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I .. ., 1 I Editor Joan C. Courtless Editorial Assistant Jane W. Fleming Family Economics Review is written and published each quarter by the Family Economics Research Group, Beltsville Human Nutrition Research Center, Agricultural Research Service, United States Department of Agriculture, Washington, DC. The Secretaty of Agriculture has determined that the publication of this periodical is necessaty in the transaction of the public business required by law of this Department. 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. Family Economics Review is for sale by the Superintendent of Documents, U.S. Government Printing Office. Subscription price is $5 per year ($6.25 for foreign addresses). Single issues cost $2 each ($2.50 foreign). Send subscription orders, change of address, and single copy requests to Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. (See subscription form in back of this issue.) Suggestions or comments concerning this publication should be addressed to: Joan C. Courtless, Editor, Family Economics Review, Family Economics Research Group, USDNARS, Federal Building, Room 439A, Hyattsville, MD 20782. Telephone (301) 436-8461. 1991 Vo/.4 No.1 Family Economics Review U.S. oEPOSlTCRY PROPERTY OF THE LIBR/\RY APR 111991 Vol. 4 No.1 2 8 14 20 23 25 28 30 32 35 36 Contents Features Expenditures on a Child by Single-Parent Families MarkLino Income and Expenditure Patterns of Consumer Units With Reference Person Age 70 to 79 and 80 or Older Retia Scott Walker and Frankie N. Schwenk Trends in Housing Nancy E. Schwenk Dietary Guidelines for Americans Revised, 1990 Betty B. Peterkin Research Summaries The Impact of Legislation on Work and Family Who's Minding the Kids? Residents of Farms and Rural Areas: 1989 Money Income and Poverty Status in the United States: 1989 Regular Items Expenditures on a Child by Husband-Wife Families, 1990 Recent Legislation Affecting Families Current Regional Research Project 37 Cost of Food at Home 38 Consumer Prices March 1991 1 Expenditures on a Child by Single-Parent Families ByMarkLino Consumer Economist Family Economics Research Group A previous ARS study examined ~xpenditures on a child by husband-wife families using the 1987 Consumer Expenditure Survey updated to current prices. This study examines these. ~xpenditures by single-parent faml11es using the same data. Estimates are provided for major components of the budget by age of child and family income level for a child in a singleparent household with two children. Child-rearing expenses increased with the age of the child and family income. Housing comprised the largest share of total expenditures on a child, regardless of the child's age or household income. Expenses on a child were slightly higher for single-parent households as opposed to husband-wife hou~eh?lds in the same income group. Th1s likely reflects expenses being shared by fewer members in single-parent households. Although single-parent households spent slightly more on a child than married-couple households in the same income group, a much larger percentage of single-parent households than married-couple households were in the lower income group. The Family Economics Research Group of the U.S. Department of Agriculture (USDA) has provided estimates of child-rearing expenses for the past two decades. The estimates reflect expenditures by husband-wife families1 on a child from birth through age 17 (4). The most recent estimates are based on the 1987 Consumer Expenditure Survey, updated to 1990 dollars using the Consumer Price Index for all Urban Consumers (CPI-U) (6). 1For this study the terms "families" and "households" are used to refer to consumer units. 2 These estimates do not apply to single-parent households, which account for an increasing percentage of households with children. This study, therefore, estimates childrearing expenses in single-parent families. Child-rearing estimates are provided for two income groups of single-parent households for the overall United States. The two income groups were selected to correspond with those used in the child-rearing estimates of husband-wife families so comparisons could be made. Expenditures on a child are estimated for the major budgetary components: housing; food; transportation; clothing; health care; and education, child care, and other miscellaneous goods and services. (See box below for description of each component.) Methodology Source of Data Data used to estimate expenditures on a child in a single-parent household are from the 1987 Consumer Expenditure Survey (CEX). T~ survey is the most comprehensive source of household expenditure information available at the national level. Administered by the Bureau of Labor Statistics (BLS), U.S. Department of Labor, the CEX has been ongoing since 1980 and collects information on household characteristics and income as well as expenditures. About 5,000 households are interviewed each quarter over a 1-year period. Each quarter is deemed an independent sample by BLS, bringing the total number of households in the 1987 survey to approximately 20,000 consumer units. One-parent families headed by a male or female with one or more children age 17 or under but no other persons present, and who were complete income reporters, were selected for the study. This yielded a sample of 1,212 families. Because of data limitations, single-parent households residing with other family members or friends were not included. The majority of singleparent households (91 percent) were Family Economics Review headed by a female. The sample was weighted using BLS methods to reflect the population of interest. Quarterly expenditures were multiplied by four to provide annual estimates. Estimating Expenditures To estimate expenditures on a child by single-parent households, this study followed the methodology used by the Family Economics Research Group in determining child-rearing expenses for husbandwife families. This approach estimates child-related expenditures (clothing, education, and child care) and overall household expenditures (housing, food, transportation, health care, and other miscellaneous goods and services). These expenditures are then assigned to a child for childspecific expenditures or, for overall household expenditures, allocated to a child based on previous research or on a per capita basis. Multivariate analysis was used to estimate household and child-related expenditures, controlling for income level, family size, and age of the younger child. The two income groups of single-parent households (1987 before-tax income under $26,000 and $26,000 and over) were selected to correspond with the income groups used in estimating child-rearing expenditures in husbandwife households (1987 before-tax income under $26,000, between $26,000 and $42,000, and over $42,000). These income groups for husband-wife households were determined by dividing the sample into equal thirds. For single-parent household estimates, the two higher income groups of the husband-wife households were combined because of the small number of single-parent households who fell in these income ranges. Of the single-parent households, 85 percent had a before-tax income under $26,000, and 15 percent had a before-tax income of $26,000 and over. When controlling for income, sex of the single parent did not significantly affect total expenditures. Hence, separate estimates were not determined for households headed by male and female single parents. For each income level the estimates were for single-parent families with two children, with the younger child in one of six age categories (0-2, 3-5, 6-8, 9-11, 12-14, and 15-17). Households with three members (two children) were selected as the base since this was the average size of one-parent families in 1987. The focus was on the younger child in a household since the older child was sometimes over age 17. If the older child had been selected as the household member of interest, expenditures for some items would be higher or lower. In addition, if a household with other than two children was selected as the base, expenditures would be different because of diseconomies or economies of scale. How these expenditures differ for an older child or for households with other than two children is addressed later in this paper. Each expense was estimated separately, thereby assuming that each expenditure was made independently of the others. The specific function describing how each budgetary expenditure was estimated in dollars is set forth in the box below. Ordinary least squares analysis was used to estimate expenditures for housing, food, and other miscellaneous goods and services. Tobit analysis was used to estimate expenditures for transportation, health, children's clothing, and children's education and child care since over 10 percent of the sample reported zero expenses for these budgetary components. Because of these zero expenditures, tobit analysis yields more efficient estimates than ordinary least squares analysis. The procedure outlined by McDonald and Moffitt (5) was used to transform the tobit analysis estimates into dollars. Allocating Expenditures Among Family Members After the various overall family and child-related expenditures were estimated, these total amounts were allocated among the three family members (parent, older child, and younger child). Since the estimated expenditures for children's clothing, education, and child care were only for children, this allocation was made by dividing these estimated expenditures by two (the number of children in the household). CEX data on children's clothing expenditures were for children age 15 and under, so a 16- or 17-year-old was assigned the clothing expenditures of a 15-year-old. Expenditures for other clothing services, such as dry cleaning, were estimated for the overall family and allocated on a per capita basis among family members. Data from other Federal studies were used to apportion the budgetary shares for food and health care to a child by age. The 1977-78 National Food Consumption Survey conducted by the Human Nutrition Information Service (HNIS), USDA, collected data on food consumption by individual family members and the money value of food used at home by the household. Four food plans were then developed from this information (thrifty, low-cost, moderate-cost, and liberal) with 4 costs updated each month. Based on the 1987 plans (7), food budget shares, as a percentage of total food expenditures, were calculated for the younger child in a single-parent household with two children under the low-cost and moderate-cost food plans for the lower and higher income groups. It was assumed the parent was between 20 and 50 years old and the age spread between the younger and older child was 3 years. Appropriate (for age of the child and income level of the family) food budget shares were then applied to the estimated family food expenditures to determine child-related food expenses. The calculated food budget shares as a percentage of total food expenditures for the younger child in a single-parent household with two children, by age of the child and income group, were: Age of child 0-2 3-5 6-8 9- 11 12- 14 15 - 17 Income group Lower Higher Percent share 26 24 25 25 30 29 32 33 33 33 33 33 The 1980 National Medical Care Utilization and Expenditure Survey (2) conducted by the Public Health Service, U.S. Department of Health and Human Services (HHS), contains data on health care expenses by age of individual household members. From these figures, the proportion of health care expenses attributable to the younger child in a single-parent household with two children was derived. These individual member shares for health care expenses then were applied to estimated family health care expenditures to determine child-related expenses. It was assumed that the age of the parent was between 19 and 54, and the age spread between the younger and older child was 1-6 years. Applying these derived health care expense shares to total family health care expenditures for the two income groups in 1987 assumes these shares have not changed since 1980 and do not vary by income. Health care budget shares by age of the younger child in a single-parent family with two children were 26 percent for a child age 0-5 and 27 percent for a child age 6-17. No authoritative base exists for allocating estimated family expenditures on housing, transportation, and other miscellaneous goods and services among individual family members. These expenditures were thereby allocated on a per capita basis.2 As the per capita approach does not allow for possible diseconomies or economies of scale from having one child or three or more children, diseconomies or economies of scale percentages were estimated for single-parent families with other than two children (seep. 7). Transportation expenses resulting from work activities are not related to child-rearing expenses, so these costs were excluded from the estimated family transportation expenses. Data from a 1983-84 study by the U.S. Department of Transportation (3) were used to calculate the percentage of transportation expenditures that may be attributed to work-related activities for singleparent families with children of different ages. Applying these percentages to 1987 Consumer Expenditure Survey data assumes these patterns have not changed since 1983-84 and do not vary by income level. Work-related transportation activities accounted for approximately 19 percent of travel for single-parent families with a child under age 6 and 29 percent for families with a child age 6-17. 2Sce Lino ( 4) for a discussion of alternative methods for allocating such expenditures. Family Economics Review Estimated Expenditures on a Child in a SingleParent Household Estimates of family expenditures on the younger child in a singleparent family with two children for the overall United States are presented in table 1. Although the estimates are based on 1987 data, income levels of households were updated to 1990 dollars using the all-items category of the CPI-U, and expenditures were updated using the CPI for the corresponding item (i.e., the CPI's for housing, food, etc.). Child-rearing expenses ranged from $3,800 to $5,650 for single-parent households in the lower income group (before-tax income less than $29,900) and from $7,830 to $10,030 for single-parent households in the higher income group (before-tax income $29,900 or more). Although families in the higher income group spent more than families in the lower income group on a child in each respective age category, this difference varied by budgetary component. Expenditures on a child in a single-parent household in both income groups generally increased over the age of a child. This held for all budgetary components with the exception of education, child care, and other miscellaneous goods and services, which were highest for a child age 3-5 in both income groups. Many women with children in this age group are in the labor force, so much of this expense can be attributed to child care. In 1987, 70 percent of divorced women with children under 6 years of age were in the labor force (8). Although the dollar costs may seem low, the averages include households with and without the expense. The largest proportion of childrelated expenditures was allocated for housing. Housing comprised, based on an average of the six age groups, 33 percent of total childrelated expenses for single-parent households in the lower income group and 35 percent for those in the higher income group. Transportation was the second largest average annual expense on a child for single-parent families in both the lower and higher income groups, accounting for 25 percent and 22 percent of child-related expenses, respectively. Food comprised the third largest average expense on a child for families in the lower income group, totaling 19 percent of childrelated expenditures. However, education, child care, and other miscellaneous goods and services accounted for the third largest average expense on a child for families in the higher income group, totaling 18 percent of child-related expenses. Clothing, on average, made up 5 to 7 percent of total child-related expenses for the two income groups of single-parent households. These Table 1. Estimated expenditures on a child by single-parent families, overall u.s., 1990 Education, Transpor- Health Child Care, Age of Child Total Housing Food tat ion Clothing Care and Other Income: Less than $29,900 0-2 ....... $3,800 $1,360 $ 710 $ 980 $ 180 $ 90 $ 480 3-5 ....... 4,770 1,570 740 1,240 250 140 830 6-8 ....... 5,180 1,800 970 1,190 290 150 780 9- 11 ... . .. 5,460 1,800 1,040 1,300 320 170 830 12- 14 .. .. .. 5,330 1,660 1,170 1,270 600 210 420 15-17 .... . . 5,650 1,760 1,230 1,440 600 190 430 Total . ... .. . $90,570 $29,850 $17,580 $22,260 $6,720 $2,850 $11,310 Income: $29,900 or more 0-2 ..... . . $7,830 $2,990 $1,060 $1,720 $ 270 $ 220 $1,570 3-5 ...... . 9,150 3,210 1,160 2,070 360 320 2,030 6-8 ... ... . 9,460 3,440 1,430 1,950 400 330 1,910 9- 11 . . .. . . 9,860 3,440 1,630 2,100 440 370 1,880 12-14 ...... 9,650 3,300 1,730 2,060 790 430 1,340 15-17 ...... 10,030 3,400 1,790 2,270 780 400 1,390 Total ....... $167,940 $59,340 $26,400 $36,510 $9,120 $6,210 $30,360 1991 Vol. 4 No. 1 5 estimates do not include children's clothing received in the form of gifts. Therefore, total overall clothing expenses on a child would likely be higher than reported here. Health care averaged between 3 and 4 percent of total child-rearing expenses for the two income groups. These estimates include only out-of-pocket expenses, and not those expenses covered by health insurance. In non-widowed single-parent situations (divorced, separated, or never married), estimates for childrelated expenses presented here include only those expenditures made by the parent with primary care of the child. The estimates do not include possible child-related expenditures made by the other parent. For example, the parent with whom the child does not reside the majority of time may incur transportation, food, and entertainment expenses during visitation days and have a larger living unit because a child stays with this parent on weekends. Such expenditures could not be estimated from the data. Hence, the overall expenses on a child in a single-parent household by the two parents in a non-widowed situation would likely be greater than this study's estimates. A comparison of the expenditures for the younger of two children in a single-parent household with those for that child in a husband-wife household for the lower income group is presented in table 2. As previously discussed, most singleparent households (85 percent) are in this lower income group. Total expenditures on a child were, on average, 5 percent higher for singleparent households compared with married-couple households. In part, this reflects the greater transportation expenses attributed to a child in a single-parent household since these expenditures are allocated among fewer members. On average, housing expenditures were slightly higher (2 percent), whereas expenditures on clothing; health care; and education, child care, and other miscellaneous goods and services on a child were lower in single-parent 6 Table 2. Estimated expenditures on a child by singleparent and husband-wife families with income less than $29,900, overall U.S., 1990 Age of child Single-parent families Husband-wife families 0-2 .............. . 3-5 .............. . 6-8 .............. . 9- 11 ............. . 12- 14 ............. . 15-17 ............. . Total .............. . than in husband-wife households. Child-related food expenditures were similar, on average, in singleparent and in husband-wife families. A precise comparison between child-rearing expense estimates for single-parent households in the higher income group to those of husband-wife households is not possible as the higher income groups of married couples (before-tax income between $29,900 and $48,300, and over $48,300) did not exactly correspond. However, the childrearing expense estimates for singleparent households in the higher income group were in the range of those of husband-wife households in these middle and highest income groups. Hence, it seems that expenses on a child in single-parent households are slightly higher than those in husband-wife households, probably because of economies of scale. What really distinguishes the two types of households is that 85 percent of single-parent households, but only 33 percent of husband-wife households, are in the lower income group. Even within this lower income group, single-parent households had a lower mean income than husband-wife households. The income of husbandwife households tended to fall in the upper range of this income category, whereas that of single-parent households was more dispersed. $3,800 4,770 5,180 5,460 5,330 5,650 $90,570 $4,330 4,630 4,620 4,480 5,150 5,490 $86,100 Differences in Expenditures for an Older Child and by Number of Children The estimates presented thus far represent expenditures on the younger child in a single-parent household with two children. Expenses for the older child may be different. To determine the extent of this difference, the previous procedure was repeated. Multivariate analysis was used to estimate expenditures for each budgetary component, controlling for household size and, for this analysis, age of the older child. A family with two children was used as the standard. The sample was weighted to reflect the U.S. population. Children's clothing, education, and child care expenditures were divided between the two children in a household. For food and health care, household member shares were calculated for a three-person household (parent and two children with the older child in one of the six age categories) using the USDA and HHS studies. These shares for the older child were then applied to estimated food and health care expenditures to determine expenses on the older child in each age category. Housing, transportation, and other miscellaneous expenditures were allocated among household members on a per capita basis. Transportation expenses were adjusted to account for non-work-related activities. Family Economics Review l On average, single-parent households with two children spent approximately 11 percent less on the older than on the younger child. This is contrary to husband-wife households that spent approximately 3 percent more on the older than on the younger child (6). Education, child care, and other miscellaneous goods and services accounted for much of the higher expenses associated with the younger child in single-parent households. In addition, diseconomies or economies of scale are achieved if a single-parent household has only one child or three or more children. To determine these disecmiomies and economies of scale factors, multivariate analysis was used to estimate expenditures for each budgetary component controlling for household size and age of the younger child. Compared with expenditures for each child in a single-parent, two-child family, single-parent households with one child spent approximately 37 percent more on the single child, and those with three or more children spent approximately 26 percent less on each child. Greater diseconomies and economies of scale are achieved in single-parent families than in husbandwife families. Husband-wife families spend approximately 21 percent more on an only child and 22 percent less on each child in families with three or more children, compared with a two-child family (6). The smaller household size of singleparent families relative to marriedcouple households is likely the reason for this. Diseconomies and economies of scale typically have a diminishing effect, so as family size moves from three to two members (a single parent with two children vs. one child), greater diseconomies of scale result than when decreasing from four to three members (a married couple with two children vs. one child). Similarly, as family size moves from three members to four or more members (a single parent with two 1991 Vol. 4 No. 1 children vs. three or more children), greater economies of scale are achieved than when increasing from four to five or more members (a married couple with two children vs. three or more children). Other Expenditures on Children Expenditures estimated in this study for a child in a single-parent household are direct expenses for six major budgetary components. There are other direct expenses involved in rearing a child in a single-parent household. One, already discussed, is expenses incurred by the parent without primary care of the child in divorced, separated, or never-married situations. Another is the cost of a college education, which usually occurs after the child reaches age 18. Child-rearing estimates in this study are for a child age 17 and under. There are also indirect costs involved in the rearing of a child. In order to care for children, current earnings and future career opportunities may be diminished for the single parent due to less time in the labor force. In addition, parental leisure time is curtailed. These indirect costs can surpass direct expenses on a child (J) and may be particularly restrictive for a single parent who typically assumes major responsibility for child rearing. References 1. Calhoun, C.A. and Espenshade, T.J.1985. The Opportunity Cost of Rearing American Children. The Urban Institute, Washington, DC. 2. Kasper, J.D. 1986. Perspectives on Health Care: United States, 1980. National Medical Care Utilization and Expenditure Survey. Series B, Descriptive Report No. 14. Office of Research and Demonstrations, Health Care Financing Administration. 3. Klinger, D. and Kuzmyak, J.R. 1986. Personal Travel in the United States, Vol. I, 1983-1984 Nationwide Personal Transportation Study. U.S. Department of Transportation. 4. Lino, M. 1990. Expenditures on a child by husband-wife families. Family Economics Review 3(3):2-18. 5. McDonald, J.F. and Moffitt, R.A. 1980. The uses of Tobit analysis. The Review of Economics and Statistics 62(2):318-321. 6. U.S. Department of Agriculture, Agricultural Research Service, Family Economics Research Group. 1991. Expenditures on a Child by Husband-Wife Families: 1990. 7. , Human Nutrition Information Service. 1987. Cost of food at home. Family Economics Review No. 3, p. 30. 8. U.S. Department of Commerce, Bureau of the Census. 1989. Statistical Abstract of the United States, 1989. [109th ed.] ~ 7 Income and Expenditure Patterns of Consumer Units with Reference Person conducted quarterly1 by the Bureau of the Census for the Bureau of Labor Statistics. Consumer units2 were interviewed in the survey; persons in nursing homes or similar institutions were not included. A consumer unit may be one person but that person need not live alone. Two persons living together but fmancially independent would be considered two separate consumer units. Fmdings are based on responses from 2,727 consumer units with reference persons3 age 70 years or older. Seventy-one percent were 70 to 79 years of age and 29 percent were 80 or older. Data were weighted to reflect the U.S. population; 8.4 million households with a head age 70 to 79 years and 3.4 million with Age 70 to 79 and 80 or Older By Retia Scott Walker Chair, Human Ecology University of Maryland at Eastern Shore Frankie N. Schwenk Research Leader Family Economics Research Group The U.S. population of older persons, especially those 80 years or older, is increasing at a faster rate than the total population. Information on the characteristics of these households will aid policymakers, planners, and educators in planning for the needs of these families. Using data from the 1987 Consumer Expenditure Survey, this study describes the socioeconomic and demographic characteristics of households with a head 80 years or older. It also compares these characteristics with those of families having a reference person age 70 to 79 years. Results indicate that the 80-plus age group had less income and spent considerably less than those in their seventies. This study did not include older persons who Jived in the homes of their children, nursing homes, or other such arrangements. Introduction Since the beginning of this century, the United States has experienced rapid growth in the older population. Whereas, 1 in 25 Americans was at least 65 years old in 1900, this proportion rose to 1 in 8 in 1990. · Projections for 2025 are that one in five persons will be 65 or older (7). The subset of persons 80 and older is expected to almost double by 2025 while the total population will increase by 20 percent (table 1). 8 Projections of an increasingly older population have far-reaching implications for educational programs and public policy on issues related to health and social and economic well-being of the older population. This study contributes to the discussion of these effects by providing information on the current socioeconomic and demographic characteristics of this population and on their income and expenditure patterns. Households with a reference person 80 years or older and those with a head age 70 to 79 years are compared. Source of Data Data used for this study were from the 1987 Consumer Expenditure Survey (CEX) (6), an ongoing survey 1Quarterly expenditure data were multiplied by four to provide estimates of annual expenditures. Income data in the suiVeywere annual data. 2Consumer unit comprises either: (1) all members of a particular household who are related by blood, marriage, adoption, or other legal arrangements; (2) two or more persons living together who pool their income to make joint expenditure decisions, or (3) a person living alone or sharing a household with others or living as a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent. To be considered financially independent, at least two of the three major expense categories (housing, food, and other living expenses) have to be provided by the respondent. The terms "household" and "family" are used throughout the text to refer to consumer units. 3Reference person (sometimes referred to as householder in this text) is the first member mentioned by the respondent when asked to "Start with the name of the person or one of the persons who owns or rents the home." Table 1. Projections of the population* by age Population Total ...................... . Age 65 and older .......... . Age 70-79 ............ . Age 80 and older ........ . *Numbers in thousands. 1990 250,410 31,559 14,227 7,082 2000 268,266 34,882 16,034 9,357 2025 298,252 59,713 26,798 13,658 Source: U.S. Department of Commerce, Bureau of the Census, 1989, Projections of the populations of the United States, by age, sex, and race: 1988 to 2080, Current Population Reports, Population Estimates and Projections, Series P-25, No. 1018. Family Economics Review . 4 one 80 or older are represented. The weighted means and proportions are presented in the text and tables. An alternative way to analyze these data is by testing the unweighted sample to determine the significance level of comparisons or relationships; therefore, t -test procedures were conducted, and significant values (p < .01) are noted in the tables. Household Characteristics Socioeconomic and demographic variables are important factors in the study of income and expenditure patterns among older households because they reflect past circumstances, needs, and preferences that impact their current economic status. Table 2 (p. 10) shows selected characteristics for two age subgroupsthe seventies (70 to 79 years) and SOplus years. For comparison, dat~ als~ are shown for the U.S. population. Gender and Race The percentages of male and female reference persons were similar for those age 70 to 79. However, the reali~ of uneven longe'?ty was reflected m a larger proportion of female reference persons among those 80 and over (62 percent). Differences in longevity also were reflected in racial composition. There was a smaller percentage of black respondents in the older group than in the younger group. 'The U.S. population had 13.5 million persons age 70 to 79 years and 6.7 million persons 80 and older in 1987. This study included 10.8 million reference persons or spouses age 70 to 79, and 3.9 million age 80 and over. Thus, 80 percent of persons 70 to 79 years and 58 percent of those 80 or older are represented. Those not included in the sample may have lived in nursing homes or other institutions or with children, grandchildren, siblings, or friends. Also, some disparity i~ numbers may have resulted from the exclusiOn in this study of consumer units that were incomplete income reporters. Tie U.S. population estimates are weighted data from all consumer units in the survey that gave complete reporting of income, i.e., provided values for at least one of the major sources of income. 1991 Vol. 4 No. 1 Education Compared with those 80 and older, the education level was higher for persons age 70 to 79. Nearly 10 percent of reference persons in each group were college graduates. The greatest difference was in the minimum years of schooling: 42 percent of the 80-plus group received an elementary education or never attended school, compared with 31 percent of the seventies group. Differences in education levels may reflect factors such as changing attitudes by society concerning how much education was appropriate (J). Income Almost half of those age 70 to 79 and 61 percent of those 80 and older reported a before-tax annual income of less than $10,000. Twelve percent and 17 percent, respectively, reported an annual income of less than $5,000 before taxes in 1987. These households were below the official poverty level ($6,872 for couples and $5,447 for single individuals over 65 years of age) (4). On the other side of the scale, 6 percent of the seventies group and 4 percent of the 80-plus households reported an annual income of $40,000 or more. These variations between groups probably reflect employment history, type of occupation during the productive years, wages earned, and related factors. Income was related to family type and education of the reference person. When compared with o~her family types, the husband and Wife households were better off in both age groups. Table 3 (p.ll) shows the two predominant family types: husband-wife and single female. Almost one-third of husband-wife families in both age groups had incomes of $20,000 or higher, whereas over three-quarters of single-female families reported income below $10,000. Those with more education tended to do better financially during the retirement years. Almost one-third of the high school graduates age 70 to 79 and onefourth of those 80 and older had income over $20,000. In contrast, the less educated reference person typically reported a household income below $10,000. Employment Most reference persons were retired, but 15 percent of the younger group and 4 percent of the older group were employed. Most worked part time. Five percent of those in their seventies and less than 1 percent of those in their eighties worked full time, year round. Marital Status As shown in table 2, there were differences between the two age groups in marital status. Compared with the younger group, a much lower percentage of married couples and a considerably higher percentage of widowed persons were seen in the 80-plus group. Persons in this older group were less likely to be separated or divorced than their younger counterparts. Family Composition As expected, there was a larger percentage of husband-wife families in the younger group ( 44 percent) than in the older group (27 percent). A higher percentage of persons 80 and older were single females (52 percent), compared with those 70 to 79 years old (36 percent). Single males accounted for approximately 10 percent of the households in both age groups. Residence- Urban/Rural More than four of five older households were located in urban as opposed to rural communities (less than 2,500 population). However, households headed by a person 80 years or older were more likely to live in an urban environment than were those headed by a person age 70 to 79. 9 5 ~ 8 ~ t'j r'l 0 0= r8;· til ::e Table 2. Selected characteristics of older consumer units and all consumer units, 1987 Characteristics Number of persons in consumer unit . .. . ...... . Gender of reference person: Female . .. ..... . .... . ..... . ...... . ..... . Race of reference person: Non-Hispanic white . ... . .... .... .... . . . .. . Non-Hispanic black .. .. ... ... . .. . ....... . . Non-Hispanic American Indian, Asian, Other .. . Hispanic origin .. . . ... .. .. . .. .... . .... . .. . Education of reference person: Never went to school . . ................... . Elementary (1-8) .. . .. . . . .......... . ..... . Some high school . .. .. . . .. . ..... . ....... . High school graduate ...... ... ... . ... . .... . Some college ....... . ........... . .. . .... . College graduate .... .. ... ...... . . ..... .. . > 4 years college . .. . . .... . ..... .. . . .. . .. . Income class (before taxes) : Under $5,000 . . . . . . ...... . ....... . .. . .. . . $5,000 - $9,999 .. . ... . ................... . $10,000- $14,999 . . .. . ...... . ....... . ... . . $15,000-$19,999 . ...... . ... . .. ....... . .. . $20,000 - $29,999 . . .................. .. . . . $30,000 - $39,999 . . ... . .... . ... .. . .. .. ... . $40,000 and over ........... . .. . . .. . . . ... . Labor force status of reference person: Employed .... ...... . . ..... ... ... . ...... . Ill, disabled ... .. ... . . . ... . ..... . . . .. . . . . . Homemaker .. ... ..... . . . .. .. .......... . . Retired ........ ..... . .... . . . . . . ...... ... . Could not find work, doing something else ... . All 70-79 80+ consumer years years units 1 1.7 47.1 88.2 9.1 1.2 1.5 1.5 Percent 61.8 88.6 8.2 1.3 1.9 2.5 33.8 81.9 10.1 2.6 5.4 .7 3.0 .5 30.0 38.8 11 .8 20.9 17.3 13.7 25.9 20.4 31.0 12.3 10.8 22.2 5.2 6.3 10.8 5.0 3.4 10.0 12.3 16.5 9.2 35.2 43.9 15.4 20.3 17.1 12.8 11.4 7.8 10.3 10.2 7.4 17.5 4.9 3.0 13.0 5.7 4.3 21.8 15.3 4.4 72.5 6.3 6.0 4.1 4.5 6.6 4.5 73.4 82.8 17.5 .5 .2 1.4 Characteristics Marital status: Married . . . ..... ..... ... . . .. . . .. .. . . . .. .. . Widowed ................ . .............. . Divorced ..... . .................. .. ..... . Separated ... ... ..... .. .. .. ............. . Never married . . .................... . ... . . Family type: Single male consumer . . . . . . .. . ........... . Single female consumer ..... . ..... . ...... . . Husband, wife only .. . . .. . . . ... . . . . .. . ... . . Husband, wife, and child ........ .... . . .... . Single parent, other family ... . ... ....... .. . . Residence: Urban .... .. ... .. . .... ... . .. ...... . ..... . Housing: Public . . .. .. .... . . .. .. . . .. .. . ...... ..... . Government pays part of costs . .. . ... .. . ... . Housing tenure: Homeowner without mortgage .. . . .. .. .. . . .. . Homeowner with mortgage . ... ....... . .. .. . Renter . .. ...... . .......... .. ....... . ... . Occupied without payment . . .. .. .. . ...... .. . Student housing . . . . ... . . . .. ... . . .. ...... . Type house: Single family, detached .......... . . .. ...... . Apartment (flats, high-rise, garden) .......... . Other (row, town, 2,3,4-plex) . . . . .. .. . . . . ... . Mobile home-trailer .. . .. . .. . .. . ........... . ~. 1AJI consumer units includes those headed by persons of any age and represents the U.S. population. ~ .. ,. All 70-79 80+ consumer years years units 1 45.5 43.4 5.3 2.5 3.3 Percent 28.3 65.6 2.3 .1 3.7 56.0 12.4 11.4 3.4 16.8 10.1 10.9 12.5 35.7 51.9 16.8 38.1 24.0 21.4 5.5 3.1 32.8 10.6 10.1 16.5 83.2 87.1 85.5 1.9 3.0 1.9 3.3 4.5 1.9 64.0 61 .6 24.6 11.0 5.2 37.1 24.8 32.8 36.1 .2 .4 1.0 0 0 1.2 67.9 60.8 61 .5 17.1 25.2 20.6 8.0 8.0 11.7 7.0 6.0 6.2 Table 3. Household income by family type and education of reference person, for age subgroups, 1987 Family characteristic All families ....................... Family type: Husband, wife only 0 ••••••••••• 0 Single female .................. Education of reference person: Did not graduate from high school . High school graduate ........... Public or Subsidized Housing Although nearly all persons in this study lived in private housing, there was a slightly higher percentage of reference persons 80 and older living in public housing or housing where the government paid part of the cost. Perhaps this was due, in part, to the economic status of older persons and the availability of subsidized apartments for the elderly. Home Ownership Reference persons in the seventies group were more likely (75 percent) than the older group (67 percent) to be homeowners. A small percentage in each group held a mortgage on their home. There was a relationship between housing tenure and family type in both age groups. Renting was more frequently observed among single-female households (35 percent of those age 70 to 79 and 41 percent ofthose 80 and older) than among husband-wife households (14 percent of the younger group and 16 percent of the older group). Housing Type The highest percentage of older persons lived in single-family homes ( 68 percent of the younger group and 61 percent of those 80 or older). Apartments (flats, high-rise, or garden-style) comprised 17 and 25 percent of the housing occupied by those age 70 to 79 and 80 years and older respectively. It may be that the 80-plus group was more likely t? be housed in an apartment -type umt than the seventies group because they were more likely to be single. 1991 Vol. 4 No. 1 70-79years $10,000- $20,000- <$10,000 $19,999 $39,~99 $40,000+ Percent 47 32 15 6 21 48 22 9 77 15 7 1 58 31 10 1 37 32 21 10 Source of Income Average annual income before taxes is shown in table 4 (p. 12), by components. Also, after-tax income and per capita incomes are given for both age groups. The percentage of consumer units who had income from each source and the average income of those who had that type of income also are presented. Although most consumer units (96 percent) had income from Social Security, less than half had income from pensions and annuities or interest on savings. Mean income before or after taxes differed significantly between the two age groups, but per capita incomes did not. Wages and salaries, Social Security, and pensions and annuities varied significantly. These income sources were expected to be lower for those 80 and older than for those age 70 to 79 because the younger group had a higher percentage of husband-wife households. The major source of income for both age groups in this study was Social Security,6 which provided, on average, over half their income (51 percent for the younger group and 55 percent for those over 80). 6 Although more elderly depend on Social Security than on other sources for ~heir in- . come their income share from Soctal Secunty varie~ widely (2). According to a Social Security Administration Report (5), in 1987 the average monthly benefit was $513 ($6,156 per year) for a retired worker. ~owev~r •. when a retired worker with a wtfe recetvmg benefits based on his earnings was included, the average monthly benefit was $873 ($10,476 annually). Widows or widowers averaged $468 per month or $5,616 per year. 80+ years $10,000- $20,000- <$10,000 $19,999 $39,999 $40,000+ Percent 61 25 10 4 26 43 22 9 78 17 4 1 68 24 6 2 50 26 16 8 A larger percentage of the younger group (37 percent) had private pensions and annuities perhaps because these were more accessible to them than they were to the 80-plus group (32 percent) during their working years. Also, the younger group was more likely to have both husband and wife receiving pensions or annuities. A larger percentage of those 80 and older (41 percent), compared with those in their seventies (37 percent), reported income from interest on savings accounts and bonds. More of them may have sold homes, placing the proceeds in savings accounts or bonds. Although 12 percent of the younger and 17 percent of the older households reported annual incomes below $5,000, few of these households received public assistance. Expenditures Total expenditures and per capita total expenditures for those 80 and older were significantly lower than those for the 70 to 79 group (table 5, p. 13). The older group spent significantly less on each category of expenditures except health care, education, miscellaneous, and cash contributions. As expected, housing commanded the largest share of the household budget for each age group followed by food, transportation, and health care. Housing included shelter, utilities, and household operations and furnishings. The older group allocated $4,162 or 42 percent of their expenditures, whereas the younger group spent $4,864 or 11 Table 4. Income sources and mean annual household income by age subgroups, 1987 Sources of before-tax income Mean for all consumer units Mean for consumer units with source Percent with income from source 70-79 years 80+ years 70-79 years Wages and salaries ......... . ......... . $1,908 490 51 $1,171* 146 $12,323 11,899 2,159 Net business ........................ . Net farm .......................... .. . Social Security, Railroad Retirement, and private retirement: Social Security and Railroad Retirement Pensions and annuities ............. . Interest, dividends, property income: Dividends, trusts, royalties, estates ..... . Interest on savings accounts or bonds .. Roomer and boarder income ......... . Other rental income .. .. .... . . . . .. .. . . Unemployment and workers' compensation: Unemployment ... . . .. .. . ....... . .. . Workers' compensation and Veterans benefits .... ... . . . .. . . . Public assistance: Welfare .... .. ............... . ... . . . Supplemental Security Income (SSI} ... . Food stamps . . .. . ..... . ... . .. .. .. . . Other income: Regular contributions .... . . . ........ . Other money income ................ . Total income (before taxes) ............. . Total income (after taxes) . .. . ... . .... .. . Per capita income (before taxes) ........ . Per capita income (after taxes) - Insufficient sample size. * p<.01. 7,711 2,406 678 1,482 6 126 62 14 107 32 33 61 $15,174 14,402 8,926 8,472 Summary 6,899* 1,524* 725 1,809 85 107 55 18 34 $12,627* 12,083* 8,418 8,055 7,927 6,433 5,477 3,969 1,040 3,743 3,228 999 1,502 491 1,332 6,412 34 percent of their expenditures on housing. Utilities accounted for almost one-third of the housing expense of each age group. Transportation expenses included vehicle purchase, gasoline and oil, insurance, maintenance, public transportation, and other expenses. Budget shares for transportation were smaller in the older group (10 percent) than the younger group (18 percent) partly because they owned fewer vehicles. Half of the older group had no vehicle, compared with 28 percent of those age 70 to 79. There was little difference between the two age groups on the expenditure share for food. As expected, the older group spent a larger share on health care than the younger group. The results of this study indicated that, on average, families with a reference person in their seventies spent nearly all of their after-tax income. It was surprising to note that the average expenditures of householders 80 and older were less than their average after-tax income. Rather than spending more than their income and drawing on their assets, as might be expected, families with a head 80 years or older had average total expenditures $2,000 less than average income. This may have been because these families wanted to save or had less inclination to spend. 12 The older households had a lower average income than those in their 80+ years $17,883 9,763 7,195 4,834 6,135 4,458 1,729 2,879 1,058 348 1,565 70-79 years 15 4 2 97 37 12 37 1 3 2 1 7 6 2 1 80+ years 7 1 96 32 12 41 5 4 5 5 2 seventies. This was due partly to smaller household size. The older group reported lower average income from most sources except dividends and interest. Fewer of the older group owned a house, so perhaps they had sold their home and put the proceeds into instruments producing dividends and interest. The older households also spent less than the younger households, and per capita expenditures also were significantly lower for older families. Families with a reference person age 80 and older spent fewer dollars and a smaller budget share than the younger group on transportation, apparel, and entertainment; they may go out less often for reasons of health or preference. Family Economics Review Table 5. Mean expenditures and budget shares by age subgroups, 1987 Mean expenditures Budget share Item 70-79 years Food . . .... . .... . . .. .. ... $2,618 Housing •• • •• • • 0 ••••••••• 4,864 Transportation • 0 0 ••• 0 0 0 0 •• 2,577 Health care ............... 1,626 Apparel and services ... . ... 615 Entertainment .. . ..... . .. .. 519 Personal care .... . ... . .... 190 Reading • 0 ••••• • 0 0 • • 0 •• 0 0 133 Education ................ 18 Miscellaneous • • • 0 0 •• •• • •• 291 Cash contributions .... . .... 169 Insurance and retirement .... 518 Alcohol .. ........ . .... .. . 123 Tobacco . .. ... ... . ... . ... 134 Total expenditures .. ..... . . $14,397 Per capita total expenditures . 8,469 * p<.01. Conclusions On average, households with a head 80 years or older had similar per capita incomes and lower per capita expenditures when compared to families in their seventies. Also, expenditures were less than income for both age groups, so some families were not using their savings or other assets for current spending. This may be welcome information to those who are concerned about the economic status of older families as the percentage of persons 80 or older increases. However, some households were not faring so well. Twelve percent of those with a reference person in their seventies and 17 percent of those 80 or older reported incomes less than $5,000, considerably below poverty thresholds for families over 65 years of age. Yet, less than 7 percent received Supplemental Security Income (SSI) and less than 6 percent received food stamps. It appears that families eligible for economic support were not receiving it. Efforts to reach these families are needed. 1991 Vol. 4 No. 1 80+ 70-79 80+ years years years Dollars Percent $1 ,890* 18 19 4,162* 34 42 1,010* 18 10 1,432 11 14 288* 4 3 231* 4 2 159* 1 2 84* 10 0 0 165 2 2 222 2 249* 4 2 43* 1 0 68* 1 $10,015* 100 100 6,677* For families in this study,1 housingrelated costs comprised the largest share of the household expenditures. Over 70 percent owned their home, but such assets are not readily available for use. Furthermore, as persons become less independent with age, it becomes more difficult to maintain a single-family dwelling. Yet, about two-thirds lived in single-family homes. Alternative housing options, including those with a service component (such as congregate housing, shared, and group homes), may be needed. Given these findings, further research related to the economics of aging is needed. Researchers, consumer educators, extension agents, and professionals on aging can contribute to developing a better understanding of the economic status of older persons. 7Persons living in nursing homes, with their children, or in other arrangements may have different expenditure patterns. For some, health-related expenses would be the major budget component. References 1. Atchley, R.C. 1988. Social Forces and Aging. Wadsworth Publishing Co., Belmont, CA. 2. Clark, R.L., Maddox, G.L. , Schrimper, R.A., and Sumner, D.A. 1984. Inflation and the Economic Well-Being of the Elderly. The Johns Hopkins University Press, Baltimore, MD. 3. U.S. Department of Commerce, Bureau of the Census. 1989. Projections of the Populations of the United States, by Age, Sex, and Race: 1988 to 2080. Current Population Reports, Population Estimates and Projections. Series P-25, No. 1018. 4. U.S. Department of Health and Human Services, Social Security Administration. 1989. Social Security Bulletin, Annual Statistical Supplement, p.123. 5. . 1988. Fast Facts and Figures about Social Security. Washington, DC. 6. U.S. Department of Labor, Bureau of Labor Statistics. Consumer Expenditure Survey: 1987 Interview Survey Public Use Tape and Documentation. 7. U.S. Senate Special Committee on Aging. 1987-1988. Aging in America: Trends and Projections. [In conjunction with the American Association of Retired Persons, the Federal Council on the Aging, and the U.S. Administration on Aging.] l6 13 Trends in Housing By Nancy E. Schwenk Consumer Economist Family Economics Research Group Using data from various government and industry sources, recent trends in housing are reported. For the past year, the inflation rate for housing was lower than the overall inflation rate, as measured by the Consumer Price Index (CPI). The increase in home prices during the 1990's is expected to be much lower than the increases during the 1970's and 1980's. The U.S. home ownership rate has held steady at about 64 percent for the past 25 years. Renters pay a higher share of their total income for housing costs than do homeowners. The housing industry is experiencing a decline. New housing starts, an indication of the health of the real estate industry and the national economy, have been decreasing for both single-family and multifamily structures. Other information presented includes mortgage trends, new developments in the housing industry, and recent legislation. Housing professionals and educators, as well as would-be home buyers, are provided with useful trend information. The CPI for housing rose 4.5 percent between December 1989 and December 1990 (table 1). This increase was less than the 6.1 percent increase for the overall CPI during the period. The housing component that showed the greatest increase in price was fuel oil and other household fuel commodities (28.6 percent). Smallest increases in price (less than 2 percent) were observed for housefurnishings, maintenance and repair commodities, gas (piped) and electricity, and household insurance. Home Ownership The U.S. Census Bureau conducted its ftrst housing census in 1940. That year, the median value of nonfarm owner-occupied homes was 14 $2,938, and the median rent was $27.28 per month (9). A majority of Americans (56.4 percent) were renters. Although many homes today have a 6-digit price tag, the dream of home ownership has become a reality for most Americans. In the second quarter of 1990, the home ownership rate was 63.7 percent. This rate has varied by only 2 or 3 percentage points over the past 25 years. The home ownership rate was highest outside Metropolitan Statistical Areas (73.2 percent) and lowest inside central cities ( 48.3 percent). Among the four geographic areas of the country, the rate was highest in the Midwest (67.4 percent) and lowest in the West (57.3 percent) (20). Home Prices Owning a home in the 1990's is not expected to be the same profitable experience as it was during the 1970's and 1980's. According to the chairman of the Federal Home Loan Mortgage Corporation (3), home prices are expected to increase about 2 percent per year in the 1990's, compared with 4 percent per year in the 1980's and 10 percent per year in the 1970's (3). Home buyers during the next few years are advised to think of their purchase as a form of asset savings rather than as an investment. The appreciation rate for home prices is decreasing in the highest priced markets such as Boston, New York City, and the California coastareas that had experienced boom markets in the late 1980's. In contrast, housing appreciation is increasing in many of the relatively lower priced urban areas such as Seattle, Akron, and Peoria. Prices in several depressed Southern markets, such as Houston and Baton Rouge, also appear to be on an upswing (8). In 1989 the median sale price of a single-family home in the United States was $120,000 for a new home and $93,100 for an existing home (table 2, p. 16). Median existing home prices for the second quarter of 1990 showed the three most expensive areas of the country to be Honolulu ($345,000), San Francisco ($263,600), and Anaheim/Santa Ana ($248,900). In contrast, the three least expensive areas were Saginaw, MI ($49,300); Youngstown-Warren, OH ($50,400); and Peoria ($52,100) (8). Metropolitan areas of the country can be compared on a housing affordability index - the percentage of income needed to marginally qualify for a conventional loan covering 80 percent of the median existing singlefamily home price, based on current lending requirements of the Federal National Mortgage Association (Fannie Mae). For example, the July 1990 affordability index of 102.3 for the United States means that a family earning the median income of $34,358 had 102.3 percent of the income necessary to purchase the median existing single-family home, priced at $98,400 (8). For the second quarter of 1990, the metropolitan areas with the most favorable affordability indexes were: Houston (179.9), Indianapolis (159.8), Minneapolis/ St. Paul (154.1), Kansas City (149.9), and Detroit (146.4). The metropolitan areas with the least favorable affordability indexes were: Los Angeles (49.5), San Francisco (51.9), New York (53.3), San Diego (58.7), and Boston (79.8) (8). In 1989, 350,000 apartment condominiums and cooperatives were sold, up from 230,000 ftve years earlier. The Northeast accounted for 45 percent of these sales. The median sale price of condos and co-ops was $84,300, ranging from $65,600 in the Midwest to $110,800 in the Northeast (7). Family Economics Review Table 1. Consumer Price Index for housing, all urban consumers: U.S. city average [1982-84 = 100) December Group and item 1989 All items 126.1 Housing ... . .. .. ..... .. .. . . .. .... . .. . .. .. . . .. .. .. ... . 124.9 Shelter ............................................ . 135.6 Renter's costs 1 •.••••. . • •••• .. • . •• . • •.••• • ..• • ..•. • • 140.1 Homeowners' costs 1 •.......................• • ....... 140.9 Household insurance 1 .. • ..........•...•.....•...•... 134.0 Maintenance and repairs ........ . .................... . 119.5 Maintenance and repair services ..................... . 122.2 Maintenance and repair commodities ................. . 115.8 Fuel and other utilities ...... . .... . .................... . 108.4 Fuel oil and other household fuel commodities ........... . 88.7 Gas (piped) and electricity .... ... ................... . . 107.0 Household furnishings and operation ................... . 111.7 Housefurnishings ................................... . 105.5 Housekeeping supplies . .... . . . .. ... .. . . .. ... ..... . .. . 123.6 Housekeeping services . ............................. . 117.6 11ndexes on a December 1982 = 100 base. Source: U.S. Department of Labor, Bureau of Labor Statistics. As of 1987, 5.8 percent of the total occupied year-round housing units in the United States were mobile homes, and 81 percent of mobile homes were owner occupied. Median monthly housing costs for mobile home owners, including all mortgages plus maintenance costs, was $266 (22). The average sale price of a new mobile home for residential use was $23,700 (19). The number of new mobile homes placed for residential use has been declining every year since 1984. Mortgage Trends Today, borrowers have numerous choices when shopping for a mortgage. Lenders are tailoring mortgages to the needs of local borrowers. In the West, the Nation's least affordable housing region, most mortgages are adjustable rate mortgages (ARM's) with monthly adjustments tied to the Eleventh District Cost of Funds Index (COFI), a relatively slow moving index that reflects lenders' borrowing costs in the Western States (2). Treasury-indexed ARM's, which react quickly to interest rate changes, are now only a small portion of the ARM's issued in the West (2). 1991 Vol. 4 No. 1 No-point ARM's are increasing in popularity among prospective home buyers with little cash for a down payment. With a no-point ARM, borrowers pay only minor closing costs. The initial interest rate discount is smaller than for a traditional ARM, and the monthly payment is slightly higher. The 7-year reset mortgage is also gaining market share in the West (2). These fixed-rate loans, which are popular with buyers who expect to live in a home for only a few years, offer automatic or conditional refinancing at the end of 7 years. In other regions of the country, most borrowers choose fiXed-rate loans, although ARM's increase in popularity when interest rates go up (table 3, p. 16). There is a trend among real estate lenders toward simplifying the financial side of home buying in the 1990's. For example, the loan approval process is expected to be shortened within the next few years. Property appraisals, which currently add about 2 weeks to the process, will be able to be completed within 24 hours due to advances in high-tech data storage and retrieval systems. A quick appraisal will enable lenders to December Percent 1990 change 133.8 6.1 130.5 4.5 142.7 5.2 149.5 6.7 147.5 4.7 136.5 1.9 123.8 3.6 128.9 5.5 116.8 .9 112.7 4.0 114.1 28.6 108.6 1.5 113.7 1.8 106.1 .6 127.5 3.2 122.3 4.0 offer instant loan commitments, and buyers can eliminate financial contingencies in their sales offers (12). Expandable mortgages, already being offered by Citibank of New York in the New York City area, will become commonplace in the future. Lenders will approve credit lines based on the appreciated value of the home at some future point, though the borrower receives only the loan money needed to purchase the home (12). Real estate lenders are trying to help home buyers concerned about environmental hazards on their property. The Federal National Mortgage Association, together with others in the lending industry, published a brochure entitled "Home Buyer's Guide to Environmental Hazards" in August 1990. Hazards, such as asbestos, formaldehyde, radon, lead paint, lead in drinking water, and toxic waste were identified and defined, together with the risks associated with each. It is predicted that, as part of sales transactions, toxic waste inspections will become as commonplace as termite inspections are today (5). 15 Demographic Trends During the 1990's, aging baby boomers will be in the market for larger trade-up homes, but selling their starter homes may be difficult. Because of the baby bust, there will be less demand at the lower end of the housing market, creating a buyers' market for starter homes and also, a time of bargains for renters. An increasing amount ofthe U.S. housing dollar will be spent on amenities that appeal to those over age 35. The latest status symbols in housing are libraries and master bedroom suites with a full bath and spa. Growth in spending on existing housing in terms of additions, remodeling, and refurnishing will approach the growth in spending on new housing. During the 1990's the number of persons age 75 and over will grow rapidly, and may increase the demand for nursing homes and assisted-living facilities. However, the number of persons age 65-74 will decline, leading to a flat demand for housing for the young elderly (JJ). First-Time Home Buyer Although the number of first-time home buyers is expected to decline during the 1990's, consumers purchasing their first home comprise a major segment of the housing market. Even in high-priced California, over one-third of purchasers in 1989 were buying their first home, spending an average of $162,500, and paying 20 percent down. Outside California, buyers typically put 10 percent down on their first homes (4). For the Nation, the median price of a home purchased by a first-time buyer in 1989 was $79,100 with a monthly payment of $642. The firsttime home buyer earning the median income of $22,878 had 74.2 percent of the income necessary to purchase this home using a conventional loan at 10.11 percent interest rate. Tie affordability index for first-time buyers is their median income divided by the amount of income needed to qualify for a mortgage, based on current lending requirements of the Federal National Mortgage Association using a tO-percent down payment (7). 16 Table 2. Number and price of single-family homes sold in selected years, 197G-89 Median sale price Single-family of single-family Year home sales homes Existing New Existing New 1970 •• 0 • •••••• 1,612,000 485,000 $23,000 $23,400 1980 0 •• 0 • • 0 • • • 2,973,000 545,000 62,200 64,600 1984 ••• ••• • 0 •• 2,868,000 639,000 72,400 79,900 1985 ...... .... 3,214,000 688,000 75,500 84,300 1986 .......... 3,565,000 750,000 80,300 92,000 1987 .......... 3,526,000 671,000 85,600 104,500 1988 .. . .... . . . 3,594,000 676,000 89,300 112,500 1989 ..... . .. . . 3,440,000 650,000 93,100 120,000 Source: U.S. Department of Commerce, Bureau of the Census and U.S. Department of Housing and Urban Development, 1990, New One-Family Houses Sold and For Sale, Current Construction Reports, Series C25-9005; and National Association of Realtors, 1990, Home Sales, Vol. 4, No.4. Table 3. Characteristics of conventional first mortgage loans for purchase of single-family homes September Loan characteristic 1970 1980 1990 New homes: Contract interest rate, all loans . . ..... 8.3 12.3 9.6 Term to maturity (years) .. ........ 0. 25.1 28.1 27.2 Purchase price ($1,000) ..... . ... . .. 35.5 83.2 156.6 Loan to price ratio ................. 71.7 73.2 74.7 Percent of loans with adjustable rates * * 32 Existing homes: Contract interest rate, all loans .... . .. 8.2 12.5 9.7 Term to maturity (years) 0 ••• • 0. 0 0 •• 0 22.8 26.9 26.2 Purchase price ($1 ,000) 0 •• 0. 0 ••• ••• 30.0 68.3 135.2 Loan to price ratio .. .... . . . ... .. . .. 71 .1 73.5 74.0 Percent of loans with adjustable rates * * 25 *Data are not available. Source: U.S. Department of Commerce, Bureau of the Census, 1990, Statistical Abstract of the United States, 1990, [110th ed.]; and Federal Housing Finance Board, 1990, News, FHFP 90-20. About 175 lenders nationwide are participating currently in an innovative program called the Community Home Buyers Program (14). Under this program, ftrst-time home buyers can make 5 percent down payments, take out bigger mortgages, and reduce their closing costs if they meet program qualification guidelines, including completion of a home ownership course. The sponsor, GE Capital Mortgage Insurance Co., based in Raleigh, NC, is insuring $800 million in mortgages under this program. The mortgage insurance reduces the lenders' risk by protecting Family Economics Review against fmanciallosses if a borrower defaults on the mortgage. Fannie Mae is purchasing most of the mortgages from the lenders. Although low down-payment mortgages have a higher default rate than conventional mortgages, the 6-hour home ownership course should reduce that risk. The required course covers topics such as budgeting, establishing good credit, and buying and maintaining a home. Lenders' income and loan limits vary, but a family that could qualify for a conventional mortgage of about $120,000 will be able to qualify for a $160,000 mortgage under this unique program (14). New Housing Starts Monthly housing starts are an indication of the health of the real estate industry and the national economy. The housing industry finished 1989 with 1.4 million housing starts, a decrease of 5.9 percent from 1988. The National Association of Home Builders (NAHB) projected about 1.3 million housing starts in 1990, and by June of 1990, new housing starts had fallen to their lowest level since 1982 when the Nation experienced a severe recession (19). A number of factors are responsible for the decline. From January to June 1990, the interest rate on a ftxed-rate loan for a newly built home rose from 9.8 percent to 10.2 percent (15). Home prices remain high, particularly in fast-growing urban areas where developers pay premium prices for land. Also, new banking regulations have contributed to sharp cutbacks in lending to some developers. The Financial Institutions Reform, Recovery and Enforcement Act, enacted in August 1989, limits savings and loan associations in the amount they can lend to any one borrower. An April1990 survey of NAHB members showed that 60 percent were cutting back their building plans for 1990 as a result of these restrictions. Builders are reducing 1991 Vol. 4 No. 1 Table 4. Characteristics of new, privately owned, single-family houses Characteristic Total houses (thousands) ....... . Floor area: Average (sq. ft.) . .. . .... . . . .. . Median (sq. ft.) ... . ...... . .. . Number of stories: 1 ........................ .. 2 or more . . . . . . ... . . . .. .. . . . Split level ........ . . .. . . .... . Bathrooms: 1 or less . ... . ...... . . . . . .. . . 1-1/2 or more ............... . Heating fuel: Electricity ..... . ....... ... . . . Gas . .... . .. .. . . ... . .... . .. . Oil .. .... .. . .. . . . . : ... . ... . . Other ...... . . ........... . . . Central air-conditioning . .. .. . .. . . 1970 793 1,500 1,385 73 17 10 32 68 28 63 8 1 34 1980 957 1,740 1,595 Percent distribution 61 31 8 18 82 51 41 3 5 63 1989 1,026 2,035 1,850 46 50 4 8 92 34 58 5 3 77 Source: U.S. Department of Commerce, Bureau of the Census, 1990, Statistical Abstract of the United States, 1990, [110th ed.]; U.S. Department of Commerce, Bureau of the Census and U.S. Department of Housing and Urban Development, 1990, Characteristics of New Housing:1989, Current Construction Reports, Series C25-8913 .. the number of homes they build, laying off workers, delaying projects, or closing down their operations temporarily (10).Even so, in early 1990 there was a h~~ inventory of new homes for sale (a 7-1/2-month supply, based on the\ratio of houses for sale to houses soid) (21). For the second consecutive year the Riverside-San Bernardino area of southern California led the Nation in 1989 in the number of building permits issued for singlefamily homes. The Los AngelesLong Beach area was second, and the Washington, DC, area was third (6). The single-family houses being built today are larger than those built over the past two decades (table 4). There is a trend toward more two-story houses, more bathrooms, more central air-conditioning, and more use of gas for heating. Rental and Multifamily Housing As of 1987, 31.9 ;ercent of total U.S. housing units were occupied by renters, 56.7 percent were occupied by owners, 8.7 percent were vacant, and 2.8 percent were seasonal. The median rent was $333 (22). Renters paid a median of 29 percent of their before-tax income for housing, compared with 18 percent for homeowners. 3 The U.S. rental vacancy 2 A housing unit is a group of rooms or a single room occupied or intended for occupancy as separate living quarters, with direct access from the outside or through a common hall. 3Monthly housing costs for renter-()(;Cupied housing units include the contract rent plus the estimated average monthly cost of utilities, fuels, property insurance, mobile home land rent, and garbage collection if paid for by the renter. Monthly housing costs for owner-occupied units include mortgage payments, real estate taxes, property insurance, homeowners' association fees, cooperative or condominium fees, mobile home park fees, land rent, utilities, fuels, and garbage collection (22). 17 rate (the number of vacant units for rent divided by total rental units) for the second quarter of 1990 was 7.0 percent. The rental vacancy rate ranged from a high of 8.4 percent in the South to a low of 6.0 percent in the Midwest (20). Multifamily housing starts (structures with two or more units) peaked in 1985 at 670,000 and represented 38 percent of total residential starts. That share fell to 27 percent by 1989 because of an oversupply of apartment buildings, tax reform in 1986, and a decline in many local economies. The multifamily market, however, shows signs of improvement. Rental vacancy rates are lower than those of 2 years ago (8.0 percent in first quarter 1988), and apartments appear to be renting more quickly, as shown by absorption rates (the percentage of new apartments completed and rented within 3 months) published by the Census Bureau (13). A major recovery for multifamily housing is not expected in the 1990's, as several factors will continue to depress the market. The number of household heads age 25 and under, of which 85 percent are renters, will drop by about 5 percent between now and the year 2000, and those age 25 to 34, also a big renter group, will decline by 15 percent. The Financial Institutions Reform, Recovery and Enforcement Act, limiting the amount of acquisition, development, and construction lending by financial institutions, will negatively affect the availability and cost of construction loans for apartment builders. Also, the U.S. Department of Housing and Urban Development's (HUD) new requirement that newly constructed apartment buildings must be accessible to the handicapped will raise the costs of building these projects (13). In 1987, 4.4 percent of U.S. households received public or subsidized housing benefits. The Federal Government spent $11.1 billion that year on public housing, and State and local governments spent an additional $2.1 billion. In 1987 there 18 were 1.4 million occupied low-income public housing units subsidized by HUD. Of these, 27 percent were intended for persons 62 years or older, disabled, or handicapped (18). New Developments Home Technology Smart House is a state-of-the-art electrical wiring, energy distribution, and communications system designed to control energy and communications throughout the home (16). The goal of Smart House is to provide integrated systems that will be practical and affordable, and will enhance safety and security in the home. The Smart House project was begun in 1984 by the National Research Center, a wholly owned subsidiary of NAHB. Smart House, L.P., a consortium, consists of over 100 manufacturers of electric, electronic, and gas-fired home products along with major utilities and research organizations. The control technology used by Smart House is composed of 17 meters and numerous complex measurement devices that keep track of the efficiency of the house and its systems. For example, appliances anywhere in the house can be operated with a wall switch, hand-held remote controller, sensor, video touch screen, touch-tone telephone, or voice. Also, the owner can control the house from any distance with a touch-tone telephone. Its sophisticated security control system will alert the owner to a fire's existence and location via audio or display devices and will notify the fire department or an emergency monitoring service. Doors and windows can be monitored and locked from remote locations, appliances can be locked out from unsupervised use, and police and neighbors can be alerted in emergency situations. A VCR tape can be viewed on a television in another room, and telephones can be used as intercoms, all without additional wiring. Smart House features are expected to be on the market in 1991. The Gas Research Institute, an organization that plans and manages financing for gas-related research and development projects, built the Gas Laboratory House in Bowie, MD. The house is a testing facility for the Smart House system and for conducting research and testing programs on new gas systems and products. The use of natural gas is increasing, and there is a virtually unlimited supply available, according to the American Gas Association. Currently, 54 percent of new singlefamily homes and 44 percent of new multifamily homes use gas. Home Sales The trend in home sales is toward greater use of pictures to sell homes. One of the newest sales tools for bringing home buyers and sellers together is video services and the accompanying hardware and software. Already on the market is a computerized multiple listing service which allows real estate brokers to show up to 27 photos of a home, along with a written description (I). Video marketing of homes on local television programs is sponsored by real estate sales companies. These programs provide prospective home buyers with a guided tour of available homes, along with a narrative description of the home's features (1). Recent Legislation Public Law 101-235, The Department of Housing and Urban Development Reform Act of 1989, revised the procedures for the allocation of grants by HUD. The Federal Housing Administration insurance funds were revised to eliminate potential areas of abuse. Incentives were provided to property owners to keep their properties affordable for low-income persons. The bill established a National Commission on Severely Distressed Public Housing, composed of 18 members. This Commission identifies those public housing projects that are in a severe state of distress, assesses the most Family Economics Review promising strategies to improve conditions in these projects, and develops a national action plan to eliminate unfit living conditions in public housing by the year 2000. Another provision of this bill established a National Commission on Native American, Alaska Native, and Native Hawaiian Housing, composed of 12 members. It evaluates the factors currently impeding the development of safe and affordable housing for these population groups and assesses the most promising strategies for the development, management, and modernization of housing for these groups. It also establishes an action plan for housing, which includes recommending legislative, regulatory, or administrative action necessary to achieve objectives. The law was enacted on December 15, 1989 (17). References 1. Billings, K. 1990. Marketing to the video generation's home buyers. FreddieMac Reports. Freddie Mac, Reston, VA. March issue, p. 6. 2 .1990. Regional roundup: Lending by locale. FreddieMac Reports. Freddie Mac, Reston, VA. April issue, pp. 1-2. 3. Brendsel, L.C. 1990. Four challenges for the 1990's. FreddieMac Reports. Freddie Mac, Reston, VA. February issue, p. 3. 4. Crellin, G.E. 1990. Starter homes. Home Sales. National Association of Realtors 4(2):3. 5. Federal Home Mortgage Association.1990.A Home Buyer's Guide to Environmental Hazards. 6. FreddieMac Reports. 1990. Freddie Mac, Reston, VA. April issue, p. 4. 7. Home Sales. 1990. National Association of Realtors 4(4):12. 8. . 1990. National Association of Realtors 4(8):15-17. 9. Housing Backgrounder. 1990. National Association of Home Builders. 1991 Vol. 4 No. 1 10. Housing News Service. 1990. National Association of Home Builders, May 16 issue. 11. Hughes, J.W. and Sternlieb, G. 1990. Demographics vs. development. American Demographics 12(5):40-41. 12. Lehman, H.J.1990. Mortgage lenders look to the future. The Washington Post, June 9 issue. 13. Martin, D. 1990. Malaise in the multifamily market. FreddieMac Reports. Freddie Mac, Reston, VA. May issue, p. 5. 14. Salmon, J.L.1990. Two more lenders sign up for homeowner's program. The Washington Post, June 2 issue. 15. News. 1990. Federal Housing Finance Board. FHFB 90-20. 16. The Smart House Partnership, Leaders in Innovation.1989. Smart House, L.P., Upper Marlboro, MD. 17. U.S. Congress.1989. Public Law 101-235-Department of Housing and Urban Development Reform Act of 1989, lOlst Congress. 18. U.S. Department of Commerce, Bureau of the Census. 1990. Statistical Abstract of the United States, 1990. (llOth ed.] 19. and U.S. Department of Housing and Urban Development. 1990. Housing Starts. Current Construction Reports, Series C20. 20. . 1990. Housing Vacancies and Home Ownership. Current Housing Reports H111-90-Q2. 21. . 1990. New One- Family Houses Sold and For Sale. Current Construction Reports C25-9005, May issue. 22. . 1989. American Housing Survey for the U.S. in 1987. Current Population Housing Reports H-150-87. l6 19 Dietary Guidelines for Americans Revised, 1990 By Betty B. Peterkin Assistant to the Administrator Human Nutrition Infonnation Service The newly published third edition of the Dietary Guidelines for Americans reflects new knowledge on diet and health and a better understanding of user perceptions of earlier guidelines. Based on the advice of a Federal Dietary Guidelines Advisory Committee, the central messages of the seven 1985 guidelines are retained. However, their presentation in 1990 is more positive and more total diet oriented, with more food selection guidance. The new guidelines are: eat a variety of foods; maintain a healthy weight; choose a diet low in fat, saturated fat, and cholesterol; choose a diet with plenty of vegetables, fruits, and grain products; use sugars only in moderation; use salt and sodium only in moderation; and if you drink alcoholic beverages, do so in moderation. The third edition of Nutrition and Your Health: Dietary Guidelines for Americans was jointly published in late 1990 by the U.S. Departments of Agriculture (USDA) and Health and Human Services (HHS) (8). It replaces the second edition (7) as the statement of Federal nutrition policy. As such, it presents the priority dietary guidance messages the Government gives to healthy Americans through its extension, food assistance, and public health programs nationwide. The new Dietary Guidelines bulletin reflects recommendations of a Dietary Guidelines Advisory Committee (DGAC) of nine nationally recognized nutrition scientists and physicians, chaired by Dr. Malden Nesheim of Cornell University. At 20 the request of USDA and HHS, this Committee reviewed the 1985 bulletin for its soundness with respect to the current scientific evidence about diet as it relates to health. In its review, the Committee drew heavily from two recent major reports on this topic by the National Academy of Sciences (NAS) and the Surgeon General (5,9). The DGAC's review also considered the utility of the bulletin to consumers and to professionals who serve them, drawing on USDAsponsored research on the use of earlier editions. The importance of stability of the message in efforts to educate the public about nutrition and health and the potential for confusion that change in the message can cause were recognized. Written public comments from numerous individuals and groups to the Committee provided useful perspectives on the guidelines. The DGAC's report to USDA and HHS (3) includes its recommendations, discussion of the rationale for changes it proposed to the 1985 edition, summaries of the research on the uses of earlier guidelines, and information on public comments received. Single copies of the report are available while supplies last from the Human Nutrition Information Service, Federal Building, Room 325A, Hyattsville, MD 20782. The Seven Dietary Guidelines The DGAC and the Government scientists who reviewed the Committee's recommendations concluded that the basic messages of the seven guidelines, as presented on the cover of the 1985 bulletin, remain sound and of major importance to Americans in choosing food for a healthful diet. However, the wording of some of the guidelines was changed (see table) for the following reasons: • "Healthy'' weight replaces "desirable" weight to describe the new and more healthoriented weight assessment method presented in the bulletin. • The guideline on fats is reworded to make it clear on the bulletin's cover that fat in the total diet is the focus. • The fat guideline and the guidelines on sugars and salt are stated more positively by removing the term "avoid too much." This phrase incorrectly conveyed to some guideline users the idea that elimination of the substance from the diet was intended. • The adequacy of complex carbohydrates and fiber in the diet is assured through guidance on the selection of foods containing these substances- vegetables, fruits, and grain products. This new wording responds to scientific evidence that healthful diets contain more and a greater variety of these foods than most Americans now consume. Also, guidance on foods is more helpful than guidance on food components to guideline users. • The term "sugars" replaces "sugar" to more accurately define the foods of concern, sugar and other caloric sweeteners, which are listed in the new bulletin's text. Family Economics 'lieview • Salt and sodium are now used in the guideline which previously referred only to sodium, because salt provides most of the sodium in American diets and is a better understood term. The Text of the Bulletin The 1990 text accompanying the seven guidelines differs from the 1985 text in both content and emphasis. Some differences reflect scientific advancements regarding diet and health, and greater consensus on some issues since the early 1980's, when the text for the 1985 edition was developed. For example, new prominence is given to recommendations to decrease fat, especially saturated fat, and to increase consumption of vegetables, fruits, and grain products. This prominence is supported by conclusions in both the NAS and the Surgeon General's reports (5,9). The guidelines and advice about their implementation emphasize enjoyable and healthful eating through variety and moderation, rather than dietary restriction. Additional attention is given to certain nutrition principles, such as the content of the total diet over a day or more is what counts, and any food that provides energy and nutrients can be part of a nutritious diet. Variety of foods defined. Many users of the bulletin requested more food selection guidance. Thus, a variety of foods is described in the 1990 guideline as the number of servings of foods from five food groups from USDA's Food Guide (1,6). People who eat little food are cautioned to choose low-calorie, high-nutrient foods from the groups. Women and adolescents are advised to eat more calcium-rich foods. Young children, teenage girls, and women of childbearing age are cautioned about their special need for iron-rich foods. Everyone is encouraged to choose foods in accordance with all of the guidelines. 1990 Vol. 4 No. 1 Dietary guidelines: 1985 and 1990 1985 Edition Eat a variety of foods Maintain desirable weight Avoid too much fat, saturated fat, and cholesterol Eat foods with adequate starch and fiber Avoid too much sugar Avoid too much sodium If you drink alcoholic beverages, do so in moderation Healthy weight defined. New, yet interim, advice on how to assess body weight and shape is introduced with this guideline. A healthy weight depends on meeting all of three conditions: Your weight is within the suggested range for persons of your height and age; your abdominal fat does not. put your health at high risk; and you do not have a health problem for which your doctor suggests weight loss or gain. If you fail to meet any of these three conditions, you are advised to check with your doctor on how your weight might affect your health and what to do about it. Research on the relationship of body weight and shape to mortality and morbidity continues. More precise criteria for healthy body weight and shape are expected ?Y the next edition of the guidelines, tf not before. Reduce weight slowly. People who are overweight are advised to set realistic weight goals and strive for long-term success through better habits of exercise and eating. A steady loss of 1/2 to 1 pound per week, rather than the 1 to 2 pounds in the 1985 edition, is suggested. A 2-pound loss, which represents a reduction of about 1,000 calories per day, is excessive and possibly dangerous for some people. The bulletin cautions about the use of other extreme and dangerous approaches to weight loss, such as inducing vomiting and using medications like laxatives, amphetamines, and diuretics. 1990 Edition (Same) Maintain a healthy weight Choose a diet low in fat, saturated fat, and cholesterol Choose a diet with plenty of vegetables, fruits, and grain products Use sugars only in moderation Use salt and sodium only in moderation (Same) Suggested goals for dietary fats. The DGAC concluded that if broad scientific consensus exists on a numerical goal for a food component important to health, such as fat, such a goal should be presented to the public. The goal will be useful to professionals and others with enough interest and information to assess diets for fat content. Also, numerical goals will help counteract the incorrect understanding by some that a healthful diet contains no fat. Goals are presented for fat and saturated fat, the two food components believed to be of most current significance to the health of Americans. The goals are to be applied to diets over several days, not to a meal or a food. Goals presented are 30 percent or less of calories from total fat and less than 10 percent from saturated fat. These are the same goals recommended by the NAS and those to be used in the National Cholesterol Education Program. The way to figure the grams of fat represented by 30 and 10 percent of calories and the fat content of a few commonly used foods are given. However, people who want to assess their diets for fat content will need additional information about the fat in foods they eat from supplemental materials and food labels. 21 Special emphasis on vegetables, fruits, and grain products. This guideline emphasizes the dietary pattern that replaces calories from fat with calories from foods containing carbohydrates, a pattern recommended in both the NAS and Surgeon General's reports (5,9). Also noted is the importance of dietary fiber in proper gastrointestinal function, and the importance of getting it from a variety of foods rather than supplements. Use sugars only in moderation. This guideline calls for using sugars only in moderation for two main reasons. First, sugars and foods that contain large amounts of them supply calories but are limited in nutrients. Second, sugars and starches, which break down into sugars in the mouth, can contribute to tooth decay. The importance of fluoride and dental hygiene in the prevention of tooth decay is also noted. Use salt and sodium only in moderation. This guideline calls for using salt and sodium only in moderation because Americans need much less of these substances than they now consume, and eating less will benefit those people whose blood pressure goes up with salt intake. If you drink alcoholic beverages, do so in moderation. With this guideline comes the caution that drinking alcoholic beverages is linked to health problems, accidents, and addiction. People who should not drink are identified: Women who are pregnant or trying to conceive; people who plan to drive or engage in other activities that require attention and skill; people who are using medication; people who cannot keep their drinking moderate; and children and adolescents. Moderate drinking defined. For people who elect to drink alcoholic beverages, moderate drinking is defined as no more than one drink a day for women and no more than two drinks a day for men. Women can drink less because they are usually smaller than men and have proportionately less water in their bodies to 22 dilute the alcohol. Also, new research indicates that women have about one-half as much as men of the enzyme that breaks down alcohol in the stomach before it enters the blood stream (4). Single copies of the bulletin, Nutrition and Your Health: Dietary Guidelines for Americans, Third Edition, HG-232, are available free from the Consumer Information Center, Dept. 514-X, Pueblo, CO 81009. For information about printing bulk copies of the bulletin, or obtaining negatives, contact the U.S. Superintendent of Documents, U.S. Government Printing Office, Washington, DC20402. References 1. Cronin, F.J. et al. 1987. Developing a food guidance system to implement the Dietary Guidelines. Journal of Nutrition Education 19:281-302. 2. Cronin, F.J. and Shaw, A.M. 1988. Summary of dietary recommendations for healthy Americans. Nutrition Today Nov./Dec. pp. 26-33. 3. Dietary Guidelines Advisory Committee. 1990. Report of the Dietary Guidelines Advisory Committee on the Dietmy Guidelines for Americans, 1990. Hyattsville, MD. U.S. Department of Agriculture, Human Nutrition Information Service. 4. Frezza, M. et al. 1990. High blood alcohol levels in women: Role of decreased gastric alcohol dehydrogenase activity and first pass metabolism. New England Journal of Medicine 322:95-99. 5. National Academy of Sciences. National Research Council. Food and Nutrition Board. 1989. Diet and Health: Implications for Reducing Chronic Disease Risk. National Academy Press, Washington, DC 6. U.S. Department of Agriculture, Human Nutrition Information Service. 1989. Preparing Foods and Planning Menus Using the Dietary Guidelines. Home and Garden Bulletin No. 232-8. 7. U.S. Department of Agriculture and U.S. Department of Health and Human Services. 1985. Nutrition and Your Health: Dietary Guidelines for Americans. Home and Garden Bulletin No. 232. 8. ____ . 1990. Nutrition and Your Health: Dietary Guidelines for Americans. Home and Garden Bulletin No. 232. 9. U.S. Department of Health and Human Services, Public Health Service. 1988. The Surgeon General's Report on Nutrition and Health. DHHS(PHS) Pub. No. 88-50215.lEJ Family Economics Review Research Summaries The Impact of Legislation on Work and Family Federal and State Governments have sought to assist in times of such family crises as unemployment, disability or death, old age, and poverty. Many U.S. social programs reflect attitudes formed by the Great Depression, when one-fourth of the labor force was unemployed (see table, p. 24). Legislation Related to Child Labor Massachusetts enacted the Nation's first child labor law in 1836 and the first compulsory school attendance law in 1852. Most States followed suit during the late 19th and early 20th centuries, but enforcement was minimal. Congress enacted laws establishing a minimum working age and maximum working hours for children in 1916 and 1919, respectively, but the U.S. Supreme Court struck down these statutes. Later, during the Great Depression, opposition to child labor legislation weakened from concern that working children would further depress wages. The 1938 Fair Labor Standards Act, enacted in 1941, set a minimum age of 16 for most kinds of work. The proportion of 14- and 15-year-old boys in the labor force dropped from 43 percent at the tum of the century to 28 percent in 1948 and 17 percent in 1985. 1991 Vol. 4 No. 1 As an alternative to work, the Government facilitated educational opportu-!lities. The 1944 GI Bill made college a reality for millions of veterans. Federal education assistance for the disadvantaged was initiated in the 1960's and Federal loans and grants expanded during the 1970's. States raised the mandatory school enrollment age to 16 or higher. Nearly all States established postsecondary educational systems that charge only a fraction of the tuition fees of private schools. Legislation Restricting Adult Working Hours The first governmental attempt to limit working hours for adults took place in 1840 when President Martin Van Buren issued an Executive Order restricting daily labor in Federal navy yards to 10 hours. By 1920, 43 States had enacted maximum hours laws, though only 11 States used an 8-hour standard, usually for a 6-day workweek. The 1938 Fair Labor Standards Act required employers to pay "time and one-half' for hours worked in excess of 40 per week. Most jobs were covered by this provision. Old-Age Retirement Programs Federal Civil War pensions represented the first broad governmental old-age retirement program. Alaska initiated welfare assistance for the aged in 1915, and by 1935, 29 States had followed suit. The 1935 Social Security Act created two cash assistance programs for the elderly: Old Age Insurance and Old Age Assistance, which induced widespread retirement. Congress broadened Old Age Insurance in 1939 and transformed it into a family program by adding benefits for spouses and dependents, as well as survivors of deceased workers. Subsequent liberalizations permitted early retirement at age 62, first for women (1956) and then for men (1961). Eligibility was later reduced to age 60 for widows (1965) and widowers (1972). Rising Social Security benefits, which outpaced the cost of living, also encouraged retirement. Average benefits as a proportion of the federally established poverty line increased greatly between 1940 (when monthly benefits were first paid) and 1988: Benefit recipient Retired men Retired couples Percent of poverty line 41 50 114 136 Private pensions grew during the 1940's as a result of two governmental decisions. In 1942 the Federal Government excluded from taxation the contributions that private employers invest in pension funds. In 1949 the Supreme Court ruled that private sector pensions are subject to collective bargaining. These actions further stimulated retirement among those eligible. As Old Age Insurance benefits increased and private sector pensions became more common, the proportion of men age 65 and over who were in the labor force dropped from over 50 percent in the 1930's to 33 percent by 1960 and to 17 percent by 1989. 23 Major work-related government programs with implications for families Retirement: Program and year of enactment 1988 expenditure (billions) Old Age and Survivors Insurance (1935) ........ .. .... . . $197.2 Tax exclusion for pensions (1942) . ... . .... .. ... ... ... . 49.3 Old Age Assistance (1935)/ Supplemental Security Income (1972) ............... . 5.71 Disability: Workers' compensation (first State, 1911) .......... ... . . 27.42 22.4 11.3 Disability Insurance (1956) ..... ... .. . .. .. .... . ... .. . . Veterans compensation . . ...................... .. ... . Aid to the Permanently and Totally Disabled (1950)/ 9.1 1 1.6 Supplemental Security Income (1972) .......... .. ... . Vocational rehabilitation (1921) . .. ... ....... . .. ..... . . . Education, employment, and training: Postsecondary education ....... . ............. . .. . .. . 58.53 3.7 .8 Job Training Partnership Act (1982) ................... . Employment Service (1933) .................. ... . . . . . Poverty: Aid to Families with Dependent Children (1935) . . . . ... : .. 19.0 Earned Income Tax Credit (1975) ............ . . . .. . ... . 4.9 Unemployment: Unemployment insurance (1935) .. . . . . ..... ... ... ... . . 13.2 Child care: Dependent Care Tax Credit (1976) . .. ..... .... ........ . 3.4 Head Start (1965) .. . ............ . .......... . .. . . .. . . 1.5 1Authors' estimate. 2Data relate to 1987. 3Data relate to 1986-87. Sources: U.S. Social Security Administration; U.S. Congress, House Committee on Ways and Means; and U.S. Ubrary of Congress, Congressional Research Service. Because of recent concern over the financial solvency of the Social Security program, Congress enacted measures designed to encourage more of the elderly to continue working. Within the next two decades, the Old Age Insurance retirement age will increase from 65 to 67. The credit for delayed retirement will become more generous, early retiree benefits will be reduced, and beneficiaries will lose less of their benefits if they continue to work. Legislation Related to Women in the Labor Force Historically, women were discouraged from working by Federal and State policies. During the Great Depression wives were denied jobs 24 needed by men. Many school districts did not hire wives and fired women who married. During World War II, labor force participation rates of married women rose from 17 to 26 percent and, after a brief postwar drop, began to climb continuously. Some of the governmental policies that encouraged women to work included expanded educational opportunities, equal pay laws, child care assistance, and the growing number of preschool facilities. A limited, temporary child care program was established for working mothers during World War II, but there was no further action until 1954, when the Federal Government established a tax deduction for employment-related child care expenses. The deduction was replaced in 1976 with a more generous tax credit. The establish- , ment of Head Start in 1965, and the Social Services Block Grant in 1974, further supported child care. The 1988 Family Support Act requires States to provide child care to parents receiving Aid to Families with Dependent Children (AFDC) who are enrolled in an educational, training, or work program. Twelve States have enacted maternal or parental leave laws. Work and Poverty In 1900 more than half of American families with at least one working member were poor by today's standards, compared with 7.2 percent of similar families in 1988. In 1938 Congress enacted the first national minimum wage law, which set an hourly minimum of 25 cents. Congress has periodically raised the minimum wage and expanded coverage to more than 90 percent of nonsupervisory workers. The minimum wage, if earned for a 40-hour workweek year round, paid wages equal to at least a poverty level income for a three-person family during most of the 1960's and 1970's. By 1989 the minimum wage yielded only an estimated 70.5 percent of a poverty level income. The scheduled $4.25 hourly rate in 1991 will yield four-fifths of a poverty line income for a family of three for full-time, year-round work. Congress introduced the Earned Income Tax Credit in 1975 to offset Social Security payroll taxes paid by low earners. If the amount of the credit exceeds tax liability, beneficiaries receive a tax rebate. The credit is restricted to working parents, and since 1987, its value has been automatically adjusted for inflation. The maximum allowable credit in 1989 was $910. Federal and State Governments have enacted other laws to expand employment opportunities, protect workers from discrimination in the workplace, and boost the income of single parents. Starting in the 1930's the Federal Government began taking steps to prevent work-related Family Economics Review . r discrimination against certain groups. During the 1960's and 1970's, Federal and State Governments banned discriminatory workplace practices relating to race, ethnic background, gender, age, disability, and religion. The 1988 Family Support Act requires States to establish guidelines for child support payments. By 1994 these payments will be automatically deducted from the absent parent's wages. The Federal Government has instituted a variety of programs to provide the poor or jobless with job search assistance, education or training, or jobs. The 1933 WagnerPeyser Act established a network of public employment offices to match jobseekers with job openings. These offices were dismantled during World War II when the Nation achieved full employment. The Federal Government created a variety of training programs during the early 1960's. Congress reintroduced public jobs programs in the 1970's, but in 1981, Congress almost entirely abolished public service employment. Of the major governmental programs, only Old Age Insurance and child labor and overtime restrictions intentionally discourage ablebodied individuals from working. In addition, unemployment insurance, various programs designed to aid the disabled, and AFDC have some work disincentive, since assisting those who are jobless or underemployed may encourage some individuals to choose benefits rather than work. The U.S. Congressional Budget Office has estimated that the availability of unemployment insurance increases the unemployment rate by about 10 to 15 percent during periods of low unemployment, and by about 5 percent during recessions. Work disincentives associated with unemployment insurance have diminished since the 1970's. Less than one-third of the currently unemployed receive benefits (a record low). The average weekly benefit, adjusted for inflation, has declined 1991 Vol. 4 No. 1 by 12 percent from its 1971 peak, and benefits, which were tax-free until1979, are now fully subject to Federal income taxes. Also, the maximum duration of benefits has been greatly reduced since the 1970's. The expansion of disability assistance may contribute to declining labor force participation rates among preretirement-age men. Between 1948 and 1969, labor force participation rates of men 45 to 54 years old remained steady at 95 to 96 percent, then dropped to 91 percent by 1977 as disability programs grew dramatically. More than half of severely disabled working-age individuals currently receive Disability Insurance, Supplemental Security Income, or both, and an unknown proportion of the remainder obtain assistance from other disability programs. Some 43 percent of Disability Insurance beneficiaries are poor. The AFDC program contains stronger work disincentives than other social programs because: (1) the program assists many ablebodied individuals; (2) participants are not required to establish a work history; and (3) benefits may be provided for 'many years. Begun as "mothers' pensions" in 1911 in Illinois and Missouri for widows with children, such programs were available in almost all States by 1935. By 1976 nearly 90 percent of potential eligibles received assistance, decreasing over the next decade to 80 percent or less. In 1989, AFDC and food stamps (received by 80 percent of AFDC beneficiaries) provided a single mother with three children nearly 20 percent more income than she could earn from a full-time, yearround minimum wage job. Source: Levitan, S.A. and Gallo, F., 1990, Work and family: The impact of legislation, Monthly Labor Review 113 (3):3440, U.S. Department of Labor, Bureau of Labor Statistics . Who's Minding the Kids? Data on child care arrangements have been collected by the Census Bureau in supplements to the Current Population Survey (CPS) since 1958 and in supplements to the Survey of Income and Program Participation (SIPP) since 1984. The most recent statistics on child care arrangements ·in the United States are based on data collected in the SIPP for the September-November 1987 period. The child care statistics reflect arrangements used for children under 15 years old during the time their parents (or guardians) were at work or in school. Data from earlier CPS and SIPP supplements on child care show a historical perspective on changes that have occurred in the way working parents arrange for the care of their children. Some parents use more than one type of child care arrangement in a typical week. Therefore, primary and secondary arrangements are reported. The primary child care arrangement refers to what the child was usually doing or the way the child was usually cared for during most of the hours the child's parent was at work or in school. If other arrangements were used in addition to the primary arrangement, the one used second most frequently was called the secondary arrangement. Child Care Arrangements Used by Employed Mothers In the fall of 1987, there were about 52.1 million children under age 15 living with their mothers in the United States. About 59 percent of these children had mothers who were employed. Another 3 percent had mothers who were enrolled in school. The remaining children were living with mothers who were neither employed nor attending school. Data on child care arrangements were collected only for the three youngest children under age 15 in the family, which represents 94.2 percent of all children under 15 years of age of employed mothers. 25 Of the 19.7 million grade-schoolage children of employed mothers, 14 million (71 percent) were in either kindergarten or grade school most of the hours their mothers were at work (table 1). Of the 5.7 million grade-school-age children not attending kindergarten or grade school while their mother worked, 2.7 million were cared for in their own home. One-half of the total care in the children's homes was provided by the children's fathers. About 800,000 children were left unsupervised most of the time that their mothers worked. 0 f the 9.1 million preschoolers with employed mothers, 30 percent were cared for in their own homes, mainly by their fathers, and 36 percent were cared for in another home. Organized child care facilities were used for 24 percent of preschoolers. An additional 9 percent of preschoolers were cared for by their mothers while working, either at home or away from home. Preschool-age children of mothers employed full time in the fall of 1987 were less likely to be cared for at home (24 percent) than were children of mothers employed part time (39 percent). Child care provided by the father was also less frequently used by women who worked full time (10 percent) than by those who worked part time (25 percent). About 8 million children of employed mothers used a secondary child care arrangement in the fall of 1987. Secondary child care arrangements were used by 12 percent of preschool-age children and by 35 percent of children ages 5 to 14 years. The most frequently mentioned location of the secondary arrangement was in the child's home (38 percent), followed by care in another home (25 percent), self-care (22 per- - cent), and organized child care facilities (10 percent). Table 1. Primary child care arrangements used by employed mothers for children under age 15: Fall 1987 Under Age Type of arrangement Total age5 5 to 14 Percent Care in child's home •• 0 0 •• • • •••••• 18.7 29.9 13.5 By father ... . ......... . ... . .... 9.4 15.3 6.7 By grandparent • •• • 0 0 • ••••••••• 2.6 5.1 1.5 By other relative ... .. . . .. .. ... .. 3.8 3.3 4.0 By nonrelative • 0 •••••• • •• 0 ••••• 2.9 6.2 1.4 Care in another home •• 0 0 •••• • • • 0 0 14.9 35.6 5.4 By grandparent 0 • • 0 • • ••• 0 0 0. 0 • • 4.1 8.7 1.9 By other relative .. . ........... . . 2.1 4.5 .9 By nonrelative •••••• 0 0 •••••••• 0 8.8 22.4 2.5 Organized child care facilities 0 • •• •• • 9.3 24.3 2.3 Day/group care center ........... 6.3 16.1 1.7 Nursery school/preschool . .. . ... . 3.0 8.3 .6 Kindergarten/grade school ••••• 0 0 0 0 48.9 1.0 71.1 Child cares for self . . .............. 2.9 .3 4.1 Mother cares for child at work 1 0 0 •••• 5.3 8.9 3.6 1 1nclude~ women working at home or away from home. Source: O'Connell, M., and Bachu, A., 1990, Who's minding the kids? Child care arrangements: Winter 1986-87, Current Population Reports, Household Economic Studies, Series P-70, No. 20, U.S. Department of Commerce, Bureau of the Census. 26 Child Care Arrangements Used by Custodial Fathers Among the 1.4 million gradeschool- age children living with their fathers, 71 percent had their child care needs met by attending kindergarten or grade school (the same percentage reported by employed mothers). In contrast, the half million preschoolers living with their fathers were more likely to receive primary care in organized child care facilities (39 percent) than those living with an employed mother (24 percent). Mothers who lived elsewhere provided child care for 19 percent of preschoolers living with their fathers. Trends in Child Care Arrangements In the June 1977 Current Population Survey, information was collected about the child care arrangements used by employed women for their two youngest children under 5 years old. Since 1977 there has been a decline in the utilization of relatives (except fathers) as child care providers both in the child's home and in the provider's home. The proportion of children cared for by their mothers while at work also declined during this 10-year period, from 11 percent to 9 percent. In the fall of 1987, 24 percent of children under age 5 were in organized child care facilities, compared with 13 percent in June 1977 (table 2). Estimates from the June 1987 CPS show that 51 percent of all women 18 to 44 years old who had given birth in the 12-month period preceding the survey were in the labor force, up from 31 percent in 1976. Child Care Arrangements by Age of Child and Economic Status In the fall of 1987 there were 1.5 million children under age 1 whose mothers were employed in the labor force. Seventy percent of these infants were cared for either in the child's home or another home. Another 14 percent were cared for in organized child care facilities (day Family Economics Review Table 2. Primary child care arrangements used by employed mothers for children under age 5: Fall 1987 and June 1977 Type of arrangement Fall1987 June 19771 Percent Care in child's home .. . .. ........... .. . 29.9 33.9 By father .......................... . 15.3 14.4 By other relative .. .... . ... .... , ..... . 8.4 12.6 By nonrelative ...... . ..... . ........ . 6.2 7.0 Care in another home ................. . 35.6 40.7 By relative ....................... .. . 13.2 18.3 By nonrelative ... ........ .... .. .... . 22.4 22.4 Day care/nursery school .. ... .. . ....... . 24.3 13.0 Child cares for self . ... . ............ ... . .3 .4 Mother cares for child at work2 .•.......•. 8.9 11.4 Other arrangements3 .................. . 1.0 .6 1 Data only for the two youngest children under 5 years of age. 2includes women working at home or away from home. 31ncludes children in kindergarten/grade school. Source: Tabulations derived from the June 1977 Current Population Survey, Current Population Reports, Series P-70, No.9, and O'Connell, M., and Bachu, A.,19~0, Who's minding the kids? Child care arrangements: Winter 1986-87, Current Population Reports, Household Economic Studies, Series P-70, No. 20, U.S. Department of Commerce, Bureau of the Census. or group care centers, nursery, or preschools). Among 1- and 2-yearolds, 74 percent were cared for either in the child's home or in another home, and 18 percent were in organized child care facilities. For 3- and 4-year-olds, 56 percent were cared for either in the child's home or in another home, while 34 percent were cared for in organized child care facilities. The economic status of the family is related to the use of organized child care facilities as the primary child care arrangement. Children of employed mothers whose family income exceeded $45,000 per year were twice as likely to be using organized child care facilities (34 percent) as were children living in families with incomes of less than $15,000 per year (16 percent). Also, children whose mothers had completed at least 1 year of college used organized child care facilities twice as often (29 percent) as children whose mothers failed to complete high school (15 percent). 1991 Vol. 4 No. 1 Cost of Child Care Arrangements Loss of Time at Work. Employed women were asked about any time they lost because the person who usually cared for their child (or children) was not available. This question was asked of women who had any of their three youngest children under age 15 cared for either by a grandparent or another relative (excluding the child's parents or siblings), a nonrelative, or in an organized child care facility. Of the 9 million women who used these arrangements, 7 percent reported losing some time from work in the past month as a result of a failure in a child care arrangement. Women with infants and 1- and 2-year-olds generally experienced more work disruptions than women with gradeschool- age children. Also, women whose children were cared for in another home experienced more work disruptions than women using organized child care centers. Cash payments1 for child care services were made by 33 percent of employed women for at least one of their children. Average child care costs of $49 per week per family were reported. The average monthly family income of women who paid for child care was about $3,200, so these payments represented 7 percent of their income. Costs varied according to region, from a high of $57 per week in the Northeast to a low of $43 per week in the South. A higher percentage of women with preschool-age children (between 53 percent and 59 percent, depending on child's age) made cash payments for the care of their children, compared with women whose youngest child was 5 years old or over (16 percent). Women with preschoolers also paid more per week ($51 to $58) than did those with older children ($35 per week). Women in poverty paid an average of $35 per week, compared with $50 by women who were not living in poverty. Among women making child care payments, those in families with monthly income less than $1,250 spent 21 percent of this income on child care. Those with monthly family income of $3,750 or higher spent only 5 percent of their family income on child care services. 1Cash transfers to family members or payments for schooling were not included in child care costs. Source: O'Connell, M., and Bachu, A., 1990, lt7!o's minding the kids? Child care a"angements: Winter 1986-87, Current Population Reports, Household Economic Studies, Series P-70, No. 20, U.S. Department of Commerce, Bureau of the Census. 27 Residents of Farms and Rural Areas: 1989 The United States has witnessed a continuous decline in its farm and rural populations. In 1920 approximately 31,974,000 (30 percent) of the resident population lived on farms. By 1989 the figure had dropped to 4,801,000 (2 percent). A little less than half ( 49 percent) of the resident population lived in rural areas in 1920. In 1989 the rural population had dropped to 27 percent of the civilian, noninstitutionalized population. Estimates of the 1989 rural and farm population are derived from data from the Current Population Survey (CPS), using annual averages of monthly data and data from the March 1989 CPS supplement. Estimates were prepared by the Bureau of the Census of the U.S. Department of Commerce and the Economic Research Service of the U.S. Department of Agriculture. Where were rural and farm residents? In 1989 there were 243.5 million people in the civilian, noninstitutionalized population. Approximately 66.2 million lived in rural areas: 4.8 million (2 percent) lived on rural farms, and 61.4 million (25 percent) lived in rural, nonfarm areas (see box for definition of terms). Most (73 percent) of those on rural farms were in nonmetropolitan areas, whereas about half (52 percent) of those living in rural nonfarm areas were in nonmetropolitan areas. Regional distribution of the rural population is essentially unchanged since 1950. In 1989 the South had the highest percentage of rural residents (44 percent) (see figure), followed by the Midwest (27 percent), the Northeast (17 percent), and the West (12 percent). The farm population, however, has experienced significant regional redistribution since 1950. The Midwest had 51 percent of the 28 Nation's farm residents in 1989, compared with 32 percent in 1950. In contrast, the South had 29 percent of the Nation's farm residents in 1989, compared with 52 percent in 1950. Between 1950 and 1989 U.S. farm population in the West increased from 8 percent to 15 percent and that in the Northeast decreased from 8 percent to 5 percent. Geographic Distribution of Rural and Farm Populations, 1989 Percent 1 00 - r770'7'7;'771 West Northeast 60- Midwest 40 - 20- South 0 Rural Farm Who were rural and farm residents? In 1989 most rural residents were white (92 percent). In rural nonfarm areas, 50.4 percent were female. In rural farm areas, the majority (52.1 percent) of residents were male (table 1). A larger percentage of farm (69 percent) than nonfarm (55 percent) residents were married with their spouses present. Also a larger percentage of farm (92 percent) than nonfarm (79 percent) families were headed by married couples. Most families consisted of two to four persons (85 percent farm and 87 percent nonfarm). A larger percentage of farm families (34 percent) than nonfarm families (28 percent) received less than $20,000 during the preceding year in money income (table 2). Also, a larger percentage of nonfarm families (26 percent) than farm families (18 percent) received $50,000 or more in money income. In 1989, 87 percent of farm and rural nonfarm residents were wage and salary employees. Of those living in rural nonfarm areas, 90 percent received wages and salary. This compared with 58 percent of farm residents who worked as wage and salary employees. In addition, 38 percent of farm residents were selfemployed. Only 10 percent of rural Family Economics Review Table 1. Race, Hispanic origin, and sex of the population, by urbanrural residence: 1989 Rural Rural Characteristics Total Urban nonfarm farm Percent distribution Race: White. .. .. . ..... .... ... 84.2 81.4 91.6 97.5 Black. . .. . . . . . . . . . ..... 12.3 14.5 6.6 1.8 Other races . . . . . . . . . . . . . 3.5 4.1 1.8 .7 Hispanic origin . . . . . . . . . . . . 8.3 10.4 2.7 2.9 Sex: Female . . . . . . . . . . . . . . . . 51.5 52.1 50.4 47.9 Male . . . . . . . . . . . . . . . . . . 48.5 47.9 49.6 52.1 Table 2. Income of farm and nonfarm families: 1988 Families Total money income1 Farm Nonfarm Percent distribution <$10,000 ........ . . .. .......... . 10.7 10.7 $10,000-$19,999 ... . ............ . 23.7 17.8 $20,000-$29,999 . . .. . . .... . .... . . 20.6 17.4 $30,000-$39,999 ..... . .... .. ... . . 17.8 16.0 $40,000 - $49,999 ...... . ......... . 9.5 12.3 $50,000 + . .. ....... ... .. . ...... . 17.7 25.8 11ncludes money wages or salary; net income from nonfarm or farm self-employment; Social Security or Railroad Retirement; Supplemental Security Income; public assistance or welfare payments; interest on savings or other investments which pay interest; dividends, income from estates or trusts, or net rental income; Veterans payments or unemployment and workers' compensation; private pensions or government employee pensions; alimony or child support, or other regular contributions by persons not living in the household. Table 3. Workers in agriculture by sex and urban-rural residence:1989 Rural Rural Class of worker Total Urban nonfarm farm Percent distribution Male: Self-employed . . . . . . . . . . 46.0 27.5 32.5 72.8 Wage and salary . . . . . . . . 52.0 72.1 66.1 23.2 Unpaid family member 2.0 .4 1.4 4.0 Female: Self-employed . . . . . . . . . . 33.9 19.1 25.4 52.8 Wage and salary . . . . . . . . 53.0 79.2 67.0 20.7 Unpaid family member . . . 13.1 1.7 7.6 26.5 Source: U.S. Department of Agriculture, Economic Research Service and U.S. Department of Commerce, Bureau of the Census, 1990, Residents offarms and rural areas: 1989, Current Population Reports, Population Characteristics, Series P-20, No. 446. 1991 Vol. 4 No. 1 nonfarm residents were selfemployed. More than half of all workers in agriculture1 (52 percent of males and 53 percent of females) received wages and salaries (table 3). A majority of agricultural workers in rural nonfarm areas received wages and salaries. Among farm residents working in agriculture, 73 percent of males and 53 percent of females were self-employed. Families and unrelated individuals are classified as being above or below the poverty level using the poverty index that is based solely on money income and reflects different consumption requirements based on family size and composition. The U.S. Department of Commerce reported that 13 percent of all persons and 10 percent of all families were below the poverty level in 1989. On farms, 12 percent of persons and 11 percent of families wer
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Title | Family Economics Review [1991, Volume 4, Number 1] |
Date | 1991 |
Contributors (group) |
Institute of Home Economics (U.S.) United States. Agricultural Research Service Consumer and Food Economics Research Division Consumer and Food Economics Institute (U.S.) United States Science and Education Administration United States. Agricultural Research Service United States Agricultural Research Service Family Economics Research Group |
Subject headings | Home economics--Accounting--Periodicals |
Type | Text |
Format | Pamphlets |
Physical description | 8 v. ; $c 27 cm. |
Publisher | Washington, D.C. : U.S. Institute of Home Economics, Agricultural Research Service, U.S. Dept. of Agriculture |
Language | en |
Contributing institution | Martha Blakeney Hodges Special Collections and University Archives, UNCG University Libraries |
Source collection | Government Documents Collection (UNCG University Libraries) |
Rights statement | http://rightsstatements.org/vocab/NoC-US/1.0/ |
Additional rights information | NO COPYRIGHT - UNITED STATES. This item has been determined to be free of copyright restrictions in the United States. The user is responsible for determining actual copyright status for any reuse of the material. |
SUDOC number | A 77.245:4/1 |
Digital publisher | The University of North Carolina at Greensboro, University Libraries, PO Box 26170, Greensboro NC 27402-6170, 336.334.5482 |
Full-text | I .. ., 1 I Editor Joan C. Courtless Editorial Assistant Jane W. Fleming Family Economics Review is written and published each quarter by the Family Economics Research Group, Beltsville Human Nutrition Research Center, Agricultural Research Service, United States Department of Agriculture, Washington, DC. The Secretaty of Agriculture has determined that the publication of this periodical is necessaty in the transaction of the public business required by law of this Department. 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. Family Economics Review is for sale by the Superintendent of Documents, U.S. Government Printing Office. Subscription price is $5 per year ($6.25 for foreign addresses). Single issues cost $2 each ($2.50 foreign). Send subscription orders, change of address, and single copy requests to Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. (See subscription form in back of this issue.) Suggestions or comments concerning this publication should be addressed to: Joan C. Courtless, Editor, Family Economics Review, Family Economics Research Group, USDNARS, Federal Building, Room 439A, Hyattsville, MD 20782. Telephone (301) 436-8461. 1991 Vo/.4 No.1 Family Economics Review U.S. oEPOSlTCRY PROPERTY OF THE LIBR/\RY APR 111991 Vol. 4 No.1 2 8 14 20 23 25 28 30 32 35 36 Contents Features Expenditures on a Child by Single-Parent Families MarkLino Income and Expenditure Patterns of Consumer Units With Reference Person Age 70 to 79 and 80 or Older Retia Scott Walker and Frankie N. Schwenk Trends in Housing Nancy E. Schwenk Dietary Guidelines for Americans Revised, 1990 Betty B. Peterkin Research Summaries The Impact of Legislation on Work and Family Who's Minding the Kids? Residents of Farms and Rural Areas: 1989 Money Income and Poverty Status in the United States: 1989 Regular Items Expenditures on a Child by Husband-Wife Families, 1990 Recent Legislation Affecting Families Current Regional Research Project 37 Cost of Food at Home 38 Consumer Prices March 1991 1 Expenditures on a Child by Single-Parent Families ByMarkLino Consumer Economist Family Economics Research Group A previous ARS study examined ~xpenditures on a child by husband-wife families using the 1987 Consumer Expenditure Survey updated to current prices. This study examines these. ~xpenditures by single-parent faml11es using the same data. Estimates are provided for major components of the budget by age of child and family income level for a child in a singleparent household with two children. Child-rearing expenses increased with the age of the child and family income. Housing comprised the largest share of total expenditures on a child, regardless of the child's age or household income. Expenses on a child were slightly higher for single-parent households as opposed to husband-wife hou~eh?lds in the same income group. Th1s likely reflects expenses being shared by fewer members in single-parent households. Although single-parent households spent slightly more on a child than married-couple households in the same income group, a much larger percentage of single-parent households than married-couple households were in the lower income group. The Family Economics Research Group of the U.S. Department of Agriculture (USDA) has provided estimates of child-rearing expenses for the past two decades. The estimates reflect expenditures by husband-wife families1 on a child from birth through age 17 (4). The most recent estimates are based on the 1987 Consumer Expenditure Survey, updated to 1990 dollars using the Consumer Price Index for all Urban Consumers (CPI-U) (6). 1For this study the terms "families" and "households" are used to refer to consumer units. 2 These estimates do not apply to single-parent households, which account for an increasing percentage of households with children. This study, therefore, estimates childrearing expenses in single-parent families. Child-rearing estimates are provided for two income groups of single-parent households for the overall United States. The two income groups were selected to correspond with those used in the child-rearing estimates of husband-wife families so comparisons could be made. Expenditures on a child are estimated for the major budgetary components: housing; food; transportation; clothing; health care; and education, child care, and other miscellaneous goods and services. (See box below for description of each component.) Methodology Source of Data Data used to estimate expenditures on a child in a single-parent household are from the 1987 Consumer Expenditure Survey (CEX). T~ survey is the most comprehensive source of household expenditure information available at the national level. Administered by the Bureau of Labor Statistics (BLS), U.S. Department of Labor, the CEX has been ongoing since 1980 and collects information on household characteristics and income as well as expenditures. About 5,000 households are interviewed each quarter over a 1-year period. Each quarter is deemed an independent sample by BLS, bringing the total number of households in the 1987 survey to approximately 20,000 consumer units. One-parent families headed by a male or female with one or more children age 17 or under but no other persons present, and who were complete income reporters, were selected for the study. This yielded a sample of 1,212 families. Because of data limitations, single-parent households residing with other family members or friends were not included. The majority of singleparent households (91 percent) were Family Economics Review headed by a female. The sample was weighted using BLS methods to reflect the population of interest. Quarterly expenditures were multiplied by four to provide annual estimates. Estimating Expenditures To estimate expenditures on a child by single-parent households, this study followed the methodology used by the Family Economics Research Group in determining child-rearing expenses for husbandwife families. This approach estimates child-related expenditures (clothing, education, and child care) and overall household expenditures (housing, food, transportation, health care, and other miscellaneous goods and services). These expenditures are then assigned to a child for childspecific expenditures or, for overall household expenditures, allocated to a child based on previous research or on a per capita basis. Multivariate analysis was used to estimate household and child-related expenditures, controlling for income level, family size, and age of the younger child. The two income groups of single-parent households (1987 before-tax income under $26,000 and $26,000 and over) were selected to correspond with the income groups used in estimating child-rearing expenditures in husbandwife households (1987 before-tax income under $26,000, between $26,000 and $42,000, and over $42,000). These income groups for husband-wife households were determined by dividing the sample into equal thirds. For single-parent household estimates, the two higher income groups of the husband-wife households were combined because of the small number of single-parent households who fell in these income ranges. Of the single-parent households, 85 percent had a before-tax income under $26,000, and 15 percent had a before-tax income of $26,000 and over. When controlling for income, sex of the single parent did not significantly affect total expenditures. Hence, separate estimates were not determined for households headed by male and female single parents. For each income level the estimates were for single-parent families with two children, with the younger child in one of six age categories (0-2, 3-5, 6-8, 9-11, 12-14, and 15-17). Households with three members (two children) were selected as the base since this was the average size of one-parent families in 1987. The focus was on the younger child in a household since the older child was sometimes over age 17. If the older child had been selected as the household member of interest, expenditures for some items would be higher or lower. In addition, if a household with other than two children was selected as the base, expenditures would be different because of diseconomies or economies of scale. How these expenditures differ for an older child or for households with other than two children is addressed later in this paper. Each expense was estimated separately, thereby assuming that each expenditure was made independently of the others. The specific function describing how each budgetary expenditure was estimated in dollars is set forth in the box below. Ordinary least squares analysis was used to estimate expenditures for housing, food, and other miscellaneous goods and services. Tobit analysis was used to estimate expenditures for transportation, health, children's clothing, and children's education and child care since over 10 percent of the sample reported zero expenses for these budgetary components. Because of these zero expenditures, tobit analysis yields more efficient estimates than ordinary least squares analysis. The procedure outlined by McDonald and Moffitt (5) was used to transform the tobit analysis estimates into dollars. Allocating Expenditures Among Family Members After the various overall family and child-related expenditures were estimated, these total amounts were allocated among the three family members (parent, older child, and younger child). Since the estimated expenditures for children's clothing, education, and child care were only for children, this allocation was made by dividing these estimated expenditures by two (the number of children in the household). CEX data on children's clothing expenditures were for children age 15 and under, so a 16- or 17-year-old was assigned the clothing expenditures of a 15-year-old. Expenditures for other clothing services, such as dry cleaning, were estimated for the overall family and allocated on a per capita basis among family members. Data from other Federal studies were used to apportion the budgetary shares for food and health care to a child by age. The 1977-78 National Food Consumption Survey conducted by the Human Nutrition Information Service (HNIS), USDA, collected data on food consumption by individual family members and the money value of food used at home by the household. Four food plans were then developed from this information (thrifty, low-cost, moderate-cost, and liberal) with 4 costs updated each month. Based on the 1987 plans (7), food budget shares, as a percentage of total food expenditures, were calculated for the younger child in a single-parent household with two children under the low-cost and moderate-cost food plans for the lower and higher income groups. It was assumed the parent was between 20 and 50 years old and the age spread between the younger and older child was 3 years. Appropriate (for age of the child and income level of the family) food budget shares were then applied to the estimated family food expenditures to determine child-related food expenses. The calculated food budget shares as a percentage of total food expenditures for the younger child in a single-parent household with two children, by age of the child and income group, were: Age of child 0-2 3-5 6-8 9- 11 12- 14 15 - 17 Income group Lower Higher Percent share 26 24 25 25 30 29 32 33 33 33 33 33 The 1980 National Medical Care Utilization and Expenditure Survey (2) conducted by the Public Health Service, U.S. Department of Health and Human Services (HHS), contains data on health care expenses by age of individual household members. From these figures, the proportion of health care expenses attributable to the younger child in a single-parent household with two children was derived. These individual member shares for health care expenses then were applied to estimated family health care expenditures to determine child-related expenses. It was assumed that the age of the parent was between 19 and 54, and the age spread between the younger and older child was 1-6 years. Applying these derived health care expense shares to total family health care expenditures for the two income groups in 1987 assumes these shares have not changed since 1980 and do not vary by income. Health care budget shares by age of the younger child in a single-parent family with two children were 26 percent for a child age 0-5 and 27 percent for a child age 6-17. No authoritative base exists for allocating estimated family expenditures on housing, transportation, and other miscellaneous goods and services among individual family members. These expenditures were thereby allocated on a per capita basis.2 As the per capita approach does not allow for possible diseconomies or economies of scale from having one child or three or more children, diseconomies or economies of scale percentages were estimated for single-parent families with other than two children (seep. 7). Transportation expenses resulting from work activities are not related to child-rearing expenses, so these costs were excluded from the estimated family transportation expenses. Data from a 1983-84 study by the U.S. Department of Transportation (3) were used to calculate the percentage of transportation expenditures that may be attributed to work-related activities for singleparent families with children of different ages. Applying these percentages to 1987 Consumer Expenditure Survey data assumes these patterns have not changed since 1983-84 and do not vary by income level. Work-related transportation activities accounted for approximately 19 percent of travel for single-parent families with a child under age 6 and 29 percent for families with a child age 6-17. 2Sce Lino ( 4) for a discussion of alternative methods for allocating such expenditures. Family Economics Review Estimated Expenditures on a Child in a SingleParent Household Estimates of family expenditures on the younger child in a singleparent family with two children for the overall United States are presented in table 1. Although the estimates are based on 1987 data, income levels of households were updated to 1990 dollars using the all-items category of the CPI-U, and expenditures were updated using the CPI for the corresponding item (i.e., the CPI's for housing, food, etc.). Child-rearing expenses ranged from $3,800 to $5,650 for single-parent households in the lower income group (before-tax income less than $29,900) and from $7,830 to $10,030 for single-parent households in the higher income group (before-tax income $29,900 or more). Although families in the higher income group spent more than families in the lower income group on a child in each respective age category, this difference varied by budgetary component. Expenditures on a child in a single-parent household in both income groups generally increased over the age of a child. This held for all budgetary components with the exception of education, child care, and other miscellaneous goods and services, which were highest for a child age 3-5 in both income groups. Many women with children in this age group are in the labor force, so much of this expense can be attributed to child care. In 1987, 70 percent of divorced women with children under 6 years of age were in the labor force (8). Although the dollar costs may seem low, the averages include households with and without the expense. The largest proportion of childrelated expenditures was allocated for housing. Housing comprised, based on an average of the six age groups, 33 percent of total childrelated expenses for single-parent households in the lower income group and 35 percent for those in the higher income group. Transportation was the second largest average annual expense on a child for single-parent families in both the lower and higher income groups, accounting for 25 percent and 22 percent of child-related expenses, respectively. Food comprised the third largest average expense on a child for families in the lower income group, totaling 19 percent of childrelated expenditures. However, education, child care, and other miscellaneous goods and services accounted for the third largest average expense on a child for families in the higher income group, totaling 18 percent of child-related expenses. Clothing, on average, made up 5 to 7 percent of total child-related expenses for the two income groups of single-parent households. These Table 1. Estimated expenditures on a child by single-parent families, overall u.s., 1990 Education, Transpor- Health Child Care, Age of Child Total Housing Food tat ion Clothing Care and Other Income: Less than $29,900 0-2 ....... $3,800 $1,360 $ 710 $ 980 $ 180 $ 90 $ 480 3-5 ....... 4,770 1,570 740 1,240 250 140 830 6-8 ....... 5,180 1,800 970 1,190 290 150 780 9- 11 ... . .. 5,460 1,800 1,040 1,300 320 170 830 12- 14 .. .. .. 5,330 1,660 1,170 1,270 600 210 420 15-17 .... . . 5,650 1,760 1,230 1,440 600 190 430 Total . ... .. . $90,570 $29,850 $17,580 $22,260 $6,720 $2,850 $11,310 Income: $29,900 or more 0-2 ..... . . $7,830 $2,990 $1,060 $1,720 $ 270 $ 220 $1,570 3-5 ...... . 9,150 3,210 1,160 2,070 360 320 2,030 6-8 ... ... . 9,460 3,440 1,430 1,950 400 330 1,910 9- 11 . . .. . . 9,860 3,440 1,630 2,100 440 370 1,880 12-14 ...... 9,650 3,300 1,730 2,060 790 430 1,340 15-17 ...... 10,030 3,400 1,790 2,270 780 400 1,390 Total ....... $167,940 $59,340 $26,400 $36,510 $9,120 $6,210 $30,360 1991 Vol. 4 No. 1 5 estimates do not include children's clothing received in the form of gifts. Therefore, total overall clothing expenses on a child would likely be higher than reported here. Health care averaged between 3 and 4 percent of total child-rearing expenses for the two income groups. These estimates include only out-of-pocket expenses, and not those expenses covered by health insurance. In non-widowed single-parent situations (divorced, separated, or never married), estimates for childrelated expenses presented here include only those expenditures made by the parent with primary care of the child. The estimates do not include possible child-related expenditures made by the other parent. For example, the parent with whom the child does not reside the majority of time may incur transportation, food, and entertainment expenses during visitation days and have a larger living unit because a child stays with this parent on weekends. Such expenditures could not be estimated from the data. Hence, the overall expenses on a child in a single-parent household by the two parents in a non-widowed situation would likely be greater than this study's estimates. A comparison of the expenditures for the younger of two children in a single-parent household with those for that child in a husband-wife household for the lower income group is presented in table 2. As previously discussed, most singleparent households (85 percent) are in this lower income group. Total expenditures on a child were, on average, 5 percent higher for singleparent households compared with married-couple households. In part, this reflects the greater transportation expenses attributed to a child in a single-parent household since these expenditures are allocated among fewer members. On average, housing expenditures were slightly higher (2 percent), whereas expenditures on clothing; health care; and education, child care, and other miscellaneous goods and services on a child were lower in single-parent 6 Table 2. Estimated expenditures on a child by singleparent and husband-wife families with income less than $29,900, overall U.S., 1990 Age of child Single-parent families Husband-wife families 0-2 .............. . 3-5 .............. . 6-8 .............. . 9- 11 ............. . 12- 14 ............. . 15-17 ............. . Total .............. . than in husband-wife households. Child-related food expenditures were similar, on average, in singleparent and in husband-wife families. A precise comparison between child-rearing expense estimates for single-parent households in the higher income group to those of husband-wife households is not possible as the higher income groups of married couples (before-tax income between $29,900 and $48,300, and over $48,300) did not exactly correspond. However, the childrearing expense estimates for singleparent households in the higher income group were in the range of those of husband-wife households in these middle and highest income groups. Hence, it seems that expenses on a child in single-parent households are slightly higher than those in husband-wife households, probably because of economies of scale. What really distinguishes the two types of households is that 85 percent of single-parent households, but only 33 percent of husband-wife households, are in the lower income group. Even within this lower income group, single-parent households had a lower mean income than husband-wife households. The income of husbandwife households tended to fall in the upper range of this income category, whereas that of single-parent households was more dispersed. $3,800 4,770 5,180 5,460 5,330 5,650 $90,570 $4,330 4,630 4,620 4,480 5,150 5,490 $86,100 Differences in Expenditures for an Older Child and by Number of Children The estimates presented thus far represent expenditures on the younger child in a single-parent household with two children. Expenses for the older child may be different. To determine the extent of this difference, the previous procedure was repeated. Multivariate analysis was used to estimate expenditures for each budgetary component, controlling for household size and, for this analysis, age of the older child. A family with two children was used as the standard. The sample was weighted to reflect the U.S. population. Children's clothing, education, and child care expenditures were divided between the two children in a household. For food and health care, household member shares were calculated for a three-person household (parent and two children with the older child in one of the six age categories) using the USDA and HHS studies. These shares for the older child were then applied to estimated food and health care expenditures to determine expenses on the older child in each age category. Housing, transportation, and other miscellaneous expenditures were allocated among household members on a per capita basis. Transportation expenses were adjusted to account for non-work-related activities. Family Economics Review l On average, single-parent households with two children spent approximately 11 percent less on the older than on the younger child. This is contrary to husband-wife households that spent approximately 3 percent more on the older than on the younger child (6). Education, child care, and other miscellaneous goods and services accounted for much of the higher expenses associated with the younger child in single-parent households. In addition, diseconomies or economies of scale are achieved if a single-parent household has only one child or three or more children. To determine these disecmiomies and economies of scale factors, multivariate analysis was used to estimate expenditures for each budgetary component controlling for household size and age of the younger child. Compared with expenditures for each child in a single-parent, two-child family, single-parent households with one child spent approximately 37 percent more on the single child, and those with three or more children spent approximately 26 percent less on each child. Greater diseconomies and economies of scale are achieved in single-parent families than in husbandwife families. Husband-wife families spend approximately 21 percent more on an only child and 22 percent less on each child in families with three or more children, compared with a two-child family (6). The smaller household size of singleparent families relative to marriedcouple households is likely the reason for this. Diseconomies and economies of scale typically have a diminishing effect, so as family size moves from three to two members (a single parent with two children vs. one child), greater diseconomies of scale result than when decreasing from four to three members (a married couple with two children vs. one child). Similarly, as family size moves from three members to four or more members (a single parent with two 1991 Vol. 4 No. 1 children vs. three or more children), greater economies of scale are achieved than when increasing from four to five or more members (a married couple with two children vs. three or more children). Other Expenditures on Children Expenditures estimated in this study for a child in a single-parent household are direct expenses for six major budgetary components. There are other direct expenses involved in rearing a child in a single-parent household. One, already discussed, is expenses incurred by the parent without primary care of the child in divorced, separated, or never-married situations. Another is the cost of a college education, which usually occurs after the child reaches age 18. Child-rearing estimates in this study are for a child age 17 and under. There are also indirect costs involved in the rearing of a child. In order to care for children, current earnings and future career opportunities may be diminished for the single parent due to less time in the labor force. In addition, parental leisure time is curtailed. These indirect costs can surpass direct expenses on a child (J) and may be particularly restrictive for a single parent who typically assumes major responsibility for child rearing. References 1. Calhoun, C.A. and Espenshade, T.J.1985. The Opportunity Cost of Rearing American Children. The Urban Institute, Washington, DC. 2. Kasper, J.D. 1986. Perspectives on Health Care: United States, 1980. National Medical Care Utilization and Expenditure Survey. Series B, Descriptive Report No. 14. Office of Research and Demonstrations, Health Care Financing Administration. 3. Klinger, D. and Kuzmyak, J.R. 1986. Personal Travel in the United States, Vol. I, 1983-1984 Nationwide Personal Transportation Study. U.S. Department of Transportation. 4. Lino, M. 1990. Expenditures on a child by husband-wife families. Family Economics Review 3(3):2-18. 5. McDonald, J.F. and Moffitt, R.A. 1980. The uses of Tobit analysis. The Review of Economics and Statistics 62(2):318-321. 6. U.S. Department of Agriculture, Agricultural Research Service, Family Economics Research Group. 1991. Expenditures on a Child by Husband-Wife Families: 1990. 7. , Human Nutrition Information Service. 1987. Cost of food at home. Family Economics Review No. 3, p. 30. 8. U.S. Department of Commerce, Bureau of the Census. 1989. Statistical Abstract of the United States, 1989. [109th ed.] ~ 7 Income and Expenditure Patterns of Consumer Units with Reference Person conducted quarterly1 by the Bureau of the Census for the Bureau of Labor Statistics. Consumer units2 were interviewed in the survey; persons in nursing homes or similar institutions were not included. A consumer unit may be one person but that person need not live alone. Two persons living together but fmancially independent would be considered two separate consumer units. Fmdings are based on responses from 2,727 consumer units with reference persons3 age 70 years or older. Seventy-one percent were 70 to 79 years of age and 29 percent were 80 or older. Data were weighted to reflect the U.S. population; 8.4 million households with a head age 70 to 79 years and 3.4 million with Age 70 to 79 and 80 or Older By Retia Scott Walker Chair, Human Ecology University of Maryland at Eastern Shore Frankie N. Schwenk Research Leader Family Economics Research Group The U.S. population of older persons, especially those 80 years or older, is increasing at a faster rate than the total population. Information on the characteristics of these households will aid policymakers, planners, and educators in planning for the needs of these families. Using data from the 1987 Consumer Expenditure Survey, this study describes the socioeconomic and demographic characteristics of households with a head 80 years or older. It also compares these characteristics with those of families having a reference person age 70 to 79 years. Results indicate that the 80-plus age group had less income and spent considerably less than those in their seventies. This study did not include older persons who Jived in the homes of their children, nursing homes, or other such arrangements. Introduction Since the beginning of this century, the United States has experienced rapid growth in the older population. Whereas, 1 in 25 Americans was at least 65 years old in 1900, this proportion rose to 1 in 8 in 1990. · Projections for 2025 are that one in five persons will be 65 or older (7). The subset of persons 80 and older is expected to almost double by 2025 while the total population will increase by 20 percent (table 1). 8 Projections of an increasingly older population have far-reaching implications for educational programs and public policy on issues related to health and social and economic well-being of the older population. This study contributes to the discussion of these effects by providing information on the current socioeconomic and demographic characteristics of this population and on their income and expenditure patterns. Households with a reference person 80 years or older and those with a head age 70 to 79 years are compared. Source of Data Data used for this study were from the 1987 Consumer Expenditure Survey (CEX) (6), an ongoing survey 1Quarterly expenditure data were multiplied by four to provide estimates of annual expenditures. Income data in the suiVeywere annual data. 2Consumer unit comprises either: (1) all members of a particular household who are related by blood, marriage, adoption, or other legal arrangements; (2) two or more persons living together who pool their income to make joint expenditure decisions, or (3) a person living alone or sharing a household with others or living as a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent. To be considered financially independent, at least two of the three major expense categories (housing, food, and other living expenses) have to be provided by the respondent. The terms "household" and "family" are used throughout the text to refer to consumer units. 3Reference person (sometimes referred to as householder in this text) is the first member mentioned by the respondent when asked to "Start with the name of the person or one of the persons who owns or rents the home." Table 1. Projections of the population* by age Population Total ...................... . Age 65 and older .......... . Age 70-79 ............ . Age 80 and older ........ . *Numbers in thousands. 1990 250,410 31,559 14,227 7,082 2000 268,266 34,882 16,034 9,357 2025 298,252 59,713 26,798 13,658 Source: U.S. Department of Commerce, Bureau of the Census, 1989, Projections of the populations of the United States, by age, sex, and race: 1988 to 2080, Current Population Reports, Population Estimates and Projections, Series P-25, No. 1018. Family Economics Review . 4 one 80 or older are represented. The weighted means and proportions are presented in the text and tables. An alternative way to analyze these data is by testing the unweighted sample to determine the significance level of comparisons or relationships; therefore, t -test procedures were conducted, and significant values (p < .01) are noted in the tables. Household Characteristics Socioeconomic and demographic variables are important factors in the study of income and expenditure patterns among older households because they reflect past circumstances, needs, and preferences that impact their current economic status. Table 2 (p. 10) shows selected characteristics for two age subgroupsthe seventies (70 to 79 years) and SOplus years. For comparison, dat~ als~ are shown for the U.S. population. Gender and Race The percentages of male and female reference persons were similar for those age 70 to 79. However, the reali~ of uneven longe'?ty was reflected m a larger proportion of female reference persons among those 80 and over (62 percent). Differences in longevity also were reflected in racial composition. There was a smaller percentage of black respondents in the older group than in the younger group. 'The U.S. population had 13.5 million persons age 70 to 79 years and 6.7 million persons 80 and older in 1987. This study included 10.8 million reference persons or spouses age 70 to 79, and 3.9 million age 80 and over. Thus, 80 percent of persons 70 to 79 years and 58 percent of those 80 or older are represented. Those not included in the sample may have lived in nursing homes or other institutions or with children, grandchildren, siblings, or friends. Also, some disparity i~ numbers may have resulted from the exclusiOn in this study of consumer units that were incomplete income reporters. Tie U.S. population estimates are weighted data from all consumer units in the survey that gave complete reporting of income, i.e., provided values for at least one of the major sources of income. 1991 Vol. 4 No. 1 Education Compared with those 80 and older, the education level was higher for persons age 70 to 79. Nearly 10 percent of reference persons in each group were college graduates. The greatest difference was in the minimum years of schooling: 42 percent of the 80-plus group received an elementary education or never attended school, compared with 31 percent of the seventies group. Differences in education levels may reflect factors such as changing attitudes by society concerning how much education was appropriate (J). Income Almost half of those age 70 to 79 and 61 percent of those 80 and older reported a before-tax annual income of less than $10,000. Twelve percent and 17 percent, respectively, reported an annual income of less than $5,000 before taxes in 1987. These households were below the official poverty level ($6,872 for couples and $5,447 for single individuals over 65 years of age) (4). On the other side of the scale, 6 percent of the seventies group and 4 percent of the 80-plus households reported an annual income of $40,000 or more. These variations between groups probably reflect employment history, type of occupation during the productive years, wages earned, and related factors. Income was related to family type and education of the reference person. When compared with o~her family types, the husband and Wife households were better off in both age groups. Table 3 (p.ll) shows the two predominant family types: husband-wife and single female. Almost one-third of husband-wife families in both age groups had incomes of $20,000 or higher, whereas over three-quarters of single-female families reported income below $10,000. Those with more education tended to do better financially during the retirement years. Almost one-third of the high school graduates age 70 to 79 and onefourth of those 80 and older had income over $20,000. In contrast, the less educated reference person typically reported a household income below $10,000. Employment Most reference persons were retired, but 15 percent of the younger group and 4 percent of the older group were employed. Most worked part time. Five percent of those in their seventies and less than 1 percent of those in their eighties worked full time, year round. Marital Status As shown in table 2, there were differences between the two age groups in marital status. Compared with the younger group, a much lower percentage of married couples and a considerably higher percentage of widowed persons were seen in the 80-plus group. Persons in this older group were less likely to be separated or divorced than their younger counterparts. Family Composition As expected, there was a larger percentage of husband-wife families in the younger group ( 44 percent) than in the older group (27 percent). A higher percentage of persons 80 and older were single females (52 percent), compared with those 70 to 79 years old (36 percent). Single males accounted for approximately 10 percent of the households in both age groups. Residence- Urban/Rural More than four of five older households were located in urban as opposed to rural communities (less than 2,500 population). However, households headed by a person 80 years or older were more likely to live in an urban environment than were those headed by a person age 70 to 79. 9 5 ~ 8 ~ t'j r'l 0 0= r8;· til ::e Table 2. Selected characteristics of older consumer units and all consumer units, 1987 Characteristics Number of persons in consumer unit . .. . ...... . Gender of reference person: Female . .. ..... . .... . ..... . ...... . ..... . Race of reference person: Non-Hispanic white . ... . .... .... .... . . . .. . Non-Hispanic black .. .. ... ... . .. . ....... . . Non-Hispanic American Indian, Asian, Other .. . Hispanic origin .. . . ... .. .. . .. .... . .... . .. . Education of reference person: Never went to school . . ................... . Elementary (1-8) .. . .. . . . .......... . ..... . Some high school . .. .. . . .. . ..... . ....... . High school graduate ...... ... ... . ... . .... . Some college ....... . ........... . .. . .... . College graduate .... .. ... ...... . . ..... .. . > 4 years college . .. . . .... . ..... .. . . .. . .. . Income class (before taxes) : Under $5,000 . . . . . . ...... . ....... . .. . .. . . $5,000 - $9,999 .. . ... . ................... . $10,000- $14,999 . . .. . ...... . ....... . ... . . $15,000-$19,999 . ...... . ... . .. ....... . .. . $20,000 - $29,999 . . .................. .. . . . $30,000 - $39,999 . . ... . .... . ... .. . .. .. ... . $40,000 and over ........... . .. . . .. . . . ... . Labor force status of reference person: Employed .... ...... . . ..... ... ... . ...... . Ill, disabled ... .. ... . . . ... . ..... . . . .. . . . . . Homemaker .. ... ..... . . . .. .. .......... . . Retired ........ ..... . .... . . . . . . ...... ... . Could not find work, doing something else ... . All 70-79 80+ consumer years years units 1 1.7 47.1 88.2 9.1 1.2 1.5 1.5 Percent 61.8 88.6 8.2 1.3 1.9 2.5 33.8 81.9 10.1 2.6 5.4 .7 3.0 .5 30.0 38.8 11 .8 20.9 17.3 13.7 25.9 20.4 31.0 12.3 10.8 22.2 5.2 6.3 10.8 5.0 3.4 10.0 12.3 16.5 9.2 35.2 43.9 15.4 20.3 17.1 12.8 11.4 7.8 10.3 10.2 7.4 17.5 4.9 3.0 13.0 5.7 4.3 21.8 15.3 4.4 72.5 6.3 6.0 4.1 4.5 6.6 4.5 73.4 82.8 17.5 .5 .2 1.4 Characteristics Marital status: Married . . . ..... ..... ... . . .. . . .. .. . . . .. .. . Widowed ................ . .............. . Divorced ..... . .................. .. ..... . Separated ... ... ..... .. .. .. ............. . Never married . . .................... . ... . . Family type: Single male consumer . . . . . . .. . ........... . Single female consumer ..... . ..... . ...... . . Husband, wife only .. . . .. . . . ... . . . . .. . ... . . Husband, wife, and child ........ .... . . .... . Single parent, other family ... . ... ....... .. . . Residence: Urban .... .. ... .. . .... ... . .. ...... . ..... . Housing: Public . . .. .. .... . . .. .. . . .. .. . ...... ..... . Government pays part of costs . .. . ... .. . ... . Housing tenure: Homeowner without mortgage .. . . .. .. .. . . .. . Homeowner with mortgage . ... ....... . .. .. . Renter . .. ...... . .......... .. ....... . ... . Occupied without payment . . .. .. .. . ...... .. . Student housing . . . . ... . . . .. ... . . .. ...... . Type house: Single family, detached .......... . . .. ...... . Apartment (flats, high-rise, garden) .......... . Other (row, town, 2,3,4-plex) . . . . .. .. . . . . ... . Mobile home-trailer .. . .. . .. . .. . ........... . ~. 1AJI consumer units includes those headed by persons of any age and represents the U.S. population. ~ .. ,. All 70-79 80+ consumer years years units 1 45.5 43.4 5.3 2.5 3.3 Percent 28.3 65.6 2.3 .1 3.7 56.0 12.4 11.4 3.4 16.8 10.1 10.9 12.5 35.7 51.9 16.8 38.1 24.0 21.4 5.5 3.1 32.8 10.6 10.1 16.5 83.2 87.1 85.5 1.9 3.0 1.9 3.3 4.5 1.9 64.0 61 .6 24.6 11.0 5.2 37.1 24.8 32.8 36.1 .2 .4 1.0 0 0 1.2 67.9 60.8 61 .5 17.1 25.2 20.6 8.0 8.0 11.7 7.0 6.0 6.2 Table 3. Household income by family type and education of reference person, for age subgroups, 1987 Family characteristic All families ....................... Family type: Husband, wife only 0 ••••••••••• 0 Single female .................. Education of reference person: Did not graduate from high school . High school graduate ........... Public or Subsidized Housing Although nearly all persons in this study lived in private housing, there was a slightly higher percentage of reference persons 80 and older living in public housing or housing where the government paid part of the cost. Perhaps this was due, in part, to the economic status of older persons and the availability of subsidized apartments for the elderly. Home Ownership Reference persons in the seventies group were more likely (75 percent) than the older group (67 percent) to be homeowners. A small percentage in each group held a mortgage on their home. There was a relationship between housing tenure and family type in both age groups. Renting was more frequently observed among single-female households (35 percent of those age 70 to 79 and 41 percent ofthose 80 and older) than among husband-wife households (14 percent of the younger group and 16 percent of the older group). Housing Type The highest percentage of older persons lived in single-family homes ( 68 percent of the younger group and 61 percent of those 80 or older). Apartments (flats, high-rise, or garden-style) comprised 17 and 25 percent of the housing occupied by those age 70 to 79 and 80 years and older respectively. It may be that the 80-plus group was more likely t? be housed in an apartment -type umt than the seventies group because they were more likely to be single. 1991 Vol. 4 No. 1 70-79years $10,000- $20,000- <$10,000 $19,999 $39,~99 $40,000+ Percent 47 32 15 6 21 48 22 9 77 15 7 1 58 31 10 1 37 32 21 10 Source of Income Average annual income before taxes is shown in table 4 (p. 12), by components. Also, after-tax income and per capita incomes are given for both age groups. The percentage of consumer units who had income from each source and the average income of those who had that type of income also are presented. Although most consumer units (96 percent) had income from Social Security, less than half had income from pensions and annuities or interest on savings. Mean income before or after taxes differed significantly between the two age groups, but per capita incomes did not. Wages and salaries, Social Security, and pensions and annuities varied significantly. These income sources were expected to be lower for those 80 and older than for those age 70 to 79 because the younger group had a higher percentage of husband-wife households. The major source of income for both age groups in this study was Social Security,6 which provided, on average, over half their income (51 percent for the younger group and 55 percent for those over 80). 6 Although more elderly depend on Social Security than on other sources for ~heir in- . come their income share from Soctal Secunty varie~ widely (2). According to a Social Security Administration Report (5), in 1987 the average monthly benefit was $513 ($6,156 per year) for a retired worker. ~owev~r •. when a retired worker with a wtfe recetvmg benefits based on his earnings was included, the average monthly benefit was $873 ($10,476 annually). Widows or widowers averaged $468 per month or $5,616 per year. 80+ years $10,000- $20,000- <$10,000 $19,999 $39,999 $40,000+ Percent 61 25 10 4 26 43 22 9 78 17 4 1 68 24 6 2 50 26 16 8 A larger percentage of the younger group (37 percent) had private pensions and annuities perhaps because these were more accessible to them than they were to the 80-plus group (32 percent) during their working years. Also, the younger group was more likely to have both husband and wife receiving pensions or annuities. A larger percentage of those 80 and older (41 percent), compared with those in their seventies (37 percent), reported income from interest on savings accounts and bonds. More of them may have sold homes, placing the proceeds in savings accounts or bonds. Although 12 percent of the younger and 17 percent of the older households reported annual incomes below $5,000, few of these households received public assistance. Expenditures Total expenditures and per capita total expenditures for those 80 and older were significantly lower than those for the 70 to 79 group (table 5, p. 13). The older group spent significantly less on each category of expenditures except health care, education, miscellaneous, and cash contributions. As expected, housing commanded the largest share of the household budget for each age group followed by food, transportation, and health care. Housing included shelter, utilities, and household operations and furnishings. The older group allocated $4,162 or 42 percent of their expenditures, whereas the younger group spent $4,864 or 11 Table 4. Income sources and mean annual household income by age subgroups, 1987 Sources of before-tax income Mean for all consumer units Mean for consumer units with source Percent with income from source 70-79 years 80+ years 70-79 years Wages and salaries ......... . ......... . $1,908 490 51 $1,171* 146 $12,323 11,899 2,159 Net business ........................ . Net farm .......................... .. . Social Security, Railroad Retirement, and private retirement: Social Security and Railroad Retirement Pensions and annuities ............. . Interest, dividends, property income: Dividends, trusts, royalties, estates ..... . Interest on savings accounts or bonds .. Roomer and boarder income ......... . Other rental income .. .. .... . . . . .. .. . . Unemployment and workers' compensation: Unemployment ... . . .. .. . ....... . .. . Workers' compensation and Veterans benefits .... ... . . . .. . . . Public assistance: Welfare .... .. ............... . ... . . . Supplemental Security Income (SSI} ... . Food stamps . . .. . ..... . ... . .. .. .. . . Other income: Regular contributions .... . . . ........ . Other money income ................ . Total income (before taxes) ............. . Total income (after taxes) . .. . ... . .... .. . Per capita income (before taxes) ........ . Per capita income (after taxes) - Insufficient sample size. * p<.01. 7,711 2,406 678 1,482 6 126 62 14 107 32 33 61 $15,174 14,402 8,926 8,472 Summary 6,899* 1,524* 725 1,809 85 107 55 18 34 $12,627* 12,083* 8,418 8,055 7,927 6,433 5,477 3,969 1,040 3,743 3,228 999 1,502 491 1,332 6,412 34 percent of their expenditures on housing. Utilities accounted for almost one-third of the housing expense of each age group. Transportation expenses included vehicle purchase, gasoline and oil, insurance, maintenance, public transportation, and other expenses. Budget shares for transportation were smaller in the older group (10 percent) than the younger group (18 percent) partly because they owned fewer vehicles. Half of the older group had no vehicle, compared with 28 percent of those age 70 to 79. There was little difference between the two age groups on the expenditure share for food. As expected, the older group spent a larger share on health care than the younger group. The results of this study indicated that, on average, families with a reference person in their seventies spent nearly all of their after-tax income. It was surprising to note that the average expenditures of householders 80 and older were less than their average after-tax income. Rather than spending more than their income and drawing on their assets, as might be expected, families with a head 80 years or older had average total expenditures $2,000 less than average income. This may have been because these families wanted to save or had less inclination to spend. 12 The older households had a lower average income than those in their 80+ years $17,883 9,763 7,195 4,834 6,135 4,458 1,729 2,879 1,058 348 1,565 70-79 years 15 4 2 97 37 12 37 1 3 2 1 7 6 2 1 80+ years 7 1 96 32 12 41 5 4 5 5 2 seventies. This was due partly to smaller household size. The older group reported lower average income from most sources except dividends and interest. Fewer of the older group owned a house, so perhaps they had sold their home and put the proceeds into instruments producing dividends and interest. The older households also spent less than the younger households, and per capita expenditures also were significantly lower for older families. Families with a reference person age 80 and older spent fewer dollars and a smaller budget share than the younger group on transportation, apparel, and entertainment; they may go out less often for reasons of health or preference. Family Economics Review Table 5. Mean expenditures and budget shares by age subgroups, 1987 Mean expenditures Budget share Item 70-79 years Food . . .... . .... . . .. .. ... $2,618 Housing •• • •• • • 0 ••••••••• 4,864 Transportation • 0 0 ••• 0 0 0 0 •• 2,577 Health care ............... 1,626 Apparel and services ... . ... 615 Entertainment .. . ..... . .. .. 519 Personal care .... . ... . .... 190 Reading • 0 ••••• • 0 0 • • 0 •• 0 0 133 Education ................ 18 Miscellaneous • • • 0 0 •• •• • •• 291 Cash contributions .... . .... 169 Insurance and retirement .... 518 Alcohol .. ........ . .... .. . 123 Tobacco . .. ... ... . ... . ... 134 Total expenditures .. ..... . . $14,397 Per capita total expenditures . 8,469 * p<.01. Conclusions On average, households with a head 80 years or older had similar per capita incomes and lower per capita expenditures when compared to families in their seventies. Also, expenditures were less than income for both age groups, so some families were not using their savings or other assets for current spending. This may be welcome information to those who are concerned about the economic status of older families as the percentage of persons 80 or older increases. However, some households were not faring so well. Twelve percent of those with a reference person in their seventies and 17 percent of those 80 or older reported incomes less than $5,000, considerably below poverty thresholds for families over 65 years of age. Yet, less than 7 percent received Supplemental Security Income (SSI) and less than 6 percent received food stamps. It appears that families eligible for economic support were not receiving it. Efforts to reach these families are needed. 1991 Vol. 4 No. 1 80+ 70-79 80+ years years years Dollars Percent $1 ,890* 18 19 4,162* 34 42 1,010* 18 10 1,432 11 14 288* 4 3 231* 4 2 159* 1 2 84* 10 0 0 165 2 2 222 2 249* 4 2 43* 1 0 68* 1 $10,015* 100 100 6,677* For families in this study,1 housingrelated costs comprised the largest share of the household expenditures. Over 70 percent owned their home, but such assets are not readily available for use. Furthermore, as persons become less independent with age, it becomes more difficult to maintain a single-family dwelling. Yet, about two-thirds lived in single-family homes. Alternative housing options, including those with a service component (such as congregate housing, shared, and group homes), may be needed. Given these findings, further research related to the economics of aging is needed. Researchers, consumer educators, extension agents, and professionals on aging can contribute to developing a better understanding of the economic status of older persons. 7Persons living in nursing homes, with their children, or in other arrangements may have different expenditure patterns. For some, health-related expenses would be the major budget component. References 1. Atchley, R.C. 1988. Social Forces and Aging. Wadsworth Publishing Co., Belmont, CA. 2. Clark, R.L., Maddox, G.L. , Schrimper, R.A., and Sumner, D.A. 1984. Inflation and the Economic Well-Being of the Elderly. The Johns Hopkins University Press, Baltimore, MD. 3. U.S. Department of Commerce, Bureau of the Census. 1989. Projections of the Populations of the United States, by Age, Sex, and Race: 1988 to 2080. Current Population Reports, Population Estimates and Projections. Series P-25, No. 1018. 4. U.S. Department of Health and Human Services, Social Security Administration. 1989. Social Security Bulletin, Annual Statistical Supplement, p.123. 5. . 1988. Fast Facts and Figures about Social Security. Washington, DC. 6. U.S. Department of Labor, Bureau of Labor Statistics. Consumer Expenditure Survey: 1987 Interview Survey Public Use Tape and Documentation. 7. U.S. Senate Special Committee on Aging. 1987-1988. Aging in America: Trends and Projections. [In conjunction with the American Association of Retired Persons, the Federal Council on the Aging, and the U.S. Administration on Aging.] l6 13 Trends in Housing By Nancy E. Schwenk Consumer Economist Family Economics Research Group Using data from various government and industry sources, recent trends in housing are reported. For the past year, the inflation rate for housing was lower than the overall inflation rate, as measured by the Consumer Price Index (CPI). The increase in home prices during the 1990's is expected to be much lower than the increases during the 1970's and 1980's. The U.S. home ownership rate has held steady at about 64 percent for the past 25 years. Renters pay a higher share of their total income for housing costs than do homeowners. The housing industry is experiencing a decline. New housing starts, an indication of the health of the real estate industry and the national economy, have been decreasing for both single-family and multifamily structures. Other information presented includes mortgage trends, new developments in the housing industry, and recent legislation. Housing professionals and educators, as well as would-be home buyers, are provided with useful trend information. The CPI for housing rose 4.5 percent between December 1989 and December 1990 (table 1). This increase was less than the 6.1 percent increase for the overall CPI during the period. The housing component that showed the greatest increase in price was fuel oil and other household fuel commodities (28.6 percent). Smallest increases in price (less than 2 percent) were observed for housefurnishings, maintenance and repair commodities, gas (piped) and electricity, and household insurance. Home Ownership The U.S. Census Bureau conducted its ftrst housing census in 1940. That year, the median value of nonfarm owner-occupied homes was 14 $2,938, and the median rent was $27.28 per month (9). A majority of Americans (56.4 percent) were renters. Although many homes today have a 6-digit price tag, the dream of home ownership has become a reality for most Americans. In the second quarter of 1990, the home ownership rate was 63.7 percent. This rate has varied by only 2 or 3 percentage points over the past 25 years. The home ownership rate was highest outside Metropolitan Statistical Areas (73.2 percent) and lowest inside central cities ( 48.3 percent). Among the four geographic areas of the country, the rate was highest in the Midwest (67.4 percent) and lowest in the West (57.3 percent) (20). Home Prices Owning a home in the 1990's is not expected to be the same profitable experience as it was during the 1970's and 1980's. According to the chairman of the Federal Home Loan Mortgage Corporation (3), home prices are expected to increase about 2 percent per year in the 1990's, compared with 4 percent per year in the 1980's and 10 percent per year in the 1970's (3). Home buyers during the next few years are advised to think of their purchase as a form of asset savings rather than as an investment. The appreciation rate for home prices is decreasing in the highest priced markets such as Boston, New York City, and the California coastareas that had experienced boom markets in the late 1980's. In contrast, housing appreciation is increasing in many of the relatively lower priced urban areas such as Seattle, Akron, and Peoria. Prices in several depressed Southern markets, such as Houston and Baton Rouge, also appear to be on an upswing (8). In 1989 the median sale price of a single-family home in the United States was $120,000 for a new home and $93,100 for an existing home (table 2, p. 16). Median existing home prices for the second quarter of 1990 showed the three most expensive areas of the country to be Honolulu ($345,000), San Francisco ($263,600), and Anaheim/Santa Ana ($248,900). In contrast, the three least expensive areas were Saginaw, MI ($49,300); Youngstown-Warren, OH ($50,400); and Peoria ($52,100) (8). Metropolitan areas of the country can be compared on a housing affordability index - the percentage of income needed to marginally qualify for a conventional loan covering 80 percent of the median existing singlefamily home price, based on current lending requirements of the Federal National Mortgage Association (Fannie Mae). For example, the July 1990 affordability index of 102.3 for the United States means that a family earning the median income of $34,358 had 102.3 percent of the income necessary to purchase the median existing single-family home, priced at $98,400 (8). For the second quarter of 1990, the metropolitan areas with the most favorable affordability indexes were: Houston (179.9), Indianapolis (159.8), Minneapolis/ St. Paul (154.1), Kansas City (149.9), and Detroit (146.4). The metropolitan areas with the least favorable affordability indexes were: Los Angeles (49.5), San Francisco (51.9), New York (53.3), San Diego (58.7), and Boston (79.8) (8). In 1989, 350,000 apartment condominiums and cooperatives were sold, up from 230,000 ftve years earlier. The Northeast accounted for 45 percent of these sales. The median sale price of condos and co-ops was $84,300, ranging from $65,600 in the Midwest to $110,800 in the Northeast (7). Family Economics Review Table 1. Consumer Price Index for housing, all urban consumers: U.S. city average [1982-84 = 100) December Group and item 1989 All items 126.1 Housing ... . .. .. ..... .. .. . . .. .... . .. . .. .. . . .. .. .. ... . 124.9 Shelter ............................................ . 135.6 Renter's costs 1 •.••••. . • •••• .. • . •• . • •.••• • ..• • ..•. • • 140.1 Homeowners' costs 1 •.......................• • ....... 140.9 Household insurance 1 .. • ..........•...•.....•...•... 134.0 Maintenance and repairs ........ . .................... . 119.5 Maintenance and repair services ..................... . 122.2 Maintenance and repair commodities ................. . 115.8 Fuel and other utilities ...... . .... . .................... . 108.4 Fuel oil and other household fuel commodities ........... . 88.7 Gas (piped) and electricity .... ... ................... . . 107.0 Household furnishings and operation ................... . 111.7 Housefurnishings ................................... . 105.5 Housekeeping supplies . .... . . . .. ... .. . . .. ... ..... . .. . 123.6 Housekeeping services . ............................. . 117.6 11ndexes on a December 1982 = 100 base. Source: U.S. Department of Labor, Bureau of Labor Statistics. As of 1987, 5.8 percent of the total occupied year-round housing units in the United States were mobile homes, and 81 percent of mobile homes were owner occupied. Median monthly housing costs for mobile home owners, including all mortgages plus maintenance costs, was $266 (22). The average sale price of a new mobile home for residential use was $23,700 (19). The number of new mobile homes placed for residential use has been declining every year since 1984. Mortgage Trends Today, borrowers have numerous choices when shopping for a mortgage. Lenders are tailoring mortgages to the needs of local borrowers. In the West, the Nation's least affordable housing region, most mortgages are adjustable rate mortgages (ARM's) with monthly adjustments tied to the Eleventh District Cost of Funds Index (COFI), a relatively slow moving index that reflects lenders' borrowing costs in the Western States (2). Treasury-indexed ARM's, which react quickly to interest rate changes, are now only a small portion of the ARM's issued in the West (2). 1991 Vol. 4 No. 1 No-point ARM's are increasing in popularity among prospective home buyers with little cash for a down payment. With a no-point ARM, borrowers pay only minor closing costs. The initial interest rate discount is smaller than for a traditional ARM, and the monthly payment is slightly higher. The 7-year reset mortgage is also gaining market share in the West (2). These fixed-rate loans, which are popular with buyers who expect to live in a home for only a few years, offer automatic or conditional refinancing at the end of 7 years. In other regions of the country, most borrowers choose fiXed-rate loans, although ARM's increase in popularity when interest rates go up (table 3, p. 16). There is a trend among real estate lenders toward simplifying the financial side of home buying in the 1990's. For example, the loan approval process is expected to be shortened within the next few years. Property appraisals, which currently add about 2 weeks to the process, will be able to be completed within 24 hours due to advances in high-tech data storage and retrieval systems. A quick appraisal will enable lenders to December Percent 1990 change 133.8 6.1 130.5 4.5 142.7 5.2 149.5 6.7 147.5 4.7 136.5 1.9 123.8 3.6 128.9 5.5 116.8 .9 112.7 4.0 114.1 28.6 108.6 1.5 113.7 1.8 106.1 .6 127.5 3.2 122.3 4.0 offer instant loan commitments, and buyers can eliminate financial contingencies in their sales offers (12). Expandable mortgages, already being offered by Citibank of New York in the New York City area, will become commonplace in the future. Lenders will approve credit lines based on the appreciated value of the home at some future point, though the borrower receives only the loan money needed to purchase the home (12). Real estate lenders are trying to help home buyers concerned about environmental hazards on their property. The Federal National Mortgage Association, together with others in the lending industry, published a brochure entitled "Home Buyer's Guide to Environmental Hazards" in August 1990. Hazards, such as asbestos, formaldehyde, radon, lead paint, lead in drinking water, and toxic waste were identified and defined, together with the risks associated with each. It is predicted that, as part of sales transactions, toxic waste inspections will become as commonplace as termite inspections are today (5). 15 Demographic Trends During the 1990's, aging baby boomers will be in the market for larger trade-up homes, but selling their starter homes may be difficult. Because of the baby bust, there will be less demand at the lower end of the housing market, creating a buyers' market for starter homes and also, a time of bargains for renters. An increasing amount ofthe U.S. housing dollar will be spent on amenities that appeal to those over age 35. The latest status symbols in housing are libraries and master bedroom suites with a full bath and spa. Growth in spending on existing housing in terms of additions, remodeling, and refurnishing will approach the growth in spending on new housing. During the 1990's the number of persons age 75 and over will grow rapidly, and may increase the demand for nursing homes and assisted-living facilities. However, the number of persons age 65-74 will decline, leading to a flat demand for housing for the young elderly (JJ). First-Time Home Buyer Although the number of first-time home buyers is expected to decline during the 1990's, consumers purchasing their first home comprise a major segment of the housing market. Even in high-priced California, over one-third of purchasers in 1989 were buying their first home, spending an average of $162,500, and paying 20 percent down. Outside California, buyers typically put 10 percent down on their first homes (4). For the Nation, the median price of a home purchased by a first-time buyer in 1989 was $79,100 with a monthly payment of $642. The firsttime home buyer earning the median income of $22,878 had 74.2 percent of the income necessary to purchase this home using a conventional loan at 10.11 percent interest rate. Tie affordability index for first-time buyers is their median income divided by the amount of income needed to qualify for a mortgage, based on current lending requirements of the Federal National Mortgage Association using a tO-percent down payment (7). 16 Table 2. Number and price of single-family homes sold in selected years, 197G-89 Median sale price Single-family of single-family Year home sales homes Existing New Existing New 1970 •• 0 • •••••• 1,612,000 485,000 $23,000 $23,400 1980 0 •• 0 • • 0 • • • 2,973,000 545,000 62,200 64,600 1984 ••• ••• • 0 •• 2,868,000 639,000 72,400 79,900 1985 ...... .... 3,214,000 688,000 75,500 84,300 1986 .......... 3,565,000 750,000 80,300 92,000 1987 .......... 3,526,000 671,000 85,600 104,500 1988 .. . .... . . . 3,594,000 676,000 89,300 112,500 1989 ..... . .. . . 3,440,000 650,000 93,100 120,000 Source: U.S. Department of Commerce, Bureau of the Census and U.S. Department of Housing and Urban Development, 1990, New One-Family Houses Sold and For Sale, Current Construction Reports, Series C25-9005; and National Association of Realtors, 1990, Home Sales, Vol. 4, No.4. Table 3. Characteristics of conventional first mortgage loans for purchase of single-family homes September Loan characteristic 1970 1980 1990 New homes: Contract interest rate, all loans . . ..... 8.3 12.3 9.6 Term to maturity (years) .. ........ 0. 25.1 28.1 27.2 Purchase price ($1,000) ..... . ... . .. 35.5 83.2 156.6 Loan to price ratio ................. 71.7 73.2 74.7 Percent of loans with adjustable rates * * 32 Existing homes: Contract interest rate, all loans .... . .. 8.2 12.5 9.7 Term to maturity (years) 0 ••• • 0. 0 0 •• 0 22.8 26.9 26.2 Purchase price ($1 ,000) 0 •• 0. 0 ••• ••• 30.0 68.3 135.2 Loan to price ratio .. .... . . . ... .. . .. 71 .1 73.5 74.0 Percent of loans with adjustable rates * * 25 *Data are not available. Source: U.S. Department of Commerce, Bureau of the Census, 1990, Statistical Abstract of the United States, 1990, [110th ed.]; and Federal Housing Finance Board, 1990, News, FHFP 90-20. About 175 lenders nationwide are participating currently in an innovative program called the Community Home Buyers Program (14). Under this program, ftrst-time home buyers can make 5 percent down payments, take out bigger mortgages, and reduce their closing costs if they meet program qualification guidelines, including completion of a home ownership course. The sponsor, GE Capital Mortgage Insurance Co., based in Raleigh, NC, is insuring $800 million in mortgages under this program. The mortgage insurance reduces the lenders' risk by protecting Family Economics Review against fmanciallosses if a borrower defaults on the mortgage. Fannie Mae is purchasing most of the mortgages from the lenders. Although low down-payment mortgages have a higher default rate than conventional mortgages, the 6-hour home ownership course should reduce that risk. The required course covers topics such as budgeting, establishing good credit, and buying and maintaining a home. Lenders' income and loan limits vary, but a family that could qualify for a conventional mortgage of about $120,000 will be able to qualify for a $160,000 mortgage under this unique program (14). New Housing Starts Monthly housing starts are an indication of the health of the real estate industry and the national economy. The housing industry finished 1989 with 1.4 million housing starts, a decrease of 5.9 percent from 1988. The National Association of Home Builders (NAHB) projected about 1.3 million housing starts in 1990, and by June of 1990, new housing starts had fallen to their lowest level since 1982 when the Nation experienced a severe recession (19). A number of factors are responsible for the decline. From January to June 1990, the interest rate on a ftxed-rate loan for a newly built home rose from 9.8 percent to 10.2 percent (15). Home prices remain high, particularly in fast-growing urban areas where developers pay premium prices for land. Also, new banking regulations have contributed to sharp cutbacks in lending to some developers. The Financial Institutions Reform, Recovery and Enforcement Act, enacted in August 1989, limits savings and loan associations in the amount they can lend to any one borrower. An April1990 survey of NAHB members showed that 60 percent were cutting back their building plans for 1990 as a result of these restrictions. Builders are reducing 1991 Vol. 4 No. 1 Table 4. Characteristics of new, privately owned, single-family houses Characteristic Total houses (thousands) ....... . Floor area: Average (sq. ft.) . .. . .... . . . .. . Median (sq. ft.) ... . ...... . .. . Number of stories: 1 ........................ .. 2 or more . . . . . . ... . . . .. .. . . . Split level ........ . . .. . . .... . Bathrooms: 1 or less . ... . ...... . . . . . .. . . 1-1/2 or more ............... . Heating fuel: Electricity ..... . ....... ... . . . Gas . .... . .. .. . . ... . .... . .. . Oil .. .... .. . .. . . . . : ... . ... . . Other ...... . . ........... . . . Central air-conditioning . .. .. . .. . . 1970 793 1,500 1,385 73 17 10 32 68 28 63 8 1 34 1980 957 1,740 1,595 Percent distribution 61 31 8 18 82 51 41 3 5 63 1989 1,026 2,035 1,850 46 50 4 8 92 34 58 5 3 77 Source: U.S. Department of Commerce, Bureau of the Census, 1990, Statistical Abstract of the United States, 1990, [110th ed.]; U.S. Department of Commerce, Bureau of the Census and U.S. Department of Housing and Urban Development, 1990, Characteristics of New Housing:1989, Current Construction Reports, Series C25-8913 .. the number of homes they build, laying off workers, delaying projects, or closing down their operations temporarily (10).Even so, in early 1990 there was a h~~ inventory of new homes for sale (a 7-1/2-month supply, based on the\ratio of houses for sale to houses soid) (21). For the second consecutive year the Riverside-San Bernardino area of southern California led the Nation in 1989 in the number of building permits issued for singlefamily homes. The Los AngelesLong Beach area was second, and the Washington, DC, area was third (6). The single-family houses being built today are larger than those built over the past two decades (table 4). There is a trend toward more two-story houses, more bathrooms, more central air-conditioning, and more use of gas for heating. Rental and Multifamily Housing As of 1987, 31.9 ;ercent of total U.S. housing units were occupied by renters, 56.7 percent were occupied by owners, 8.7 percent were vacant, and 2.8 percent were seasonal. The median rent was $333 (22). Renters paid a median of 29 percent of their before-tax income for housing, compared with 18 percent for homeowners. 3 The U.S. rental vacancy 2 A housing unit is a group of rooms or a single room occupied or intended for occupancy as separate living quarters, with direct access from the outside or through a common hall. 3Monthly housing costs for renter-()(;Cupied housing units include the contract rent plus the estimated average monthly cost of utilities, fuels, property insurance, mobile home land rent, and garbage collection if paid for by the renter. Monthly housing costs for owner-occupied units include mortgage payments, real estate taxes, property insurance, homeowners' association fees, cooperative or condominium fees, mobile home park fees, land rent, utilities, fuels, and garbage collection (22). 17 rate (the number of vacant units for rent divided by total rental units) for the second quarter of 1990 was 7.0 percent. The rental vacancy rate ranged from a high of 8.4 percent in the South to a low of 6.0 percent in the Midwest (20). Multifamily housing starts (structures with two or more units) peaked in 1985 at 670,000 and represented 38 percent of total residential starts. That share fell to 27 percent by 1989 because of an oversupply of apartment buildings, tax reform in 1986, and a decline in many local economies. The multifamily market, however, shows signs of improvement. Rental vacancy rates are lower than those of 2 years ago (8.0 percent in first quarter 1988), and apartments appear to be renting more quickly, as shown by absorption rates (the percentage of new apartments completed and rented within 3 months) published by the Census Bureau (13). A major recovery for multifamily housing is not expected in the 1990's, as several factors will continue to depress the market. The number of household heads age 25 and under, of which 85 percent are renters, will drop by about 5 percent between now and the year 2000, and those age 25 to 34, also a big renter group, will decline by 15 percent. The Financial Institutions Reform, Recovery and Enforcement Act, limiting the amount of acquisition, development, and construction lending by financial institutions, will negatively affect the availability and cost of construction loans for apartment builders. Also, the U.S. Department of Housing and Urban Development's (HUD) new requirement that newly constructed apartment buildings must be accessible to the handicapped will raise the costs of building these projects (13). In 1987, 4.4 percent of U.S. households received public or subsidized housing benefits. The Federal Government spent $11.1 billion that year on public housing, and State and local governments spent an additional $2.1 billion. In 1987 there 18 were 1.4 million occupied low-income public housing units subsidized by HUD. Of these, 27 percent were intended for persons 62 years or older, disabled, or handicapped (18). New Developments Home Technology Smart House is a state-of-the-art electrical wiring, energy distribution, and communications system designed to control energy and communications throughout the home (16). The goal of Smart House is to provide integrated systems that will be practical and affordable, and will enhance safety and security in the home. The Smart House project was begun in 1984 by the National Research Center, a wholly owned subsidiary of NAHB. Smart House, L.P., a consortium, consists of over 100 manufacturers of electric, electronic, and gas-fired home products along with major utilities and research organizations. The control technology used by Smart House is composed of 17 meters and numerous complex measurement devices that keep track of the efficiency of the house and its systems. For example, appliances anywhere in the house can be operated with a wall switch, hand-held remote controller, sensor, video touch screen, touch-tone telephone, or voice. Also, the owner can control the house from any distance with a touch-tone telephone. Its sophisticated security control system will alert the owner to a fire's existence and location via audio or display devices and will notify the fire department or an emergency monitoring service. Doors and windows can be monitored and locked from remote locations, appliances can be locked out from unsupervised use, and police and neighbors can be alerted in emergency situations. A VCR tape can be viewed on a television in another room, and telephones can be used as intercoms, all without additional wiring. Smart House features are expected to be on the market in 1991. The Gas Research Institute, an organization that plans and manages financing for gas-related research and development projects, built the Gas Laboratory House in Bowie, MD. The house is a testing facility for the Smart House system and for conducting research and testing programs on new gas systems and products. The use of natural gas is increasing, and there is a virtually unlimited supply available, according to the American Gas Association. Currently, 54 percent of new singlefamily homes and 44 percent of new multifamily homes use gas. Home Sales The trend in home sales is toward greater use of pictures to sell homes. One of the newest sales tools for bringing home buyers and sellers together is video services and the accompanying hardware and software. Already on the market is a computerized multiple listing service which allows real estate brokers to show up to 27 photos of a home, along with a written description (I). Video marketing of homes on local television programs is sponsored by real estate sales companies. These programs provide prospective home buyers with a guided tour of available homes, along with a narrative description of the home's features (1). Recent Legislation Public Law 101-235, The Department of Housing and Urban Development Reform Act of 1989, revised the procedures for the allocation of grants by HUD. The Federal Housing Administration insurance funds were revised to eliminate potential areas of abuse. Incentives were provided to property owners to keep their properties affordable for low-income persons. The bill established a National Commission on Severely Distressed Public Housing, composed of 18 members. This Commission identifies those public housing projects that are in a severe state of distress, assesses the most Family Economics Review promising strategies to improve conditions in these projects, and develops a national action plan to eliminate unfit living conditions in public housing by the year 2000. Another provision of this bill established a National Commission on Native American, Alaska Native, and Native Hawaiian Housing, composed of 12 members. It evaluates the factors currently impeding the development of safe and affordable housing for these population groups and assesses the most promising strategies for the development, management, and modernization of housing for these groups. It also establishes an action plan for housing, which includes recommending legislative, regulatory, or administrative action necessary to achieve objectives. The law was enacted on December 15, 1989 (17). References 1. Billings, K. 1990. Marketing to the video generation's home buyers. FreddieMac Reports. Freddie Mac, Reston, VA. March issue, p. 6. 2 .1990. Regional roundup: Lending by locale. FreddieMac Reports. Freddie Mac, Reston, VA. April issue, pp. 1-2. 3. Brendsel, L.C. 1990. Four challenges for the 1990's. FreddieMac Reports. Freddie Mac, Reston, VA. February issue, p. 3. 4. Crellin, G.E. 1990. Starter homes. Home Sales. National Association of Realtors 4(2):3. 5. Federal Home Mortgage Association.1990.A Home Buyer's Guide to Environmental Hazards. 6. FreddieMac Reports. 1990. Freddie Mac, Reston, VA. April issue, p. 4. 7. Home Sales. 1990. National Association of Realtors 4(4):12. 8. . 1990. National Association of Realtors 4(8):15-17. 9. Housing Backgrounder. 1990. National Association of Home Builders. 1991 Vol. 4 No. 1 10. Housing News Service. 1990. National Association of Home Builders, May 16 issue. 11. Hughes, J.W. and Sternlieb, G. 1990. Demographics vs. development. American Demographics 12(5):40-41. 12. Lehman, H.J.1990. Mortgage lenders look to the future. The Washington Post, June 9 issue. 13. Martin, D. 1990. Malaise in the multifamily market. FreddieMac Reports. Freddie Mac, Reston, VA. May issue, p. 5. 14. Salmon, J.L.1990. Two more lenders sign up for homeowner's program. The Washington Post, June 2 issue. 15. News. 1990. Federal Housing Finance Board. FHFB 90-20. 16. The Smart House Partnership, Leaders in Innovation.1989. Smart House, L.P., Upper Marlboro, MD. 17. U.S. Congress.1989. Public Law 101-235-Department of Housing and Urban Development Reform Act of 1989, lOlst Congress. 18. U.S. Department of Commerce, Bureau of the Census. 1990. Statistical Abstract of the United States, 1990. (llOth ed.] 19. and U.S. Department of Housing and Urban Development. 1990. Housing Starts. Current Construction Reports, Series C20. 20. . 1990. Housing Vacancies and Home Ownership. Current Housing Reports H111-90-Q2. 21. . 1990. New One- Family Houses Sold and For Sale. Current Construction Reports C25-9005, May issue. 22. . 1989. American Housing Survey for the U.S. in 1987. Current Population Housing Reports H-150-87. l6 19 Dietary Guidelines for Americans Revised, 1990 By Betty B. Peterkin Assistant to the Administrator Human Nutrition Infonnation Service The newly published third edition of the Dietary Guidelines for Americans reflects new knowledge on diet and health and a better understanding of user perceptions of earlier guidelines. Based on the advice of a Federal Dietary Guidelines Advisory Committee, the central messages of the seven 1985 guidelines are retained. However, their presentation in 1990 is more positive and more total diet oriented, with more food selection guidance. The new guidelines are: eat a variety of foods; maintain a healthy weight; choose a diet low in fat, saturated fat, and cholesterol; choose a diet with plenty of vegetables, fruits, and grain products; use sugars only in moderation; use salt and sodium only in moderation; and if you drink alcoholic beverages, do so in moderation. The third edition of Nutrition and Your Health: Dietary Guidelines for Americans was jointly published in late 1990 by the U.S. Departments of Agriculture (USDA) and Health and Human Services (HHS) (8). It replaces the second edition (7) as the statement of Federal nutrition policy. As such, it presents the priority dietary guidance messages the Government gives to healthy Americans through its extension, food assistance, and public health programs nationwide. The new Dietary Guidelines bulletin reflects recommendations of a Dietary Guidelines Advisory Committee (DGAC) of nine nationally recognized nutrition scientists and physicians, chaired by Dr. Malden Nesheim of Cornell University. At 20 the request of USDA and HHS, this Committee reviewed the 1985 bulletin for its soundness with respect to the current scientific evidence about diet as it relates to health. In its review, the Committee drew heavily from two recent major reports on this topic by the National Academy of Sciences (NAS) and the Surgeon General (5,9). The DGAC's review also considered the utility of the bulletin to consumers and to professionals who serve them, drawing on USDAsponsored research on the use of earlier editions. The importance of stability of the message in efforts to educate the public about nutrition and health and the potential for confusion that change in the message can cause were recognized. Written public comments from numerous individuals and groups to the Committee provided useful perspectives on the guidelines. The DGAC's report to USDA and HHS (3) includes its recommendations, discussion of the rationale for changes it proposed to the 1985 edition, summaries of the research on the uses of earlier guidelines, and information on public comments received. Single copies of the report are available while supplies last from the Human Nutrition Information Service, Federal Building, Room 325A, Hyattsville, MD 20782. The Seven Dietary Guidelines The DGAC and the Government scientists who reviewed the Committee's recommendations concluded that the basic messages of the seven guidelines, as presented on the cover of the 1985 bulletin, remain sound and of major importance to Americans in choosing food for a healthful diet. However, the wording of some of the guidelines was changed (see table) for the following reasons: • "Healthy'' weight replaces "desirable" weight to describe the new and more healthoriented weight assessment method presented in the bulletin. • The guideline on fats is reworded to make it clear on the bulletin's cover that fat in the total diet is the focus. • The fat guideline and the guidelines on sugars and salt are stated more positively by removing the term "avoid too much." This phrase incorrectly conveyed to some guideline users the idea that elimination of the substance from the diet was intended. • The adequacy of complex carbohydrates and fiber in the diet is assured through guidance on the selection of foods containing these substances- vegetables, fruits, and grain products. This new wording responds to scientific evidence that healthful diets contain more and a greater variety of these foods than most Americans now consume. Also, guidance on foods is more helpful than guidance on food components to guideline users. • The term "sugars" replaces "sugar" to more accurately define the foods of concern, sugar and other caloric sweeteners, which are listed in the new bulletin's text. Family Economics 'lieview • Salt and sodium are now used in the guideline which previously referred only to sodium, because salt provides most of the sodium in American diets and is a better understood term. The Text of the Bulletin The 1990 text accompanying the seven guidelines differs from the 1985 text in both content and emphasis. Some differences reflect scientific advancements regarding diet and health, and greater consensus on some issues since the early 1980's, when the text for the 1985 edition was developed. For example, new prominence is given to recommendations to decrease fat, especially saturated fat, and to increase consumption of vegetables, fruits, and grain products. This prominence is supported by conclusions in both the NAS and the Surgeon General's reports (5,9). The guidelines and advice about their implementation emphasize enjoyable and healthful eating through variety and moderation, rather than dietary restriction. Additional attention is given to certain nutrition principles, such as the content of the total diet over a day or more is what counts, and any food that provides energy and nutrients can be part of a nutritious diet. Variety of foods defined. Many users of the bulletin requested more food selection guidance. Thus, a variety of foods is described in the 1990 guideline as the number of servings of foods from five food groups from USDA's Food Guide (1,6). People who eat little food are cautioned to choose low-calorie, high-nutrient foods from the groups. Women and adolescents are advised to eat more calcium-rich foods. Young children, teenage girls, and women of childbearing age are cautioned about their special need for iron-rich foods. Everyone is encouraged to choose foods in accordance with all of the guidelines. 1990 Vol. 4 No. 1 Dietary guidelines: 1985 and 1990 1985 Edition Eat a variety of foods Maintain desirable weight Avoid too much fat, saturated fat, and cholesterol Eat foods with adequate starch and fiber Avoid too much sugar Avoid too much sodium If you drink alcoholic beverages, do so in moderation Healthy weight defined. New, yet interim, advice on how to assess body weight and shape is introduced with this guideline. A healthy weight depends on meeting all of three conditions: Your weight is within the suggested range for persons of your height and age; your abdominal fat does not. put your health at high risk; and you do not have a health problem for which your doctor suggests weight loss or gain. If you fail to meet any of these three conditions, you are advised to check with your doctor on how your weight might affect your health and what to do about it. Research on the relationship of body weight and shape to mortality and morbidity continues. More precise criteria for healthy body weight and shape are expected ?Y the next edition of the guidelines, tf not before. Reduce weight slowly. People who are overweight are advised to set realistic weight goals and strive for long-term success through better habits of exercise and eating. A steady loss of 1/2 to 1 pound per week, rather than the 1 to 2 pounds in the 1985 edition, is suggested. A 2-pound loss, which represents a reduction of about 1,000 calories per day, is excessive and possibly dangerous for some people. The bulletin cautions about the use of other extreme and dangerous approaches to weight loss, such as inducing vomiting and using medications like laxatives, amphetamines, and diuretics. 1990 Edition (Same) Maintain a healthy weight Choose a diet low in fat, saturated fat, and cholesterol Choose a diet with plenty of vegetables, fruits, and grain products Use sugars only in moderation Use salt and sodium only in moderation (Same) Suggested goals for dietary fats. The DGAC concluded that if broad scientific consensus exists on a numerical goal for a food component important to health, such as fat, such a goal should be presented to the public. The goal will be useful to professionals and others with enough interest and information to assess diets for fat content. Also, numerical goals will help counteract the incorrect understanding by some that a healthful diet contains no fat. Goals are presented for fat and saturated fat, the two food components believed to be of most current significance to the health of Americans. The goals are to be applied to diets over several days, not to a meal or a food. Goals presented are 30 percent or less of calories from total fat and less than 10 percent from saturated fat. These are the same goals recommended by the NAS and those to be used in the National Cholesterol Education Program. The way to figure the grams of fat represented by 30 and 10 percent of calories and the fat content of a few commonly used foods are given. However, people who want to assess their diets for fat content will need additional information about the fat in foods they eat from supplemental materials and food labels. 21 Special emphasis on vegetables, fruits, and grain products. This guideline emphasizes the dietary pattern that replaces calories from fat with calories from foods containing carbohydrates, a pattern recommended in both the NAS and Surgeon General's reports (5,9). Also noted is the importance of dietary fiber in proper gastrointestinal function, and the importance of getting it from a variety of foods rather than supplements. Use sugars only in moderation. This guideline calls for using sugars only in moderation for two main reasons. First, sugars and foods that contain large amounts of them supply calories but are limited in nutrients. Second, sugars and starches, which break down into sugars in the mouth, can contribute to tooth decay. The importance of fluoride and dental hygiene in the prevention of tooth decay is also noted. Use salt and sodium only in moderation. This guideline calls for using salt and sodium only in moderation because Americans need much less of these substances than they now consume, and eating less will benefit those people whose blood pressure goes up with salt intake. If you drink alcoholic beverages, do so in moderation. With this guideline comes the caution that drinking alcoholic beverages is linked to health problems, accidents, and addiction. People who should not drink are identified: Women who are pregnant or trying to conceive; people who plan to drive or engage in other activities that require attention and skill; people who are using medication; people who cannot keep their drinking moderate; and children and adolescents. Moderate drinking defined. For people who elect to drink alcoholic beverages, moderate drinking is defined as no more than one drink a day for women and no more than two drinks a day for men. Women can drink less because they are usually smaller than men and have proportionately less water in their bodies to 22 dilute the alcohol. Also, new research indicates that women have about one-half as much as men of the enzyme that breaks down alcohol in the stomach before it enters the blood stream (4). Single copies of the bulletin, Nutrition and Your Health: Dietary Guidelines for Americans, Third Edition, HG-232, are available free from the Consumer Information Center, Dept. 514-X, Pueblo, CO 81009. For information about printing bulk copies of the bulletin, or obtaining negatives, contact the U.S. Superintendent of Documents, U.S. Government Printing Office, Washington, DC20402. References 1. Cronin, F.J. et al. 1987. Developing a food guidance system to implement the Dietary Guidelines. Journal of Nutrition Education 19:281-302. 2. Cronin, F.J. and Shaw, A.M. 1988. Summary of dietary recommendations for healthy Americans. Nutrition Today Nov./Dec. pp. 26-33. 3. Dietary Guidelines Advisory Committee. 1990. Report of the Dietary Guidelines Advisory Committee on the Dietmy Guidelines for Americans, 1990. Hyattsville, MD. U.S. Department of Agriculture, Human Nutrition Information Service. 4. Frezza, M. et al. 1990. High blood alcohol levels in women: Role of decreased gastric alcohol dehydrogenase activity and first pass metabolism. New England Journal of Medicine 322:95-99. 5. National Academy of Sciences. National Research Council. Food and Nutrition Board. 1989. Diet and Health: Implications for Reducing Chronic Disease Risk. National Academy Press, Washington, DC 6. U.S. Department of Agriculture, Human Nutrition Information Service. 1989. Preparing Foods and Planning Menus Using the Dietary Guidelines. Home and Garden Bulletin No. 232-8. 7. U.S. Department of Agriculture and U.S. Department of Health and Human Services. 1985. Nutrition and Your Health: Dietary Guidelines for Americans. Home and Garden Bulletin No. 232. 8. ____ . 1990. Nutrition and Your Health: Dietary Guidelines for Americans. Home and Garden Bulletin No. 232. 9. U.S. Department of Health and Human Services, Public Health Service. 1988. The Surgeon General's Report on Nutrition and Health. DHHS(PHS) Pub. No. 88-50215.lEJ Family Economics Review Research Summaries The Impact of Legislation on Work and Family Federal and State Governments have sought to assist in times of such family crises as unemployment, disability or death, old age, and poverty. Many U.S. social programs reflect attitudes formed by the Great Depression, when one-fourth of the labor force was unemployed (see table, p. 24). Legislation Related to Child Labor Massachusetts enacted the Nation's first child labor law in 1836 and the first compulsory school attendance law in 1852. Most States followed suit during the late 19th and early 20th centuries, but enforcement was minimal. Congress enacted laws establishing a minimum working age and maximum working hours for children in 1916 and 1919, respectively, but the U.S. Supreme Court struck down these statutes. Later, during the Great Depression, opposition to child labor legislation weakened from concern that working children would further depress wages. The 1938 Fair Labor Standards Act, enacted in 1941, set a minimum age of 16 for most kinds of work. The proportion of 14- and 15-year-old boys in the labor force dropped from 43 percent at the tum of the century to 28 percent in 1948 and 17 percent in 1985. 1991 Vol. 4 No. 1 As an alternative to work, the Government facilitated educational opportu-!lities. The 1944 GI Bill made college a reality for millions of veterans. Federal education assistance for the disadvantaged was initiated in the 1960's and Federal loans and grants expanded during the 1970's. States raised the mandatory school enrollment age to 16 or higher. Nearly all States established postsecondary educational systems that charge only a fraction of the tuition fees of private schools. Legislation Restricting Adult Working Hours The first governmental attempt to limit working hours for adults took place in 1840 when President Martin Van Buren issued an Executive Order restricting daily labor in Federal navy yards to 10 hours. By 1920, 43 States had enacted maximum hours laws, though only 11 States used an 8-hour standard, usually for a 6-day workweek. The 1938 Fair Labor Standards Act required employers to pay "time and one-half' for hours worked in excess of 40 per week. Most jobs were covered by this provision. Old-Age Retirement Programs Federal Civil War pensions represented the first broad governmental old-age retirement program. Alaska initiated welfare assistance for the aged in 1915, and by 1935, 29 States had followed suit. The 1935 Social Security Act created two cash assistance programs for the elderly: Old Age Insurance and Old Age Assistance, which induced widespread retirement. Congress broadened Old Age Insurance in 1939 and transformed it into a family program by adding benefits for spouses and dependents, as well as survivors of deceased workers. Subsequent liberalizations permitted early retirement at age 62, first for women (1956) and then for men (1961). Eligibility was later reduced to age 60 for widows (1965) and widowers (1972). Rising Social Security benefits, which outpaced the cost of living, also encouraged retirement. Average benefits as a proportion of the federally established poverty line increased greatly between 1940 (when monthly benefits were first paid) and 1988: Benefit recipient Retired men Retired couples Percent of poverty line 41 50 114 136 Private pensions grew during the 1940's as a result of two governmental decisions. In 1942 the Federal Government excluded from taxation the contributions that private employers invest in pension funds. In 1949 the Supreme Court ruled that private sector pensions are subject to collective bargaining. These actions further stimulated retirement among those eligible. As Old Age Insurance benefits increased and private sector pensions became more common, the proportion of men age 65 and over who were in the labor force dropped from over 50 percent in the 1930's to 33 percent by 1960 and to 17 percent by 1989. 23 Major work-related government programs with implications for families Retirement: Program and year of enactment 1988 expenditure (billions) Old Age and Survivors Insurance (1935) ........ .. .... . . $197.2 Tax exclusion for pensions (1942) . ... . .... .. ... ... ... . 49.3 Old Age Assistance (1935)/ Supplemental Security Income (1972) ............... . 5.71 Disability: Workers' compensation (first State, 1911) .......... ... . . 27.42 22.4 11.3 Disability Insurance (1956) ..... ... .. . .. .. .... . ... .. . . Veterans compensation . . ...................... .. ... . Aid to the Permanently and Totally Disabled (1950)/ 9.1 1 1.6 Supplemental Security Income (1972) .......... .. ... . Vocational rehabilitation (1921) . .. ... ....... . .. ..... . . . Education, employment, and training: Postsecondary education ....... . ............. . .. . .. . 58.53 3.7 .8 Job Training Partnership Act (1982) ................... . Employment Service (1933) .................. ... . . . . . Poverty: Aid to Families with Dependent Children (1935) . . . . ... : .. 19.0 Earned Income Tax Credit (1975) ............ . . . .. . ... . 4.9 Unemployment: Unemployment insurance (1935) .. . . . . ..... ... ... ... . . 13.2 Child care: Dependent Care Tax Credit (1976) . .. ..... .... ........ . 3.4 Head Start (1965) .. . ............ . .......... . .. . . .. . . 1.5 1Authors' estimate. 2Data relate to 1987. 3Data relate to 1986-87. Sources: U.S. Social Security Administration; U.S. Congress, House Committee on Ways and Means; and U.S. Ubrary of Congress, Congressional Research Service. Because of recent concern over the financial solvency of the Social Security program, Congress enacted measures designed to encourage more of the elderly to continue working. Within the next two decades, the Old Age Insurance retirement age will increase from 65 to 67. The credit for delayed retirement will become more generous, early retiree benefits will be reduced, and beneficiaries will lose less of their benefits if they continue to work. Legislation Related to Women in the Labor Force Historically, women were discouraged from working by Federal and State policies. During the Great Depression wives were denied jobs 24 needed by men. Many school districts did not hire wives and fired women who married. During World War II, labor force participation rates of married women rose from 17 to 26 percent and, after a brief postwar drop, began to climb continuously. Some of the governmental policies that encouraged women to work included expanded educational opportunities, equal pay laws, child care assistance, and the growing number of preschool facilities. A limited, temporary child care program was established for working mothers during World War II, but there was no further action until 1954, when the Federal Government established a tax deduction for employment-related child care expenses. The deduction was replaced in 1976 with a more generous tax credit. The establish- , ment of Head Start in 1965, and the Social Services Block Grant in 1974, further supported child care. The 1988 Family Support Act requires States to provide child care to parents receiving Aid to Families with Dependent Children (AFDC) who are enrolled in an educational, training, or work program. Twelve States have enacted maternal or parental leave laws. Work and Poverty In 1900 more than half of American families with at least one working member were poor by today's standards, compared with 7.2 percent of similar families in 1988. In 1938 Congress enacted the first national minimum wage law, which set an hourly minimum of 25 cents. Congress has periodically raised the minimum wage and expanded coverage to more than 90 percent of nonsupervisory workers. The minimum wage, if earned for a 40-hour workweek year round, paid wages equal to at least a poverty level income for a three-person family during most of the 1960's and 1970's. By 1989 the minimum wage yielded only an estimated 70.5 percent of a poverty level income. The scheduled $4.25 hourly rate in 1991 will yield four-fifths of a poverty line income for a family of three for full-time, year-round work. Congress introduced the Earned Income Tax Credit in 1975 to offset Social Security payroll taxes paid by low earners. If the amount of the credit exceeds tax liability, beneficiaries receive a tax rebate. The credit is restricted to working parents, and since 1987, its value has been automatically adjusted for inflation. The maximum allowable credit in 1989 was $910. Federal and State Governments have enacted other laws to expand employment opportunities, protect workers from discrimination in the workplace, and boost the income of single parents. Starting in the 1930's the Federal Government began taking steps to prevent work-related Family Economics Review . r discrimination against certain groups. During the 1960's and 1970's, Federal and State Governments banned discriminatory workplace practices relating to race, ethnic background, gender, age, disability, and religion. The 1988 Family Support Act requires States to establish guidelines for child support payments. By 1994 these payments will be automatically deducted from the absent parent's wages. The Federal Government has instituted a variety of programs to provide the poor or jobless with job search assistance, education or training, or jobs. The 1933 WagnerPeyser Act established a network of public employment offices to match jobseekers with job openings. These offices were dismantled during World War II when the Nation achieved full employment. The Federal Government created a variety of training programs during the early 1960's. Congress reintroduced public jobs programs in the 1970's, but in 1981, Congress almost entirely abolished public service employment. Of the major governmental programs, only Old Age Insurance and child labor and overtime restrictions intentionally discourage ablebodied individuals from working. In addition, unemployment insurance, various programs designed to aid the disabled, and AFDC have some work disincentive, since assisting those who are jobless or underemployed may encourage some individuals to choose benefits rather than work. The U.S. Congressional Budget Office has estimated that the availability of unemployment insurance increases the unemployment rate by about 10 to 15 percent during periods of low unemployment, and by about 5 percent during recessions. Work disincentives associated with unemployment insurance have diminished since the 1970's. Less than one-third of the currently unemployed receive benefits (a record low). The average weekly benefit, adjusted for inflation, has declined 1991 Vol. 4 No. 1 by 12 percent from its 1971 peak, and benefits, which were tax-free until1979, are now fully subject to Federal income taxes. Also, the maximum duration of benefits has been greatly reduced since the 1970's. The expansion of disability assistance may contribute to declining labor force participation rates among preretirement-age men. Between 1948 and 1969, labor force participation rates of men 45 to 54 years old remained steady at 95 to 96 percent, then dropped to 91 percent by 1977 as disability programs grew dramatically. More than half of severely disabled working-age individuals currently receive Disability Insurance, Supplemental Security Income, or both, and an unknown proportion of the remainder obtain assistance from other disability programs. Some 43 percent of Disability Insurance beneficiaries are poor. The AFDC program contains stronger work disincentives than other social programs because: (1) the program assists many ablebodied individuals; (2) participants are not required to establish a work history; and (3) benefits may be provided for 'many years. Begun as "mothers' pensions" in 1911 in Illinois and Missouri for widows with children, such programs were available in almost all States by 1935. By 1976 nearly 90 percent of potential eligibles received assistance, decreasing over the next decade to 80 percent or less. In 1989, AFDC and food stamps (received by 80 percent of AFDC beneficiaries) provided a single mother with three children nearly 20 percent more income than she could earn from a full-time, yearround minimum wage job. Source: Levitan, S.A. and Gallo, F., 1990, Work and family: The impact of legislation, Monthly Labor Review 113 (3):3440, U.S. Department of Labor, Bureau of Labor Statistics . Who's Minding the Kids? Data on child care arrangements have been collected by the Census Bureau in supplements to the Current Population Survey (CPS) since 1958 and in supplements to the Survey of Income and Program Participation (SIPP) since 1984. The most recent statistics on child care arrangements ·in the United States are based on data collected in the SIPP for the September-November 1987 period. The child care statistics reflect arrangements used for children under 15 years old during the time their parents (or guardians) were at work or in school. Data from earlier CPS and SIPP supplements on child care show a historical perspective on changes that have occurred in the way working parents arrange for the care of their children. Some parents use more than one type of child care arrangement in a typical week. Therefore, primary and secondary arrangements are reported. The primary child care arrangement refers to what the child was usually doing or the way the child was usually cared for during most of the hours the child's parent was at work or in school. If other arrangements were used in addition to the primary arrangement, the one used second most frequently was called the secondary arrangement. Child Care Arrangements Used by Employed Mothers In the fall of 1987, there were about 52.1 million children under age 15 living with their mothers in the United States. About 59 percent of these children had mothers who were employed. Another 3 percent had mothers who were enrolled in school. The remaining children were living with mothers who were neither employed nor attending school. Data on child care arrangements were collected only for the three youngest children under age 15 in the family, which represents 94.2 percent of all children under 15 years of age of employed mothers. 25 Of the 19.7 million grade-schoolage children of employed mothers, 14 million (71 percent) were in either kindergarten or grade school most of the hours their mothers were at work (table 1). Of the 5.7 million grade-school-age children not attending kindergarten or grade school while their mother worked, 2.7 million were cared for in their own home. One-half of the total care in the children's homes was provided by the children's fathers. About 800,000 children were left unsupervised most of the time that their mothers worked. 0 f the 9.1 million preschoolers with employed mothers, 30 percent were cared for in their own homes, mainly by their fathers, and 36 percent were cared for in another home. Organized child care facilities were used for 24 percent of preschoolers. An additional 9 percent of preschoolers were cared for by their mothers while working, either at home or away from home. Preschool-age children of mothers employed full time in the fall of 1987 were less likely to be cared for at home (24 percent) than were children of mothers employed part time (39 percent). Child care provided by the father was also less frequently used by women who worked full time (10 percent) than by those who worked part time (25 percent). About 8 million children of employed mothers used a secondary child care arrangement in the fall of 1987. Secondary child care arrangements were used by 12 percent of preschool-age children and by 35 percent of children ages 5 to 14 years. The most frequently mentioned location of the secondary arrangement was in the child's home (38 percent), followed by care in another home (25 percent), self-care (22 per- - cent), and organized child care facilities (10 percent). Table 1. Primary child care arrangements used by employed mothers for children under age 15: Fall 1987 Under Age Type of arrangement Total age5 5 to 14 Percent Care in child's home •• 0 0 •• • • •••••• 18.7 29.9 13.5 By father ... . ......... . ... . .... 9.4 15.3 6.7 By grandparent • •• • 0 0 • ••••••••• 2.6 5.1 1.5 By other relative ... .. . . .. .. ... .. 3.8 3.3 4.0 By nonrelative • 0 •••••• • •• 0 ••••• 2.9 6.2 1.4 Care in another home •• 0 0 •••• • • • 0 0 14.9 35.6 5.4 By grandparent 0 • • 0 • • ••• 0 0 0. 0 • • 4.1 8.7 1.9 By other relative .. . ........... . . 2.1 4.5 .9 By nonrelative •••••• 0 0 •••••••• 0 8.8 22.4 2.5 Organized child care facilities 0 • •• •• • 9.3 24.3 2.3 Day/group care center ........... 6.3 16.1 1.7 Nursery school/preschool . .. . ... . 3.0 8.3 .6 Kindergarten/grade school ••••• 0 0 0 0 48.9 1.0 71.1 Child cares for self . . .............. 2.9 .3 4.1 Mother cares for child at work 1 0 0 •••• 5.3 8.9 3.6 1 1nclude~ women working at home or away from home. Source: O'Connell, M., and Bachu, A., 1990, Who's minding the kids? Child care arrangements: Winter 1986-87, Current Population Reports, Household Economic Studies, Series P-70, No. 20, U.S. Department of Commerce, Bureau of the Census. 26 Child Care Arrangements Used by Custodial Fathers Among the 1.4 million gradeschool- age children living with their fathers, 71 percent had their child care needs met by attending kindergarten or grade school (the same percentage reported by employed mothers). In contrast, the half million preschoolers living with their fathers were more likely to receive primary care in organized child care facilities (39 percent) than those living with an employed mother (24 percent). Mothers who lived elsewhere provided child care for 19 percent of preschoolers living with their fathers. Trends in Child Care Arrangements In the June 1977 Current Population Survey, information was collected about the child care arrangements used by employed women for their two youngest children under 5 years old. Since 1977 there has been a decline in the utilization of relatives (except fathers) as child care providers both in the child's home and in the provider's home. The proportion of children cared for by their mothers while at work also declined during this 10-year period, from 11 percent to 9 percent. In the fall of 1987, 24 percent of children under age 5 were in organized child care facilities, compared with 13 percent in June 1977 (table 2). Estimates from the June 1987 CPS show that 51 percent of all women 18 to 44 years old who had given birth in the 12-month period preceding the survey were in the labor force, up from 31 percent in 1976. Child Care Arrangements by Age of Child and Economic Status In the fall of 1987 there were 1.5 million children under age 1 whose mothers were employed in the labor force. Seventy percent of these infants were cared for either in the child's home or another home. Another 14 percent were cared for in organized child care facilities (day Family Economics Review Table 2. Primary child care arrangements used by employed mothers for children under age 5: Fall 1987 and June 1977 Type of arrangement Fall1987 June 19771 Percent Care in child's home .. . .. ........... .. . 29.9 33.9 By father .......................... . 15.3 14.4 By other relative .. .... . ... .... , ..... . 8.4 12.6 By nonrelative ...... . ..... . ........ . 6.2 7.0 Care in another home ................. . 35.6 40.7 By relative ....................... .. . 13.2 18.3 By nonrelative ... ........ .... .. .... . 22.4 22.4 Day care/nursery school .. ... .. . ....... . 24.3 13.0 Child cares for self . ... . ............ ... . .3 .4 Mother cares for child at work2 .•.......•. 8.9 11.4 Other arrangements3 .................. . 1.0 .6 1 Data only for the two youngest children under 5 years of age. 2includes women working at home or away from home. 31ncludes children in kindergarten/grade school. Source: Tabulations derived from the June 1977 Current Population Survey, Current Population Reports, Series P-70, No.9, and O'Connell, M., and Bachu, A.,19~0, Who's minding the kids? Child care arrangements: Winter 1986-87, Current Population Reports, Household Economic Studies, Series P-70, No. 20, U.S. Department of Commerce, Bureau of the Census. or group care centers, nursery, or preschools). Among 1- and 2-yearolds, 74 percent were cared for either in the child's home or in another home, and 18 percent were in organized child care facilities. For 3- and 4-year-olds, 56 percent were cared for either in the child's home or in another home, while 34 percent were cared for in organized child care facilities. The economic status of the family is related to the use of organized child care facilities as the primary child care arrangement. Children of employed mothers whose family income exceeded $45,000 per year were twice as likely to be using organized child care facilities (34 percent) as were children living in families with incomes of less than $15,000 per year (16 percent). Also, children whose mothers had completed at least 1 year of college used organized child care facilities twice as often (29 percent) as children whose mothers failed to complete high school (15 percent). 1991 Vol. 4 No. 1 Cost of Child Care Arrangements Loss of Time at Work. Employed women were asked about any time they lost because the person who usually cared for their child (or children) was not available. This question was asked of women who had any of their three youngest children under age 15 cared for either by a grandparent or another relative (excluding the child's parents or siblings), a nonrelative, or in an organized child care facility. Of the 9 million women who used these arrangements, 7 percent reported losing some time from work in the past month as a result of a failure in a child care arrangement. Women with infants and 1- and 2-year-olds generally experienced more work disruptions than women with gradeschool- age children. Also, women whose children were cared for in another home experienced more work disruptions than women using organized child care centers. Cash payments1 for child care services were made by 33 percent of employed women for at least one of their children. Average child care costs of $49 per week per family were reported. The average monthly family income of women who paid for child care was about $3,200, so these payments represented 7 percent of their income. Costs varied according to region, from a high of $57 per week in the Northeast to a low of $43 per week in the South. A higher percentage of women with preschool-age children (between 53 percent and 59 percent, depending on child's age) made cash payments for the care of their children, compared with women whose youngest child was 5 years old or over (16 percent). Women with preschoolers also paid more per week ($51 to $58) than did those with older children ($35 per week). Women in poverty paid an average of $35 per week, compared with $50 by women who were not living in poverty. Among women making child care payments, those in families with monthly income less than $1,250 spent 21 percent of this income on child care. Those with monthly family income of $3,750 or higher spent only 5 percent of their family income on child care services. 1Cash transfers to family members or payments for schooling were not included in child care costs. Source: O'Connell, M., and Bachu, A., 1990, lt7!o's minding the kids? Child care a"angements: Winter 1986-87, Current Population Reports, Household Economic Studies, Series P-70, No. 20, U.S. Department of Commerce, Bureau of the Census. 27 Residents of Farms and Rural Areas: 1989 The United States has witnessed a continuous decline in its farm and rural populations. In 1920 approximately 31,974,000 (30 percent) of the resident population lived on farms. By 1989 the figure had dropped to 4,801,000 (2 percent). A little less than half ( 49 percent) of the resident population lived in rural areas in 1920. In 1989 the rural population had dropped to 27 percent of the civilian, noninstitutionalized population. Estimates of the 1989 rural and farm population are derived from data from the Current Population Survey (CPS), using annual averages of monthly data and data from the March 1989 CPS supplement. Estimates were prepared by the Bureau of the Census of the U.S. Department of Commerce and the Economic Research Service of the U.S. Department of Agriculture. Where were rural and farm residents? In 1989 there were 243.5 million people in the civilian, noninstitutionalized population. Approximately 66.2 million lived in rural areas: 4.8 million (2 percent) lived on rural farms, and 61.4 million (25 percent) lived in rural, nonfarm areas (see box for definition of terms). Most (73 percent) of those on rural farms were in nonmetropolitan areas, whereas about half (52 percent) of those living in rural nonfarm areas were in nonmetropolitan areas. Regional distribution of the rural population is essentially unchanged since 1950. In 1989 the South had the highest percentage of rural residents (44 percent) (see figure), followed by the Midwest (27 percent), the Northeast (17 percent), and the West (12 percent). The farm population, however, has experienced significant regional redistribution since 1950. The Midwest had 51 percent of the 28 Nation's farm residents in 1989, compared with 32 percent in 1950. In contrast, the South had 29 percent of the Nation's farm residents in 1989, compared with 52 percent in 1950. Between 1950 and 1989 U.S. farm population in the West increased from 8 percent to 15 percent and that in the Northeast decreased from 8 percent to 5 percent. Geographic Distribution of Rural and Farm Populations, 1989 Percent 1 00 - r770'7'7;'771 West Northeast 60- Midwest 40 - 20- South 0 Rural Farm Who were rural and farm residents? In 1989 most rural residents were white (92 percent). In rural nonfarm areas, 50.4 percent were female. In rural farm areas, the majority (52.1 percent) of residents were male (table 1). A larger percentage of farm (69 percent) than nonfarm (55 percent) residents were married with their spouses present. Also a larger percentage of farm (92 percent) than nonfarm (79 percent) families were headed by married couples. Most families consisted of two to four persons (85 percent farm and 87 percent nonfarm). A larger percentage of farm families (34 percent) than nonfarm families (28 percent) received less than $20,000 during the preceding year in money income (table 2). Also, a larger percentage of nonfarm families (26 percent) than farm families (18 percent) received $50,000 or more in money income. In 1989, 87 percent of farm and rural nonfarm residents were wage and salary employees. Of those living in rural nonfarm areas, 90 percent received wages and salary. This compared with 58 percent of farm residents who worked as wage and salary employees. In addition, 38 percent of farm residents were selfemployed. Only 10 percent of rural Family Economics Review Table 1. Race, Hispanic origin, and sex of the population, by urbanrural residence: 1989 Rural Rural Characteristics Total Urban nonfarm farm Percent distribution Race: White. .. .. . ..... .... ... 84.2 81.4 91.6 97.5 Black. . .. . . . . . . . . . ..... 12.3 14.5 6.6 1.8 Other races . . . . . . . . . . . . . 3.5 4.1 1.8 .7 Hispanic origin . . . . . . . . . . . . 8.3 10.4 2.7 2.9 Sex: Female . . . . . . . . . . . . . . . . 51.5 52.1 50.4 47.9 Male . . . . . . . . . . . . . . . . . . 48.5 47.9 49.6 52.1 Table 2. Income of farm and nonfarm families: 1988 Families Total money income1 Farm Nonfarm Percent distribution <$10,000 ........ . . .. .......... . 10.7 10.7 $10,000-$19,999 ... . ............ . 23.7 17.8 $20,000-$29,999 . . .. . . .... . .... . . 20.6 17.4 $30,000-$39,999 ..... . .... .. ... . . 17.8 16.0 $40,000 - $49,999 ...... . ......... . 9.5 12.3 $50,000 + . .. ....... ... .. . ...... . 17.7 25.8 11ncludes money wages or salary; net income from nonfarm or farm self-employment; Social Security or Railroad Retirement; Supplemental Security Income; public assistance or welfare payments; interest on savings or other investments which pay interest; dividends, income from estates or trusts, or net rental income; Veterans payments or unemployment and workers' compensation; private pensions or government employee pensions; alimony or child support, or other regular contributions by persons not living in the household. Table 3. Workers in agriculture by sex and urban-rural residence:1989 Rural Rural Class of worker Total Urban nonfarm farm Percent distribution Male: Self-employed . . . . . . . . . . 46.0 27.5 32.5 72.8 Wage and salary . . . . . . . . 52.0 72.1 66.1 23.2 Unpaid family member 2.0 .4 1.4 4.0 Female: Self-employed . . . . . . . . . . 33.9 19.1 25.4 52.8 Wage and salary . . . . . . . . 53.0 79.2 67.0 20.7 Unpaid family member . . . 13.1 1.7 7.6 26.5 Source: U.S. Department of Agriculture, Economic Research Service and U.S. Department of Commerce, Bureau of the Census, 1990, Residents offarms and rural areas: 1989, Current Population Reports, Population Characteristics, Series P-20, No. 446. 1991 Vol. 4 No. 1 nonfarm residents were selfemployed. More than half of all workers in agriculture1 (52 percent of males and 53 percent of females) received wages and salaries (table 3). A majority of agricultural workers in rural nonfarm areas received wages and salaries. Among farm residents working in agriculture, 73 percent of males and 53 percent of females were self-employed. Families and unrelated individuals are classified as being above or below the poverty level using the poverty index that is based solely on money income and reflects different consumption requirements based on family size and composition. The U.S. Department of Commerce reported that 13 percent of all persons and 10 percent of all families were below the poverty level in 1989. On farms, 12 percent of persons and 11 percent of families wer |
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