Family Economics Review [1991, Volume 4, Number 1]

              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