Family Economics Review [1984, Number 2]

              Family
Economics
Review
Editor
Katherine S. Tippett
Managing Editor
Sherry Lowe
Editorial Assistant
Nancy J. Bailey
Family Economics Review is published each
quarter by the Family Economics Research
Group, Agricultural Research Service,
United States Department of Agriculture,
Washington, D. C.
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. Use of funds for this
periodical has been approved by the
Director of the Office of Management and
Budget through March 31, 1987.
Contents may be reprinted without
permission, but credit to Family Economics
Review would be appreciated.
Use of commercial or trade names does not
imply approval or constitute endorsement
by USDA.
Suggestions or comments concerning this
publication should be addressed to:
Katherine S . Tippett, Editor, Family
Economics Review, Family Economics
Research Group, USDA/ARS, Federal
Building, Room 442A, Hyattsville, Md.
20782.
For subscription information, see p. 41.
For sale by the Superintendent ot Documents. U S Government Printing Ott!ce Washlngton. D C. 20402
family Economics Review 1984 No.2
Family
Economics
Review
CONTENTS
Recent Trends in Clothing and Textiles
Joan C. Courtless
............................................... 2
Economic Outlook for Families--1984
Colien Hefferan
... ................................................ 12
Consumer Spending: Recovery and Beyond ••••••••••••••••••••.•• o •••• 0 •••••••••••• 0.. 20
Sanclra Shaber
Housing Quality and Affordability . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Carol B. Meeks
Urban and Rural Housing Characteristics ••••••••••••••• o.............................. 30
Arthur F. Young and F. John Devaney
Abstracts
Credit Card Use in the United States •••••••••••••• o................................... 10
Food Price Trends........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Users' Guide: 1980 Census of Population and Housing. . ................................ 20
Women at Work: A Chart book • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 20
Revised Metropolitan Statistical Area Definitions • • • • • • .. • • • • • • • • • • • • • • • .. • • • • • • • • • • • • • • 29
Factfinders for the Nation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Private Pension Legislation: The Tax Equity and Fiscal Responsibility Act of 1982...... 33
Programs of HUD.... . ... . .... . .......... . ............................................. 33
Regular Features
Some New USDA Charts . . . . . . . . . . . . . . . . . . . . . • . • . . . . . • . . . . . . . . . . . . . . . . . . . . . . • . . . . . . • . • . 24
Updated Estimates of the Cost of Raising a Child • .. • • • • • • • • • • • • • • • • • • • • • • • • • • • • • .. • • • • 34
Cost of Food at Home, U. S. and Regions . . . • . . . • • • . • • . . . . . . . • . • . . • . . . . . . . . . . . • . . . . • . . . 36
Consumer Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Issued April 1984
1984Noo2 ramily Econom~cs Heview
Recent 'IIends in Clothing and
Textiles,
By Joan C. Court less
Family economist
CLOTHING EXPENDITURES AND PRICES
Apparel and upkeep prices in 1983, as
measured by the Consumer Price Index (CPI).
increased 2.7 percent over those in 1982 .
This increase was less than the 3.9-percent
increase for the "all items" category during
the same period (table 1). Within the CPI
clothing and footwear categories, women's
dresses and women's suits increased more
than other clothing items; these garments
are those most influenced by fashion, and
prices may reflect the value women place on
dressing in the current style. As shown by
the CPI, prices of men's coats and jackets,
men's shirts, girls' clothing, and women's
footwear were lower in 1983 than in 1982.
For many years clothing prices have
increased at a lower rate than prices for
other items. This is one reason for the
decline in the percentage of total personal
consumption expenditures in current dollars
allotted to clothing and shoes since 1960
(table 2). When the effect of inflation is
removed (shown by constant dollars in
table 2), the percentage of personal con­sumption
expenditures for clothing and shoes
remains relatively steady. Per capita expen­ditures
for clothing (in constant dollars)
indicate that consumers have increased their
clothing purchases over the years.
Annual spending for clothing and shoes in
1983 is estimated at $529 per person,
according to preliminary figures for the
first three quarters of 1983 (table 2). This
amount exceeds 1982 spending by $16 per
person; 69 percent of this increase can be
attributed to higher prices and 31 percent
to increased buying.
1Use of commercial or trade names does not
imply approval or constitute endorsement by
USDA.
2 famlly Ecunumlcs Review 1984 No.z
TRENDS IN RETAILING
One textile manufacturer has tested, in
selected retail stores, an electronic sales
device which enables a customer to choose
linens through a television monitor. Choices
are displayed on the monitor and the cus­tomer
places an order by typing in appro­priate
responses as to color, size, number,
and so forth. Merchandise is then delivered
within 10 days directly to the customer's
home, or any address designated by the
customer.
Off-price, branded apparel specialty
stores continue to grow more rapidly than
any other segment of the clothing retail
market. In 1983 sales from these stores were
5.6 percent of clothing and shoe sales: pro­jected
sales for 1986 and 1988 are 9.1 and
12.1 percent, respectively (!). A nationally
representative sample of 1, 000 persons were
asked by Opinion Research Corporation for
the Daily News Record whether their buying
of apparel from off-price stores increased
in 1983. Responses indicated that those
segments of the population most likely to
report increased buying from these stores
included women (as compared with men),
persons 18 to 24 years old, those employed
in white collar clerical or sales positions,
members of households with children, and
members of households with three or more
members <.~).
TRENDS IN FIBERS AND FABRICS
Although new fibers are not likely to be
developed in the near future, existing
fibers will continue to be modified and
blended in such a way as to produce fabrics
which possess the most desirable features of
each fiber. Blending manmade with natural
fibers can improve durability and washabil­ity,
and can lower production costs . Fiber
producers also try to create yarns which
cannot be readily duplicated in other
countries. Examples of blends which will be
manufactured in 1984 include:
Rayon--with polyester, silk, or wool.
Cotton and wool--with silk, linen,
mohair, nylon, or acrylic.
Triacetate--with nylon, polyester, or
linen.
Cashmere--with wool or silk.
Table 1. Percentage change tn selected tndez of consumer prices, August 1983 (annualized)
C8 tegory and i tern Percentage change
All items ..................................................
Apparel and upkeep ...........................•..........
Men's and boys' clothing ...............................
Men's ................................................
Suits, sport coats, and jackets
Coats and jackets ••..••..•••.••....••••• ••••••••• •.
Furnishings and special clothing
Shirts ... ..........................................
Dungarees, jeans, and trousers ••••••••••• ••• •••• ••
Boys' ... . ....... ........•.......•.•. ~ ............... .
Coats, jackets, sweaters, and shirts •• •••• •• •••• •••
Furnishings ....................................... .
Suits, trousers, sport coats, and jackets
Women's and girls' clothing •••••••••.•• •••••••••••••••••
Women's ..............................................
Coats and jackets ....•.•.••.• •..••• •.• •. .. .••••.•••
Dresses .................... ....... ............ · · · · ·
Separates and sportswear •••••••.•••••••••••••••••••
U nderwe11r, nigh twear, and hosiery •••••••••••••••••
Suits ..............................................
Girls' •....................... · · · · · · · · · · · · · • · • · • · • · · · ·
Coats, jackets, dresses, and suits ••••••• ••••••••••
Separates and sportswear • ••••••••• •••• •• • •••• •• ••••
Underwear, night wear, hosiery, and accessories ••••
Infants' and toddlers' clothing ••• •• •• ••• •••••••••••• •• •
Other apparel commodities ••••••••••••••••• •••• •• • • • • • • •
Sewing materials and notions •••••••••••••••••• • • • • • · •
Jewelry and luggage ................... · • · · · · · · · · • • · ·
Footwear .......................... · · · · · · · · • • · · · · · • · · · · ·
Men's •••••.•••••••••••• • • • • • • • • • · • • • • • • • • • • • • • • • • • • • •
Boys' and girls' . ............... .. ... · · · · · · · · • · · · · • • • ·
Women's •••••• •••••• •••• •••• • • • • • • • • • • • • • • • • • • • • • • • • • •
+3.9
+2.7
+.6
+.1
+4.0
-5.4
+3.2
-5 . 2
+.8
+2 . 2
+3.9
+1.9
+.9
+4 . 2
+6 .1
+3.8
+14.6
+2.9
+2.8
+12.9
-3.3
-4.8
-3.1
-1.5
+4.3
+4.1
+1.7
+5.1
-.2
+.6
+1.3
-2.2
Source: Calculated from the CPI Detailed Report, December 1982 and August 1983.
U.S. Department of Labor , Bureau of Labor Statistics.
1984 No. 2 family Economics Rev i ew
Table %. Annual e.rpenditures on clothing and shoes 1
Year
1960 .............
1961 .............
1962 .............
1963 .............
1964 .............
1965 .............
1966 .............
1967 .............
1968 .............
1969 .............
1970 .............
1971 .............
1972 .............
1973 .............
1974 .............
1975 .............
1976 .............
1977 .............
1978 .............
1979 .............
1980 .............
1981 .............
1982 .............
19833 ...........
Per capita
expenditures2
Constant
dollars
(1972)
203
203
209
209
222
227
239
236
242
245
240
249
264
281
279
288
293
306
331
341
342
362
364
369
Olrrent
dollars
148
149
154
156
166
172
186
192
208
223
227
244
264
291
308
328
345
375
415
440
459
502
513
529
Percent of
expenditures
for personal
cons\lll'l)tion
Constant
dollars
(1972)
8.1
8.1
8.1
7.9
8.1
7.9
8.0
7.8
7.7
7.6
7.4
7.5
7.5
7.7
7.8
7.9
7.7
7.8
8.1
8.3
8.4
8.7
8.7
8.6
Olrrent
dollars
8. 2
8.2
8.1
7.9
8.0
7.8
7.9
7.8
7.8
7.8
7.5
7.6
7.5
7.6
7.3
7.2
6.9
6.9
6.9
6.6
6.3
6.2
6.0
5.8
1 Includes yard goods, but excludes services such as cleaning and
shoes.
Aggregate
expenditures
Bill ions
of
constant
dollars
(1972)
36 . 6
37.3
38.9
39 . 6
42.6
44.2
46 .9
46.9
48.6
49.6
49.2
51.6
55.1
59.2
59 . 1
61.4
63 .8
67 . 5
73.6
76.7
77 .9
83 .2
84.4
86.4
repairing
Bi 11 ions
of
current
dollars
26.7
27.4
28.7
29.5
31.9
33.5
36.6
38 .2
41.8
45 .1
46.6
50.5
55.1
61.3
65.3
70.1
75.3
82.6
92.4
99.1
104.6
115.3
119.0
124.0
clothing and
2 Calculated by dividing aggregate expenditures for each year by population figures for July
of each year.
3 Preliminary figures--average of estimates for first 3 quarters of 1983 (i.e. , seasonally
adjusted quarterly totals at annual rates).
Sources: U.S . Department of Commerce, Bureau of the Census, 1983. Population estimates
and projections, Current Population Reports, Series P-25, No. 938 . U.S. Department of
Commerce, Bureau of Economic Analysis, 1983, Survey of Current Business 63(7) :35-36
(tables 2.2 and 2.3), and personal communication.
4 family Economics Review 1984 No.2
Rayon is expected to replace cotton in many
blends because the 1983 cotton crop was
smaller than usual, causing relatively high
cotton prices . Cashmere will be used in
combination with other fibers in an effort
to contain costs and because China is not
exporting its finer cashmere. Fibers that
may replace cashmere in blends include camel
hair, angora, llama, alpaca, mink, yak, musk
ox, and buffalo.
Consumers familiar with polypropylene in
disposable diapers and thermal underwear
will become aware of new applications in the
next few years. Because polypropylene
(called Insulite by one producer) can pro­vide
warmth without weight and can draw the
body's moisture away from the skin, its
insulating properties effectively provide
comfort in both cold and hot weather.
Skiwear, swim wear, running shorts, golf
shirts, professional sports uniforms, and
bedsheets are among the products to be
manufactured of polypropylene.
"Migration dyeing," a hand dyeing process,
gives a patterned, intarsia effect usually
achieved by knitting with different colored
yarns. The technique involves the transfer
of water-soluble reactive dyes from an inert
paper support through liquid to the fiber,
under heat and pressure; the dye is com­pletely
absorbed and is colorfast. Migration
dyeing is limited to sweaters made of
natural fibers and results are improved if
the sweaters are prewashed by machine prior
to dyeing. A disadvantage is that a light
dye will not transfer onto a dark sweater.
Five textile mills are now producing
stretch denim using a stretch polyester
filament yarn from Du Pont or Celanese. Each
mill has a trade name for its fabric which
has 18 to 20 percent stretch and is
ordinarily 65 percent cotton and 35 percent
polyester. As much as one-quarter of the
denim market could belong to stretch denim
within 5 years (8).
Cotton's share -of men's and women's
apparel is 51 and 27 percent, respectively.
This represents an increase of 19 and 69
percent, respectively, over the last 7 years
(!) . Consumer acceptance of "natural blend"-­fabric
made of at least 60 percent cotton--
has contributed to this increase. Manufac­turers
are increasing production of cotton
sweaters, which have proven to be a year­round
favorite with consumers because of
their comfort and washability.
Engineers with USDA's Agricultural
Research Service (ARS), Eastern Regional
Research Center (ERRC), have designed an
experimental facility to automate cowhide
processing operations. Because of the uneven
shape and irregular size of raw hides, the
level of automation in tanning has remained
low until this time. The facility includes
an automatic feeding device, conveyor
systems to transport hides through soaking
and chemical unhairing, mechanical unhairing
and fleshing, and an automatic hide-splitting
system. Called "continuous beamhouse" (hides
used to be hand treated on logs or beams),
this process offers many advantages in
addition to being the cleanest, most
self-contained processmg operation yet
developed, according to ERRC. The advan­tages
include savings in labor and water,
less pollution, shorter processing time,
less use of chemicals, better use of
equipment, and improvement in quality of
the leather.
Scientists in the Southern Regional
Research Center, ARS, USDA, who developed
a no-twist cotton yarn2 will cooperate with
Cotton , Inc., in testing the yarn's suita­bility
for commercial applications. ARS per­sonnel
will produce the no-twist yarn, and
Cotton, lnc., will evaluate its performance
in various products. Fabrics made from
no-twist cotton are soft and very absorbent
and would be appropriate for sportswear,
underwear, socks, and toweling.
USDA's Textile and Clothing Laboratory
at Knoxville, Tenn., has recently discovered
that hollow fibers, such as polyester and
rayon, can be made temperature adaptable by
incorporating certain "phase change" mate­rials
into the fiber. These materials can
melt and recrystalize to produce a warming
or cooling effect, thereby offering thermal
2 For further information, see Family
Economics Review, spring 1980, p. 27.
1984 No.2 Fami.ly F:.-onomics Review S
storage and release capabilities to the
fibers. Apparel made of these fibers can be
comfortable in both summer and winter; home
furnishings such as draperies and blankets
can have insulative value.
OUTLOOK FOR RAW MATERIALS
The 1983 U.S. mill use of total fibers is
estimated at 51.6 pounds per capita. This
includes 11.8 pounds of cotton, 0. 6 pound
of wool, and 39.2 pounds of manmade fibers.
Per capita use in 1982 was 43.7 pounds,
including 10.7 pounds of cotton, 0.5 pound
of wool, and 32. 5 pounds of manmade fibers.
In the years since 1965 (l_!_), the record per
capita use for all fibers was 61 pounds in
1973, 25.1 pounds of cotton in 1966, 2.9
pounds of wool in 1965, and 42.4 pounds of
manmade fibers in 1978.
World production of fibers reached a high
in 1981 with 31.1 million metric tons (MMT);
1982 production totaled 29.4 MMT. Production
of cotton and manmade fibers also peaked in
1981 at 15.4 and 14.0 MMT, respectively;
production decreased in 1982 to 14.7 and
13.0 MMT. In contrast, world wool production
has shown a slight increase every year since
1976, reaching 1.6 MMT in 1982. Natural
fibers were 56 percent of world fiber
production in 1982, the largest percentage
since 1975 (_!, !~).
Cotton
The 1983 domestic cotton crop is expected
to be about 7 .8 million bales, down 35
percent from last year . Almost 7 million of
the 15 million acres ordinarily devoted to
cotton went unplanted in response to USDA's
payment-in-kind (PIK) program. 3 Also, the
average yield per acre dropped to
503 pounds per acre, down from 590 pounds
in 1982, mainly because of poor weather.
Favorable economic conditions have encour­aged
an increased demand for cotton and
other fibers because consumers are indicat­ing
a willingness to increase their spending
3Cotton farmers participated in the PIK
program to a greater extent than antici­pated.
Under PIK, farmers are to receive, in
return for cutting back acreage, cotton
surplus from previous years totaling 1. 3
million bales.
6 family Economics Review 1984 No.2
for goods of all kinds. Therefore, the re­duction
in cotton supply may lead to higher
prices in 1984. During the first 7 months of
1983, the price of cotton averaged 75 cents
a pound, 6 cents more than for the same
period in 1982.
Approximately 30 percent of 1982 cotton
imports were made from U.S. cotton (or
cotton textiles). About 90 percent of U.S.
cotton textile imports from Korea are made
of U.S. cotton; corresponding figures for
Taiwan, Japan, and Hong Kong are 70, 44,
and 32 percent, respectively.
Wool
U.S. wool production for 1983 is estimated
at almost 6 percent below the 1982 yield and
about 9 percent below the 1981 yield. Mill
consumption of apparel wool for the first
6 months of 1983 was 12 percent higher than
that for the same period in 1982. Imports of
raw wool for apparel in the first 6 months
of 1983 were 13 percent below imports for
the same period in 1982. U.S . farm prices
for wool in the first 7 months of 1983 were
an average 10 cents per pound lower than
for the same period in 1982 and 30 cents per
pound lower than for January to July 1981.
Mohair
Supplies of mohair, worldwide, have been
sold out as soon as they became available.
Mohair blends are used by designers of
women's coats, sweaters, suits, and so
forth, instead of the more costly angora and
cashmere.
U.s. exports of mohair in the first
6 months of 1983 were 22 percent higher than
for the same period in 1982. Over 60 percent
of the exports were shipped to the United
Kingdom.
Manmade Fibers
Shipments of manmade fibers by U.S.
producers during the first 7 months of 1983
were 12 percent above shipments a year
earlier (_!1) but 12 percent below the 1981
level (.!Q_). During the first 6 months of
1983, 72 percent of all fibers consumed by
U.S. mills were manmade Cll).
DEVELOPMENTS IN THE EXPORTING AND
IMPORTING OF FIBERS, FABRICS, AND
APPAREL
The trade deficit in 1982 for the U.S.
textile and apparel industries was the
largest in history--$6. 3 billion. In 1983
this trade deficit should be even higher;
for the first half of 1983 it was 34 percent
higher than during the same period in 1982.
In square yards equivalent, imports were 20
percent higher for January to August 1983
than for the comparable period in 1982;
corresponding increases by fiber were:
Cotton--14 percent, wool--20 percent, and
manmade--24 percent. Imports now account
for about one-third of all apparel sold in
the United States . About 25 percent of
apparel imports are brought into this
country by U. S. manufacturers of clothing
(1..); they contend their costs would double
if the garments were made here.
Most imports come from Hong Kong, Taiwan,
and South Korea. Quotas imposed by bilateral
trade agreements with these countries permit
only 0. 5 to 1. 0 percent growth in categories
considered particularly damagin~ to U.S.
manufacturers , such as cotton knit shirts
for men and boys, wool coats for women, and
manmade fiber blouses . Other categories,
believed to be comparatively less threaten­ing
to domestic suppliers, are uncontrolled
but subject to "consultation calls." When
the U.S. market is disrupted'* by a country's
product not under quota, a consultation call
cuts off new exports of the item from that
countr y without prior warning . During the
first 9 mouths uf 1983, 67 calls were
invoked and millions of dollars worth of
goods were embargoed.
'*Market disruption by an exporting country
is determined by the Committee for the
Implementation of Textile Agreements,
composed of representatives from the U.S.
Departments of Commerce, Labor, State, and
Treasury. The U.S. Department of Commerce
is responsible for proving market disruption
and must offer evidence, including data
regarding declines in U.S . production,
employment, and mill capacity; a surge in
imports; and extremely low prices of
imported goods in comparison to American
goods.
About half of import growth in 1983 was
in products controlled by specific quotas,
generally from the "big three" nations and
China; the other half is in products not
covered by specified quotas from all
exporting countries. As quotas are filled,
U.S. importers switch to similar items not
subject to quotas; for example, when a quota
for cotton sweaters was filled, sweaters
made of a ramie/ cotton blend were imported.
When quotas are neared, the exporting
country raises prices dramatically, and
American goods become more competitive.
A new 5-year bilateral trade agreement
with China was signed on August 19, 1983,
which permits U.S. imports of designated
Chinese textile items to grow by 3 to
4 percent annually. Because the volume of
Chinese imports has increased so rapidly in
recent years, U.S. negotiators stressed
minimum growth rate rather than actual
reduced volume.
On August 22, 1983, the International
Trade Commission found that U.S. textile
companies suffered economic injury from
China's dumping of cotton-polyester cloth.
These goods were found to be priced 22.4
percent below the fair market value, which
will be the amount of fine imposed on China
retroactive to March 3, 1983, when the
Department of Commerce first detected
dumping. The Chinese share of the U.S.
cotton-polyester printcloth market went from
0. 8 percent in 1979 to 17 percent in the
first 6 months of 1982 <~) ·
FEDERAL LEGISLATION AND REGULATIONS
RELATED TO TEXTILES AND APPAR!EL
Flammable Fabrics Act
Final rules on the enforcement and
administration of the Flammable Fabrics Act
became effective in June 1983 (l) regarding
the use of alternative tests to prove com­pliance
with the flammability standards for
clothing textiles and children's sleepwear.
The rules stipulate under what conditions
tests may be used that utilize equipment or
procedures other than those designated in
the flammability standard.
1!1114 No.2 family Econorucs Rev1ew 7
Between 1975 and July of 1983, a product
that failed to meet Federal flammability
standards was prohibited from sale in this
country, and from export to another country
unless the manufacturer informed the Con­sumer
Product Safety Commission ( CPSC) that
the product would be manufactured exclusive­ly
for export. In July 1983 the CPSC voted
to allow such goods to be exported, if
labeled properly, upon 30 days notice to
CPSC. The importing country would then be
notified and given the opportunity to reject
the shipment.
In 1977, when the CPSC banned domestic
sales of children's sleepwear treated with
tris, some textile and apparel manufacturers
and retailers experienced financial losses.
Legislation permitting these companies to
apply to the U.S. Court of Claims for
compensation from the Government was
passed early in 1983.
Care Labeling of Textile Wearing Apparel
and Certain Piece Goods
The Federal Trade Commission has amended,
effective January 2, 1984 (~), the current
labeling rule which became effective July
1972. The current rule has been difficult to
enforce because it does not clearly state
what information should be on care labels.
The amended rule is designed to eliminate
problems which occurred because of insuffi­cient,
inconsistent, or inaccurate care
labeling. It will identify in greater detail
the washing or drycleaning information which
should be included on a permanent care
label, provide standardized language that
can be used in the instructions, and require
that any care instructions be supported by
test results, current technical literature,
or past experience. The same information
must appear at the end of the bolt or roll
of fabric if intended for home-sewn wearing
apparel. Specific requirements include:
Care labels must be attached in such a
way that they can be seen or easily found
before product is purchased; if prepackaged,
care instructions may also appear on package
exterior.
Either washing or drycleaning instruc­tions
are required; if either is acceptable,
the manufacturer may select which set of
instructions to put on label--both are not
needed.
8 F amily Econom1cs Rev1ew 1984 No.2
If a washing procedure is described,
the label must specify whether machine or
hand washing is desirable.
If regular use of hot water will not
harm the product, the label need not specify
water temperature.
• Care labels must state whether the
product should be dried by machine or some
other method. When machine drying is speci­fied,
drying temperature must be included
unless hottest setting will not harm
product.
Ironing instructions must be given if
ironing is needed to preserve the product's
appearance. If ironing is mentioned, a tem­perature
setting should be specified unless
a "hot" iron will not harm the product. If
ironing would damage the product, a warning
is required.
If all available bleaches can safely be
used on a regular basis, the label need not
mention bleaching. If only non-chlorine
bleaches can be used, the label must specify
"only non-chlorine bleach, when needed." If
all bleaches would be harmful, the label
should specify "no bleach . " Also, if product
is bleachable, a "no bleach" warning is
prohibited.
A care label does not have to warn
against washing methods not recommended on
the label; also, if the care label includes
washing instructions it need not warn
against dry cleaning. (The reverse is also
true).
If drycleaning instructions are given,
a solvent should be specified unless any
commercially available solvent can be used.
If any regular step of the drycleaning
procedure would harm the product or other
items being cleaned with it, a warning must
be included on the label. The terms
"drycleanable" and "commercially dryclean"
are prohibited because they do not have a
clear meaning for consumers and drycleaners.
The Commission has also provided a
glossary of standardized terms. The glossary
includes some terms and definitions which
were developed by the American Society for
Testing and Materials; these were found to
be clear and meaningful to consumers by the
Federal Trade Commission. Other terms,
including "machine wash," "hand wash,"
''home launder," "wash separately," all
bleaching instructions, and all drycleaning
instructions, were redefined by the
Commission.
Other Labels
On August 4, 1983, legislation (8.1816)
was introduced and referred to committee
that would require U. S. apparel and textile
manufacturers to identify their products as
made in this country. Imported items would
identify the country of origin. This label
would be placed in the most conspicuous
place possible on the inside of the garment,
and for packaged p'rociucts country of origin
(including the United States) would be
placed on the package exterior. Mail-order
catalogs would be required to identify
country of origin, also.
Many segments of the textile and apparel
industry are voluntarily promoting "made in
America." Promotions include the National
Knitwear and Sportswear Association's
''American knitwear--made in the USA" and
the American Wool Council's "made-in-America
from American wool."
Occupational Exposure to Cotton Dust
The Occupational Safety and Health Admin­istration
(OSHA), U. S. Department of Labor,
after spending 2 years reviewing the cost
and effectiveness of the Federal cotton dust
safety standard, concluded that both indivi­dual
respirators and engineering controls
for ventilation are needed to protect tex-tile
employees. OSHA has proposed a revised
standard which retains the requirement that
the textile industry meet permissible
exposure levels by installing engineering
control equipment. Exempted in the revised
standard (!~) , however, are segments of the
nontextile and knitting industries where
there is no evidence of significant risk
from exposure to cotton dust.
About 80 percent of textile mills have
incorporated engineering controls and find
the equipment is improving productivity and
employee morale. Based on measurements of
cotton dust levels in mills, OSHA estimates
the incidence of byssinosis or brown lung
disease has decreased by 35 to 40 percent
since 1978.
LITERATURE CITED
1. Consumer Product Safety Commission.
1983. Standards for the flammability of
clothing textiles and children's sleep­wear;
final enforcement and administra­tive
rules. Final rules. Federal
Register 48(93):21310-21317.
2. Cotton Incorporated. 1983. New York,
N.Y. [Daily News Record, June 16
issue, p. 3.]
3. Daily News Record. 1983. August 11
issue, p. 10.
4. Davidson, William. 1983. Management
Horizons Inc. [Personal communication
on October 25, 1983.1 Columbus, Ohio.
5. Federal Trade Commission. 1983. Amend­ment
to trade regulation rule concern­ing
care labeling of textile wearing
apparel and certain piece goods.
Federal Register 48(181) :41575.
6. More, Carlos. 1983. American Textile
Manufacturers Institute. [Personal
communication in October 1983.1
7. Priestland, Carl. 1983. American
Apparel Manufacturers Association.
[Personal communication in October
1983.]
8. Schechinger, Robert. 1983. E. I. Du Pont
De Nemours & Co. Inc. [Daily News
Record, June 14 and July 8 issues, and
personal communication with Terrence
Cressy on October 17, 1983.]
9. Textile Organon. 1976. Vol. 47, No. 6,
p. 65.
10 • • 19 B 2. Y ol. 5 J. No. 8 ,
p. 180.
11. • 1983. Vol. 54, No.5, p. 67,
12. • 1983. Vol. 54, No. 6, p. 81.
13. • 1983 . Vol. 54, No. 8,
pp. 131 and 136.
14. U.S. Department of Labor, Occupational
Safety and Health Administration.
1983. Occupational exposure to cotton
dust. Proposed rule. Federal Register
48(113):26962-26984.
1984 No, 2 fam.ily Economics Review t
Credit Card Use in the
United States
Credit cards are widely used throughout
the United States. According to the Board of
Governors of the Federal Reserve System,
there are currently almost 600 million credit
accounts in existence with outstanding
balances totaling more than $7 5 billion. A
recent study by the Board of Governors pull­ed
together several surveys that examined
(1) the impact of credit cards on the costs
incurred by retailers and creditors, the
pricing of goods and services, and the vol­ume
of retail sales; and (2) the attitudes
of consumers and retailers toward discount­for-
cash programs. The overall purpose of
the study was to determine if. and to what
extent, cash-paying consumers subsidize
credit card users when they both pay the
same prices at the retail level. Findings
indicate that (1) transaction costs for
credit cards are typically 2 to 3 percent
higher than similar costs for cash and
checks, (2) these higher costs are not
offset by increased sales, (3) credit card
usage increases the price of a given item by
about 1 percent, and (4) consumers who pay
cash for their purchases help to cover the
costs incurred by retailers when they
provide credit to others.
Assumed incremental sales above the
cash-only volume was the dominant reason
retailers first honored credit cards; they
believed that consumers, lacking cash on
hand or in the bank, would spend greater
amounts. There is little evidence to support
this theory, however. Neither is there any
evidence indicating a particularly strong
relationship between impulse buying and
credit cards; credit card use probably in­fluences
the timing of purchases more than
the amount or number of purchases. A retail­er's
objective in extending credit today may
be defensive--to avoid losing sales to
competitors who do honor credit cards.
There are several kinds of costs that
retailers incur from a sales transaction.
These costs include ( 1) point-of-sale costs
(such as time and personnel needed to write
sales slips, make change, and verify
identities); (2) loss and security costs
(from thefts, bad checks, and credit card
10 family Economics Review 1984 No.2
fraud); and (3) deposit and financial costs
(such as bank service charges). An April­May
1983 survey by the Board of Governors
of 700 stores asked retailers to compare
these costs for cash, checks, and credit
cards. For point-of-sales costs, most
retailers considered credit cards more
costly than cash and checks. For loss and
security costs and deposit and financial
costs, however, most retailers saw little or
no difference among the three. An additional
cost of credit cards is the "merchant dis­count"
fee paid by retailers to third-party
card issuers. This fee is figured as a
percentage of the volume of credit card
sales (typically 1 to 5 percent).
Although retailers believe credit cards
have a minimal impact on their transaction
costs and prices, legislators have consider­ed
several measures to protect consumers
from paying the higher prices charged by
retailers who accept credit. These include
eliminating interest rate ceilings or any
other barriers that prevent creditors from
charging the full cost of credit to credit
users; and establishing a two-tier pricing
system that would allow discounts for con­sumers
using cash, or surcharges for those
using credit cards. The Cash Discount Act of
1981 (P.L. 97-25), which is now in effect,
encourages discounts for cash purchases and
bars surcharges for credit card purchases.
Currently about 25 percent of gasoline
stations and 6 percent of other retailers
offer discount-for-cash programs. Since only
15 to 30 percent of total sales are credit
card sales and retailers regard the differ­ence
among cash, check, and credit cards as
a relatively small proportion of the trans­action
amount, most do not offer discounts
for cash. Although a measurable shift from
credit to cash use is likely when retailers
offer discounts, there seems to be only
minimal savings to the retailer, especially
if the credit customer switches from paying
with a credit card to paying with a check.
Source: Board of Governors of the Federal
Reserve System , 1983, Credit Cards in the
U.s. Economy: Their Impact on Costs, Prices.
and Retail Sales. (Single copies of this
report are available free of charge from the
Board of Governors of the Federal Reserve
System, Washington, D. c. 20551.)
Food Price Trends1
In recent years food price increases have
trended downward . Since 1979, when food
prices rose nearly 11 percent, prices have
risen at successively lower rates each year.
In 1983 fuud prices rose about 2 percent,
marking the smallest increase since 1967.
Also, 1983 was the eighth time in the last
9 years that annual food prices rose less
than the general inflation rate.
Price increases have slowed in recent
years for both food at home and food away
from home. Prices for food at home, repre­senting
food purchased in grocery stores,
rose nearly 11 percent in 1979, but rose
only about 1 percent in 1983. Prices for
food purchases away from home in
restaurants, cafeterias, and fast food
establishments rose about 4 percent in 1983,
compared with more than 11 percent in 1979.
The underlying cause of food price
changes can be seen in the table. The retail
cost of the USDA's market basket represents
domestically produced farm foods sold in
grocery stores, and consists of two parts-­the
farm value and the farm-to-retail price
spread . The farm value represents about
one-third of the retail cost. The farm-to­retail
price spread is the difference
between farm value and retail costs, and
represents all of the costs incurred in
transforming raw farm products into finished
foods and making them available to
consumers. The market basket does not
include imported foods, fish, and seafood .
The farm value of food rose at a decreas­ing
rate in each of the last 3 years, and in
1983 the farm value of food declined. This
trend developed in part from rising crop
production and weak domestic and foreign
demand for agricultural commodities as a
result of the r ecession and the loss of some
grain export markets . This, coupled with
large supplies of livestock products,
depressed farm prices in 1983 .
1 This article is abstracted from "The
1984 outlook for food prices and consump­tion
, " a talk presented by Ralph L. Parlett
of the Economic Research Service, USDA, at
the 1984 Agricultural Outlook Conference in
November 1983 at Washington, D. C.
Market basket atatiatica
Category Relative Olanges fran previous
weight year (percent)
1979 1980 1981
Retail cost •••••••• 100 11.7 7.2 7,7
Farm value •••••• 33 10.7 5.5 2.8
Farm-to-retail
price spread ••• 67 12.3 8.3 10.5
1982 1983 1 1984 2
Retail cost •••.•••. 100 3.8 l.l 3- 6
Farm value •••••• 33 1.0 -4.5 4- 7
Farm-to-retail
price spread ••• 67 5.1 4.0 2- 5
1Preliminary.
2F'orccast.
Increases in the farm-to-retail price
spread have also slowed in recent years.
Since the farm-to-retail price spread
accounts for about two-thirds of the retail
price of the market basket, smaller in­creases
in food marketing costs exert a
significant impact on food prices. The farm­to-
retail price spread rose about 4 percent
in 1983, less than half as much as in 1981.
In 1984 food prices will average 4 to
7 percent above 1983 prices, with relatively
low prices moving into 1984 and higher
prices at the end of 1984. Further increases
in marketing costs, a moderate rise in
prices of farm commodities, and stronger
consumer demand prompted by higher real
disposable personal income are the primary
reasons for the increase. The 1983 drought
is responsible for about 1. 0 to 1. 5
percentage points of the increa~e. While . the
drought's impact on the yearly mcrease m
food prices is relatively small, most of its
impact on price increases will come at one
time--in the summer and fall of 1984.
Early in the year. food prices will rise
at a relatively slow rate, but prices-­particularly
meat prices--are expected to go
up sharply from July to Septem_ber, when the
adjustment in livestock production due to
the drought reduces beef and pork supplies.
1984 No. 2 Family Economics Rev1ew 11
Economic Outlook for
Families-1984
By Colien Hefferan
Economist
Recovery from the recession of 1981-82 has
been the most important economic development
affecting families in 1983. The economy
began a sharp upturn during the first half
of the year, with real Gross National
Product (GNP) increasing at a near record
9 . 7 -percent annual rate in the spring.
Estimates show r eal GNP grew at a 7. 7-
percent annual r ate in the third quarter. 1
Although the pace of recovery has moderated
somewhat over the past several months, most
indicators suggest that 1983 and 1984 will
be characterized by economic expansion.
Overall, real GNP is expected to show a
6.0-percent increase in 1983 and about a
4. 5-percent increase in 1984, reflecting
both increased economic activity and reduced
inflation. As the recovery progresses,
families should benefit from improved
employment opportunities and relatively
stable prices.
The economic recovery and other trends,
such as deregulation of the banking indus­try,
changes in Federal income tax laws, and
proposed revisions in State pr operty laws,
are creating a new environment for family
financial decision making. Economic uncer­tainty
may be giving way to growing complex­ity
as the major problem facing families as
they manage their resources. This paper
reviews the economic conditions and trends
affecting both the income and expenditure
sides of the family ledger, as well as indi­cators
of the ability of families to balance
the two. Family financial management issues
are examined in light of current economic
conditions and the outlook for the future.
1Estimates of GNP are published monthly in
the Survey of Current Business, U.S.
Department of Commerce, Bureau of Economic
Analysis.
1% ramily Economics Review 1984 No . 2
Income
1983 may be the first year since 1979 in
which there is an increase in median family
income adjusted for increases in consumer
prices. Although household income data for
1983 will not be available until the March
1984 Current Population Survey (CPS), the
personal income component of the National
Income and Product Accounts (NIPA), an
aggregate measure of income available to
individuals and families, showed a
5.9-percent increase (about 3.0 percent
adjusting for inflation) between the second
quar ters of 1982 and 1983 and is continuing
to rise at an increasing rate. 2 This general
rise in personal income is unlikely to bene-fit
all families equally, however. In 1982,
for example , the decline in real median
income was greater among married couple
families, black families, families of
Spanish origin, and families living in the
West than among other types of families (see
table). In the same year, farm family income
rose, whereas nonfarm family income declined.
In 1983 this relationship is likely to be
reversed as a result of the summer drought.
During the past decade the real income
position of families has eroded, whereas
non family households 3 have maintained or
improved their level of real income. Income
remains much lower in nonfamily households
than in families, however. Nonfamily house­holds
rely on transfer payments and other
nonearned sources of income more than
families do. Until very recently, nonearned
income (such as social security benefits,
which are indexed to increases in consumer
prices) has grown more rapidly than wages
and salaries.
The decline in family income and the
maintenance and improvement in nonfamily
2 lncome data from the CPS and the NIPA
are not directly comparable. Only limited
trend information on family income can be
derived from the NIPA. See "Interpreting
statistical data in family economics," by
Colien Hefferan, et. al., Family Economics
Review 1983(1) :21-26.
3 lncludes primarily persons living alone,
including an increasing number of young
persons delaying marriage and older, r etired
persons.
income is especially pronounced when after­tax
income is examined. Since non family
households tend to be concentrated at the
low end of the income distribution, the
redistributive aspect of the Federal income
tax system, coupled with extra exemptions
for older persons and nontnxed transfer pay­ments,
has acted to preserve the disposable
income of these households (1_). At the same
time, the tax burden on family households
has risen faster as a result of rising nomi­nal
incomes and little offsetting increase
in personal exemption and zero-bracket
amounts. The larger the family, the greater
has been the rate of increase in relative
tax burden. For example, a couple earning
median income with two dependents will pay
about 9.9 percent of the 1984 earnings in
Federal income tax, compared with 6. 9 per­cent
in 1960. A couple with four dependents
will pay 8.4 percent in 1984, compared with
2.6 percent in 1960 (~).
Comparison of median family money income tn 198Z and 1981, by selected characteristics
Olaracteristic
All families .......•...............
Type of family:
Married couple families ••••••••••
Wife in paid labor force ••••••
Wife not in paid labor force •••
Female householder, no
husband present ••••••••••••••••
Race of householder:
White ••••••. • ••••.•.••.••.• · · • • ·
Black . . •......•..•...•.•........
Spanish origin ••••••••••••••••••
Residence:
Nonfarm •• .••..••.....••••..•.•••
Farm .•••••.••••.••••..... · .. • · · •
Region:
Northeast ••.••••.•.••.••...••.••
North Central ....•......•...•• · •
South ..•.............•.•.•..••..
West ••••••••••••••••••• • • • • • • • • •
Number of earners:
No earners .........• • • • •• , . • . • • •
1 earner ...........•......... · · ·
2 earners ......•................
1982
$23,433
26,019
30,342
21 '299
11' 484
24,603
13,599
16,228
23,585
18,756
24,918
24,219
21,500
24,624
9,911
18,913
28' 073
Median family income
Constant
dollars
$23,761
26,630
31,040
21,571
11.632
24,959
14,079
17,406
23,937
18,129
25,159
24,535
21,844
25,337
9,987
18,707
28,507
1981
CUrrent
dollars
$22,388
25,065
29,247
20,325
10,960
23,517
13,267
16,402
22,554
17,082
23,706
23,118
20,582
23,873
9,410
17,626
26,860
Percent
change in
real money
inccme
-1.4
-2.2
-2.2
-1.3
-1.3
-1.4
-3.4
-6.8
-1.5
3.5
-1.0
-1.3
-1.6
-2.8
-.8
1.1
-1.5
Source: u.s. Department of Commerce, Bureau of the Census , 1983, Money income and
poverty status of families and persons in the United States: 1982, Current Population Reports,
Series P-60, No. 140, (advance data from the March 1983 Current Population Survey).
1984 No.2 family Economics Rev i ew 13
Although real income may rise for all
types of households in 1983 and 1984, these
trends suggest that nonfamily households may
experience a larger increase in disposable
income than will families. This pattern
could change, however, if pretax income in
families increases at a faster rate than in
nonfamily households. This could be the case
if earnings continue to increase significantly
more rapidly than transfer payments.
Changes in the level of family income are
accompanied by changes in the number and
percent of persons below the poverty line.
In 1982, when real median income declined
1.4 percent, the poverty rate rose from 14.0
to 15.0 percent. Poverty rates increased
among whites, persons of Spanish origin, and
blacks. The age structure of poverty changed
significantly in 1982 with the poverty rate
among children under 18 years old rising
from 19.8 to 21.7 percent, while the rate
among persons 65 years and over showed no
significant change from the previous year (!!_).
Poverty rates are influenced not only by
income but also by eligibility standards for
Government aid programs and by inflation,
which affects the poverty threshold.'+ In the
absence of major changes in eligibility
standards, rising family income and moderat­ing
inflation in 1983 and 1984 should act to
reduce the poverty rate.
Employment is the major factor influencing
income. Personal and family income are
expected to increase overall in 1983 and
1984 not because the earnings of currently
employed workers will rise significantly,
but rather because the number of employed
persons is expected to rise and the inci­dence
of unemployment to decline. Workers
with jobs during all of 1980, for example,
earned 2-1/2 times as much as those who
were unemployed during all or part of the
year (~_). In 1981 families with one or more
unemployed members had a median income
about 33 percent less than families with no
unemployment (~_).
During 1983 unemploymtmt declined from the
post-World War II record of 10.8 percent
"The poverty threshold for a family of
four was $9,862 in 1982. The threshold is
expected to increase to about $10, 200 in
1983.
U F amily Econo111ica Review 1984 No.2
in December 1982. 5 In October civilian unem­ployment
was 8. 8 percent . There has also
been a reduction in the number of persons
involuntarily working part time because of
the unavailability of full-time jobs . During
the same period, the number of employed
persons has grown by about 3. 0 million, with
adult men and women sharing about equally
in the increase. Average hours of work and
hourly earnings have edged upward slightly
during the first half of 1983. The employ­ment
earnings picture is expected to
continue slowly improving into 1984, with
unemployment at the end of the year in the
8. 0- to 8. 5-pe,rcent range.
The long-term forecast for employment and
income is mixed, however. In a report
entitled The Future of Work, the AFL-CIO
predicts persistently high unemployment
throughout the eighties as a result of
technology replacing workers, the high
exchange value of the dollar encouraging
imports, and rapid entry of women, minori­ties,
and young people into the labor force
<!). They also predict that the labor force
will become polarized into a two-tier
occupational structure with executives,
scientists, engineers, and managers in one
group and low-paid workers performing
unskilled, repetitive, and replaceable tasks
in the other. This polarization and loss of
a skilled, middle class will result in a
widening earnings and income gap between
workers. Families that by choice or
circumstance have only one earner would be
at greatest economic risk in this scenario.
In particular, single-parent households,
most often headed by women who are less
likely to hold upper-tier jobs, could fall
victim to lost economic opportunities if
middle-class jobs become scarce.
Others argue that the introduction of high
technology jobs will result in only a modest
rearrangement in the income and occupational
structures (!) and that changes in jobs can
5Employment data is published monthly in
News and Employment and Earnings,
U.S. Department of Labor, Bureau of Labor
Statistics.
have a positive effect on work <.~). As jobs
have changed, so have family labor force
patterns. Many of the low responsibility,
unskilled, and replaceable jobs available in
the service sector, for example, blend well
with family responsibilities, resulting in
continued growth in the number of two­earner
families. The income position of the
middle class may be as much influenced by
this as by the potential polarization of
occupations. Technology may allow more
decentralization of work, which could result
in increased flexibility and control over
work schedules and less conflict between
work and family roles.
Expenditures
Consumer expenditures, which account for
about two-thirds of transactions in the U.S.
economy, are poised for an upturn. The
Index of Consumer Sentiment, which often
signals improvement in buying plans,
measured 91.5 in the second quarter of 1983,
the highest level since 1972. 6 Overall,
economic indicators show incomes are rising,
household debt loads are relatively low, and
asset levels are high. In spite of this
apparent willingness and ability of con­sumers
to buy, a major burst of spending has
been slow to start in 1983. After increasing
in the spring, retail sales declined 1.4
percent in August. This 1-month decline in
sales may be attributed to isolated condi­tions
such as shortages of new cars, the
telephone strike, and Hurricane Alicia. By
yearend and into 1984, consumer spending is
expected to show a sustained upward trend.
Prices and the rate at which they change
are major factors influencing spending.
During the first 9 months of 1983, the
Consumer Price Index for all Urban Con­sumers
(CPI-U) rose at a seasonally adjusted
annual rate of 3. 7 percent, slightly lower
than the 3. 9-percent rate in 1982. The rate
of price increases has accelerated during
the year, however, with prices advancing at
tt 5. 3-percent compound Annual rate in the
6 This measure of consumer confidence is
collected as part of the Survey of Consumer
Attitudes, by the Institute for Social
Research, University of Michigan.
Richard T. Curtin is director of the survey.
third quarter compared with a 0.4-percent
compound annual rate in the first quarter.
Energy prices have been the dominant
factor influencing the CPI-U during 1983
(~). In the first quarter of the year,
energy costs decreased at a 25.1-percent
annual rate. In the second quarter, energy
costs increased at a 21. 0-percent annual
rate to nearly offset the earlier decline.
In recent months, gasoline and household
fuel prices advanced slightly. Shelter
costs, excluding energy, have increased in
1983 at a slightly faster rate than in 1982.
Medical care services, transportation
services (including auto financing and
public transportation costs), and food
prices have increased at a lower pace thus
far in 1983 than in 1982. The prices for
commodities used by families--such as new
cars, household furnishings, and apparel-­fluctuate
widely from month to month, but as
a group have increased at about the same or
slightly slower rate than in 1982.
Forecasts for consumer price inflation in
1984 range from 4.5 to 6.0 percent, depend­ing
on expectations for food prices and
interest rates. Most forecasts indicate a
slightly accelerating rate over the course
of the year. Underlying the moderating rate
of inflation in 1983 and 1984 are relatively
small increases in wage demands. Increases
in wages have been lower in 1983 than in
the past 20 years and are expected to remain
low in 1984. Labor costs comprise about two­thirds
of the costs of producing and distri­buting
consumer goods and services. With
low and predictable increases in costs of
this factor of production, the likelihood
of unanticipated spurts in prices in 1984
is very low.
High and unanticipated inflation in past
years created a variety of problems and
generated some consumer spending and finan­cial
management practices with detrimental,
long-term consequences for families. Many
families are now living with the conse­quences
of decisions based on inflationary
expectations. In periods of rapid inflation,
market information about prices quickly
becomes obsolete. This can lead to careless
purchasing or buying in anticipation of
1984 No . 2 family EconornjcA Review 1S
price increases rather than buying to meet
real needs. Inflation reduces the value of
cash balances, leading some families to com­pletely
deplete cash reserves in favor of
illiquid, but inflation-resistant, assets.
Inflation also reduces the real costs of
borrowing, encouraging families to mortgage
future earnings to meet current consumption
wants and needs. Inflation can lead to
short-term investment rather than long-term
capital development. Although all of these
practices may be appropriate and effective
when inflation rates are high and accelerat­ing,
as inflation rates moderate and stabi­lize,
new spending criteria and financial
management practices need to be developed.
Interest rates exert a major influence on
consumer spending, particularly for durables
such as appliances, autos, and houses. The
sensitivity of consumers to changes in
interest rates is evidenced in the sharp up­swings
and downturns in demand for houses
and autos that accompany changes in
mortgage and installment credit rates. These
shifts are attributable both to changes in
families' ability to qualify for credit at
different interest rates and to their
willingness to pay the finance charges
associated with borrowing money.
From autumn of 1982 through late spring of
1983, interest rates (including home mort­gage
and installment rates) trended steadily
downward . In early summer, however, rates
again began to climb, with home mortgage
rates peaking at 13.7 percent in July. Real
interest rates, that is, nominal rates
adjusted for inflation, continue to be
historically high in spite of the economic
recovery. For example, adjusting the current
mortgage rate of 13.7 percent for the
3. 7-percent annual rate of increase in the
CPI-U, real mortgage rates are about 10.0
percent, or twice the level of real rates in
1960.
Opinion is strongly and widely divided on
the outlook for interest rates in 1984. At
issue is the impact of funding the Federal
budget deficit on the demand for credit.
Those who see interest rates rising argue
16 Family Economics Review 1984 No.2
that funding the Federal deficit will squeeze
the credit markets, putting renewed pressure
on rates. Others argue that rates can be
stabilized through the use of monetary
policy and continued efforts to control the
deficit . Under either circumstance, the
forecasts do not call for major swings in
rates charged to consumers in 1984.
Interest rates paid by consumers in 1984
will continue to be influenced by deregula­tion
in the banking industry which began in
1980. During the past 3 years, interest
rates and deposit terms on savings and
transaction accounts at commercial banks and
thrift institutions have been deregulated.
One result of this process has been an
increase in market-determined, variable
interest rate accounts, which impose higher
costs on financial institutions than did
older, fixed rate accounts. As interest rate
ceilings are eliminated and more money earns
floating rates of r eturn, financial institu­tions
may need to increase the interest
rates charged on consumer loans and/or
create variable interest rate loan instru­ments
to match the new variable rate deposit
instruments. Many such instruments have
already been developed for home mortgages.'
Similarly, variable rate auto financing is
now offered in several States, and variable
rate lines of credit tied to home equity
have been introduced nationwide.
Balancing Income and Expenditures
The ability of families to balance their
income and spending needs can be generally
assessed by examinin5! trends in credit use
and saving in the household sector of the
economy. After more than a year of low
levels of credit use and steady saving
rates, the net worth position of households
was very strong at the beginning of 1983.
During the year, credit use expanded slight­ly
and saving declined. Nonetheless, house­holds
will enter 1984 in a strong net worth
position with capacity for spending and
acquiring new debt. As the economic recovery
progresses, resulting in a broader base of
employment and higher family income, both
credit and saving should expand in 1984.
7 See "Alternative mortgage instruments,"
by Carolyn S. Edwards, Family Economics
Review 1982(4): 1-18.
Credit use generally declines with con­sumer
spending during a recession. Families
pay off almost as much old debt as they
acquire new. Not only does the volume of
credit transactions decline during recessions
but the relationship of credit use to saving
changes. Over the past decade, households
have saved about $1.70 for each dollar of
debt acquired. 8 In 1982 the net saving-to­debt
ratio increased to 3. 6. indicating that
at the depth of the recession households
saved about $3.60 for each dollar of new
debt acquired. Beginning in early 1983, the
net saving-to-debt ratio declined to about
2. 2 and is continuing to trend downward .
The volume of credit, particularly home
mortgages, also increased in early 1983.
indicating that households were I'eturning to
nonrecessionary patterns of credit buying.
Savings dropped to 3. 9 percent of
disposable personal income in May as
households increased personal expenditures.
The rate of saving has fluctuated widely
over the past 2 years from 6.6 percent in
1981 to the current low rate. The volume and
rate of saving are expected to increase with
family income in 1984.
In recent years the forms of household
savings have varied as much as the rate of
saving . Through 1981 there was a long-term
trend toward increased saving in tangible
assets and decreased saving in financial
assets. The expansion of money market fund
investments in 1981 and 1982. stabilizing
real estate values, and the introduction of
new money market instruments at banks and
thrift institutions have somewhat checked
this trend .
As interest rates have become more
volatile, families have become more rate
sensitive as shown in an increasing number
of savings and investment transactions in
recent year s . At the same time, new special
purpose savings accounts, such as Individual
Retirement Accounts (extended to all earners
8Calculated as a ratio of net incr ease in
assets to net increase in liabilities in the
household sector, using "Flow of Funds"
data from the Federal Reserve System.
in 1983), may lead to deposits being held
longer and greater stability in family
savings balances.
Famlly Financial Management
During the past decade the environment in
which families make economic decisions has
been shaped by four underlying trends: The
aging of the population, increasing labor
force participation among women, growing
diversity in family living arrangements, and
advancing technology applied to information
management. These trends--combined with
supply and price shocks in fossil fuels,
frequent world and national political
changes, and declining confidence in public
institutions--led to pervasive economic
uncertainty in the late 1970's and early
1980's. Families responded, in part, by
moderating their expectations for the
future. Although living standards9 may not
have declined for most families over the
past several years, it is also unlikely that
they have risen. The one positive legacy of
economic instability and uncertainty may be
reduced pressure to always have more.
Steady living standards would allow family
resources to catch up with family goals.
The process of managing economic
resources within the family has always been
complicated because of the need to balance
current and long-term goals and the
difficulty of responding to the needs and
goals of several members at one time. In
recent years, it has also been complicated
by uncertainty about economic conditions
outside the control of the family. The
outlook for 1984 is for relatively stable
economic conditions. Uncertainty will focus
primarily on issues of degree rather than
direction of economic trends.
Although 1984 may offer a break from the
economic uncertainty that has characterized
the past decade, the financial management
tasks of families will continue to be per­formed
in a complex economic environment.
Deregulation of financial and other consumer
services and technological advances that
9The term "living standards" is used here
to mean the level of consumption and style
of life that individuals and families aspire
to attain.
1984 No.2 Famlly Eeonotuee ReVIew 11
allow specific cost-accounting and billing,
will expand the choices and increase the
decisionmaking responsibilities of families
in 1984. The market will offer a broadening
array of financial instruments and services,
and the distinctions between financial
institutions will blur. At the same time
that financial choices increase, costs paid
directly by consumers will also increase.
Prices will be based on individual service
costs and consumers will pay for exactly
what they use . No longer will costs of some
services subsidize the costs of others. New
pricing will also develop for other consumer
services. For example, growing competition
in the communications industry and reorgani­zation
of the Bell system will result in
unit pricing for most telephone services.
New pricing for services will also be
evident in the increasing share of savings
and credit instruments that carry variable
interest rates. This means that to effec­tively
manage resources, financial managers
will need to collect more information and
engage in complex calculations and analyses
to compare the long-term costs and benefits
of alternatives. As consumers are no longer
charged an averaged rate for service costs
and no longer earn an averaged rate of
return on their assets, those unable or
unwilling to shop for lowest costs and best
returns are destined to realize a signifi­cant
increase in costs and decline in
benefits in 1984.
Family financial management will be
influenced in 1984 and beyond by several
trends which signal growing reliance on
individual responsibility and decreased in­stitutional
involvement in family financial
affairs . For example, several States have
repealed or eased usury laws leaving the
market to set consumer interest rates and
individuals to recognize and reject
unreasonably high rates. Another approach
to increasing individual responsibility has
been use of the Federal income tax structure
to encourage families to save for retirement
through Individual Retirement Accounts and
ultimately ease pressure on socially
supported retirement income programs in the
11 remil)l Economics Review 1984 No.2
future. Families unable or unwilling to
assume individual responsibility for
protecting themselves in the financial and
consumer markets or taking advantage of
planning incentives may find their economic
position deteriorating at the same time that
social support is declining.
The underlying factors driving the economy
during the past decade will continue to
exert important influences throughout the
eighties. In the short term, the aging
population and increasing labor force par­ticipation
of women will benefit society
through an increase in the number of older,
experienced workers and growth in the ratio
of workers to nonworkers. In the longer
term, however, the aging population will
retire, reducing the resources needed for
continued economic expansion and refocusing
economic concerns on issues of equity and
distribution.
Families will enter the mid- and late­eighties
in a strong economic position with
improved prospects for employment and earn­ings,
stabilizing prices , historically high
asset levels, reduced debt loads, and
realistic expectations for the future. The
remainder of the decade will offer families
a relatively stable economic period in which
to adjust to increased economic complexity
and renewed individual financial responsi­bility.
This adjustment will require that
families increase their level of financial
management activities .
LITERATURE CITED
1. American Federation of Labor-Congress
of Industrial Organizations Committee on
the Evaluation of Work . 1983. The Future
of Work.
2. Callahan, David, Douglass Robertson,
and Lorie Scheibel. 1983. The anatomy of
price change. Monthly Labor Review
106(9):22-26. U. S. Department of Labor,
Bureau of Labor Statistics.
3. Piel, Gerard. 1983. Re-entering
paradise: The mechanize tion of work.
Challenge, September-October issue,
pp. 4-11.
4. Samuelson, Robert J. 1983. High-tech
job binge a fantasy. Washington Post,
June 28 issue, pp. Dl3-14.
TRENDS TO WATCH IN 1984
Marital property reform. The National Conference of Commissioners on Uniform
State Laws is currently drafting model legislation which defines the ownership of pro­perty
brought into and acquired during marriage. This legislation would influence State
inheritance laws, property settlement agreements, and the economic responsibilities
and status of husbands and wives .
Unisex pricing of insurance premiums and benefits. The U.S. Supreme Court's 1983
decision in the case of Norris vs Arizona Governing Committee for Tax Deferred
Annuities and Deferred Compensation Plans and current debate on the Fair Insurance
Practices Act C S. 372), suggest that new unisex pricing for insurance premiums and
elimination of gender-based annuity benefits may be instituted in 1984. Already several
States--including Massachusetts, Michigan, and Hawaii--have banned differential auto
insurance rates for men and women. Unisex pricing would result in generally higher
premiums for auto and life insurance and lower premiums for annuities and disability
insurance for women.
Special purpose. tax-sheltered savings accounts. Several legislative proposals
have been introduced in Congress which would extend Federal income tax benefits t~o
those who set aside income for savings related to specific goals, such as the purchase
of a house or education of children. Modeled after Individual Retirement Accounts
(IRA's), Individual Housing Accounts (IHA's) and Individual Education Accounts
(lEA's) would provide tax exemption or deferral for income saved for these purposes.
Although the likelihood is very low that IHA's or lEA's will become available in the
near future, debate on ways to help families meet these goals and encourage personal
saving is likely to mount.
• Social security funding and benefits. As part of the Social Security Reform Act
of 1983 (P. L. 98-21), social security taxes will increase for all workers. In 1984 the
increase will be offset by credits against Federal income tax liability. This is the
first time that social security funding has been directly or indirectly tied to other
Federal revenue. The Social Security Reform Act also makes a portion of benefits
received in high income households taxable for the first time.
Variable rate credit instruments. Banking deregulation, new entrants into the
financial services market, and easing of State usury ceilings have resulted in the intro­duction
of a variety of new credit instruments, especially variable interest rate loans.
Home equity credit lines, in which the interest rate varies with changes in the market
rate of interest, are an example. There is likely to be continut!d growth in the use of
these types of instruments in 1984.
5. Steuerle, Eugene. 1983. The tax treat­ment
of households of different size.
JE.. Rudolph G. Penner, editor. Taxing
the Family. American Enterprise Institute.
6. Terry, Sylvia L. 1982. Unemployment
and its effect on family income in 1980.
Monthly Labor Review 105(4) :35-43.
U.S. Department of Labor, Bureau of
Labor Statistics.
7. U.S. Department of Commerce, Bureau
of the Census. 1983. Estimating
after-tax money income distributions
using data from the March Current
Population Survey. Current Population
Reports, Series P-23, No. 126.
8. • 1983. Money income and
poverty status of families and persons
in the United States: 1982. Current
Population Reports, Series P-60 ,
No. 140.
9. U.S. Department of Labor, Bureau of
Labor Statistics. 1983. Linking
Employment Problems to Economic Status.
Bulletin No. 2169.
1984 No.2 famlly Economics Re-view 1'
Usezs' Guide: 1980 Census of
Population and Housing
The multivolume Users' Guide provides
information needed to understand and use the
data from the 1980 Census. Part A. Text
describes the subjects covered by the census
data; geographic considerations; reports,
tapes, maps, and other products; and ser­vices
available to users . Supplement 1
consists of three sections. The first,
"Part B," is a glossary with detailed defi­nitions
of terms associated with the Census.
The "Sources of Assistance" section fur­nishes
addresses and phone numbers of public
and private organizations offering Census­related
products and services such as tape
processing, area profiles, training, and
reference assistance. The third section,
"Updates," provides information on new
developments relating to the 1980 Census.
Copies of Users' Guide: 1980 Census of
Population and Housing may be ordered from
the Superintendent of Documents, Government
Printing Office, Washington, D.C. 20402, as
follows: Part A. Text, Stock No. 003-024-
03625-8, $5.50; Supplement 1, Stock No.
003-024-05004-8, $6.00.
Women at Work: A Chartbook
The Bureau of Labor Statistics, Division
of Employment and Unemployment Analysis,
has prepared a chartbook focusing on women's
economic activities and participation in the
labor force. The information is primarily
from the Current Population Survey and
includes labor force trends, occupational
and industrial employment patterns, unem­ployment,
and market work of women in a
family context. Women at Work: A Chartbook,
issued April 1983, is available from the
U.S. Government Printing Office. Washington,
D. C. 20402, for $4. Ask for Stock No.
029-001-02750-8.
.20 Family Economics Review 1984 No . 2
Consumer Spending: Recovery
andBeyond1
By Sandra Shaber
Director of Consumer Economics
Chase Econometrics
After several years of very sluggish
growth in consumer demand, the period ahead
should bring some welcome changes. The com­bination
of economic recovery, personal
income tax cuts, and moderate inflation is
providing the most significant boost to real
income in years . Productivity--a crucial
element in the growth of income and stan­dards
of living--has improved markedly from
the dismal performance of the late seventies
and should continue to rise more rapidly in
the years ahead. The prospects are good that
we will be able to avoid the spiraling
prices for energy and food that have had so
damaging an effect on the purchasing power
of middle- and lower-income consumers. In
most respects demographic changes will rein­force
the economic trends. Slower growth in
the adult population and a shift in age
structure of the baby boom generation will
bolster income per capita and per household,
favoring growth in demand for more discre­tionary
and income-sensitive goods and
services.
Household Budgets Through the Mid-Eighties
Consumer spending during the next several
years will be dominated by recovery from the
recent recession and preceding years of weak
economic activity. The most dramatic change,
already underway, is that consumers will
spend an increasing share of their budgets
on autos, appliances, furniture, and other
durable goods.
• Inflation-adjusted expenditures per
household on many key durable goods are
below peaks reached 3 and even 4 years ago.
The result is a substantial backlog in
1 This article is condensed from a paper
presented at the Agricultural Outlook
Conference in November 1983 at Washington,
D.C. Complete copies are available from
Family Economics Research Group (see inside
front cover for address) •
demand which will require several years to
satisfy. A rebound in sales of durable goods
is typical during an economic reco\Tery since
these are the types of purchases which are
most readily sacrificed or postponed during
recessions. However, the rebound effect in
this recovery should be especially strong
because of the very long period of poor
economic conditions and the persistence of
extremely high consumer finance rates.
• Strong underlying demand for housing,
as witnessed by the rapid surge in housing
starts and home sales as soon as mortgage
rates began to ease, is providing a major
boost to sales of housing-related goods.
Demand for appliances and furniture will
continue to expand in the next several years
as long as significant increases in mortgage
rates and horne prices can be avoided.
• The demographic trends are favorable,
especially since the baby boom generation is
swelling the number of consumers in the
prime auto purchase and household formation
years. A large fraction of these consumers
are dual-earner couples with above-average
incomes.
Slow income gains and high interest
rates have led to a major retrenchment in
consumer cr edit purchases since 1979. Even
with stepped-up credit demand recently, the
ratio of installment debt to income remains
modest, and consumers generally are in a
good position to finance major purchases.
• Consumer confidence has soared to
levels not seen since the early seventies,
with many people reporting that interest
rates and other economic conditions favor
buying homes, autos, and other durable
goods.
Demand for durables during this period
could turn out to involve some trade-offs,
especially between autos and housing-related
durables. The key element is likely to be
the trend in home prices and the cost and
availability of mortgages. Should prices
accelerate once again, many consumers will
be priced out of the market. Slower growth
in demand for housing may then encourage
more auto purchases as many families decide
to continue paying rent or remain in their
existing homes. Similarly, if the housing
market recovers more rapidly than expected-­either
because home prices remain relatively
stable or because mortgage rates fall more
rapidly--higher home payments and purchases
of appliances and furniture may depress
demand for autos and other types of
durables, including electronics.
Spending for nondurable goods, particularly
food at home, is likely to decline as a
share of consumer budgets in the years ahead
as moderate prices allow consumers to buy
more discretionary items. However, some
types of nondurable goods will benefit from
the increase in discretionary income.
including such items as food away from home,
clothing, sports supplies, and toys.
Real demand for services is likely to
remain fairly stable in the next several
years as consumers rebuild their stocks of
durable goods. Nevertheless, as a share of
current dollar spending, the trend can be
expected to continue upward since prices are
likely to continue to rise more rapidly for
services than for goods. Both because of
high relative prices and because demand is
sensitive to income growth, spending for
services such as medical care and recreation
should expand fairly rapidly. Americans are
likely to continue to travel abro6-d in the
next year or so as exchange rates remain
favorable; other travel-associated expen­ditures
should also expand given only
moderate price increases for gasoline and
transportation.
As employment in many of the hard-hit
manufacturing industries begins to rise
again, blue-collar unemployment rates will
begin to recede. More job gTowth and rising
real wages will go far toward bolstering the
income of groups hardest hit by the
recession --the young, one-earner families,
and many lower income households. Stronger
income gains for these consumers, together
with more moderate price increases for food
and fuels, should lead to stronger growth in
the mid-price segment of many markets.
Longer Term Spending Patterns
As the recovery process and the associated
rebound in demand for durables are completed
in the mid-eighties. some of the longer term
trends in spending should reappear. Real
demand for durables is likely to level off;
lower prices relative to other goods and
19Ril No.2 Fan~ily Economics Review 21
services will allow the share of nominal
spending for durables to decline. In both
real and nominal terms, the spending share
for nondurable goods will continue to fall.
As noted earlier, real demand for services
is likely to remain stable as a share of
total spending, although high relative
prices will lead to a rising share in
nominal terms.
The demographic trends of the decade
ahead will reinforce many of the long-term
economic trends. Growth in the size of the
population 25 to 34 years old will peak in
the mid-eighties, dampening further growth
in demand for some durable goods. Slower
growth in the adult population and the addi­tion
of fewer households compared with the
seventies will also limit demand for
housing-related durable goods . Slower
population growth also implies sluggish
expansion in demand for goods, such as
food, which respond primarily to numbers of
people. Several demographic factors will
bolster household income . These include the
aging of the baby boom and the associated
increase in that generation's relative
income, the growing number of two-income
families, and the continuing trend toward
.small households and families . Stronger in­come
per household and per household member
will combine with the growth in aggregate
income to bolster demand for discretionary
goods and services.
Both the economic and demographic trends
point to relatively strong growth in labor­saving
and leisure-enhancing goods and
services. Thus, the expanding markets of
the eighties include appliances which incor­porate
technological advances and provide
convenience or entertainment, electronics
and services which promise personal enrich­ment
and improved skills, goods and services
related to sports and physical fitness, and
education and travel. Examples of these
trends include the mass marketing of video
recorders, the spread of cable television,
recent experiments with electronic home
shopping, and the development of digital
recording and playback.
Another strong market in the years ahead
is the category including wheel goods,
sports equipment, and "durable" toys. In the
past decade growing interest in sports and
physical fitness--much of this associated
tz ram i ly Economic s Rev i ew 1984 No.2
with the baby boom generation--together with
the introduction of electronic games, led to
rapid growth in demand. Even with some
market saturation of sports equipment and
volatility of tastes. these products will
continue to expand on the s trength of real
income growth, relatively modest price
increases, and the large number of people in
their middle years who are likely to retain
at least some of the earlier interest in
physical fitness. Oddly perhaps, in view of
the low probability of any significant in­crease
in the birth rate, the prospects are
bright for sales of toys. The baby boom
generation is likely to continue to have
small families, but the sheer size of the
generation is resulting in a large number of
births. The number of children under 15,
which declined at an annual rate of nearly
1 percent during the past decade, is
expected to increase at nearly that rate
during the decade ahead. It also appears
quite likely that young families with more
income will spend relatively large amounts
on each child , offsetting the effects of
fewer children per family.
As real disposable income increases more
rapidly, the share of household budgets
spent for most types of nondurables will
continue to decline. Slower population
growth will be another limiting factor.
especially in the case of food and other
necessities. However, there are several
important qaalifioations to this general
trend. One is that continuing migration im­plies
that some geographic areas--especially
the Sunbelt and less urbanized areas--will
achieve above average growth in demand for
nondurables. Second. demand will be rela­tively
strong for more discretionary items,
even in such markets as food. Finally,
demographic changes--including the maturing
population and the greater affluence of
two-income families--will bolster demand for
products which are marketed to appeal to
sophistication, status, or convenience .
By the mid-eighties, with the rebound in
demand for durables largely exhausted, the
long-term shift toward services will pick up
speed. Several types of services look espe­cially
promising. Telephone and telegraph
services are likely to benefit from new
products and new forms of data transmission.
Growth in real spending for medical care
will continue to outpace expenditures for
services in general, both because of the in­come
sensitivity of medical care and above­average
price increases. The expansion of
cable television, movie sales to television,
and casino gambling will continue to boost
the recreation category. Even growth in
auto repairs should be fairly brisk as older
consumers keep cars longer and face an
increasingly complex machine.
Faster and slower growth markets of the 1980's
The central theme in this scenario for the
eighties is that despite only modest
improvement in economic growth (the economy
is not likely to return to the growth rates
of the sixties) the coincidence of less
inflation, improved productivity gains, and
demographic changes will strengthen house­hold
income. The result will be more rapid
expansion in many areas of consumer
spending, especially more discretionary
goods and services (see table).
[Consumption expenditures, 1972 dollars, moderate growth scenario]
Growth rmrkets
Faster growth:
All consumer goods and services
Motor vehicles ••••••••••••••••••••••••
Floor coverings •••••••••••••••••••••••
Audio and video electronics •••••••••••
Wheel goods, sport equipment, and
durable toys ........................ .
Boats •..........................•..•..
Toys and sport supplies •••••••••••••••
Lodging •••••••••••• • • • • • • • • • • • • • • • • • • •
Airline travel ........................ .
Private hospitals ..................... .
Telephone and telegraph •••••••••••••••
Slower growth:
Food at home ....................... • • •
Alcohol ..•..•.............•. • • · • • · · · · ·
Tobacco ....••.. ...•.... ... · • • • • • • • • • • •
Toilet articles ..................... . . .
Men's clothing ........•.........•.... · •
Foot wear 'l ••••••• ~ •• • ~ .. • • • • • • • • • • • • • • • •
Cleaning and paper products ••••••••••
Stationery ......................... • • •
Magazines and newspapers ••••••••••• ••
Railroads ...•.............. · · • · · · · · · · ·
1972-82
2.8
.2
3.0
7.9
4.1
-5.0
4.6
2.3
1.4
5.4
6.6
1.7
2.0
1.1
.8
3.0
3.6
-.7
1.9
-1.3
-.1
Percent
1982-92
3.3
5.7
4.7
5.1
5.2
5.6
4.5
4.7
4.5
4.1
4.5
2.0
2.2
1.7
2.5
2.0
2.3
2.2
1.7
1.5
2.3
1984 No.2 Fa~aily Economics Review %J
Some New USDA Charts
Consumer Debt Burden
% of disposable Income
20
18
16
14
12
65 70 75 80
First quarter for 1982.
Source Federal Reserve Board.
Unemployment Rates
Weekly Earnings of Families with Unemployed
Members
Married
couple
Female
householder
Male
householder
1982 data.
$per family
496
347
253 IIIIIIIIWithuonemuptlo yed
227 .___ _____ _.
299
members
With unemployed
members
Source: Bureau of Labor Statistics
Percent
30
Married, spouse present Widowed, divorced, separated Single, never married
20
10
0
1974 76 78 80 82 1974
Black Includes black and others. Ages 20 to 64.
Source: Bureau of Labor Statistics.
z• family Economics Reviow 1984 No.2
76 78 80 82 1974 76 78 80 82
Outstanding Principal Balance on Four Mortgages
S thousand
80
60
40
20
0
0 5 10 15 20 25 30
Mortgage year
Loan of $60,000, 12.5 percent, 30 years (except for growing equity
mor1gage). Source: U.S. Department of Housing and Urban Development
Distribution of Individual Savings
1981
Securities 4%-------------::~--.~-­Demand
deposits 6%------~~
Nonfarm homes 9%
Other tangible assets 14%
Savings accounts-14%----
Money market funds 23%-----
Interest Rates by Instrument
Percent
20r-------------------------------~
16
12
8
21h-year variable
,( ceiling certificate
\
6-month money
mar1<et certificate
,,
l.
1'-
1 \
I\ ',·, ..... _,..--- ..... ~
_______ ._L"'"_ .....,Pa_ssboo_k sav_ings _ 1980 81 82 83
Certificate and passboolt rates as offered by commercial banks.
Source: Federal Reserve Board.
1982
Other tangible assets 1nclude consumer durabtes, nonresidential fixed assets, and lnven1orles.
Source: Federal Reserve Board.
19RA Nn. 2 F"amily F"conomics Review 2S
Housing Quality and
A11ordability1
By Carol B. Meeks
Housing section head
Economic Development Division
Economic Research Service
This paper analyzes newly available data
on housing quality and affor dability from
the 1980 Census of Population and Housing.
The data are presented on a metro-nonmetro
continuum developed by the Economic Research
Service, USDA, (see box). Counties are
grouped into four metro and six nonmetro
county groupings according to the aggregate
size of their urban populations and their
geographic proximity to metro areas . These
county groupings add further refinement to
the traditional and more broadly defined
metro and nonmetro classifications.
Housing Quality
Measures of housing quality include :
(1) Plumbing--the availability of a complete
bathroom; (2) crowding--the average number
of persons per room; (3) kitchen facilities-­the
availability of installed sink with piped
water, a range or cook stove, and a mechan­ical
refrigerator; and ( 4) the age of the
structure--whether built in 1939 or earlier.
In general, the more rural the county the
lower the housing quality as evidenced by
the increased pr oportion of homes that
lacked plumbing, the increased proportion
that lacked kitchen facilities, the presence
of more than one person per room on average,
and the presence of a greater proportion of
older homes (table 1). There are several
exceptions to this generalization , however.
First, greater metro core counties have as
great a proportion of crowding or older
structures as the less urbanized nonmetro
counties; and second, for the plumbing,
kitchen , and crowding measures the small
1 This article is condensed from a paper
presented at the Agricultural Outlook
Conference in November 1983 at Washington,
D. c. Complete copies are available from
Family Economics Research Group (see inside
front cover for address).
Z& family Economics Review 1984 No.2
metro counties have lower housing quality
than the more urbanized nonmetro counties.
Since 1940, house building in metro
counties (outside the core) has exceeded
that in nonmetro areas, resulting in a
larger proportion of new housing stock in
these counties. The presence of a greater
proportion of newer structures in metro
parallels the better housing quality of
these areas.
Housing Affordability
Housing affordability--as measured by the
percent of income spent on housing by owners
and renters--is not related to degree of
rurality. Housing costs are much higher in
urban areas, but so are incomes. With the
exception of the core counties of greater
metro areas, the more urban the counties the
higher the income, the higher the average
rent, and the higher owners' costs (table 2).
In 1980 metro incomes were 26 percent higher
than nonmetro incomes; the average gross
rent in metro areas was 27 percent higher
than in nonmetro counties, and total owner
costs (including payments for mortgage, real
estate taxes, property insurance, utilities,
fuel, and garbage collection) were 26 percent
higher in metro than in nonmetro counties.
These similarities suggest that average
housing costs for owners and renters are
highly correlated with income.
There was little difference in the
proportion of income spent on housing by
people across the rural-urban continuum
(table 3). Approximately 75 percent of all
owners, regardless of location, spent 25
percent or less of income for housing.
However, r enters were not as fortunate as a
group. The percent of renters per classifi­cation
which spent 25 percent or less of
their income on housing ranged from 51
percent in core metro areas to 58 percent in
totally rural areas. While only 12 percent
of all owners spent 35 percent or more for
housing, 28 percent of all renters spent
this much. Thus, the biggest differences on
percent of income spent on housing is
between owners and renters, not among
locations.
County classification
Greater metro (core counties)
Greater metro (fringe counties)
Medium metro
Small metro
Urbanized nonmetro (adjacent to metro county)
Urbanized nonmetro (not adjacent to metro county)
Less urbanized nonmetro (adjacent to metro county)
Less urbanized nonmetro (not adjacent to metro county)
Totally rural nonmetro (adjacent to metro county)
Totally rural nonmetro (not adjacent to metro county)
Aggregate population
1 million or more
1 million or more
250,000-999,999
50,000-249,999
20,000-49,999
20,000-49,999
2,500-19,999
2,500-19,999
Less than 2, 500
Less than 2, 500
Source: Hines, Fred K., David L. Brown, and John M. Zimmer, 1975, Social and
Economic Characteristics of Population in Metro and Nonmetro Counties, 1970, Economic
Research Service, USDA, AER 272.
Table 1. Proportion of housing stock failing to meet specified measures of housing quality,
by metro-nonmetro location , 1980
Metr o:
Metro and nonmetro
location
Greater (core) ••••••••••••• • ••••••••
Greater (fringe) ............ . .....•.
Medium •••••• • •••••••• • •••• • ••••• • • • •
Small •. •• . • .• ••. • • •.•••••... •. ••.•. .
Total metro
Nonmetro :
Urbanized:
Adjacent •.•........ . . ...... .•.....
Not adjacent • •••••••••• .• •••••• • .•
Less urbanized:
Adjacent .. ....... . ......... . . .. .. .
Not adjacent ••••••••••••••••••••••
Totally rural:
Adjacent ............••........•...
Not adjacent ••••••••••••••••••• •••
Total nonmetro ..............•. . .
Lacking
COIJl)lete
plurbing
2.4
2.4
3.3
3.9
3.2
3.4
4.4
6.6
6.7
10.3
10.2
7.5
Units
Crowded, Without built
with CCXJl>lete 1939 or
plurbing kitchen earlier
Percent of housing stock
4.4 1.8 30.7
2.8 1.8 19 . 1
3.4 2.5 24.5
3.7 3.0 23.2
3.5 2.5 23.4
3.5 2.5 29.9
4.0 3.4 25.9
4.3 5.0 31.6
4.3 5.1 32.6
4.6 7.8 30.9
4.5 8.4 37.1
4.3 5.9 32.7
Sour ce: Developed by the Economic Research Service, USDA, from unpublished data, 1980
Census of Population and Housing .
1984 No.2 Family Economics Review 27
Table 2. Average household Income and average housing coats, by metro-nonmetro location, 1980
Metro and normetro location
Metro:
Greater (core) .•••.••••••••••••.••• .
Greater (fringe) • ••. •.••••••••••••••
Medium ••••••••. .• .•....••••••.••••••
Small •••••• .. ••••• · •• ·• • • • • • • • • · • • • ·
Total metro
Non metro:
Urbanized:
Adjacent •••.• ••••••• •• •••••••••.•.
Not adjacent ••••••• .••••••••••.•••
Less urbanized:
Adjacent ••••••••.••••..•....•.••••
Not adjacent ••••.•••••••••..•••.••
Totally rural:
Adjacent ••.••••••••••• , • , •. •• •••••
Not adjacent •••.•••••••••••••••••.
Total nonmetro ••••.. . •..••..• . •.
1These owners own their homes free and
Average
household
income
$21,153
25,749
20,327
19,167
21,424
18,385
17.576
16,875
16,188
15,846
14,935
16,966
clear.
Gross
rent
$270
305
247
239
265
227
218
199
194
188
190
208
~thly average
<>.mer cost
With llDrtgage
$447
489
397
379
431
368
355
335
326
328
310
343
1 Without mortgage
$157
190
145
128
154
135
121
117
115
113
112
120
Source: Developed by the Economic Research Service, USDA, from unpublished data, 1980 Census of
Population and Housing.
Table 3. Average percent of income spent on housing, by metro-nonmetro location, 1980
25 percent or less 35 percent or rmre
Metro and norunetro location
C>.mers Renters C>.mers Renters
Percent
Metro:
Greater (core) ••••• i ••••••••••••• •• 73.8 50.7 13.2 31.3
Greater (fringe) •••••••••••••• <II •••• 74.6 54.4 11.2 26.9
Medium •••••••••••••••••••••••.••••• 76.1 53.3 11.4 29.0
Small .............................. 76.6 52.8 11.4 29.2
Total metro ...................... 75.7 53.2 11.5 28.8
Nonmetro:
Urbanized:
Adjacent ......................... 76.5 52.6 11.3 29.8
Not adjacent ..................... 76.1 52.1 11.6 29.8
Less urbanized:
Adjacent •••• • ••• • ••• • ••••••••• . •• 75 .9 55.9 12 .3 27.6
Not adjacent ..................... 75.4 55.4 12.5 27.6
Totally rural:
Adjacent ...... ................... 74.9 56.9 13.3 27 .2
Not adjacent ..................... 74.1 57.9 13.8 26.2
Total non metro ••••••••••••••••• 75.3 55 .9 12.7 27.5
Source: Developed by the Economic Research Service, USDA, from unpublished data, 1980 Census of
Population and Housing.
28 f"amily Economics Review 1984 No, z
Revised Metropolitan
Statistical Area Definitions
The Office of Management and Budget has
applied new standards for defining metropol­itan
statistical areas to data from the 1980
decennial census. The designations provide
a uniform statistical standard for comparing
metropolitan areas throughout the United
States. The final revised designations,
including new areas and those that have
changed, went into effect June 30, 1983.
The Standard Metropolitan Statistical Area
(SMSA), the single term previously used to
describe all metropolitan areas, was
replaced by two classification terms. A
Metropolitan Statistical Area (MSA) is a
free-standing metropolitan area surrounded
by nonmetropolitan counties and not closely
associated with other metropolitan areas. An
area qualifies as an MSA in one of two ways:
If there is a city of at least a 50,000
population or an urbanized area of at least
50,000 with a total metropolitan population
of at least 100,000. An urbanized area is
defined on the basis of population density.
MSA's are defined in terms of entire
counties, except in the six New England
States. Thus, in addition to the county
containing the main city, an MSA may also
include additional counties that have close
economic and social ties to the central
county.
A Primary Metropolitan Statistical Area
(PMSA) is a metropolitan area that is close­ly
related to another. A grouping of PMSA's
is referred to as a Consolidated Metropol­itan
Statistical Area (CMSA). lt is similar
to the previous Standard Consolidated
Statistical Area (SCSA) used to refer to a
cluster of SMSA's.
Each MSA and PMSA is designated by
population size to allow for further compar­ison
within and between groups. An "A"
designation corresponds to areas with popu­lations
of 1 million or more, a "B" to areas
with populations of 250,000 to 1 million, a
"C" to areas between 100,000 and 250,000,
and a "D" to areas with populations less
than 100,000.
The detailed report, entitled Metropolitan
Statistical Areas, 1983 (PB83-218891), is
available on microfiche or paper from the
National Technical Information Service. The
publication is 105 pages and costs $4.50 for
microfiche ($9.00 foreign) or $13.00 for the
paper copy ($26. 00 foreign). To order, call
or write: National Technical Information
Service, Document Sales Desk, 5285 Port
Royal Road, Springfield, Va. 22151, (703)
487-4650 .
Factfinders for the Nation
This series of 22 publications listed
below, provides quick, topical information
about specific U.s. Census Bureau products.
1. Statistics on Race and Ethnicity
2. Availability of Census Records
About Individuals
3. Agriculture Statistics
4. History and Organization
5. Reference Sources
6. Housing Statistics
7. Population Statistics
8. Census Geography-Concepts and
Products
9. Construction Statistics
10. Retail Trade Statistics
11. Wholesale Trade Statistics
12. Statistics on Service Industries
13. Transportation Statistics
14. Foreign Trade Statistics
15. Statistics on Manufactures
16. Statistics on Mineral Industries
17. Statistics on Governments
18. Census Bureau Programs and Products
19 • Enterprise S ta tis tics
20. Energy and Conservation Statistics
21. International Programs
22. Data for Small Communities
Numbers 4 and 18 describe the Bureau's
history, organization, and statistical
programs. Number 18 serves as a reference
guide to the other 21 Factfinders. Numbers
1, 6, 7, 8, and 22 focus on 1980 census
products. The remaining Factfinders cover
specific Bureau programs.
Single copies of Factfinders for the
Nation are available free ($5 for complete
set) from the Census History Staff, Data
User Services Division, Bureau of the
Census, Washington, D.C. 20233.
1984 No.2 Family Ecnnnmics Review %9
Urban and Rural Housing
Characteristics 1
By Arthur F. Young and F. John Devaney
Chief, Housing Division, and
Special assistant
Bureau of the Census
U.S. Department of Commerce
The United States was a predominantly
rural nation until well into the twentieth
century. Not until 1920 did census data show
that a majority of the Nation's people lived
in urban areas. Urbanization increased
during the twenties, slowed down in the
thirties, then continued to increase through
the sixties.
Decennial censuses since 1790 have shown
a greater percentage increase in the urban
population than in the rural population,
except for the 1810-20 decade. This histor­ical
pattern was modified in the 1970-80
decade, when the population of rural areas
grew almost as fast as that of urban areas,
11.1 percent and 11.6 percent, respectively,
and both rates of change were close to the
total population growth of 11.4 percent. 2
As a result, the percentage of the
population living in rural areas in 1980
(26. 3 percent) was virtually unchanged from
1970 (26.4 percent).
In 1980 the most rural region in terms of
population was the South, where 33 percent
of the population lived in rural areas. The
West was the least rural region; only 16
percent of the population was in rural
1 This article is condensed from a paper
presented at the Agricultural Outlook
Conference in November 1983 at Washington,
D.C. Complete copies are available from
Family Economics Research Group (see inside
cover for address) .
2 For the 1980 census, urban geography
includes urbanized areas comprising an
incorporated place and adjacent densely
settled surrounding area that together have
a minimum population of 50 ,000, as well as
incorporated or census designated places of
2, 500 or more population. Remaining areas
are classified as rural.
'0 fam1ly Economics Review 1984 No.2
territory. The rural percentages in the
other regions were closer to the national
rate, 21 percent in the Northeast and
30 percent in the North Central region.
From 1970 to 1980, the Nation's population
density increased from 58 to 64 persons per
square mile. However, there was a lowering
of population densities in cities, suburbs,
and small cities and towns, with the overall
urban density declining from 2, 760 to 2,260
persons per square mile. The decrease in
urban densities resulted from geographical
expansion or urbanized areas, increase in
the number of urban places, annexations to
cities, and a decrease in average household
size. Conversely, the population density of
rural areas increased from 15. 5 to 17 . 2
persons per square mile, as a result of an
increase in rural population and a decrease
in total rural land area.
Housing Distribution
In 1980 the distribution of the Nation's
housing was similar to population distribution
in broad geographical terms. Rural areas con­tained
slightly more than 26 percent of both
population and housing (table 1). Rural pop­ulation
and housing were located primarily
in very small places (less than 1, 000 persons)
or in territory having no recognized incor­porated
or unincorporated place designation.
Housing units were unevenly divided among
the four regions of the country in 1980--
33 percent in the South, 26 percent in the
North Central region, 22 percent in the
Northeast, and 19 percent in the West
(table 2). There were six States with more
than 1 million rural housing units, repre­senting
about 30 percent of the Nation's
total rural housing in 1980. This group
includes New York and Pennsylvania in the
Northeast, Ohio and Michigan in the North
Central region, and North Carolina and
Texas in the South.
Housing Characteristics
In 1980, 64 percent of all households
owned their own home. The rural ownership
rates were higher than urban rates in all
regions. The greatest gap between rural and
urban homeownership was in the Northeast,
with 81 percent of rural and only 54 percent
of urban households owning their homes
(table 3) .
Table 1. Percentage distribution of population and
housing, by urban and rural reeldence, 1980
Residence Population
Total number
(thousands).. ............ 226.546
Housir~
units
88,411
Percent
Total United States .••• • .•.
Urban •• .••• • ..•••.•••.••
Inside urbanized
areas • • .•....•........
Other urban .••.•......
Rural .•. • •..•• • .•.•... ••
Places of 1 , 000 to
2, 500 •••••••••.••••••
Places of less
than 1,000
1
.......... .
Other rural •.•.••..•.
100
74
26
61
13
3
2
21
100
74
26
61
13
3
1Territory havin~t no reco~tnized incorporated or
unincorporated place designation.
Source: U. S. Department of Commerce, Bureau of
the Census, 1983.
Table 2. Percentage distribution of urban and rural
housin11. by region, 1980
Region
Total
Total number
(thousands} ..•.....• 88,411
Total United States ...• 100
Northeast •.• • •••..•• 22
North Central •.••••• 26
South , . ..... , ...• , •. 33
West ..•..•••••..•••• 19
Housing units
Urban
64.939
Percent
100
23
25
30
22
Rural
23,472
100
18
29
41
12
Source: U.S. Department of Commerce, Bureau of
the Census. 1983.
Table 3. Homeownershlp rates, urban and rural, by
region, 1980
Region
Percent owner-occupied
Thtal Urban Rural
Total United States .•.•. 64 59 80
Northeast ••. • ••.•••.• 59 54 81
North Central •••.•.•• 69 64 82
South .•.......•...•. • 67 61 79
West •.•.•..•...••••• • 60 58 75
Source: U.S. Department of Commerce, Bureau of
the Census, 1983.
The vast majority of renter households are
found in urban areas. In 1980 of the almost
29 million renter households, 86 percent
were found in urban areas, while only 14
percent were in rural areas. Of the 52
million owner households, 69 percent were
located in urban ar eas and 31 percent in
rural areas .
The Nation's housing was "younger" in 1980
than ever previously recorded in a housing
census, with a median age of 22.7 years.
About one-fourth of the housing inventory
was in structures built from 1970 to March
1980, and another one-fourth in structures
built prior to 1940. The proportion of
structures built prior to 1940 was slightly
higher for rural areas (27 percent) than for
urban areas (25 percent) . The regional
distribution pattern for pre-1940 housing
was virtually the reverse of the pattern for
new housing (table 4).
Rural areas contributed one-third of the
new housing in the seventies . The proportion
of housing built during the decade in terri­tory
which was rural at the time of con­struction
was actually greater, since some
rural areas were converted to the urban
classification as a result of urbanized area
expansions, annexations, and growth of small
towns into urban places during the seventies.
The housing in urban and rural areas dis­plays
sharp contrasts by structural types.
Single-family, detached homes, and mobile
homes are more likely to be found in rural
areas. Almost one-third of single , detached
housing units and two-thirds of mobile homes
were in rural areas. In contrast. more than
90 percent of structurally attached housing
units were located in urban areas. These
include single attached units and apartments
in multi-unit structures. Mobile homes were
Table 4. Period of housing construction, by region,
1980
Reg ton
Northeast ··········· North Central ••...••
South •••••• • •••••••.
West .................
Percent built
1970 to
Mnrch 1980
15
22
33
32
1940-69
43
45
51
52
1939 or
earlier
42
33
16
16
Source: U.S. Department of Commerce, Bureau of
the Census, 1983.
1984 No.2 family Ecunomlce Review '1
most prevalent in the South, where 47 per­cent
of such units were located. The West
also had high representation of mobile homes,
where in several States more than 10 percent
of owner-occupied units were mobile homes.
Important changes took place in the
Nation's pattern of principle home heating
fuel use from 1970 to 1980. Households using
electricity increased from 8 to 18 percent
of all households; the actual number in­creased
from 4.9 to 14.8 million. There was
also an increase in the percentage of homes
using wood, from 1 to 3 percent. Although
the number of households using either
utility gas, or bottled, liquid, or LP gas
increased, the percentages of homes in each
category decreased. The number of homes
using fuel oil and kerosene dropped from
16.4 to 14.7 million, or from 26 to 18
percent. There were also declines in the
numbers and percentages of households using
coal and other fuels.
In 1980 a wide variety of home heating
fuels was used in rural areas. In those
areas, the three principal fuels were
utility gas, electricity, and fuel oil
(totaling 70 percent). In addition, 18 per­cent
of rural homes used bottled, tank, or
LP gas, and 11 percent used wood. Utility
gas was the predominant home heating fuel in
urban areas (63 percent of homes).
The 1980 census showed that the lack of
complete plumbing facilities for exclusive
use was no longer a major housing problem
nationwide. The number of housing units
lacking complete plumbing was reduced by
slightly over a half, from 4. 7 million in
1970 to 2.3 million in 1980--down to only
2. 7 percent of year-round units. In rural
areas, almost 6 percent lacked plumbing,
with the South the only region exceeding
this rate (8.5 percent). Just 40 years ago,
when the first housing census was conducted,
the percentages of housing lacking complete
plumbing were as follows: All units, 45;
urban, 23; rural nonfarm, 61; and rural
farm, 89 percent.
The proportion of housing with three or
more bedrooms was higher in rural areas
(59 percent), reflecting the predominance of
single-family homes in rural areas and the
prevalence of multi-unit rental housing in
urban areas. A higher proportion of urban
J2 family Econora.ice Review 1984 No . 2
housing units (87 percent) than rural (70
percent) was equipped with centraJL heating
systems. The urban percentage was higher in
all regions of the country. Air-conditioning
was also more likely to be found in urban
homes (58 percent) than in rural homes
(45 percent). Percentages were substantially
higher in the South and substantially lower
in the West.
Almost one-fourth of the Nation's house­holds
had moved into their present residence
during the 15-month period of January 1979
to March 1980. Throughout the Nation,
mobility was lower in rural areas and much
less for farm residents.
Americans are very dependent on private
transportation; 87 percent of households had
one or more vehicles (autos, vans, and
one-ton trucks) available in 1980. The
proportions were higher for rural and farm
households, 93 and 97 percent, respectively.
Less than one-half of the Nation's rural
housing was connected to public water
systems or private companies. Nationwide,
the sources of water for year-round homes
in rural areas included 9. 8 million units
with public systems or private company,
9.5 million with individual drilled well,
1. 7 million with individual dug well, and
1.1 million using some other source of
water. About one-fourth of rural homes were
connected to a public sewer system in 1980.
More than nine-tenths of the Nation's
homes had telephones in 1980. The percent­ages
for urban, rural, and farm housing
were higher than nationwide in the
Northeast, North Central, and West regions,
and lower in the South. The percentage of
farm homes with telephones (95 percent) was
higher than the percentages in both urban
and rural areas.
During the seventies the median value of
the Nation's single-family homes increased
178 percent, gross rent paid by renters
increased 125 percent, but household income
increased only 97 percent. Although percent­age
increases were greater in rural than in
urban areas, in 1980 the rural medians
continued to be lower than urban medians.
Median monthly owner costs (data acquired
for the first time in a decennial census in
1980) were higher in urban than in rural
areas for both mortgaged and nonmortgaged
homes.
Private Pension Legislation:
The 1tix Equity a nd Fiscal
Responsibility Act of 1982
During the past 50 years, Congress has
recognized the value of pri;rate pension
coverage and benefits by offering favorable
income tax treatment to plan participants
and sponsoring employers. With tax favored
status, however, have come requirements for
coverage, vesting, and management of funds
in pension plans. The Employee Retirement
Income Security Act of 1974 (ERISA),
P.L . 93-406, set forth comprehensive regula­tions
for pension plans. 1 More recently,
provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA).
P.L. 97-248, redefined tax benefits in three
areas: Limitations on maximum benefits and
contributions in corporate plans, provisions
for noncorporate plans, and requirements for
plans that provide excessive benefits to
highly paid employees.
Under TEFRA, benefits payable under de­fined
benefit plans are limited to the smaller
of either $90,000 a year or 100 percent of
thP. wot-ker's Average compensation for the
3 highest consecutive years when covered by
the plan. Contributions to an employee's
account under a defined contribution plan
are limited to the smaller of either $30,000
a year or 25 percent of the employee's
annual compensation. Limits had been set by
previous legislation, but cost-of-living
adjustments to these limits had pushed the
allowed maximum benefit or contribution to
much higher levels (from $75,000 to $136,425
for defined benefit; $25, 000 to $45,4 7 5 for
defined contribution maximum). TEFRA
provisions lowered the limitation levels for
corporate pension plans and suspended
cost-of-living adjustments until 1986.
In addition to provisions for corporate
pension plans, TEFRA includes provisions for
"noncorporate" plans covering employees and
owners of single proprietorships and part­nerships
(known as Keogh plans) and small,
1See "Pensions," by Frankie N. Schwenk
in Family Economics Review, spring 1981,
PP • 8-13, for further information.
closely held corporations. Previously, Keogh
plans had much lower limits on contributions
(the lower of either $15,000 or 15 percent
of salary) than corporate plans, but TEFRA
extended to Keogh plans the more liberal
limits of corporate plans. Also, some Keogh
rules were extended to cover corporate
plans, thus resulting in nearly the same set
of rules and limitations for corporate and
Keogh pension plans.
TEFRA set new requirements for plans that
benefit primarily the key employees of a
company. If a plan's accrued benefit values
for key employees is more than 60 percent of
the values for all employees covered, it is
a topheavy plan. To qualify for tax advan­tages,
the top heavy plan must (1) include
only the first $200,000 of an employee's
annual compensation for computing pension
benefits; (2) have an accelerated vesting
schedule for non-key employees; and (3)
meet minimum benefit or contribution levels
for non-key employees.
Source: Carter, Gene, 1983, Private
pensions: 1982 legislation, Social Security
Bulletin 46 (8): 3-8.
Programs of HUD
This booklet, which was revised in August
1983, contains a brief description of each
of the programs administered by the Depart­ment
of Housing and Urban Development
(HUD). Descriptions of 61 programs are
organized into 6 sections as follows:
Community planning and development, housing,
policy development and research, Government
National Mortgage Association, fair housing
and equal opportunity, and access to housing
for the handicapped. Information about the
nature, authorization, eligibility, funding
levels, and sources of other information for
each program is included . Indexes include a
chronological listing of major Federal
legislation and executive orders authorizing
HUD programs, as well as a directot'y of
regional and field offices of HUD. Copies of
Programs of HUD, HUD-214-7-PA (Stock
No. 023-000-00701-1), are available for
$4 each from the U.S. Government Printing
Office, Washington, D.C. 20402.
1984 No . Z Family Economics Review ::n
Updated Estimates of the Cost of Raising a Child
The cost of raising urban chtldren: 1983 annual average; moderate-coat level 1
Region and
age of chi ld
(years)
NORTH CENTRAL:
Under I ..•••••••
I ...........• • .•.
2-3 •••••••••• • .••
4-5 ••.••.•••••.••
6 •••••••••••••.••
7-9 ••••••••.••.•.
10-11 ••••••.••.••
12 •••••••••.••. • •
13-15 •••.•.•••••.
16-17 •••••.•• . •. .
Total •• • .....••
NORTHEAST:
Under 1 •••••••••
1 .••••••••••.••••
2-3 ••.••.•.•••••.
4-5 ••.•.••••••.••
6 ••.•••••••• • ••••
7-9 .•••••• ••••.•.
10-11 •.••••.•••••
12 ..•.•.••••••.•.
13-15 •••••••••...
16-17 .•.•.•.••...
Total
SOUTH:
Under I ........•
1 ••••••••••••••••
2-3 ••....•.•••••.
4-5 ••..••••.••.•.
6 ••••••••••.••• • .
7-9 ••••••..••..••
10-11 ••••••.••.••
12 ............. ..
13-15 .......... ..
16-17 •.••.•.••.. .
Total
WEST:
Under I ........ .
I ............... .
2-3 .•.••••.••••.•
4-5 ............. .
6 .............. ..
7-9 ............ ..
10-11 •••••••.••••
12 .............. .
13-15 ••••.••••.••
16-17 •.••••••••••
Total ..••..••••
Total
$4,107
4,231
3,940
4, 174
4,348
4, 521
4,695
5, 015
5,139
5,643
83,585
4,074
4,223
4.110
4,344
4,655
4.828
5,051
5,362
5,510
5 912
88. 162
4,470
4,593
4,304
4,513
4,773
4,921
5,119
5 ,457
5,606
6,024
90,794
4,403
4,551
4,314
4. 575
4,906
5,079
5,302
5,596
5,719
6,277
92,786
Food
at
home 2
$544
668
668
767
742
915
1,089
I, 113
1,237
1,385
17' 341
643
792
767
866
866
1,039
1,262
1,262
1,410
1,559
19,818
594
717
693
767
767
915
1,113
I, 113
I, 262
1.385
17,638
594
742
717
816
792
965
1,188
I, 188
I ,311
1,484
18,554
Food
away
from
home
so
0
0
135
135
135
135
162
162
162
2,052
0
0
0
135
162
162
162
162
162
189
2,268
0
0
0
135
162
162
162
189
189
189
2. 376
0
0
0
162
189
189
189
189
189
216
2,646
Clothing Housing) Medical
care
$135
135
219
219
303
303
303
438
438
607
5,930
135
135
236
236
320
320
329
472
472
590
6,202
152
152
236
236
320
320
320
472
472
607
6,270
135
135
219
219
320
320
320
455
455
573
6,032
Sl, 787
I, 787
I, 571
1, 57 I
1,489
1,489
1,489
1,544
1,544
1 5!1R
28,164
1,814
1,814
1,652
1,652
1,625
1,625
1,625
!,679
1,679
1,706
30,114
1,923
1,923
I, 706
1, 706
1,625
1,625
1,625
I ,679
1,679
1, 733
30,602
1,869
1,869
1,679
1,679
1,652
1,652
1,652
1, 706
I, 706
1 787
30,764
$265
265
265
265
265
265
265
265
265
265
4,770
265
265
265
265
265
265
265
265
265
265
4,770
294
294
294
294
294
294
294
294
294
294
5,292
324
324
324
324
324
324
324
324
324
324
5,832
Educa­tion
$0
0
0
0
118
118
118
118
118
118
1,416
0
0
0
0
148
148
148
148
148
148
I, 776
0
0
0
0
177
177
177
177
177
177
2,124
0
0
0
0
148
148
148
148
148
148
I, 776
Transpor- All
tation other'
$825
825
719
719
719
719
719
772
772
852
13,632
719
719
666
666
666
666
666
745
745
799
12,676
878
878
772
772
772
772
772
825
825
905
14,586
878
878
772
772
799
799
799
878
878
958
15,066
$551
551
498
498
577
577
577
603
603
656
10,280
498
498
524
524
603
603
603
629
629
656
10,538
629
629
603
603
656
656
656
708
708
734
11,906
603
603
603
603
682
682
682
708
708
787
12,116
1Annual 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, Agricultural Research Service, USDA.
· Includes home-produced food and school lunches.
11ncludes shelter, fuel, utilities , household operations, furnishings, and equipment.
'Includes personal carE', recreation, reading, and other miscellaneous expenditures.
)4 F'amily Economics Review 1984 No . 2
The coal of raf•!ng rural nonfarm children : 1983 annual average; moderale-cosl level 1
Re~lon and
a~tc or child
(yoers)
NORTH CENTRAL:
Under I •••••.•••
I ····••··········
2-3 .•...•..••••••
4-5 •••••.••.•••••
6 .....••.• • .....•
7-9 •••••.•••.•.••
10-11 •.•.•••.••••
12 ••••.••••.•••.•
13-15 •.•••••.••••
16-17 •.•..•••••.•
Total ••.••.••••
NORTHEAST:
Under I ••••.•••.
I ················
2-3 ••••.......•..
4-5 ••••.•••••.•••
6 ••••••••••••••••
7-9 •••••••••••..•
10-11 •.•••• • .••••
12 •••.••.••••••••
13-15 ••••••••••.•
16-17 •.••••••.•..
Total
SOUTH:
Und!'r I •••••••. .
I . .... •..........
2-3 •••..•..•..•••
4-5 •.•..••.••••••
6 •.••••.•••••••••
7-9 ••••..•..•.•••
10-11 .•••••••••••
12 ••••••.••.•.•••
13-15 ••••••••••.•
16-17 ..•.••.•••••
Total
I~I::ST:
Under I ....... . .
I ············•···
2-3 •....••••••••.
4-5 •.•••••••.•• . •
f\ ••••••••••••••••
7-9 ••••••.••.••••
10-11 ••••....••.•
12 ••••.••..••••••
13-15 .•••••••••••
16-17 ••••..••••••
Totel ••••••••••
Total
$3,881
4,005
3 , 562
3,769
4,066
4,214
4,4 12
4, 751
4,875
5 .235
77,926
Food
at
homo 2
$495
619
594
693
693
841
1.039
1,039
I, 163
I, 286
16,082
Food
away
from
hane
so
0
0
108
135
135
135
135
135
162
1,890
Clothinl( Uouslng 1 Medical
$118
118
185
185
286
286
286
438
438
539
5,522
$1 '706
I, 706
1,435
1,435
1,408
1,408
1,408
1,462
I ,462
I 489
26,426
care
$265
265
236
236
236
236
236
236
236
265
4,364
Educa­tion
so
0
0
0
118
118
118
118
118
118
1,416
Transpor­ta
t ion
$799
799
666
666
692
692
692
772
772
799
13,100
All • other
$498
498
446
446
498
498
498
551
551
577
9,126
4, 505 594 0 135 I , 923 265 0 932 656
4,628 717 0 135 1,923 265 0 932 656
4,418 693 0 219 1,760 265 0 852 629
4,679 792 162 219 1,760 265 0 852 629
5,010 792 189 320 I, 733 265 177 852 682
5,158 940 189 320 1,733 265 177 852 682
5,381 1,163 189 320 I, 733 265 177 852 682
5,709 1,163 189 489 1,787 265 177 905 734
5.857 1. 311 189 489 1,787 265 177 905 734
6 , 37~·~--~·~·4~6~0 _______ 2,~1~6 ______ ~6~40~--~1~8~4~1~--~2~6~5 _____ ~1~77~----~9~8~5~--~7~8~7 _ _
94,595 18.235 2 , 646 6,302 32 .114 4,770 2 , 124 15,974 12,430
4. 657 594 0 152 I, 923 294 0 I, 065 629
4, 756 693 0 152 1.923 294 0 1,065 629
4. 305 668 0 236 I, 652 294 0 878 577
4,566 767 162 236 1,652 294 0 878 577
4, 745 742 162 320 I, 598 294 148 852 629
4, 894 891 162 320 I , 598 294 148 852 629
5. 092 I. 089 162 320 I, 598 294 148 852 629
5 .475 1,089 189 489 1,652 294 148 932 682
5, 598 I , 212 189 489 1,652 294 148 932 682
__6~ ~~--~1~3~6~~------~2~16~----~6~9~1 ___. ~1~6~7~9 ____~ 29~4~----~1~48~----~9~85~--~7~0~8 __
91 ,1 99 17,197 2, 484 6,506 30,008 5,292 1.776 16,4~~ 11.484
4,828
4,951
4,472
4,733
5,084
5 , 257
5, 455
5,838
5 , 986
6,564
96 ,878
594 0 135 1,950 324 0 1,065 760
717 0 135 1,950 324 0 1,065 760
693 0 219 1,679 294 0 905 682
792 162 219 1,679 294 0 905 682
767 162 337 1,652 324 177 905 760
940 162 337 1,652 324 177 905 760
I, 138 162 337 1,652 324 177 905 760
1.138 189 506 1,706 324 177 985 813
I, 286 189 506 I, 706 324 177 985 813
1,460~-----2~1~6~----~5~9~0 ____ ,1~·~8~14~----~32~4~----~17~7 ____ ~1~1~18~----~86~5~--
18,060 2,484 6 , 372 30,980 5,71:1 2 ,124 17,356 13,790
1Annu111 cost of raisinR a child from birth to age 18, by age, in a husband-wife family with no more than 5 children.
For mor<' information on these and additional child cost estill\8tea. sec USDA Miscellaneous Publication No. 1411, "USDA
Estimati'S of the Cost o f Raising a Child: A Guide to Their Use and Interpretation." by Carolyn S . Edwards, Family
Economic~ ReM:>arch Group, Agricultu rsl 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.
1984 No .2 family Economic& Review JS
..,
Ill .a.. . ....
'<
1"'1
0
0
::l
0
3 ....
0
(I)
:XI
a>
<... .
a>
~
>D
CD
p
z
0
l Cost of food at home estimated for food plans at 4 cost levels. January 1184. U.S. average
Sex-age group
FAMILIES
Family of 2: 3
20-50 years
51 years and over ••••••••••••••••••
Family of 4:
Couple, 20-50 years and children--
1-2 and 3-5 years ••••••••••••••••
6-8 and 9-11 years •••••••••••••••
INDIVIDUALS~
Child:
1-2 years ......................... .
3-5 years • • •••••••••• • •••••••••••••
6-8 years ....... .. ................ .
9-11 years ••••••• . ••..•••••••••••••
Male:
12-14 years .. .... . ................ .
15-19 years ••••••••••••••••••••• • ••
20-50 years ••••••••••••••••••••••••
51 years and over •••.••••••••••••••
Female:
12-19 years .. .. ......... .. ........ .
20-50 years •••••••••.•••••• • • • •••••
51 years and over ..........•......
Thrifty
plan 2
$36.70
34.90
53.20
61.00
9.50
10.30
12.60
15.00
15.80
16.40
17.50
16.00
15.70
15.90
15.70
Cost for 1 week
Low-cost
plan
$46.00
44.10
65.90
77.30
11.50
12.60
16 . 60
18.90
21.50
22.40
22.20
21.10
18.70
19.60
19.00
Mxferate­cost
plan
$56.50
54.00
80.20
96.40
13.30
15.50
20.70
24.30
26.70
27.60
27.70
25.80
22.60
23 . 70
23.30
Liberal
plan
$69.90
64.20
97.90
115.80
15.90
18.50
24.20
28.10
31.40
31.90
33.30
30.80
27.20
30.20
27.60
Thrifty
plan2
$159.50
151.30
230.90
264.50
41.30
44.60
54.60
64.90
68.50
71.20
76.00
69.30
67.90
69.00
68.20
Cost for 1 month
Low-cost
plan
$199.40
190.70
285.60
335.10
49.70
54.60
71.90
81.90
93.10
97 .oo
96.30
91.20
81.20
85 . 00
82.20
Mbderate- Liberal
cost plan plan
$245.20
233.90
347.90
418.20
57.80
67.20
89.90
105.40
115.90
119.50
120.10
111.60
98.00
102.80
101.00
$302.80
278.60
424.30
502.00
68.90
80.10
105.10
121.60
135.90
138.40
144.30
133.50
118.10
131.00
119.80
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 computed from quantities of foods published in Family Economics Review, 1984 No. 1. Estimates for the other plans
were computed from quantities of foods published in Family Economics Review, 1983 No. 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 Coupon allotment in the Food Stamp Program based on this food plan.
3 10 percent added