.
Source: Hayghe, Howard, 1988, Employers and child care: what roles do they play? Monthly Labor Review 111 (9):38·44, U.S. Department of Labor, Bureau of Labor Statistics.
pay and benefits. These employees
might work fewer hours at their
usual job or transfer to another posi­tion
that was part time. This practice
was more prevalent among small
than large establishments. It was also
more prevalent among service­producing
firms. Job sharing (one
full-time job divided into two part­time
jobs held by different people)
was offered by about 16% of
employers. There was very little
variation in the extent of this policy
by establishment size; however, it
was more prevalent in government
agencies than in industry.
20
Conclusion
Because the 1987 Survey was a
one-time effort, it is difficult to ex­trapolate
future trends from these
data. However, only 2% of the estab­lishments
that reported no child care
benefits or flexible work schedule
policies said they were considering
doing something in the future. This
appears to contradict the more op­timistic
reports and comments by ex­perts
in the field of child care, which
indicate employers are generally be­coming
more supportive of the child
care needs of their workers.
Source: Hayghe, Howard, 1988, Employers
and child care: what roles do they play?
Monthly I.abor Review 111(2):38-44, U.S.
Department of Labor, Bureau of Labor
Statistics.
Vol. 2 No. 2 Family Economics Review
Education Level of
U.S. Labor Force
The educational attainment of the
U.S. labor force increased signifi­cantly
between 1978 and 1988, ac­cording
to data from the March 1988
Current Population Survey (CPS).1
In 1988, 26% of workers age 25 to 64
were college graduates, up from
21% in 1978. An additional 20% of
workers had completed 1 to 3 years
of college, up from 16% in 1978. As
the proportion of workers with for­mal
education beyond high school
increased over the past decade, the
proportion without a high school
diploma declined sharply, from 24%
in 1978 to 15% in 1988. The propor­tion
ending their formal education
with a high school diploma has
remained stable at about 40%.
Although differences remain in
the proportion of college graduates
among whites, blacks, and Hispanics
in the labor force, all three groups
have achieved significant increases
in educational attainment. In 1988,
26% of whites had attended 4 or
more years of college (vs. 21% in
1978). Comparable figures for blacks
were 15% in 1988 (up from 10% in
1978) and 13% for Hispanics (up
from 9%). Over the decade, the
proportion of labor force par­ticipants
who had not completed 12
years of education dropped 17 per­centage
points (to 23%) for blacks,
12 percentage points (to 40%) for
Hispanics, and 8 percentage points
(to 14%) for whites.
College graduates continue to
have the highest rate of labor force
participation. Overall, 88% of all col­lege
graduates age 25 to 64 were in
the labor force in March 1988. The
participation rate for persons with
1 to 3 years of college was 83%,
compared with 77% for those only
graduating from high school and
1The Current Population SuiVey is a
monthly household suiVey conducted for the
Bureau of Labor Statistics by the Bureau of
the Census.
Vol. 2 No. 2 Family Economics Review
61% for persons who had not com­pleted
4 years of high school. Over
the past 10 years, labor force par­ticipation
rates in all educational
groups declined for men but in­creased
for women. Participation
rates for women who were college
graduates increased from 71% to
81%.
In March 1988, as in other years,
the groups with the highest levels of
education experienced the lowest
incidence of unemployment. The
jobless rate for college graduates
(age 25 to 64) was 2%, compared
with 4% for persons with 1 to 3 years
of college, 5% for high school
graduates, and 9% for high school
dropouts.
Source: U.S. Department of Labor, Bureau
of Labor Statistics, 1988, ~ USDL 88-423.
Population Growth of
the Middle Aged and
the Elderly
The median age of the U.S.
population will reach 43.9 years by
2080, up from 32.1 in 1988. The
United States can expect to see a
notable rise in the number of people
65 years old and over. According to
middle series projections (see box),
between 1987 and 1995 the elderly
population is expected to increase
12%, or by 4 million people.
However, in the 10 years following
(1995- 2005), the number will
increase more slowly, by only 2.5
million. After 2010 (as baby boomers
become senior citizens) this popula­tion
will climb more rapidly- from
39.4 million in 2010 to 52.1 million by
2030, and to 65.6 million by 2040.
Well over 71.6 million Americans,
out of a projected total of 292
million, will be elderly by 2080; 17
million of these will be 85 years old
and over.
The effect of this aging process
can be seen in the "dependency
ratio." This ratio shows how many
children and elderly there are for
every 100 people of working age
(18 to 64 years). The overall ratio is
projected to decline over the next 20
years, because there will be fewer
children per adult. By 2010 the
projected dependency ratio will
drop to 57, from a high in 1965 of 83.
This drop in the overall ratio reflects
declines in youthful dependency.
However, after 2010 the growing
elderly population will force the
ratio back up, and by 2080 overall
dependency will be 78.0. Youthful
dependency will be 34.4; elderly
dependency, 43.6.
Projections of the U.S. popula­tion
by age, sex, and race for the
years 1988 to 2080 are based on
July 1, 1986, population estimates.
Three different assumptions (low,
middle, and high) are made about
future fertility, mortality, and net
immigration levels. The series
using the middle assumption for
each component is designated the
"middle series." For further infor­mation,
see "Projections of the
Population of the United States,
by Age, Sex, and Race: 1988 to
2080," Population Estimates and
Projections, Current Population
Reports, Series P-25, No. 1018, by
Gregory Spencer, Bureau of the
Census, U.S. Department of
Commerce.
Source: U.S. Department of Commerce,
Bureau of the Census, 1989, Middle age is
becoming the norm, Census and You 24(~):6.
21
Rural and Farm
Population
The 1987 rnral and [ann popula­tion
estimates were prepared by the
U.S Department of Commerce,
Bureau of the Census and the
Economic Research Service,
USDA. The estimates are annual
averages of monthly data from the
Current Population Survey (CPS)
for the calendar year 1987.
Size and Distribution
In 1987 the number of persons
living in rural areas of the United
States was 63.9 million, or 27% of
the total U.S. population. About 2%
of the Nation's population had a
farm residence- about 1 of every 13
rural residents in 1987. In 1920,
when farm residents were first iden­tified
as a separate group in census
statistics, they represented 30% of
the total population. This proportion
fell to 15% by 1950, and to 5% by
1970. No statistically significant
change in the number of farm resi­dents
took place from 1986 to 1987.
However, when year-to-year changes
were cumulated from 1981 through
1987, the farm population averaged
a significant loss of2.5% per year.
The rate of loss approximates the
2.9% average annual decline of the
previous decade.
In 1987, one-half of the total farm
population lived in the Midwest,
whereas in 1950 the largest percent­age
of the farm population lived in
the South (see table 1). Although
most of the farm residents lived in
nonmetropolitan territory, about
one-fourth lived within the
1The farm population consists of persons
residing on rural farms only; it does not in­clude
the residents of the small number of
farms located in urban areas. The CPS
defines a farm as a place that sold $1,000 or
more in agricultural products during the
preceding year. Rural areas include the open
countryside and also towns and villages with a
population lower than 2,500, that are not in
the suburbs of large cities.
22
boundaries of metropolitan areas. In
contrast, more than three-fourths of
the nonfarm population lived in
metropolitan areas.
Social Characteristics
As compared with the nonfarm
population, in 1987 the farm popula­tion
had a higher proportion of
whites, a lower proportion of blacks,
and a lower proportion of Hispanics
(who could be of any race), as shown
in table 2.
Farm residents are older than the
rural population in general. The
median age of farm residents was
37.6 years in 1987-significantly
higher than the median of 32.0 years
for the nonfarm population. In 1987
the median age of the urban popula­tion
was 31.8 years and the median
age of the rural total was slightly
higher at 32.8 years; however, both
were significantly lower than the
farm population median.
The ratio of males to females was
higher in the farm population (109 to
100) than in the nonfarm population
(93 to 100). Farm residents were
more likely to be married than were
nonfarm residents. About 67% of
farm residents 15 years old or older
were married and living with a
spouse, compared with 56% of non­farm
residents. As might be ex­pected
given the gender ratios, this
difference was greater among
women than men-70% of farm
women were married and living with
their husbands versus 53% of non­farm
women, whereas 63% of farm
men were married versus 58% of
nonfarm men. Relatively fewer farm
than nonfarm residents were mar­ried
and living apart, widowed, or
divorced; however, the percentage
of residents who were single was
similar for the farm and nonfarm
populations.
Table 1. Distribution of U.S. population, by region
Region
Northeast . ....... .... ...... ... ... .. .
Midwest .... ...... : . ............... .
South .. .................. .. ....... .
West .......... .. ..... .... .... ..... .
Total population
1950
26.1
29.4
31.2
13.3
1987
20.7
24.5
34.4
20.4
Farm population
1950
7.8
32.3
51.6
8.4
1987
6.1
50.7
28.7
14.5
Source: U.S. Department of Commerce, Bureau of the Census, 1988, Aural and Aural Farm Popu!atjon· 1987 Current
Population Reports, Series P·27, No.61.
Table 2. Race and Hispanic origin of U.S. population, by farm and
nonfarm residents
Race and Hispanic origin
Total persons .................... .
White .. ....... ............. ... . .
Black ............. . .. .. ........ .
Other races ....................•.
Hispanic origin .................. .
Total
100.0
84.7
12.1
3.2
7.9
Farm
percent djstrjbutjon 1
100.0
97.0
2.5
0.6
2.7
Nonfarm
100.0
84.4
12.3
3.3
8.1
1 Percentages do nol add to 100 because Hispanics are also Included as either white, black, or other.
Vol. 2 No. 2 Family Economics Review
There were 1.7 million farm
households in 1987, representing
about 2% of all U.S. households.
Families comprised about 85% of
farm households, compared with
72% of the nonfarm households.
The average family size was about
the same for farm and nonfarm
households-3.28 and 3.18 mem­bers,
respectively. In the past, this
difference was considerably larger.
For example, in 1950 farm families
averaged 4.13 members, compared
with 3.52 for nonfarm families. In
1987 farm families were more likely
than nonfarm families to have both
husband and wife present (94%,
compared with 80%) but were less
likely to have children living at home
( 41%, compared with 50%) despite
their somewhat higher fertility rate.
This reflects the older age structure
of the farm population.
Economic Characteristics
About 69% of farm residents 15
years old and over were in the labor
force in 1987. In every age group
except 20 to 24 years, the proportion
of farm men in the labor force was
significantly higher than that of
nonfarm men. Farm women,
however, had about the same
proportion in the labor force as
nonfarm women at all ages until age
65 and over, when farm women's
participation rate exceeded that for
nonfarm women. A relatively low
rate of unemployment characterizes
the farm resident labor force. Only
3% of the labor force living on farms
was unemployed in 1987, compared
with 6% of the nonfarm labor force.
However, Midwestern farm resi­dents
were less likely to be
unemployed than Southern farm
residents. Higher labor force par­ticipation
and lower unemployment
are distinctive of the farm popula­tion.
The overall rural labor force
participation rate and the unemploy­ment
rate were both only slightly
lower than the urban rates.
Vol. 2 No. 2 Family Economics Review
The annual average estimate of
the number of persons with farm
occupations in 1987 was 3.4 million
(about 3% of the total employed
labor force). About two-fifths ofthe
group were "farm operators and
managers;" the remainder were
"farm workers and related occupa­tions."
Farm operators and managers
were more likely to live on farms
than farm workers. About two-thirds
of farm operators and managers
lived on farms in 1987, compared
with just one-sixth of farm workers
and workers in related occupations?
Employed farm residents overall
were slightly more likely to work in
nonfarm than in farm occupations as
their primary job. Male farm resi­dents
who were employed, however,
most often had farm jobs ( 61% ),
generally as farm operators and
managers. Only 25% of farm women
worked in farm occupations. Farm
residents of both sexes were much
more likely to be self-employed or
unpaid family workers than nonfarm
residents and less likely to work for
wages and salaries. In 1987 the
predominance of self-employment in
agriculture was more pronounced
among farm men (70%) than women
( 49% ). A much lower proportion of
men ( 4%) than women (27%) were
unpaid family workers, and similar
proportions of both sexes were in
wage and salary jobs.
Money income for 1986 was lower
for households and families living on
farms than for those in nonfarm
areas. According to the March 1987
CPS supplement, the 1986 median in­come
was $21,655 for farm house­holds
and $24,979 for nonfarm
2:rbe category "farm workers and related oc­cupations"
includes persons in related jobs
not performed on farms or in rural settings.
According to the 1980 Census of Population,
one-third of these workers had related
occupations-ground keepers and gardeners;
and graders, sorters, and inspectors of agricul­tural
products. In 1987workers in this
category were as likely to have urban as rural
residences, whereas 90% of farm operators
and managers had rural residences.
households. In 1986 the median in­come
of farm families was $23,326,
79% of the nonfarm family median
of$29,632. There was no statistically
significant change in the median in­come
of farm families from 1985 to
1986, after adjusting for inflation.
The median family income of non­farm
families, in contrast, increased
by 4.3% over this period. The in­come
reported by farm households
and families includes both farm and
nonfarm income. The Economic
Research Service has estimated that
in 1986 about 46% of cash income of
farm operator households came
from off-farm sources. Farm
operator households with annual
farm sales of less then $40,000,
which represent 73% of all farms,
received 81% of the total off-farm
income.
The March 1987 CPS reported
that 16% of all farm families had
incomes below the poverty level,
compared with 11% of nonfarm
families. The poverty rate for all
farm residents, including unrelated
individuals, was 20%-considerably
higher than the rate of 13% for
nonfarm residents.3
3oata on consumer income collected in the
CPS are limited to money income received
before payments of Federal, State, local, or
Social Security (FICA) taxes and before any
other types of deductions such as union dues
or Medicare premiums. Money income is the
sum of amounts received from earnings;
Social Security and public assistance pay­ments;
dividends, interest, and rent;
unemployment and worker's compensations;
government and private employees' pensions;
and other peridic income. Money income
does not include noncash benefits such as
food stamps or subsidized housing, food
produced and consumed on the farm, or rent­free
housing.
Source: U.S. Department of Commerce,
Bureau of the Census, 1988, Ryral and Ryral
Farm Popylatjon· 1987 Current Population
Reports Series P-27, No. 61.
23
Updated Estimates of the Cost of Raising a Child
The cost of raising urban children: 1988 annual average; moderate-cost level 1
Region and age Total Food at Food away Clothing Housing3 Medical Education Transportation All
of child (years) home2 from home care other4
MIDWEST:
Under1 •• 0 0 0 0 0 •••• 0 •• $4,927 $640 $0 $155 $2,118 $365 $0 $904 $745
1 .. ... . ... .......... . 5,072 785 0 155 2,118 365 0 904 745
2-3 ................. 4,724 785 0 252 1,861 365 0 787 674
4-5 ...... . .. . ....... 5,005 902 164 252 1,861 365 0 787 674
6 .........•.......... 5,259 873 164 349 1,765 365 175 787 781
7-9 ......•.......... 5,462 1,076 164 349 1,765 365 175 787 781
10-11 ............... 5,666 1,280 164 349 1,765 365 175 787 781
12 . ........ .. ........ 6,042 1,309 197 505 1,829 365 175 846 816
13-15 ..... .. ........ 6,188 1,455 197 505 1,829 365 175 846 816
16-17 ....... .. ...... 6,778 1,629 197 699 1,893 365 175 933 887
Total ... .. ... .. ..... 100,596 20,392 2,494 6,830 33,372 6,570 2,100 14,928 13,910
NORTHEAST:
Under1 .............. 4,887 756 0 155 2,150 365 0 787 674
1 .................... 5,062 931 0 155 2,150 365 0 787 674
2-3 .... .. . ..•....... 4,935 902 0 272 1,957 365 0 729 710
4-5 ................. 5,215 1,018 164 272 1,957 365 0 729 710
6 .................... 5,638 1,018 197 369 1,925 365 219 729 816
7-9 ................. 5,842 1,222 197 369 1,925 365 219 729 816
10-11 ............... 6,104 1,484 197 369 1,925 365 219 729 816
12 ....... . . ...... ... . 6,466 1,484 197 543 1,990 365 219 816 852
13-15 ............... 6,640 1,658 197 543 1,990 365 219 816 852
16-17 ............... 7,110 1,833 230 679 2,022 365 219 875 887
Total ............... 106,227 23,303 2,758 7,142 35,682 6,570 2,628 13,878 14,266
SOUTH:
Under1 0 0 0 0 0 0 ••• • 0 0 0. 5,371 698 0 175 2,278 406 0 962 852
1 ........ ............ 5,517 844 0 175 2,278 406 0 962 852
2-3 .. . ..•........... 5,177 815 0 272 2,022 406 0 846 816
4-5 ................. 5,428 902 164 272 2,022 406 0 846 816
6 ......... .... .. ..... 5,794 902 197 369 1,925 406 262 846 887
7-9 ....... . ......... 5,968 1,076 197 369 1,925 406 262 846 887
10-11 .... .. ......... 6,201 1,309 197 369 1,925 406 262 846 887
12 ................... 6,602 1,309 230 543 1,990 406 262 904 958
13-15 ... ... . ...... . . 6,777 1,484 230 543 1,990 406 262 904 958
16-17 ............... 7,265 1,629 230 699 2,054 406 262 991 994
Total ••••• 0 0 •• 0 0 0 •• 0 109,661 20,743 2,890 7,222 36,262 7,308 3,144 15,982 16,110
WEST:
Under1 0 ••• 0 ••••••••• 5,292 698 0 155 2,214 447 0 962 816
1 .................... 5,467 873 0 155 2,214 447 0 962 816
2-3 ................. 5,195 844 0 252 1,990 447 0 846 816
4-5 ..... . ........... 5,508 960 197 252 1,990 447 0 846 816
6 ..... ... ... ... ...... 5,951 931 230 369 1,957 447 219 875 923
7-9 ..... • ........... 6,155 1,135 230 369 1,957 447 219 875 923
10-11 ............... 6,416 1,396 230 369 1,957 447 219 875 923
12 ....... . ........... 6,758 1,396 230 524 2,022 447 219 962 958
13-15 .... ...... ..... 6,904 1,542 230 524 2,022 447 219 962 958
16-17 .... ........... 7,567 1,745 263 660 2,118 447 219 1,050 1,065
Total • 0 • •••••••• 0 ••• 112,017 21,819 3,220 6,948 36,454 8,046 2,628 16,506 16,396
1 Annual cost of raising a child from birth to age 18, by age, in a husband-wife family with no more than 5 children. For more information on these and additional child cost estimates, see USDA
Miscellaneous Publication No. 1411, "USDA Estimates of the Cost of Raising a Child: A Guide to Their Use and Interpretation,• by Carolyn S. Edwards, Family Economics Research Group,
A~icultural Research Service, USDA.
Includes home-produced food and schoollur;~ches.
3 Includes shelter, fuel, utilities, household operations, furnishings, and equipment.
4 Includes personal care, recreation, reading, and other miscellaneous expenditures.
24 Vol. 2 No. 2 Family Economics Review
The cost of raising rural nonfarm children: 1988 annual average; moderate-cost level 1
Region and age Total Food at Food away Clothing Housing3 Medical Education Transportation All
of child (years) home2 from home care other4
MIDWEST:
Under 1 ••••• • 0 ••••••• $4,654 $582 $0 $136 $2,022 $365 $0 $875 $674
1 . . .. ...... ...... .... 4,799 727 0 136 2,022 365 0 875 674
2-3 ................ . 4,270 698 0 214 1,701 325 0 729 603
4-5 ................. 4,518 815 131 214 1,701 325 0 729 603
6 .............. •. .... 4,910 815 164 330 1,669 325 175 758 674
7-9 .. ... ... ...•..... 5,084 989 164 330 1,669 325 175 758 674
10-11 ............... 5,317 1,222 164 330 1,669 325 175 758 674
12 . . ...... .. .... ..... 5,715 1,222 164 505 1,733 325 175 846 745
13- 15 ...... . ........ 5,860 1,367 164 505 1,733 325 175 846 745
16- 17 . .............. 6,292 1,513 197 621 1,765 365 175 875 781
Total •• •••• 0 •••• •••• 93,704 18,910 2,296 6,370 31,324 6,010 2,100 14,348 12,346
NORTHEAST:
Under1 ........ . .. . .. 5,404 698 0 155 2,278 365 0 1,021 887
1 .................... 5,550 844 0 155 2,278 365 0 1,021 887
2 -3 .... ....... .. . .. 5,303 815 0 252 2,086 365 0 933 852
4-5 ............. ... . 5,616 931 197 252 2,086 365 0 933 852
6 ....... .. ....•...•.. 6,067 931 230 369 2,054 365 262 933 923
7-9 ....... . . . ... . •.. 6,241 1,105 230 369 2,054 365 262 933 923
10-11 ............... 6,503 1,367 230 369 2,054 365 262 933 923
12 .. ..... . .. ...... .. . 6,890 1,367 230 563 2,118 365 262 991 994
13-15 ...... .. . . .. ... 7,065 1,542 230 563 2,118 365 262 991 994
16-17 ... . ........ . .. 7,670 1,716 263 738 2,182 365 262 1,079 1,065
Total •••••• 0 • • 0 ••••• 114,013 21,439 3,220 7,260 38,060 6,570 3,144 17,494 16,826
SOUTH:
Under 1 ..... .... ..... 5,575 698 0 175 2,278 406 0 1,166 852
1 .................... 5,692 815 0 175 2,278 406 0 1,166 852
2-3 ................. 5,163 785 0 272 1,957 406 0 962 781
4-5 ......•....... ... 5,477 902 197 272 1,957 406 0 962 781
6 .. . . .....•.. . .. ..... 5,742 873 197 369 1,893 406 219 933 852
7-9 ......•.. . .... . .. 5,916 1,047 197 369 1,893 406 219 933 852
10-11 .... . .......... 6,149 1,280 197 369 1,893 406 219 933 852
12 .......... .. ...... . 6,599 1,280 230 563 1,957 406 219 1,021 923
13-15 ....• ...... . .. . 6,744 1,425 230 563 1,957 406 219 1,021 923
16-17 ..... . .. ....... 7,311 1,600 263 796 1,990 406 219 1,079 958
Total ....... . ....... 109,788 20,216 3,022 7,496 35,550 7,308 2,628 18,020 15,548
WEST:
Under1 •••••••• 0 • • • •• 5,805 698 0 155 2,310 447 0 1,166 1,029
1 .... ........ . ... .... 5,951 844 0 155 2,310 447 0 1,166 1,029
2-3 ..... ... . • . .. . . .. 5,377 815 0 252 1,990 406 0 991 923
4-5 ..... . .... . ..•.. . 5,690 931 197 252 1,990 406 0 991 923
6 .... .. . ... ....... ... 6,173 902 197 388 1,957 447 262 991 1,029
7-9 .. .. ... . . . . .. .. .. 6,376 1,105 197 388 1,957 447 262 991 1,029
10-11 .. .... ......... 6,609 1,338 197 388 1,957 447 262 991 1,029
12 ... . .. ... .. . ....... 7,060 1,338 230 582 2,022 447 262 1,079 1,100
13-15 .. ... .. . ... . ... 7,235 1,513 230 582 2,022 447 262 1,079 1,100
16-17 ..... .. .. . . . ... 7,913 1,716 263 679 2,1 50 447 262 1,225 1,171
Total •••• • •• 0 ••••••• 117,000 21,236 3,022 7,332 36,710 7,882 3,144 19,008 18,666
~Annual cost of raising a child from birth to age 18, by age, in a husband·wife family with no more than 5 children. For more information on these and additional child cost estimates, see USDA
Miscellaneous Publication No. 1411, "USDA Estimates of the Cost of Raising a Child: A Guide to Their Use and Interpretation,• by Carolyn S. Edwards, Family Economics Research Group,
A~icultural Research Service, USDA.
Includes home·produced food and school lunches. ! Includes shelter, fuel, utilities, household operations, furnishings, and equipment.
Includes personal care, recreation, reading, and other miscellaneous expenditures.
Vol. 2No. 2 Family Economics Review 25
Cost of Food at Home
Cost of food at home estimated for food plans at 4 cost levels, March 1989, U.S. average 1
Cost for 1 week Cost for 1 month
Sex-age group Thrifty Low--cost Moderate- Uberal Thrifty Low--cost Moderate- Uberal
plan plan cost plan plan plan plan cost plan plan
FAMILIES
Family of 2: 2
20-50 years . .......... . .. . ..... $44.20 $55.70 $68.80 $85.50 $191.30 $241.10 $297.80 $370.40
51 years and over ............... 41 .80 53.50 66.00 79.00 181.00 231.40 286.10 342.50
Family of 4:
Couple, 20-50 years and children-
1-2 and 3--5 years . ............ 64.30 80.00 97.80 120.20 278.30 346.70 423.90 520.90
~and 9--11 years . ... . ....... 73.70 94.00 117.60 141.70 318.90 407.20 509.60 614.20
INDIVIDUALS 3
Child:
1-2years . .. . ... . .. ...... .. . . . . 11 .60 14.10 16.40 19.80 50.20 61.00 71 .10 85.80
3--5 years .. ..... .... . .... ...... 12.50 15.30 18.90 22.70 54.20 66.50 82.10 98.40
~years .. .. .... . .. .. . ... .. . . . 15.30 20.30 25.40 29.60 66.20 88.00 110.10 128.50
9--11 years . ..... . .......... .. .. 18.20 23.10 29.70 34.40 78.80 100.00 128.80 149.00
Male:
12-14years ....... . ............ 19.00 26.20 32.70 38.30 82.40 113.40 141.80 166.10
15-19 years ................... . 19.70 27.10 33.60 39.00 85.40 117.20 145.60 168.90
20-50 years ..... ... ............ 21 .10 26.90 33.70 40.80 91.30 116.60 145.90 176.70
51 years and over ... . ....... . .. . 19.20 25.60 31.50 37.80 83.00 110.80 136.70 163.90
Female:
12-19 years ....... . ..... . ... . .. 18.90 22.70 27.50 33.30 82.00 98.30 119.30 144.40
20-50 years . .. . .... . ..... ... ... 19.10 23.70 28.80 36.90 82.60 102.60 124.80 160.00
51 years and over ........... ... . 18.80 23.00 28.50 34.00 81.50 99.60 123.40 147.50
1 Assumes that food for all meals and snacks is purchased at the store and prepared at home. Estimates for the thrifty food plan were com-puted
from quantities of foods published in Family Economjcs Review 1984{1). Estimates for the other plans were computed from quantities
of foods published in Family Economics Review 1983(2). The costs of the food plans are estimated by updating prices paid by households
surveyed in 1977-78 in USDA's Nationwide Food Consumption Survey. USDA updates these survey prices using information from the
Bureau of Labor Statistics, CPI Detailed Report, table 3, to estimate the costs for the food plans.
2 10 percent added for family size adjustment. See footnote 3.
3 The costs given are for individuals in 4-person families. For individuals in other size families, the following adjustments are suggested:
1-person -add 20%; 2-person -add 10%; 3-person -add 5%; 5- or 6-person -subtract 5%; 7- or more-person -subtract 10%.
26 Vol. 2 No. 2 Family Economics Review
Consumer Prices
Consumer Price Index for all urban consumers [1982-84 100)
Group
All items .........•................................
Food ....... .. .......... ... .................. .. .
Food at home ......................... . ....... .
Food away from home .......................... .
Housing ......... ...... .... .. ... . . ..... ... ...... .
Shelter ....................................... .
Renters' costs 1 .••. ....... . .. •.....••••..•. . ..•
Homeowners' costs 1
•••••••••••••••••••••••••••
Household insurance 1
••.•.•••..••••••.•• • ••• .
Maintenance and repairs . .. ............... . .... .
Maintenance and repair services ............... .
Maintenance and repair commodities .. ..... . .. .
Fuel and other utilities .......................... .
Fuel oil and other household fuel
commodities .... .... .. .... .... .. .... ....... .
Gas (piped) and electricity ... .. . . ....... . .... .. .
Household furnishings and operation ............. . .
Housefurnishings .............. ......... .... .. .
Housekeeping supplies ........................ .
Housekeeping services ....... . ..... .. . ........ .
Apparel and upkeep . ...... ... ... ... ....... . ...... .
Apparel commodities ..... . . . ... ... .... ......... .
Men's and boys' apparel . ... .... .......... .. .. . .
Women's and girl's apparel .................... .
Infants' and toddlers apparel .... . .. .. . ......... .
Footwear ............... . ... ... . ............ .
Apparel services ........ . .... . .... ... ... ....... .
Transportation ................................... .
Private transportation .. ... ... .... . . ... .. . ...... . .
New vehicles ........... .................... . .
Used cars ..... ... . .... .. ... .... .. ........... .
Motor fuel ............. ................ .. .... .
Automobile maintenance and repair ..... . ....... .
Other private transportation .................... .
Other private transportation commodities .. . .... .
Other private transportation services . .......... .
Public transportation .... .. .. .. . ........... .. .
Medical care .. ....... . .. ............ .. . . . . ...... .
Medical care commodities ....................... .
Medical care services ... ....... . ....... . ... .. ... .
Professional medical services .... ... ............ .
Entertainment . ......... .................. ..... . . .
Entertainment commodities ...................... .
Entertainment services ......... .... . ............ .
Other goods and services ......................... .
Personal care ................................. .
Toilet goods and personal care appliances ........ .
Personal care services ......................... .
Personal and educational expenses .... . ..... . .... .
School books and supplies ..................... .
Personal and educational services ............... .
1 Indexes on a December 1982 = 100 base.
Source: U.S. Department of Labor, Bureau of Labor Statistics.
Vol. 2 No. 2 Family Economics Review
March
1989
122.3
123.5
122.7
125.7
121.5
131.2
138.6
135.0
131.3
117.1
119.6
113.8
105.9
81.5
104.8
110.5
105.1
118.5
116.9
119.3
117.5
115.9
119.4
118.5
114.1
128.5
111.9
110.7
119.4
120.5
81 .5
123.5
134.5
100.1
141.9
128.2
146.1
147.2
145.9
144.4
124.7
118.5
132.9
144.4
123.6
122.4
124.8
154.6
155.1
154.7
Unadjusted indexes
February January March
1989 1989 1988
121 .6 121 .1 116.5
122.9 122.2 115.9
122.0 121.2 113.9
125.2 124.7 120.2
121.1 120.7 117.0
130.3 129.8 125.6
136.3 135.2 132.9
134.7 134.4 129.2
131.2 130.9 127.8
117.1 116.1 113.3
119.9 118.7 116.4
113.4 112.8 109.2
105.9 106.0 102.7
81.4 80.5 80.5
104.9 105.1 101 .7
110.9 110.9 108.3
105.9 106.0 104.7
117.7 117.5 112.9
116.8 116.6 111.7
115.3 115.3 114.3
113.3 113.3 112.7
114.2 115.1 111.6
111.4 111.6 115.3
118.8 115.6 114.0
112.7 112.2 107.3
127.8 127.3 122.2
111.6 111.1 106.5
110.3 109.8 105.4
119.5 119.4 115.7
120.5 120.5 116.1
80.3 79.6 77.5
123.3 122.4 118.5
134.3 133.5 124.9
101.2 101 .0 98.3
141.4 140.4 130.3
128.1 127.5 121.4
145.2 143.8 136.3
145.8 145.0 137.0
145.1 143.5 136.1
143.5 142.2 135.4
124.3 123.8 119.0
118.4 118.1 113.4
132.3 131.6 126.5
144.1 143.4 134.6
123.2 122.8 118.1
121.9 121.7 116.8
124.4 123.8 119.2
154.4 154.0 145.0
155.0 153.3 146.2
154.6 154.2 145.1
27
Subscription Order Or
Change Of Address Form
Enclosed is $ ______ _
0 Check
0 Money order
0 Charge to my Deposit Account
No. ________ _
Order No . ______ _
Make check payable to,
Superintendent of Documents
CREDIT CARD ORDERS ONLY
(Visa and Mastercard)
Total charges S
Credit card No.
Expiration Date Month/Year
FAMILY
ECONOMICS
REVIEW
Annual subscription Single copies
$5.00 domestic $2.00 domestic
($6.25 foreign) ($2.50 foreign)
Please print or type
Company or Personal Name
I I I I I I I I I I I I I
Additional Address I Attention Une
I I I I I I
Street Address
I I
City
I I I
Country
I I I I
CHANGE OF ADDRESS
Please attach mailing label here and
send this form when requesting a
change of address
MAIL ORDER FORM TO,
Supeiintendentof~en~
Government Printing Office
Washington, D.C. 20402
State ZIP Code
L1J L..L._I ...1...1 --'--...l_j
FOR OFFICE USE ONLY
Quantity Charges
___ Publications
___ Subscriptions ___ _
Special Shipping Charges __ _
International Handling ____ _
Special Charges _ _ ___ _
OPNR
_____ UPNS
_____ Balance Due
--'----- Discount
_____ Refund
28 'll" U.S.GOVERNMENTPRINTINGOFFICE: 1989 - 242- 123 - 8 14/03 005 Vol. 2 No. 2 Family Economics Review