Family Economics Review [1991, Volume 4, Number 3]

              0 I 0 4 1
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,
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Family
Economics
Review
Vol. 4 No.3
Contents
Features
Only
2 Women 65 Years or Older: A Comparison of Economic
Well-Being by Living Arrangement
9
16
24
26
28
29
30
32
33
34
35
F. N. Schwenk
Income and Expenditures of Families With a Baby
MarkLino
Food Trends
Nancy E. Schwenk
Research Summaries
Volunteers in the United States
Home Ownership Trends in the 1980's
U.S. DEPOSITORY
PROPERTY OF THE LIBRARY
NOV 0 41991
University of North Carolina
at Greensboro
The Effects of Food Stamps on Food Consumption:
A Review of the Literature
Computer Use in the United States: 1989
Pawnshops: The Consumer's Lender of Last Resort
Regular Items
Poverty Thresholds
Recent Legislation Affecting Families
Current Regional Research Project
Data Sources
36 Cost of Food at Home
37 Consumer Prices
September 1991
For sale by the U.S. Government Printing Office
Superintendent of Documenll, Mail Stop: SSOP, W•hington, DC 20402-9328
Women 65 Years or Older: A
Comparison of Economic Well­Being
by Living Arrangement
By F. N. Schwenk
Research Leader
Family Economics Research Group
Using data from the 1988 Con­sumer
Expenditure Survey, this study
reports the living arrangements of
women who were 65 years or older: 38
percent lived alone; 36 percent lived
with a husband; and 26 percent lived
with children, siblings, or others. The
economic status of these three types of
consumer units was compared using
several measures of economic well­being.
By most of the measures, women
living alone fared least well and hus­band-
wife couples rated best. Families
where older women lived with others
had higher income but lower per capita
income than couples or women living
alone.
Older women outnumber older
men (65 or more years) by almost a
3-to-2 ratio ( 4). Consequently, many
older women live alone or with
children, siblings, or other relatives.
This study describes the consumer
units1 in which women 65 years or
older reside. Using several measures,
the economic well-being of these
households is compared to deter­mine
if households with a woman
living alone, with a husband, or with
others fare better.
1The terms household and family are used
in this paper to refer to consumer units that
are comprised of either. (1) all members of
a particular household who are related by
blood, marriage, adoption, or other legal
arrangements; (2) 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; or
(3) two or more persons living together who
pool their income to make joint expenditure
decisions. 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.
2
Sample and Data
The 1988 Consumer Expenditure
Survey (CEX) provided the data for
this project ( 6). The CEX, collected
by the Bureau of Census for the
Bureau of Labor Statistics (BLS),
is an ongoing survey of 5,000 con­sumer
units each quarter; four
quarters of data were used for this
study. The sample was weighted to
represent the noninstitutionalized
U.S. population. Persons residing in
nursing homes2 or other institutions
were not part of the sample. Only
consumer units regarded by BLS as
complete reporters of income were
included.
Consumer units were selected if a
woman 65 years or older resided in
the household. In some cases, she
was the reference person or wife of
the reference person; in others, she
lived with a family or another per­son
and was not the household
head. There were 3,067 units, repre­senting
14 mi1Iion3 consumer units,
with a woman 65 years or older.
:lsix percent of women age 65 or older live
in nursing homes, including 1 percent of
those 65-74 years, 7 percent of those 75-84
years, and 25 percent of women 85 years or
older (5).
3Data from the 1989 Current Population
Survey (3) indicate there are almost 17 mil­lion
women 65 years or older. This study does
not include units with incomplete reporting
of income or persons residing in nursing
homes.
Living Arrangements of
Women 65 Years or Older
During the course of her later
years, a woman may reside in
several living arrangements: with a
husband, then alone, and then per­haps
with a sibling or child. This
study, however, is cross-sectional,
reflecting just one point in time.
Table 1 describes where older
women were living in 1988, that is,
the percentage of consumer units
providing various types of living
arrangements.
Over one-third (38 percent) of
units with a woman 65 years or
older had a woman living alone;4
over one-third (36 percent) had a
woman living with her husband
only; and the remaining units
(26 percent) had many combina­tions
of relatives and nonrelatives.
In 8 percent of the units the older
woman was the reference person,
but others (children, grandchildren,
other relatives) lived with her. In
5 percent, the older woman lived
with her husband, but others
(children, grandchildren, other
relatives) lived with them. Eight
percent lived with a child-either a
divorced or widowed child or a child
and his or her spouse. Three per­cent
of the units had siblings living
together, and often they were both
older women.
"'Three of the 1,169 consumer units in this
group had women who did not actually live
alone. Each was the reference person in a
one-person consumer unit but other con­sumer
units shared the same dwelling. The
three units belong in this group because the
woman was financially independent (that is,
provided two of three major expense
categories) so data from the consumer unit
reflected only her characteristics but her
expenditures probably were affected by the
fact that she shared a dwelling with other
consumer units.
Family Economics Review
Although units with a woman
65 years or older were roughly
distributed as one-third married
couples, one-third women alone,
and one-third other arrangements,
the distribution was considerably
different for units with a woman
75 years or older. In those units,
about half (52 percent) were women
living alone; about one-fourth (24
percent) were wife-husband families;
about one-fourth (24 percent) were
living in other living arrangements.
Comparisons of the
Economic Well-Being of
Units With Women 65
Years or Older
Income and Expenditures as
Measures of Economic Well­Being
Income is often considered a
measure of economic well-being.
Various incomes are used: before­tax,
after-tax, earnings, take-home
pay, discretionary income, and
others. Because income may fluc­tuate
considerably for families who
are self-employed or in certain
occupations, total expenditures of
the consumer unit are sometimes
considered a proxy for permanent
income.
Other measures of economic well­being
may include wealth, savings,
durables, earning potential, health
status, leisure time, and public
goods and services. Some measu.res
establish standards of consumption
(for example, nutrient intakes o.r
housing features such as plumbmg
and electricity).
To compare the economic well­being
of consumer units that in­clude
a woman 65 years or older,
three of these measures (before-tax
income, after-tax income, and ex­penditures)
are shown in a portion
of table 2. Consumer units were
divided into three groups: women
living alone, with husband only, and
with others. It is recognized that the
latter group included a wide variety
of living arrangements and there
were considerable differences
within the group. The intent of
1991 Vol. 4 No. 3
Table 1. Consumer units with women 65 years or older, 1988
Living arrangement
Percent
woman, 65+ years, as reference person or spouse:
Wife, husband only .. ....... . . ........ .... ... · · · · · · · · 36
5
38
8
Wife, husband and others .. . . . . ...... ... . .. · · · · · · · · · · ·
Woman reference person, only .. .. . ... . .. . . .... · · · · · · ·
Woman reference person, no spouse but others ......... .
Woman, 65+ years, lives with others:
Lives with child who does not have a spouse .. . .... . .... . 3
5
3
2
Lives with child who has a spouse ....... ........ . .... · ·
Lives with sibling (or sibling with her) ....... . . . . ... .. . .. .
Lives with other relatives or nonrelatives . . ...... ... .... . .
the comparison was to determine
whether women 65 years or older
living in one type of arrangement
were better off than those living in
other arrangements.
Both before-tax and after-tax
incomes5 were considerably dif­ferent
among the three groups.
Taxes were a higher proportion of
income for the third family type.
Mean expenditures, like mean in­comes,
were very dissimilar among
the groups. For women living alone,
average expenditures exceeded
average after-tax income. Women
in this group may have been drawing
on savings. The other two groups
spent less than their after-tax
income.
Using any of these three measures
(before-tax income, after-tax inco~e,
and expenditures), consumer umts
consisting of one woman were less
well-off than units with others in
the household. Average income was
less than one-half that in the other
two groups. Also, average expendi­tures,
which measure the level of
consumption, were much less for
units with one woman.
5Jncluding in-kind transfers in the mea~~re
of after-tax income improves the comparab1hty
of measures; this study included food stamps
in the definition of income but did not have a
value for government-supported housing.
Income and Expenditure
Measures Adjusted for
Household Size
Comparisons of economic well­being
among these groups need to
include an adjustment for house­hold
size. Clearly, a one-person
household usually consumes less
than a multi-person family. This
adjustment is especially important
when comparing older households
to younger households or when
comparing groups within the older
population because a large propor­tion
of older families are one­person
households.
Two measures that adjust for
household size are per capita
measures and those based on
equivalency scales ( 1, 7). Per capita
measures are simply the income or
expenditures divided by the number
of persons in the consumer unit. In
this study, this was done at a house­hold
level; the calculations were
made by dividing each household
income or expenditures by the num­ber
of persons in that unit, and the .
average per capita income or expendi­ture
is reported. An alternative way
that yields different results is to
divide the average income or
expenditure of the group by the
average household size for that
group of households.
3
With the equivalency adjustment
method used in this study, income
and expenditures were modified for
household size by using a ratio cal­culated
from the poverty thresholds.
(1): The 1988 poverty threshold6
for two-person households ($7,704)
was divided by the threshold for a
one-person household ($6,024) to
produce an index of 1.28. The ratio
of thresholds for three-person to
one-person households was 1.56;
for four persons, 2.00; for five
persons, 2.36; and for six or more
persons, 2.68. The income or expendi­ture
of each unit was divided by the
appropriate ratio (for example, 1.28
for a two-person family).
Comparisons of Family Types
Using Multiple Measures of
Economic Well-Being
Which group of older women
fared best overall? In table 2,
comparisons can be made by the
measure and by the three types of
living arrangements. Considering
income and expenditure measures,
the woman living alone appeared
worst off and the third family type
fared best. When the equivalency
measures were used, the woman
6por poverty thresholds since 1965, see
table, p. 32.
living alone still was worst off but
the wife-husband families rated
best. With per capita measures, the
third type of family rated least well
and the husband-wife family scored
highest. Clearly, adjustments for
household size produce substantially
different pictures of economic well­being.
When stating the comparisons by
living arrangements, the economic
well-being of women who lived
alone was less than the other groups
using the first two measures. The
wife-husband families rated best in
the two measures that adjusted for
household size. The third family type
had the highest income and expendi­tures
but when divided by the num­ber
of persons in the family, their
per capita income and expenditures
were the lowest of the three groups.
Some of the factors that explain
these differences among family
types are addressed below.
Characteristics of Consumer
Units as Related to
Economic Well-Being
The discussion of factors related
to economic well-being is facilitated
by selecting a single measure of
well-being. As stated previously,
different measures produce
different results. For the remainder
of this paper, after-tax income will
be the measure used, because the
tax payment was quite different
among the groups ($325 for women
living alone, $1,174 for wife-husband
couples, and $2,201 for other family
types). Expenditures were not
chosen as a proxy for income be­cause
they were quarterly numbers
multiplied by four; since the income
variables were annual numbers,
they may be a more stable measure
of income for this study.
Equivalent after-tax income will
be used for this comparison because
it is a mid-way measure (see figure).
Use of the income measure may
overstate the economic well-being
of the wife-husband and especially
the other family type because their
income must cover the costs of mul­tiple
family members. Yet, the per
capita measure may understate the
well-being of these two groups
because it does not allow for the
economies of scale they enjoy. Con­versely,
using the income measure
may understate the well-being of a
woman living alone because her in­come
serves only one person, and
the per capita measure may over­state
her relative well-being because
she does not experience economies
of scale. The equivalent measure
Table 2. Economic well-being of consumer units with a woman 65 years or older, using several measures
of economic well-being, 1988 ·
Measures of economic
well-being
Income before tax • ••• •••• • •••• 0 0.
Income after tax . . ... ... . . . . . . ....
Total expenditures • • •••• •• 0 . 0 ••• • •
Per capita income before tax . .. . ... .
Per capita income after tax . . ...... .
Per capita expenditures ... . . .. . . .. .
4
All consumer units
with 65+ woman
$18,685
17,592
16,709
10,016
9,487
9,255
65+ Woman
lives
alone
$9,274
8,949
9,557
9,274
8,949
9,557
65+ Wife
with husband
only
$22,972
21,798
19,786
11,486
10,899
9,893
Other family
type with
a65+ woman
$27,357
25,156
23,572
9,000
8,232
7,812
Family Economics Review
After-tax income of consumer units with a woman 65 years or older, using three
measures of economic well-being, 1988
$thousands
~ ~----------------------------------------------------~
25
20
15
10
5
0
Income measure
presented here represents economies
of scale based on food expenditures
since the poverty thresholds have a
food expenditures base. Economies
of scale for housing and transporta­tion
are greater than for food, so
this index (1.28 for a two-person
household, etc.) provides a measure
that falls closer to the per capita
income than if equivalency scales
based on other commodities had
been used.
Women Living Alone
The consumer units that were
least well-off, using the equivalent
after-tax income measure, were
women living alone (see table 2).
Population estimates from the data
in this study indicate that nearly
6 million older women lived alone
(see table 3). The average age of
this group was 76 years, compared
to 72 years for wife-husband families
and 73 years for other family types.
Three-quarters of women living
alone reported incomes less than
$10,000. Their average after-tax
income was $8,949. Only 10 percent
1991 Vol. 4 No. 3
Equivalent measure
were earners; 60 percent of their
income came from Social Security
(see table 4). A smaller proportion
( 49 percent) had a high school
education, compared with the refer­ence
persons in the other groups.
There were other indicators that
women who lived alone had a lower
level of economic well-being. Twelve
percent received Supplemental
Security Income (SSI), and 10 per­cent
received food stamps. They
were less likely than other groups
to live in a single-family detached
home and more likely to have
government support for housing
or to live in public housing. Nearly
half had no vehicle.
Owning a home is one indicator
of assets. Women living alone (66
percent) were less likely than those
in other groups (oyer 80 percent)
to be homeowners. Dividends and
interest from savings also indicate
assets. There were similarities
between this group and the third
family type in levels of dividends
and interest, but on average, levels
were less than half those of wife­husband
families.
• Lives alone
········.·······,·· ······ ···········1 111 only
[I] Other family type
Per capita measure
Wife-Husband Families
Of the three groups, the wife­husband
families fared best when
income was adjusted for household
size. The average age of the wife
was 72, the youngest age of the
groups. One-fifth had incomes of
$30,000 or more; the average after­tax
income was $21,798. Thirty per­cent
had one or two earners. Nearly
all received Social Security; the
average amount was $10,459. Only
6 percent were Black, compared
with 11 percent of women living
alone and 15 percent of the other
family type. Only 2 percent received
SSI and 1 percent received food
stamps.
Wealth of these couples may be
higher than for the other groups.
Eighty-seven percent owned their
house. Ninety-four percent owned
one or more vehicles. Mean pen­sions,
dividends, and interest on
savings were two or three times the
level of those for the other groups.
5
Table 3. Characteristics of consumer units with a woman 65 years or older, 1988
Characteristics All consumer units
with 65 + woman
Number in sample . . . . . . . . . . . . . . . . 3,067
Population estimate (in thousands) . . 14,343
Characteristics of consumer unit:
Number in consumer unit . ..... . .
Income groups:
<$10,000 .................. .
>$30,000 .... . ....... .. . ... .
Number of earners:
0 .... . .. . ....... . . .. . .... . .
1 .. .. ...... . . . .... ... .... . .
2+ ..... . .......... . ... .. .. .
Education of reference person:
High school graduate or more
Race of reference person:
White .... ....... .. ..... ... .
Black ........... .. ........ .
Number of vehicles:
0 .. . ... . .......... . .... . .. .
1 ..... . . . .......... . . ..... .
2+ .. .. .. .... .. . . . . . ....... .
Region:
Urban:
Northeast . .. ........ ..... .
Midwest . . . . .... . ...... .. .
South ......... . ... ...... .
West .............. . .. .. . .
Rural ......... . . .. . . .. . .. .. .
Housing unit:
Single family detached . . ..... .
Housing tenure:
Owner .. .. .... . ...... ...... .
Government-supported housing . . .
Characteristics of woman 65 years or older:
Age (years) ..... .. .... ... . . . .. .
Marital status:
Married . .. . .. . . . ..... . ..... .
Widowed . ... . .......... . .. .
Divorced or separated .. .. . . .. .
Never-married ..... .. ... .. . . .
NA = Not applicable.
6
1.9
Percent
41
16
67
23
10
52
89
10
23
41
36
19
21
25
17
18
70
77
5
74
Percent
44
45
7
4
65+ Woman
lives
alone
1,169
5,608
1.0
76
3
90
10
0
49
88
11
45
51
4
20
21
23
17
19
57
66
10
76
2
80
10
8
65+ Wife
with husband
only
1,110
5,240
2.0
Percent
16
20
70
25
5
55
94
6
6
38
56
17
21
25
17
20
78
87
3
72
Percent
100
NA
NA
NA
Other family
type with
a65+ woman
788
3,495
3.2
21
33
25
42
33
55
82
15
13
30
57
22
20
29
16
13
79
81
3
73
28
59
10
3
Family Economics Review
Table 4. Income of consumer units with a woman 65 years or older, 1988
65+ Woman 65+ Wife Other family
Source of income All consumer units lives with husband type with
with 65+ woman alone only a65+ woman
Wages and salaries ............... $4,694 $ 672 $2,311 $14,718
Social Security 1
• 0 ••••• 0 ••• •• ••• 0 0 7,660 5,565 10,459 6,824
Pensions ........................ 2,659 1,254 4,561 2,060
Dividends ....................... 796 543 1,139 690
Savings account interest ........... 1,385 859 2,325 821
Supplemental Security Income ..... . 141 144 17 322
Food stamps • 0 •• 0 •• 0 0 • •••••••••• 34 38 1 80
Other ........................... 1,316 199 2,159 1,842
After-tax income .... . .... . .. ...... $17,592 $8,949 $21,798 $25,156
Before-tax income ................ 18,685 9,274 22,972 27,357
1Social Security received by members in the consumer unit.
2Social Security received by the older woman (or one of the women if there were two or more who were 65 or older).
Other Family Type With a
Woman 65 Years or Older
Although these families had the
highest average income, they also
had the largest household size, an
average of 3.2 persons. Of these
units, 31 percent consisted of an
older woman living with her child­ren
and their families; 33 percent
were reference persons with
children or others living with her;
20 percent were couples with
children or others living with them;
9 percent consisted of siblings; and
7 percent were composed of an
older woman and other relatives
or nonrelatives.
Because many of these families
included younger persons, most (75
percent) had one or more earners
and one-third had incomes of
$30,000 or more. Also, 23 percent
had a reference person less than 65
years of age. They were more likely
to live in the urban South than
other groups. A larger proportion
(15 percent) in this group were
Black than in other groups. Twenty­eight
percent of the older women
were married.
1991 VoL 4 No. 3
More than half of the income of
these families was in the form of
wages and salaries. Social Security
was received by 87 percent. The con­tribution
of the older woman to the
family may be represented, in part,
by the Social Security she received.
Amounts of Social Security received
by all eligible members are shown
in table 4; amounts received by the
woman (or one of the women if
there were two or more) are specified
as Woman's Social Security.
For this other family type, on
average, an older woman received
$4,086, or 60 percent of the Social
Security received by the family. In
wife-husband families, the wife's
Social Security was about one-third
of total Social Security received.
As a percentage of total before­tax
income, the woman's Social
Security was 15 percent in these
other families, about the same as
for couples. In contrast, for women
living alone, Social Security ac­counted
for 60 percent of income.
Comparisons of Women Living
Alone to Those Living With
Others
Women without husbands live
alone, live with others, or have
others living with them. The de­cision
to live alone or with others
involves factors such as health,
attachment to a home, availability
and suitability of potential com­panions,
and many other considera­tions,
economics being only one.
This study indicated that women
living alone, compared to those
living with others (the third family
type), were older. They were more
likely to be in rural areas, less likely
to be in the urban South, and less
likely to be Black. They may have
had more resources. The Social
Security received by the woman
living alone was $5,565, compared
to $4,086 received by a woman (one
of the women if there were two or
more older women in the unit) in
the other family type. Since Social
Security is a major source of income
for older persons and reflects their
work histories or that of deceased
spouses, this may indicate that
women who were more able to live
on their own did so. However, the
7
economic well-being of a woman
who lived with others (or had others
live with her) appeared to be better
than that of a woman who lived
alone when an equivalent income
measure was used for comparison.
Thus, women living with others
may have less income of their own,
but the economic well-being that
results from sharing resources with
others may be greater than that
achieved by women who lived alone.
It should be noted that this state­ment
is based on limited data.
More information about the
assets and wealth of older women,
separate from that of the consumer
unit's resources, is needed. Also,
the older woman in a multi-person
household may not share equally in
the distribution of family resources.
The assumption in equivalent in­come
measures for economic well­being
is that each family member
received an equal share of the
resources, but that may not be the
case, especially if an older woman
lives with her children and
grandchildren.
Implications
Clearly, the measure chosen to
assess economic well-being is critical
to the results. Policymakers may
need to employ multiple measures
when determining economic need.
Educators may consider various
measures in determining target
audiences for financial and con­sumer
education programs. Re­searchers
may expand and test
additional measures.
Also, this study showed the high
relative well-being of older wife­husband
couples living by themselves.
Attention needs to be focused on
older women living alone and in
other types of living arrangements.
8
In the short run, assistance in
finding information about available
government and community resour­ces
may be needed, particularly for
women living alone. Perhaps some
women could consider living with
others to share costs. In the long run,
individuals and employers, when
planning retirement programs, must
consider increased longevity among
women and trends for increased
likelihood of women living alone
instead of with other family
members (2).
References
1. Blaylock, J.R. and Blisard,
W.N. 1990. Economic Well-Being
and Household Size: Alternative
Ways of Analyzing Demographic
Infomwtion on Households. Agricul­tural
Economic Report No. 640.
U.S. Department of Agriculture,
Economic Research Service.
2. Congress of the United States,
Congressional Budget Office. 1988.
Changes in the Living Arrangements
of the Elderly: 1960-2030.
3. Saluter, A. 1989. Marital Status
and Living Arrangements: March
1989. Current Population Reports,
Population Characteristics. Series
P-20, No. 445. U.S. Department of
Commerce, Bureau of the Census.
4. Spencer, G. 1989. Projections of
the Population of the United States,
by Age, Sex, and Race: 1988 to 2080.
Current Population Reports,
Population Estimates and Projec­tions.
Series P-25, No. 1018. U.S.
Department of Commerce, Bureau
of the Census.
5. U.S. Department of Health
and Human Services, Public Health
Services. 1989. Vital and Health
Statistics, Nursing Home Utilization
by Current Residents: United States,
1985. Series 13, No. 102, p. 30.
6. U.S. Department of Labor,
Bureau of Labor Statistics. Con­sumer
Expenditure Surveys: 1988
Interview Survey Public Use Tape
and Documentation.
7. van der Gaag, J. and
Smolensky, E. 1982. True house­hold
equivalence scales and charac­teristics
of the poor in the United
States. Review of Income and Wealth
28(1):17-28. ~
Family Economics Review
Income and Expenditures of
Families With a Baby
ByMarkLino
Economist
Family Economics Research Group
The birth of a baby has important
economic implications for households.
To obtain a better understanding of
these ramifications, Part 1 of this study
examined the income and expendi­tures
of husband-wife households:
without children, with a baby, and
with a baby and other children. Cross­sectional
data from the 1989 Con­sumer
Expenditure Survey showed
that income and expenditures were
higher for households without a baby
than for those with a baby, although the
difference for expenditures was of less
magnitude than that for income. Part 2
of this study focused on changes in
household income and expenditures
immediately after having a baby. A
longitudinal analysis of the 1987-89
Consumer Expenditure Surveys deter­mined
that real household income
declined by 3 percent immediately after
the birth of a baby, whereas real total
expenditures rose by 20 percent.
During the 1960's and early 1970's,
the fertility rate1 in the United States
dropped significantly, from 118 in
1960 to 73 in 1972 (see figure, p. 10).
More career opportunities available
to women, greater access to birth
control, and higher costs of living
generally are associated with this
decline. The fertility rate ranged
from a low of 65 to a high of 711ive
births per 1,000 women ages 15 to
44 over the 1973-90 period, generally
moving upwards during the latter
years of this period.
Coupled with this has been a
steady increase in the number of
births in the United States. In 1990
about 4.2 million births were
1The fertility rate is defined as the number
of live births per 1,000 women ages 15 to 44.
1991 Vol. 4 No. 3
recorded, the highest since 1961.
This growth has been attributed to
the greater number of women of
child-bearing age, many of whom
were born between 1946 and 1964,
the baby boom years.
The birth of a baby has important
economic implications for a family.
Previous research examined direct
expenditures on a child by parents
(2,4, 7,1 0,11) as well as indirect ex­penses
(1). To supplement this re­search,
this study examines income
and expenditure patterns of husband­wife
households with a baby versus
those without children (Part 1), and
changes in household income and
expenditures immediately after
having a baby (Part 2). This may give
family policymakers and profes­sionals
a better understanding of
the impact children have on family
economic well-being.
Part 1 - Households With
and Without a Baby
Data and Analysis
Data used to examine income
and expenditure patterns of husband­wife
households with a baby versus
those without children are from the
interview component of the 1989
Consumer Expenditure Survey
(CEX) (13). The Survey contains
data on household characteristics,
income (including employment
status), and expenditures. A nation­ally
representative sample of 5,000
consumer units, which are equivalent
to households or families in this
study, are interviewed each quarter
over four consecutive quarters.2The
sample is rotating, in that one-fourth
of the households are replaced by
new households each quarter. For
the purposes of estimating descrip­tive
statistics, each quarter is
deemed an independent sample.
Husband-wife households with
both spouses between 18 and 35
years of age and who were complete
income reporters were selected.3
Households containing members
other than own children, such as
extended family, were excluded.
Also excluded were households
where either spouse was a student
and not working because their
economic status would not be
typical of most husband-wife
households. Comparisons of mean
income and expenditures were
made among families (1) without a
baby, (2) with a baby, but no other
children, and (3) with a baby and
other children.
A baby was defined as a child
age 1. If a baby had been defined as
a child under age 1, the child could
have been born toward the end of a
quarter. In such situations, house­hold
income and expenditures
might not fully reflect the presence
of the child. Unweighted sample
sizes of the groups were 659, 160,
and 214, respectively. The data were
weighted to reflect the population
of interest.
Differences in income and expendi­tures
among the groups may not be
due entirely to the presence of a
baby; many other factors could be
contributing. However, the presence
of a baby and other children was a
major factor differentiating the
three groups.
2-rhe survey actually interviews households
over five consecutive quarters; however, data
from the the first interview are used for
bounding purposes only.
3Complete income reporters are defined
as consumer units that provide values for
major sources of income, such as wages and
salaries, self-employment income, and Social
Security income.
9
Number of births and fertility rate for women ages 15 to 44, 1990
Millions of births
5
3 ~--=.-.- ...-..-. .-...-..- ---------------------------­2
____'·_·_ .._.._.. _..._..._ ..___. ._.._..._.. , __________ Fertility Rate
200
160
120
.. 80
'·· .. ··-- ~ .. -.. ........ ..., .. .- ~ ...... _... .... ._ .....
1-----------·------ ------·-·---- -------·-·--- 40
0
1990
Number Rate
Source: U.S. Department of Health and Human Services, Public Health Service, Monthly Vital Statistics Report
Vol. 39, No. 12 (1991) and No.4, Supplement (1990).
Characteristics
In 1989 there were approximately
3.20 million husband-wife households
where both spouses were between
ages 18 and 35 with no children,
0.69 million with a baby age 1, and
0.96 million with a baby age 1 and
other children (average household
size was four for these families). In
both husband-wife-only families
and husband-wife families with a
baby, the average age of husbands
was 28 years and that of wives, 27
years. For husband-wife families
with a baby and other children, the
average age of both spouses was
slightly older, 30 years for husbands
and 28 years for wives.
Males in husband-wife-only
households tended to have a higher
level of education than their
10
counterparts with children. Thirty­four
percent of males in families
without children had a college
degree, compared with 31 percent
of males in households with a baby
and no other'Children and 27 per­cent
in households with a baby and
other children. This same pattern
held for wives; 35 percent of females
in husband-wife-only families had a
college degree, compared with 27
percent of their counterparts with a
baby only and 20 percent with a
baby and other children.
A higher percentage of husband­wife
households with a baby and
other children were non-White
(11 percent), compared with
households with a baby only or
with no children (6 and 4 percent,
respectively).
Income
Average before-tax income was
highest in husband-wife-only
households ($41,636) (table 1).
Before-tax income was 15 percent
lower for husband-wife households
with a baby and no other children
($35,274) and 21 percent lower for
husband-wife households with a
baby and other children ($32,879)
than for couples without children.
Of husband-wife-only households,
19 percent had a before-tax income
below $20,000 and 45 percent had
an income of $40,000 and over. For
couples with a baby only, 32 percent
had a before-tax income below
$20,000 and 34 percent, $40,000 and
over. For couples with a baby and
other children, 30 percent had a
before-tax income below $20,000
and 29 percent, $40,000 and over.
Family Economics Review
The percentage of husbands
working in the labor force during
the past year (99 to 100 percent)
was nearly the same for all three
family groups. The major difference
was in the percentage working full­time,
full-year, and part-time, full­year.
(Full-time was defined as
working 35 or more hours per week
and part-time was less than 35 hours
per week; full-year was defined as
working 50 or more weeks per year,
including any time off with pay.) A
higher proportion of husbands with
a baby and other children worked
full-time, full-year (82 percent) than
their counterparts with a baby only
and without children (75 and 77 per­cent,
respectively). A lower propor­tion
of husbands with a baby and
other children (1 percent) worked
part-time, full-year than those with
a baby only and without children
(6 and 5 percent, respectively).
Compared with husbands, there
was a greater difference in the
employment status of wives among
the three family groups, particularly
for those working full-time, full­year
and those not working. Fifty­nine
percent of wives without
children worked full-time, full-year
and only 5 percent were not work­ing.
For wives with a baby only, the
percentages were 31 and 24 percent,
respectively, and for wives with a
baby and other children, the per­centages
were 18 and 39 percent,
respectively. The presence of
children decreases the labor force
participation of females to a greater
degree than that of males.
Expenditures
Average total expenditures
($31,624) were highest for husband­wife-
only families. Differences in
total expenses between the three
groups were not as extreme as those
observed in income. Total expendi­tures
were 6 percent lower for both
husband-wife households with a
baby and no other children and
those with a baby and other children
($29,711 and $29,786, respectively)
than for couples without children.
1991 Vol. 4 No. 3
Table 1. Mean annual Income, expenditures, and wife's employment
status for young husband-wife households with and without a baby,
1989
Husband-wife,
Characteristic Husband-wife Husband-wife baby, and
Before-tax income . ..... . . ... .
After-tax income ... ........ . . .
Total expenditures . . ... . ... . . .
Housing ... ...... . ....... .
Transportation .. .... . ..... .
Food at home . ..... . . . . . . .
Food away from home . . .. . .
Clothing . ............ . ... .
Health care .. ... . . . ...... .
Entertainment . ... . ... . .. . .
Child care . .. ... . ........ .
Retirement . ... ...... ..... .
Other .... . .. ... . .... . ... .
Wife's employment:
Full-time, full-year . . ... . . . . .
Part-time, full-year ......... .
Full-time, part-year ..... . .. .
Part-time, part-year . . .. .... .
Not working ............ . . .
Housing accounted for the
largest share of total expenditures,
31 or 32 percent, for the three family
groups. Mean housing expenditures
were lower for the two groups of
households with a baby than for
childless couples. The home owner­ship
rate, however, was higher for
households with a baby (53 percent
for couples with a baby only and 58
percent for those with a baby and
other children) than for couples
without children ( 49 percent).
Possibly, couples with children may
have purchased homes before prices
escalated or childless couples may
rent more expensive apartments.
Transportation made up the
second largest share of total expendi­tures
for all three family groups, 21
to 23 percent, and was highest for
husband-wife-only households.
only and baby other children
$41,636 $35,274 $32,879
37,248 33,221 30,517
31,624 29,711 29,786
Percent of total ex(2enditures
32 31 31
23 22 21
8 11 13
5 3 3
5 6 5
2 4 4
5 4 5
0 4 3
12 9 9
8 6 6
59 31 18
10 9 6
19 15 16
7 21 21
5 24 39
Food at home was highest, as a
percentage of total expenses (13 per­cent)
and in dollar amount ($3,981),
for husband-wife families with a
baby and other children. This is not
surprising, given their larger family
size. Food away from home ac­counted
for a larger share of total
expenditures in husband-wife-only
households (5 percent) than in
families with a baby or a baby and
other children (3 percent). The
greater labor force participation of
wives and absence of children make
eating out more convenient and
less difficult for these families.
The three family groups spent 5
or 6 percent of total expenditures
for clothing and 4 or 5 percent for
entertainment. Health care ac­counted
for a larger percentage of
total expenses and a higher dollar
11
amount among the two groups of
households with children, 4 percent
and over $1,100, compared with 2
percent and $761 in husband-wife­only
families. Retirement expenses,
which includes Social Security pay­ments,
accounted for a larger share
of total expenditures for husband­wife-
only families (12 percent) than
for their counterparts with children
(9 percent). Wives were most likely
to be employed in the labor force in
husband-wife-only households.
Child care expenses accounted for
3 or 4 percent of total expenditures
for the two groups of families with
children. Although this may seem
low, a study by the Census Bureau
on child care arrangements in 1986-
87 found that 40 percent of children
age 1 were cared for by a relative,
such as a father or grandparent,
when the mother was at work (6).
Care by a relative would diminish
the need for more costly forms of
child care. Other expenses (per­sonal
care, education, etc.) were
higher for husband-wife-only
households than for families with
children, probably because the
former group has more discretion­ary
income.
Part 2 - Households
Immediately After Having
a Baby
Data and Analysis
Data used to examine changes in
income and expenditures immedi­ately
after having a baby are from
the interview components of the
combined 1987-89 CEX. Husband­wife
households who had a baby be­tween
the first and fourth interview
(the baby being born during the
second or third interview periods)
and who were complete income
reporters, with no other persons
living in their home except own
children, were selected.4 Households
"The first and fourth interviews do not
necessarily have to be those at the beginning
and end of a calendar year because of the
rotating sample in the CEX. For example, the
first interview for a household could be mid-
1987 and the fourth interview, mid-1988.
12
in which either spouse was not
working because of student status
were excluded. The sample con­sisted
of 83 families. Because of the
size of 'the sample, the data were not
weighted to reflect the national
population, and may be regarded as
a pilot study of these households.
Data on income and employment
status are collected from households
at the end of each quarter and apply
to the past 12 months, whereas
expenditure data apply to the past
3 months. Analysis was undertaken
for the first interview (before a baby
was born) and the fourth interview
(after the birth). Given the sample
size, median income and expendi­tures
were used to minimize the im­pact
of extreme values. Dollar values
for 1987 and 1988 were converted
into 1989 dollars using the overall
Consumer Price Index for Urban
Consumers (CPI-U) for income and
total expenditures, and individual
budgetary component CPI-U's for
the selected expenditures.
As with the analysis in Part 1,
changes in income and expenditures
that occur between the first and
fourth interview may not result
exclusively from the birth of a baby.
For any household, numerous other
events could produce income and
expenditure changes, such as a
family member taking a new job or
requiring special medical care. How­ever,
one of the major occurrences
for these households between the
two quarters was the birth of a baby.
Medical Costs of Having a Baby in 1989
Health care expenditures before and after having a baby were not ex­amined
using the CEX as these expenses may be incurred in one quarter
and paid in another and may or may not include insurance reimbursement.
Total medical costs involved in having a baby, however, are substantial
(see table below). In 1989, the average cost of a normal delivery was
$4,334 in the United States and that of a cesarean delivery was 66 percent
higher at $7,186. These costs were highest in the Northeast and West and
lowest in nonmetropolitan areas. Direct costs to households are typically
lower because more than 95 percent of employees covered by employer­sponsored
group policies have maternity benefits. Cesarean deliveries are
becoming more common, accounting for 25 percent of all births in 1989,
compared with 17 percent in 1980 (3). A recent study (9) found that
nonclini~l variables such as hospital ownership and payment source
influenced the choice between cesarean and normal deliveries, thereby
calling into question the need for this more costly delivery procedure.
Total medical costs of having a baby, 1989
Type of delivery
Region or area Normal Cesarean
U.S. average .. . ...... . . . . : . . . . $4,334 $7,186
Northeast .. . ....... .. ...... . 4,456 7,879
Midwest ............. . ..... . 4,149 6,741
South ............ . . . . . .... . 4,204 7,087
West .. ........... . ... . . . . . . 4,237 7,586
Nonmetro .. . ......... . . . . .. . 4,128 6,736
Note: Non metro areas are in all four regions.
Source: Health Insurance Association of America, Source Book of Health Insurance Data,
1990 edition.
Family Economics Review
Characteristics
At the time of the first interview,
the median age of husbands in the
sample was 29 years and that of
wives, 27 years. A college degree
was reported by 33 percent of hus­bands
and 28 percent of wives; 7
percent of husbands and 8 percent
of wives reported less than a high
school diploma. About 95 percent
of the families were White. Forty­one
percent of the couples were
having their first child and 39 per­cent,
their second, with 20 percent
having a third child (or more). The
sample is different from the overall
population of women who had a
baby in 1988 (see box, p. 14) in that
all mothers were married, they
were more educated, and a greater
proportion were White.
Income
For couples in the sample,
median annual after-tax income,
in real terms, declined 3 percent
($35,013 to $34,047) from the first
interview (before a baby was born)
to the fourth interview (after birth)
(table 2). There was little change in
husbands' employment status from
the first to fourth interviews. Eighty­two
percent of husbands reported
working full-time, full-year in the
first interview, compared with 83
percent in the fourth interview.
Thirteen percent of husbands were
working full-time, part-year in both
the first and fourth interviews; only
1 percent of males reported not
working during the past year in either
interview period. Real median
annual earnings of males in the
sample was similar in the quarters
before and after birth ($26,205 and
$26,197).
Unlike their husbands, wives in
the sample had a considerable shift
in their employment status over the
interview periods. This shift was
primarily from working full-year to
working part-year. In the first inter­view,
31 percent of wives reported
1991 Vol. 4 No. 3
Table 2. Median annual Income, quarterly expenditures, and wife's
employment status before and after birth of a baby, 1987-89
Before birth After birth Percent
Characteristic (First interview) (Fourth interview) change
1989 dollars
After-tax income. . . . . . . . . . . . . . $35,013 $34,047 -3
+11
+13
-12
+20
-43
NA
NA
Total expenditures ........... .
Housing ................. .
Transportation ............ .
Food at home ............ .
Food away from home ..... .
Infant's clothing ........... .
Child care ............... .
Wife's employment:
Full-time, full-year ......... .
Part-time, full-year ......... .
Full-time, part-year . ....... .
Part-time, part-year ...... .. .
Not working .............. .
N = 83.
NA = Not applicable.
working full-time, full-year, and
16 percent were working part-time,
full-year during the past year. By
the fourth interview, 11 percent of
women reported working full-time,
full-year, and 5 percent were work­ing
part-time, full-year during the
past year.
Wives who reported working full­time,
part-year increased from 6 to
25 percent, and those who were
working part-time, part-year rose
from 11 to 21 percent over the inter­view
periods. This increase in work­ing
during only part of the year
likely was because many women
were on unpaid maternity leave or
had exited the labor force. A study
by the Census Bureau found that
among women who would return to
work within a year of having a child,
40 to 50 percent delayed their return
to work by more than 3 months (5).
$6,625
1,911
794
692
229
0
0
31
16
6
11
36
Percent
$7,345
2,168
697
831
131
127
6
11
5
25
21
38
Also, 28 percent of women quit
their jobs at some point during their
pregnancy or shortly after giving
birth.
Given this large shift in the
employment status of wives, a larger
than 3 percent decline in after-tax
income may have been expected.
The small decrease probably reflects
income being measured on an
annual basis; fourth quarter income
likely would show a larger decrease.
Also, hourly earnings of women
typically are less than those of men,
thereby diminishing the impact of
a change in wives' labor force par­ticipation
on household income. In
1988 mean earnings of men employed
full-time were 57 percent greater
than those of women employed
full-time (8).
13
Characteristics of Women
Having a Baby in 1988
Data for any 12-month period
during 1987-88 show that of the ap­proximately
3.7 million women ages
18 to 44 who had a baby, 22 percent
were not married at the time (see
table). This percentage likely would
be higher if females under age 18
were included. In 1976 only 17 per­cent
of women ages 18 to 44 who
had a baby were unmarried (12). In
1988 the majority (65 percent) of
women having children were be­tween
the ages of 18 and 29. The
fertility rate was highest for those
ages 25 to 29, 114 births per 1,000
women in this age range, com­pared
with 9 to 87 births per 1,000
women in the other age groups.
Seventy-nine percent of babies
born in 1988 were to White women.
Black women had a higher fertility
rate than Whites (87 births per
1,000 Black women vs. 66 per
1,000 White women). The fertility
rate of Hispanic women (who
could be of any race) was also
higher than that of non-Hispanic
women. Most women (72 percent)
who had a baby had a high school
diploma, but the fertility rate was
highest among non-high-school
graduates, 87 births per 1,000
women.
Of women who had a baby in
1988, 49 percent were not in the
labor force at the time, 45 percent
were employed, and the remainder
were unemployed (not working,
but looking for work). The fertility
rate was much higher for women
not in the labor force than for
those employed. The majority (58
percent) of women who had a baby
had a family before-tax income
under $30,000 in 1988. Thirteen
percent had a family before-tax
income of $50,000 or over. Women
in lower income households had a
higher fertility rate than those in
upper income households.
14
Characteristics of women ages 18 to 44 who had a child, 1988
Characteristic
Marital status:
Married . .............. . .... .
Divorced or widowed . . ...... .
Single . . . .............. . ... .
Age:
18-24
25-29
30-34
35-39
40-44
Race:
White
Black
Other
Ethnic origin:
Hispanic .. .......... . .... .
Non-Hispanic .......... . . .
Education:
Not a high school graduate ... .
High school graduate .. ..... . .
Some college ............. . .
College degree .. .. .... .. ... .
Labor force status:
Employed .. .. .. . . ...... ... .
Unemployed .......... ..... .
Not in labor force ............ .
Family income:
Under$10,000 ...... . .. ..... .
$10,000-$14,999 ..... . .... . .
$15,000-$19,999 .. ..... . ... .
$20,000 - $29,999 ........... .
$30,000 - $34,999 .... . . ... .. .
$35,000 - $49,999 .... .. .. . . . .
$50,000 and over ............ .
Not reported ............. ... .
Fertility rate
Percent (births per 1 ,000 women)
78 91
5 37
17 39
31 87
34 114
24 82
9 34
2 9
79 66
16 87
5 NA
11 94
89 68
18 87
43 72
21 61
18 63
45 46
6 85
49 128
22 106
10 76
8 73
18 68
8 61
17 70
13 50
3 43
Source: U.S. Department of Commerce, Bureau of the Census, 1989, Fertility of American
Women: June 1988, Current Population Reports, Population Characteristics, Series P-20,
No. 436.
NA = Not available.
Family Economics Review
Expenditures
Median quarterly total expendi­tures,
in real terms, increased 11
percent ($6,625 to $7,345) from the
interview before a baby was born
to the interview after birth. Of the
budgetary components examined,
food at home had the largest per­centage
increase (20 percent), and
food away from home had the
largest decrease (43 percent) be­tween
the quarters. Eating away
from home becomes more difficult
with infants.
Housing expenses increased 13
percent from the first to fourth in­terviews.
This probably reflects the
purchase of home furnishings, which
are included in overall housing ex­penses,
for a baby. Home ownership
did not change over the two inter­view
periods. Seventy-one percent
of the sample were homeowners in
each quarter.
Transportation expenses de­creased
12 percent over the period.
Reduced work-related commuting
costs that result from declining
numbers of employed women is
likely the reason for this.
Infants' clothing expenses were
zero in the first interview and $127
in the fourth. These infant clothing
expenses include only those in­curred
by parents and not those
made by other family members or
friends.
Median child care expenses were
zero in the first quarter and $6 in
the fourth. Child care expenses are
low for the fourth quarter because
many in the sample reported zero
expenditures. Mean child care
expenses in the fourth quarter
were much higher ($210).
1991 Vol. 4 No. 3
Conclusion
This study examined income and
expenditures at one point in time
for three groups of husband-wife
households (those without children,
those with a baby age 1 and no other
children, and those with a baby age
1 and other children) and changes
in income and expenditures of
husband-wife households immedi­ately
after having a baby. Children's
influence on household income and
expenditures, however, is long term;
different goods and services are
purchased over the years and parents
often alter their career paths. Further
research needs to focus on these
longitudinal effects of children to
obtain a clearer picture of the
impact of children on family
economic well-being.
References
1. calhoun, C.A. and Espenshade,
T.J. 1985. The Opportunity Cost of
Rearing American Children. The
Urban Institute, Washington, DC.
2. Espenshade, T.J. 1984. Invest­ing
in Children: New Estimates of
Parental Expenditures. The Urban
Institute, Washington, DC.
3. Health Insurance Association
of America. 1990. Source Book of
Health Insurance Data. [1990 ed.]
4. Lazear, E.P. and Michael, R.T.
1988. Allocation of Income Within
the Household. University of
Chicago Press, Chicago, IL.
5. O'Connell, M. 1990. Maternity
Leave Arrangements: 1961-85. Work
and Family Patterns of American
Women. Current Population Reports,
Special Studies. Series P-23,
No. 165. U.S. Department of
Commerce, Bureau of the Census.
6. O'Connell, M. and Bachu, A.
1990. JWlo 's Minding the Kids? Child
Care Arrangements: Wmter, 1986-87.
Current Population Reports,
Household Economic Studies.
Series P-70, No. 20. U.S. Depart­ment
of Commerce, Bureau of the
Census.
7. Olson, L. 1983. Costs of
Children. Lexington Books, D.C.
Heath and Company, Lexington,
MA.
8. Ryscavage, P. and Henle, P.
1990. Earnings inequality ac­celerates
in the 1980's. Monthly
Labor Review 113(12):3-16.
9. Stafford, R.S. 1991. The impact
of nonclinical factors on repeat
cesarean section. Journal of the
American Medical Association
265(1 ):59-63.
10. Turchi, B.A. Estimating the
Cost of Children in the United
States. 1983. Final Report to the
National Institute of Child Health
and Human Development
[Unpublished].
11. U.S. Department of Agriculture,
Agricultural Research Service,
Family Economics Research Group.
1991. Expenditures on a Child by
Husband-Wife Families: 1990.
12. U.S. Department of Commerce,
Bureau of the Census. 1989. Fertility
of American Women: June 1988.
Current Population Reports,
Population Characteristics. Series
P-20, No. 436.
13. U.S. Department of Labor,
Bureau of Labor Statistics,
Consumer Expenditure Survey:
1987-89 Interview Survey Public
Use Tapes and Documentation.llS
15
Food Trends
By Nancy E. Schwenk
Consumer Economist
Family Economics Research Group
Changes in the food consumption
pattens of Americans are taking place.
This article presents data that suggest
the reasons for these changes, includ­ing
rising prices, expenditures, nutri­tional
guidelines, demographics,
changes in the marketing of food in
supermarkets and restaurants, and
Government programs and regulations.
During 1990, food prices increased
more than the overall inflation rate, as
measured by the Consumer Price Index
(CPI). Americans allocate about 15 per­cent
of their total expenditures for
food-the lowest percentage of any
country in the world. Food away from
home accounts tor 42 percent of the
U.S. food dollar. There is a trend toward
fewer but larger supermarkets, with
greatly expanded types of products and
services offered. Over 16 percent of the
population receives some form of food
assistance, such as food stamps,
vouchers, commodities, and cash.
Federal legislation designed to reduce
consumer confusion concerning food
labeling became law in 1990. Profes­sionals
in food economics education
and in the food industry are provided
with an overall perspective on trends in
food consumption.
Prices, Expenditures, and
Consumption
Prices
The increase in the Consumer
Price Index (CPI) for food was 5.8
percent in 1990, identical to the
increase in 1989. For the fourth
year in the past 5 years, the increase
in food prices was greater than the
CPI increase for all items (17).
Overall inflation was 5.4 percent in
1990, up from 4.8 percent in 1989.
Prices for food eaten at home in­creased
6.5 percent and for food
eaten away from home, 4.7 percent.
The price of alcoholic beverages
16
also increased 4.7 percent (table 1).
The CPI for food away from home
surpassed the CPI for food at home
in 1983 and has remained higher
every year since then.
A sluggish economy will influence
prices restaurateurs charge for
meals. According to the National
Restaurant Association's 1990
Tableservice Operator Survey,
about half of table service restaurant
operators have added lower priced
items to their menus since January
1989, and about one-third of those
with a per-person average check of
$15 or more have cut prices. The
National Restaurant Association
expects restaurant prices to increase
4.6 percent in 1991 and the overall
inflation rate to be 5.1 percent, both
down slightly from the increases in
1990 (4).
Expenditures
In 1990 Americans spent $546.3
billion on food (81 percent paid by
households, 17 percent by govern­ment
and businesses, and 2 percent
produced and consumed at home
with relatively little cash outlay)
and $79.7 billion on alcoholic
beverages (12).
To obtain data on food and
beverage purchases, the Bureau of
Labor Statistics administers a diary
portion of the Consumer Expendi­ture
Survey (CEX). About 5,000
households are surveyed every
3 months over a 1-year period.
Households keep an expenditure
diary for 2 consecutive weeks. The
diary survey obtains data on small,
frequently purchased items that are
normally difficult to recall, including
food, beverages, tobacco, house­keeping
supplies, and personal care
products. It excludes expenditures
incurred while respondents are
away from home overnight or
longer (18).
The average annual expenditure
per household in 1989 was $4,152
for food and $284 for alcohol (16).
Between 1988 and 1989, food ex­penditures
rose 10.8 percent and
alcohol expenditures rose 5.6 per­cent,
compared with a 7.4-percent
increase for all expenditures (table 2).
Expenditures for food at home1
rose more than expenditures for
food away from home, 2 11.9 percent
compared with 9.3 percent. The
food category with the greatest an­nual
increase was cereal and bakery
products, which rose 15.1 percent.
Households in the West had the
highest food-at-home expenditures
1Includes food and nonalcoholic beverages
from grocery, convenience, and specialty
stores and food prepared while on out-of­town
trips (18).
2Includes school meals, catered affairs,
food on out-of-town trips, and meals received
as pay, as well as dining in restaurants (18).
Table 1. Consumer Price Index for all urban consumers 1989-1990
(1982-84 = 1 00)
1989 1990 Percent
change
All items .. ............... ....... . 124.0 130.7 5.4
Food ........................... . 125.1 132.4 5.8
Food at home ....... .. ........ . 124.2 132.3 6.5
Food away from home .......... . 127.4 133.4 4.7
Alcohol ......................... . 123.5 129.3 4.7
Source: CPI News Release, December 1990.
Family Economics Review
Table 2. Annual expenditures of all consumer units and percent
change, Integrated Consumer Expenditure Survey, 1988 and 19891
Item 1988 1989 Percent change
Income before taxes •• 0. 0 ••••••• $28,540 $31,308 9.7
Average annual expenditures ..... 25,892 27,810 7.4
Food ... . ......... . ......... 3,748 4,152 10.8
Food at home ••• • 0 0 0 •• •••• 2,136 2,310 11.9
Cereal and bakery products 312 359 15.1
Meat, poultry, fish, eggs . .. 551 611 10.9
Dairy products ........ ... 274 304 10.9
Fruits and vegetables .... . 373 408 9.4
Other food at home ....... 625 708 13.3
Food away from home .•. . 0. 1,612 1,762 9.3
Alcoholic beverages .......... 269 284 5.6
1Table includes data from both the Diary and Interview components of the Consumer
Expenditure Survey. The BLS has published integrated data from the two surveys since the
release of 1987 data.
Source: U.S. Department of Labor, Bureau of Labor Statistics, 1990, Consumer Expenditures
in 1989, USDL 90-616.
and the highest alcohol expenditures,
and households in the Northeast
had the highest food-away-from­home
expenditures (16).
Amon~ CEX complete income
reporters in 1989, food expenditures
accounted for 14.8 percent of total
annual household expenditures.
The percentage of annual expendi­tures
spent on food decreased with
increasing income, and ranged from
18.0 percent for households earning
less than $5,000 per year to 12.6 per­cent
for households earning over
$50,000 per year (16).
Food away from home accounted
for 42 percent of the U.S. household
food dollar in 1989. Households
earning over $50,000 per year had
higher expenditures for food away
from home than for food at home
(see figure, p. 18). Single consumers
and those under age 25 also spent
nearly 50 percent of their food
budgets on food away from home.
The oldest households, those age 75
and over, spent the lowest share of
their food dollar in restaurants (32
percent) (16).
3Respondents who provided values for
major sources of income, such as wages and
salaries, self-employment income, and Social
Security income.
1991 Vol. 4 No. 3
Consumption
Food consumption patterns are
influenced by a variety of factors,
including diet and health concerns,
changes in real disposable income,
the availability of convenience
foods, governmental food programs,
demographic patterns related to an
aging population, smaller household
size, and an increasing proportion
of ethnic minorities in the popula­tion.
In 1989 Hispanics accounted
for 8.3 percent of the population
and Asians, 2.8 percent. Their
cuisines, which include more rice
and specialty vegetables, such as
snow peas and chili peppers, are
becoming increasingly popular
among the general population (10).
Nutrition awareness is at an
all-time high. The Nation's two
nutrition-related priorities are to
reduce the intake of foods high in
saturated fat and cholesterol and to
increase the consumption of com­plex
carbohydrates and fiber. As a
result, there has been a prolifera­tion
of fat-free and lowfat foods in
the market. Lowfat milk consump­tion
accounted for 19 percent of
total milk consumption in 1970, 38
percent in 1980, and 53 percent by
1988 (11). Health-oriented consumers
are eating more grains, fruits, and
vegetables and less red meat ( 4).
Per capita consumption of red
meat dropped from 123 pounds in
1980 to 115 pounds in 1988, a decline
of7 percent. Per capita consumption
of poultry and fish increased 34
percent and 17 percent during this
period (table 3, p. 19). Forecasts
for 1991 put red meat and beef per
capita consumption at their lowest
levels since the early 1960's (11).
Although nutritional concern about
fat and cholesterol consumption is a
factor contributing to these changes,
another is the high relative prices
for red meats and high production
costs compared with the costs of
producing poultry (11). The higher
quality and greater variety of oven­ready
and microwavable prepared
foods have also boosted fish and
seafood consumption (10). Despite
these trends, the United States
leads the world in consumption of
red meat and poultry, followed by
Australia, Argentina, and New
Zealand.
Increases in the consumption of
cream and sour cream, cheese, flour
and cereal products, vegetable fats
and oils, fresh and processed fruits,
and fresh and frozen vegetables and
17
Portion of food dollar spent on food away from
home, by income level before taxes, Consumer
Expenditure Survey, 1989
$thousand
CJ Food at home
potatoes and decreases in animal
fats and oils and canned vegetables
occurred between 1980 and 1988.
Also, per capita tea consumption
decreased 5 percent, coffee con­sumption
decreased 9 percent, and
milk consumption decreased 6 per­cent,
as soft drink consumption in­creased
17 percent (11). Diet soft
drinks captured 27 percent of the
soft drink market in 1989, com­pared
with 16 percent in 1980 (1 0).
There has also been an increase in
the consumption of fruit juices and
drinks (11) (table 4, p. 20).
Per capita consumption of eggs
has declined steadily since the end
of World War II from an all-time
high of 403 eggs in 1945 to 235 in
1989 (11). Whereas shell egg use
declined, consumption of eggs in
the form of egg products rose,
reflecting greater use of eggs in
food service establishments and in
food products such as pasta and
sweet baked goods (10). The per
capita consumption of low-calorie
sweeteners including saccharin and
aspartame, reported on a sugar­sweetness
equivalent basis, in­creased
from 7.7 pounds in 1980
to 20 pounds in 1988 (11).
18
Although adult per capita
consumption of distilled spirits
decreased 26 percent between 1980
and 1988 and consumption of beer
decreased 7 percent, wine consump­tion
has not changed during this
period (11) (see table 4, p. 20). ·
Light beer's share of the market was
27 percent in 1989, compared with
13 percent in 1980 (10). The wine
market is expected to expand by 12
percent between 1990 and 2000, and
the slower growing beer market, by
8 percent. The baby boomers are
moving into their middle years and
are changing the Nation's drinking
habits. Whereas beer drinking peaks
at ages 20 to 24, wine drinking peaks
at ages 50 to 54. Income and educa­tionallevels
also influence wine
consumption. Nineteen percent of
college graduates are moderate to
heavy wine drinkers (defined as
people having at least two drinks a
week), compared with 10 percent
of those with only a high school
education. Also, 20 percent of
people with incomes of $60,000 or
more are moderate to heavy wine
drinkers (2).
Trends
Supermarkets
There is a trend toward fewer
but larger supermarkets that are
becoming one-stop shopping places
containing florist shops, bakeries,
photo finishing centers, and phar­macies,
with some even offering
home delivery. According to the
Food Marketing Institute, median
supermarket size increased from
23,000 square feet in 1981 to 35,000
square feet in 1989 as retailers ex­panded
the variety of products and
services offered. Despite the decline
in the total number of supermarkets
from 26,321 to 23,000 over the last
decade, shoppers can take advantage
of a wider variety of grocery store
options due to the advent of com­bination
food and drug stores,
superstores, hypermarkets,4
warehouse stores, and wholesale
club stores (5).
In 1989 over 12,000 new food and
grocery products were introduced,
excluding new size introductions.
About 62,000 new products were
introduced between 1982 and 1989.
Between 90 and 99 percent of new
products fail, as even a superstore
can stock only about 60,000 items (15 ).
Food service (dispensing prepared
meals and snacks for on-premise or
immediate consumption) has become
an area of new growth in the grocery
store industry. According to a 1989
Supermarket Business study, service
delis, which account for the largest
share of food service in supermarkets,
are in 66 percent of all supermarkets
in the United States, up from 52 per­cent
in 1982. In addition, 50 percent
of U.S. supermarkets offer salad and
soup bars; 43 percent, hot pizza sec­tions;
42 percent, fresh pasta sections;
4A hypermarket is the largest supermarket
format, with general merchandise items
accounting for up to 40 percent of sales. A
superstore is a supermarket distinguished
by its greater size and variety of products
than conventional supermarkets, including
specialty and service departments and a
considerable inventory of general
merchandise (5).
Family Economics Review
....
Table 3. Major foods: Per capita consumption, 1980-1988, In pounds
Item 1980 1981 1982 1983 1984 1985 1986 1987 1988
Red meat •••••••••••• • • •• 0 •••••• 123.4 121 .9 116.7 120.3 119.9 120.9 118.3 113.3 115.1
Poultry 0 ••••••••• 0 • •• ••• • 0 0 0 •••• 42.6 43.9 44.8 45.7 47.0 49.3 51.0 55.2 57.1
Fish . ................ ........... 12.8 12.7 12.1 12.9 13.4 14.3 14.8 15.2 15.0
Eggs ........................... 34.4 33.5 33.5 33.0 32.9 32.2 31.7 32.0 30.9
Dairy products . ........ .... ..... . 543.4 540.9 555.5 572.4 581.3 592.7 590.5 597.8 582.2
Fats and oils ..... ....... .. ...... . 57.2 57.6 58.2 59.9 58.7 64.1 64.1 62.7 62.7
Caloric sweeteners ........... . .... 123.9 124.0 123.1 124.8 127.8 130.4 129.6 132.3 132.7
Flour and cereal products .......... 152.0 152.1 153.9 152.9 153.8 160.1 163.9 170.2 171.8
Fresh fruits . . .................... 86.9 83.8 83.9 88.8 88.0 85.8 91.8 96.9 94.4
Processed fruits .................. 15.5 14.5 15.1 14.0 14.4 14.4 15.3 15.3 15.4
Fresh vegetables ............... .. 72.6 71.2 75.0 74.6 79.1 79.2 84.6 89.0 89.8
Vegetables for canning and freezing 105.0 100.3 98.5 100.3 108.7 104.7 103.4 103.7 100.7
Fresh potatoes . . .......... ... .... 49.0 43.8 44.8 47.9 46.8 44.7 47.6 46.5 52.4
Processed potatoes ............... 25.1 25.6 26.3 26.4 27.1 29.1 30.1 29.7 28.6
Sou.rce: Putnam, J ., 1990, Food Consumption, Prices, and Expenditures, 1967-1988, Statistical Bulletin No. 804, U.S. Department of
Agnculture, Economic Research Service.
19 percent, tortillerias; 17 percent,
ice cream stands; 14 percent, yogurt
machines; and 6 percent, sushi bars.
Sit-down eating areas in super­markets
have been steadily increas­ing,
from 7 percent in 1980 to 19
percent in 1988. In addition, many
supermarkets offer in-store micro­wave
ovens. The newest innovations
are microwavable fast foods, such as
breakfast sandwiches, hamburgers
and cheeseburgers, potato products,
soups, and entrees especially for
children. These items compete with ·
fast food chains for the away-from­home
food dollar (9).
Shelf-stable foods are items that
are vacuum-packed in plastic tubs,
trays, or pouches and cooked at
very high temperatures. They are
prepared without preservatives
and can be kept for years without
refrigeration or freezing. Increased
microwave ownership and new pack­aging
technology have contributed
to the growth of shelf-stable foods.
Microwavable shelf-stable foods,
which can be heated in a microwave
in 75 to 90 seconds, accounted for
1991 Vol. 4 No. 3
$250 million in sales in 1988 and
could reach $696 million by 1993
(9). In addition, consumer concerns
about food safety and environmental
hazards have increased the sale of
organically grown food products ( 4).
The number of microwavable
frozen foods is expected to grow by
25 percent during the next 4 years,
and the value of food prepared
especially for microwave heating
is expected to grow from $5 billion
in 1988 to $7 billion by 1993. New
frozen and shelf-stable microwavable
foods have been developed specifi­cally
for children. Meals that come
packaged in colorful containers
and often include activity kits are
currently being tested (9).
Catering services are now offered
by 40 percent of the Nation's super­markets.
Other customer conven­ien~
in the future will be drive-up
windows, separate entrances for the
deli and food service areas, and
separate cash registers in the deli
department (9).
Generic Advertising
Over $750 million was spent on
generic (not brand name) advertis­ing
of U.S. agricultural products in
1989. Generic advertising currently
includes over 350 programs covering
about 80 commodities. Programs
are either funded and managed en­tirely
by farmers or tied to USDA
regulatory programs. The majority
of promotion funds since 1983 were
contributed by dairy, beef, and pork
farmers. The amount farmers con­tribute-
which is set by legislation­almost
doubled in the 1980's. This
money is used for product develop­ment
and research in addition to
domestic and overseas market
promotions (3).
In-depth studies of two generic
programs show that sales of cheese
and Florida citrus products have
been boosted by advertisements.
The effect of advertising on prices
depends on how consumers react
to the ads and how farmers respond
to changes in demand. Some promo­tions
have tried to offset the effects
of advertising for non-nutritious
19
Table 4. Beverages: Per capita consumption, In gallons, 1980-1988 F
Beverage 1980 1981 1982 1983 1984 1985 1986 1987 1988
Whole milk •• •••• • 0 •••••••••••••• 17.0 16.2 15.5 15.1 14.7 14.3 13.5 12.9 12.3
Lowfat milk ... ............ . . . . . .. 10.6 10.8 10.9 11.1 11 .6 12.3 13.0 13.2 13.7
Tea •• • •• 0. 0 •• • 0 • •• • • •••• 0 ••••• • 7.3 7.2 6.9 6.9 7.1 7.1 7.1 6.9 6.9
Coffee ........ ....... . .. .... . . .. 26.7 26.0 25.9 26.3 26.7 27.3 27.4 26.3 24.3
Soft drinks 0 • •• • 0 . 0 0 •• • 0 ••••••• • • 27.1 27.1 26.9 27.4 28.4 30.4 31.9 30.5 31.7
Fruit juice and drinks ••••••••• 0 0 0 0. NA NA NA 8.6 8.7 9.3 9.5 10.0 10.4
Alcohol:1
Beer 0. 0 •• 0 0 • • • ••••• • ••••• •••• 36.6 36.8 36.2 35.6 35.0 34.4 34.7 34.4 34.1
Wine ..... . .. . ....... . .. . .... . 3.2 3.3 3.3 3.3 3.4 3.5 3.5 3.4 3.2
Distilled spirits •• 0 • •••• • • •• • •••• 3.0 2.9 2.8 2.7 2.6 2.5 2.4 2.3 2.2
1Adult population, 21 years and over.
NA = Not available.
Source: Putnam, J ., 1990, Food Consumption, Prices, and Expenditures, 1967-1988, Statistical Bulletin No. 804, U.S. Department of
Agriculture, Economic Research Service.
foods, for example, by urging con­sumers
to substitute milk for soft
drinks or grapes for candy. Other
promotions have tried to correct
misconceptions about a food's
nutritional value, introduce a
variety of foods, and offer serving
suggestions, recipe ideas, and
nutritional information (3).
Restaurant Patronage
Recent economic factors that
influence eating-place sales include
a drop in consumer confidence and
a sluggish growth in real personal
disposable income. These factors
result in a cash-tight consumer who
is cautious and value conscious.
As a result, fast food is likely to
account for the largest growth in
eating-place sales in 1991. Pastas,
pizzas, and bistro (simple, European
style) fare are examples of restaurant
items gaining in popularity. There
has also been growth in sales of
sandwiches, appetizers that can
serve as a meal, and casual meal
combinations (4).
The family composition of a
household affects restaurant spend­ing.
Data from the 1989 Consumer
Expenditure Survey indicate that
husband-wife households with
children spent $596 per person per
20
year compared with $989 per
person per year for husband-wife
households with no children. Per
capita expenditures on food away
from home increased as the age of
the child increased. Husband-wife
households with an oldest child
under age 6 spent $503 per person
per year, compared with $583 per
person for husband-wife households
with an oldest child between 6 and
17 years old, and $687 per person
for husband-wife households with
an oldest child 18 years or older (16).
The proportion of families with
more than one earner began to in­crease
sharply after World War II,
from 39 percent in 1950 to 57 per­cent
in 1989 (1). Rising family
incomes increase expenditures on
more expensive food items as con­sumers
demand more convenience
and quality. This lifestyle trend has
benefited restaurateurs because
the consumer is willing to pay for
conveniences such as take-out
orders and home delivery in ex­change
for time. The convenience
of restaurant meals as an alternative
to cooking relieves the stress of
having to prepare meals in a
hurry (4).
Food service operators are also
responding to consumers' demands
for healthier, lower fat foods. A
1990 National Restaurant Associa­tion
survey of fast food and family
restaurant chains found that almost
90 percent use only all-vegetable oil
and/or shortening for frying, and
the majority offer decaffeinated
coffee, entree salads and/or salad
bars, skinless poultry, reduced or
low-calorie salad dressing, lowfat
milk, fruit juices, and margarine ( 4).
Because of a variety of social and
legislative pressures, alcohol sales
growth at eating places is expected
to remain sluggish in 1991. Another
reason for a cutback on alcohol pur­chases
may be the Federal alcohol
excise tax on beer, wine, and dis­tilled
spirits that went into effect in
January 1991. The sale of alcohol
in bars and taverns is expected to
decrease in 1991; tax increases on
alcohol, at all levels of government,
have caused prices of alcoholic
beverages to rise faster than other
prices on the menu (4).
Family Economics Review
Food Assistance Programs
In 1989 over 16 percent of the
U.S. population received food
assistance, including food stamps,
vouchers, food packages, and cash.
Federal food assistance totaled
$23.4 billion in fiscal1990, up from
$1.1 billion in 1969 when USDA
established the Food and Nutrition
Service to administer these
programs (7).
Family Nutrition Programs
The largest ofthe family nutrition
programs is the Food Stamp Pro­gram,
which served an average of
22.5 million people per month in
the second quarter of fiscal1991,
at a cost of $4.6 billion. Under the
program, which was started in 1961,
coupons are issued monthly to
eligible low-income households
to be redeemed for food at retail
stores (7). Average monthly food
stamp benefits, per person, were
$63.96 in the second quarter of
fiscal 1991. These benefits, which
are adjusted annually, are based on
the cost of the Thrifty Food Plan
(TFP) for a family of four (8).
The U.S. Government also
supports food assistance programs
targeted for special localities such
as Puerto Rico and the Marshall
Islands. Puerto Rico's Food Stamp
Program was replaced by the Nutri­tion
Assistance Program in 1982 (7).
Under this block grant program,
Puerto Rico received $937 million
in fiscal1990 (8).
The Food Distribution Program
on Indian Reservations and the
Marshall Islands operates as an
alternative to the Food Stamp
Program. Under the program,
recipients receive food packages,
including canned meats, fruits and
vegetables, and dairy products (7).
Average participation was 138,000
per month in 1990, at a cost of $60
million for food administration
funds (8).
1991 Vol. 4 No. 3
Child Nutrition Programs
USDA oversees five child nutri­tion
programs in cooperation with
State and local governments. The
cost of these programs to the
Federal Government, including
the value of donated commodities,
was $5.3 billion in fiscal1990 (7).
Participation in the National School
Lunch Program averaged 24.1
million children each school day in
fiscal1990. Eligibility for free and
reduced-price meals, which provide
approximately one-third of the
recommended dietary allowances
for school-age children, is deter­mined
by household size and in­come.
Schools receive commodities
and cash payments for every lunch
served. In school year 1990 they
received 13.25 cents worth of com­modities
per meal, up from 12.25
cents in 1989 (8).
In 1990 over 4.0 million children
participated in the School Breakfast
Program, 1.6 million more than
when the program was permanently
authorized in 1974. Federal costs
for this program were $594.2
million in fiscal1990 (7).
The Child Care Food Program
provides commodity assistance and
cash to nonprofit child care centers
and family day care homes. Daily
attendance at facilities offering this
program averaged 1.4 million in
1989, at 141,000 sites. Participation
in this program is likely to increase
as the need for child care grows.
The recently introduced adult care
component of this program in­creased
from 833,300 adult meals
served in the second quarter of
fiscal1989 to 1.9 million in the
same period in 1990 (7).
The Special Milk and Summer
Food Service Programs are smaller
programs. Federal costs for the
Special Milk Program, which
provides half-pints of milk at
schools, child care institutions,
and summer camps, have averaged
between $15 and $19 million annually
since 1982, while expenditures for
the Summer Food Service Program
were $150.4 million in 1989 (7).
WIC and the Commodity
Supplemental Food Program
WIC (Special Supplemental
Food Program for Women, Infants,
and Children) is designed to im­prove
the nutritional status of
low-income, nutritionally at-risk
women, infants, and children up to
age 5. Participants receive vouchers
that can be exchanged for monthly
allotments of foods, such as infant
formula, eggs, fruit juice, milk,
cheese, and cereal. Begun in 1974,
WIC also provides nutrition educa­tion
and referrals to health services.
It now includes special provisions
under the Hunger Prevention Act
of 1988 to reach the homeless. As a
nonentitlement program, funding
for WIC is allocated on the basis
of a formula rather than solely on
participation. Total participation
averaged 4.5 million in fiscal 1990,
an increase of 23.6 percent from
fiscal1980 (7).
The Commodity Supplemental
Food Program (CSFP), established
in 1969, initially targeted a popula­tion
similar to that of WIC (7).
However, elderly participants now
constitute 39 percent ofthe program.
The CSFP provides supplemental
food assistance by purchasing com­modities
and shipping them to State
and local agencies for distribution
to participants. Costs of the pro­gram
were $68.7 million during
fiscal1990. Total participation
averaged 273,000 in fiscal1990 (8).
Food Distribution Programs
Aside from the child nutrition
programs, distribution programs
are The Emergency Food Assistance
Program (TEFAP), the Nutrition
Program for the Elderly (NPE),
and the Commodity Distribution
to Charitable Institutions Program
(CDCIP). These programs have
historically been associated with
commodities obtained through
farm price support and surplus
removal programs. Spending for
these programs was $621.3 million
41
in fiscal 1990, down from a peak of
$1.5 billion in fiscal 1984 because
some Government surpluses,
primarily dairy products, were
depleted. Commodities are pur­chased
for distribution to soup
kitchens and food banks (see box)
under the Mickey Leland Memorial
Domestic Hunger Relief Act of 1991.
Under the NPE, USDA provides
food and funds to the U.S. Depart­ment
of Health and Human Services
(HHS), which administers programs
to provide meals for the elderly
either at a central location or
delivered to their homes.
The CDCIP provides surplus
commodities to eligible charitable
institutions, such as orphanages,
summer camps, and nursing homes,
which are not covered by other
USDA programs (7).
Proposed Program Reforms
Current reform proposals include:
(1) broadening WIC program
coverage over time to all eligible
persons and (2) requiring that non­AFDC
families with absent parents
cooperate with the Child Support
Enforcement Agency as a condition
of eligibility for the parent.
Recent Legislation
Public Law 101-445, the National
Nutrition Monitoring and Related
Research Act of 1990, requires the
Secretary of Agriculture and the
Secretary of Health and Human
Services to undertake a 10-year plan
to strengthen national nutrition
monitoring. The plan will assess
the dietary and nutritional status
of the U.S. population, support
and develop nutrition monitoring,
promote national nutrition educa­tion,
and establish dietary guide­lines.
The plan will provide a
scientific basis for the maintenance
and improvement of the nutritional
status of the population and the
nutritional content of the food
consumed in the United States.
22
Under The EmergencyFdbdA;isistari& Prbgr~M· (m¥xPj;~~·ipii)~ !.. ::
biiiter, con1mgal, and flour are distributed. Ih addition to the suipt.#s (
commodities, $120 million will have been spentin fiscal 1991 fo(th.epuh
chase and distribution Of additional commodltles;·'the cammoditles diat <
;f!~?E~S~~~~1l~t~fll~~t111: provide: nutrition services in schools; community cell:tersfchtirches; p!tbU¢ <
housing; and other places located within \\falking d1Sta#ce oft~.~ . ~?l'll~~ 6(
the majoilty of local elderly people; nutritious; weu~baJ~~cedhotortol4 H
rneals at least once a day; transportation to arid from t)le sit¢s for tho~¢ <
~~6 ~;;~~~~6~~~:;;.~~~;;.~0:2 0;.~ ~J.~i~st on~ .r~~~~ ~Jj0~S~j~~~
:···under the . cornmodit)ibistiibutihn _ t()Ch~~itablelristitl1~idlls~r()gr(lll} i
. ~;~di~~;b:i~~!:~~i:d1M~:~~~6u~J:t;~:~J~:·~~~§~~~~f4~~±l~~~·
from churches operating soup kitchens for the homeless ariddestit~t¢tq
orphanages and homes for the aged. In addltiohto the cdirin}odit)Iil#s~~
tante that has tradtionauy been provided to charitable instituti(}n~U# i
nscai 1991, $32 million will have been spenno purchase an~ pro~l~~~E .
tional commodities for distribution to soup kitchens that pjep*re Iridll.s<
for the homeless. The foods USDA donates tb"charitableinstitu:tioris v~ry <<
from time to time. Generaily, theyiricliiqe cereals ahd grains; i>~I'lll(il#d
oil pwduCts,and butter. The commodities that USDApurclias~d .. i~ fisqtl ...
1991for distribution to soup kitchens include canned meats; fruit~; arid ?
y~g:~#bles. . · · · · · · · ···
The Secretaries will assess and
report on the dietary and nutritional
status of the population and trends.
At the discretion of the Secretaries,
the status and trends related to
preschool and school-age children,
pregnant and lactating women, the
elderly, low-income populations,
Blacks, Hispanics, and other groups
will be reported separately. The
plan will maintain and coordinate
the National Health and Nutrition
Examination Survey (NHANES)
and the Nationwide Food and
Consumption Survey (NFCS). The
President will establish a National
Nutrition Monitoring Advisory
Council, consisting of nine voting
members, to carry out the purposes
of this act and to provide scientific
and technical advice.
At least every 5 years the
Secretaries will publish a report
entitled "Dietary Guidelines for
Americans" containing nutritional
and dietary information and
guidelines for the general public.
The report will be promoted by
each Federal agency in carrying
out any Federal food, nutrition, or
health program. Also, the Secretary
of HHS will submit a report describ­ing
the appropriate Federal role in
ensuring that students enrolled in
U.S. medical schools and physicians
practicing in the United States have
access to adequate training in the
field of nutrition and its relationship
to human health. The bill was signed
into law on October 22, 1990 (13).
Public Law 101-535, the Nutrition
Labeling and Education Act of
1990, was designed to lessen con­sumer
confusion regarding products
promoted by some food manufac­turers.
It will require, for the first
time, a uniform system of labeling
food products. Under the bill, most
food product labels must state the
following nutrition information:
serving size or the common house­hold
unit of measure that expresses
the serving size of the food; the
number of servings or other units
Family Economics Review
of measure per container; the total
number of calories and the calories
derived from the total fat in each
serving size or other unit of
measure; and the amount of total
fat, saturated fat, cholesterol,
sodium, total carbohydrates, com­plex
carbohydrates, sugars, dietary
fiber, and total protein contained
in each serving size or other unit
of measure.
The Secretary of HHS is required
to carry out activities that educate
consumers about the availability of
nutrition information in the labeling
of food and the importance of that
information in maintaining healthy
dietary practices. The bill requires
health claims about foods to meet
HHS standards and would disallow
misleading health claims. For ex­ample,
a claim may not state the
absence of a nutrient, such as
cholesterol, unless the nutrient is
usually present in the food.
Within 12 months of the date of
the enactment of Public Law 101-
535, the Secretary of HHS will issue
proposed regulations to implement
section 403(r) of the Federal Food,
Drug, and Cosmetic Act, defining
the following terms used to charac­terize
the level of any nutrient in
food: free, low, light or lite,
reduced, less, and high. If a food
purports to be a beverage contain­ing
vegetable or fruit juice, a state­ment
of the total percentage of such
fruit or vegetable juice contained in
the food is required on the informa­tion
panel with appropriate
prominence.
The Secretary ofHHS will deter­mine
whether claims linking the fol­lowing
nutrients and diseases meet
HHS requirements: calcium and os­teoporosis,
dietary fiber and cancer,
lipids and cardiovascular disease,
lipids and cancer, sodium and
hypertension, and dietary fiber and
cardiovascular disease. Similarly,
the Secretary will establish the pro­cedure
and standard concerning the
validity of claims made with respect
to a dietary supplement of vitamins,
1991 Vol. 4 No. 3
minerals, herbs, or other similar
nutritional substances and will
determine whether claims linking
the following nutrients and diseases
are valid: folic acid and neural tube
defects, antioxidant vitamins and
cancer, zinc and immune function
in the elderly, and omega-3 fatty
acids and heart disease. The bill was
signed into law on November 8,
1990 (14).
References
1. Blaylock, J. and Elitzak, H.
1990. Food expenditures. National
Food Review 13(3):17-25.
2. Exter, T. 1990. Let them drink
wine. American Demographics
12(3):8.
3. Foulke, J. 1990. Generic
advertising of farm products grows
rapidly. Farmline 11(7):6-9.
4. Gordon, E., et al. 1990.1991
National Restaurant Association,
Foodservice Industry Forecast.
National Restaurant Association,
Washington, DC.
5. Kaufman, P. and Newton, D.J.
1990. Trends in grocery retailing
concentration. National Food
Review 13(4):16-19.
6. Korb, P. and Cochrane, N.
1989. World food expenditures.
National Food Review 12( 4):26-29.
7. Levedahl, J.W. and Matsumoto,
M. 1990. Food assistance. National
Food Review 13(3):26-32 and
personal communication with
C. Kocsis.
8. Matsumoto, M. 1990. Recent
trends in domestic food programs.
National Food Review 13( 4):27-29
and personal communication with
C. Kocsis.
9. Price, C. 1990. Supermarkets
seek growth in foodservice. National
Food Review 13(4):6-10.
10. Putnam, J.J. 1990. Food con­sumption.
National Food Review
13(3):1-9.
11. . 1990. Food Con-sumption,
Prices, and Expenditures,
1967-1988. Statistical Bulletin No.
804. U.S. Department of Agriculture,
Economic Research Service.
12. Putnam, J.J. and Allshouse,
J.E. 1991. Food Consumption,
Prices, and Expenditures, 1968-89.
Statistical Bulletin No. 825.
U.S. Department of Agriculture,
Economic Research Service.
13. U.S. Congress. 1990. Public
Law 101-445, National Nutrition
Monitoring and Related Research
Act of 1990. 101st Congress.
14. . 1990. Public Law
101-535, Nutrition Labeling and
Education Act of 1990. 101st
Congress.
15. U.S. Department of Agricul­ture,
Economic Research Serivce.
1990. Focus on food stores. National
Food Review 13( 4):38.
16. U.S. Department of Labor,
Bureau of Labor Statistics. 1990.
Consumer expenditures in 1989.
News. USDL No. 90-616.
17. . 1990. Summary of
CPI News Release, 1980 to 1990.
18. . 1986. Consumer
Expenditure Survey: Diary Survey
1982-83. Bulletin 2245.1;S
23
Research Summaries
Volunteers in the
United States
Millions of Americans perform
volunteer work for a variety of
organizations and institutions, such
as schools, hospitals, churches, and
civic groups. Data from supplemen­tary
questions included in the May
1989 Current Population Survey1
were used to answer the following
questions: Who are these volunteers?
For whom do they perform volun­teer
work? How much time do they
spend at these unpaid activities?
Who Volunteers?
About 38 million Americans did
volunteer work without pa~ for an
organization or institution at some
time during the year ended in May
1989. This represented about 20 per­cent
of the civilian noninstitutional
population age 16 and over. The
likelihood of volunteering varies
by several demographic and
economic factors, such as sex, age,
race, marital status, educational
attainment, employment status,
and income (see table).
1The Current Population Survey is a
monthly survey conducted by the Bureau of
the Census for the Bureau of U!bor Statistics.
The sample includes about 60,000 households
that are selected to represent the civilian
noninstitutional population, 16 years old
and older, in the 50 States and the District
of Columbia.
2Excluded were persons whose unpaid
work was done in connection with a family
business or farm.
24
During the year that ended in
May 1989,22 percent of women
and 19 percent of men did some
volunteer work. Women were
somewhat more likely than men
to be volunteers, partly because of
their employment and family status.
Women account for a larger pro­portion
of part-time workers or
persons not in the labor force. Also,
women who are mothers have many
opportunities to volunteer through
their children's school, sports, and
religious activities.
People in the 35- to 44-year-old
age group were more likely than
those younger or older to have done
volunteer work. Higher percentages
of married men and women per­formed
volunteer work, compared
with those who were single, divorced,
or widowed.
Adults with a college degree were
much more likely to do volunteer
work than those with fewer years of
schooling. Among college graduates
age 25 years or older, 38 percent
participated in unpaid volunteer
work, compared with 19 percent of
high school graduates and 8 percent
of high school dropouts.
Employed persons were more
likely to be volunteers than those
who did not work. Age is a key
reason why nearly 70 percent of
volunteers held paying jobs.
Employed people tended to be in
those age groups in which the volun­teer
rate was highest (25 to 54 years
old), whereas those who were un­employed
or not in the labor force
were mostly younger or older. Among
employed men, full-time workers
were more likely to be volunteers,
whereas among employed women,
part-time workers were more likely
to do volunteer work.
In general, people with higher
income are more likely to perform
volunteer work. The link between
volunteering and income may reflect
the relationship between education
and volunteering: people who have
college degrees tend to have higher
incomes than those with fewer years
of schooling. Also, participation in
volunteer activities can require some
out-of-pocket expenses for such
things as transportation, clothing,
or incidentals. The volunteer rate
for persons whose 1988 family (or
individual) income was over $50,000
was about three times that for per­sons
with income under $10,000.
Blacks and Hispanics were less
likely than Whites to serve as volun­teers.
This was partly because they
tended to be more concentrated in
groups with relatively low volunteer
rates. Compared with Whites, they
were younger, less educated, and
had a higher unemployment rate.
Blacks and Hispanics also tend to
have lower incomes than Whites.
For Whom, How Long, and
How Often?
Volunteers were more likely to
work for "church or other religious
organizations" than for any other
kind of organization. During the
year that ended in May 1989, 36
percent of male and 39 percent of
female volunteers reported that
working for churches was their
main volunteer activity. Among
Family Economics Review
People who performed unpaid volunteer work at some time
during the year ended May 1989, by sex and selected
characteristics
Volunteers as percent of population
Characteristic Both sexes
Total . . . . . . . . . . . . . . . . . . . . . . . . 20.4
Age (years):
16 to 24 . ..... ............. .
25to 34 ................... .
35to 44 ................... .
45to 54 ................... .
55 to 64 ................... .
65 and over .... .. ......... .
Race and Hispanic origin:
White ..................... .
Black ..................... .
Hispanic origin ........... . . .
Marital status:
Never married ...... . . ..... .
Married, spouse present ..... .
Married, spouse absent ..... . .
Divorced .................. .
Widowed ................. .
Years of school completed by
people 25 years old and over:
0 to 11 ................. .
12 only . . ........ ..... .. .
13 to 15 ................ .
16 or more . ............. .
Employment status:
In labor force .............. .
Employed ............... .
Full time .............. .
Part time ... ... ........ .
Unemployed ............ .
Not in labor force ........... .
lncome:1
Under$10,000 ............. .
$10,000 to $29,999 ....... ... .
$30,000 to $49,999 .... ...... .
$50,000 or more .. . ......... .
1 For year ended March 1989.
12.3
20.2
28.9
23.0
20.8
16.9
21.9
11.9
9.4
13.7
24.8
13.2
17.3
15.3
8.3
18.8
28.1
38.4
22.1
22.6
21.9
26.0
13.8
17.1
9.2
15.6
23.4
27.0
Men
18.8
11.4
17.4
26.8
21.8
19.8
15.8
20.0
11.5
8.6
12.4
22.8
12.1
15.3
11.9
7.8
16.0
24.0
36.0
20.9
21.4
21 .8
18.0
11.1
12.2
7.5
12.9
20.9
25.1
Women
21.9
13.1
23.0
30.9
24.1
21.8
17.7
23.6
12.3
10.1
15.3
26.9
14.0
18.6
16.0
8.8
20.9
31.6
41.4
23.6
24.0
22.0
29.9
16.8
19.6
10.0
18.0
26.0
29.1
Source: Hayghe, H.V., 1991, Volunteers in the U.S.: Who donates the time?, Monthly Labor
Review 114(2) :17-23, U.S. Department of Commerce, Bureau of Labor Statistics.
1991 Vol. 4 No. 3
men, the second and third ranking
choices were "civic or political
organizations" and "sports or
recreational organizations." For
women, "schools or other educa­tional
institutions" and "hospitals
or other health organizations"
were the second and third choices.
During the survey year, 60 per­cent
of volunteers spent fewer than
5 hours a week at their volunteer
activity, 20 percent worked 5 to 9
hours, 17 percent worked 10 to 34
hours, and less than 4 percent did
volunteer work for 35 hours a week
or more. Volunteers who were
Black, Hispanic, or age 65 and over
tended to spend more hours a week
volunteering than other volunteers.
Also, high school dropouts and un­married
people, though volunteer­ing
less often than college graduates
or married people, tended to do
so for more hours per week. Most
volunteer workers, 56 percent, were
active in fewer than half the weeks
of the year; however, 28 percent did
some volunteer work throughout
the entire year.
In 1965 and 1974, data on volun­tarism
were collected via the Current
Population Survey. Differences in
questions, concepts, and coverage
permit very limited comparisons
with the 1989 survey. Overall,
however, the proportion of persons
reporting volunteer work has de­creased
slightly since 1974, reflecting
an increase in the proportion of the
population composed of groups
with relatively low volunteer rates­Blacks,
Hispanics, and unmarried
people.
Source: Hayghe, H.V., 1991, Volunteers in
the U.S.: Who donates the time?, Monthly
Labor Review 114(2):17-23, U.S. Department
of Commerce, Bureau of Labor Statistics.
25
Home Ownership
Trends in the 1980's
The U.S. Department of Commerce
used data from the Current Popula­tion
Survey/Housing Vacancy Survey
(CPS/HVS) to determine geographic
and demographic trends in home
ownership during the 1980's. In
1989 the home ownership rate for
the United States was 63.9 percent,
significantly lower than the 65.6
percent rate recorded in 1980. This
was the first decade-long decline in
home ownership rates since the
1930's. Contributing factors include
(1) decreases in home ownership by
families, (2) decreases in home
ownership by householders under
60 years of age, and (3) increases in
the nonfamily household popula­tion,
a group that historically has
had lower home ownership rates.
Geographic Trends
The Northeast had a higher home
ownership rate in 1989 (62.0 percent)
than in 1980 (60.8 percent). Four of
ten States with higher home owner­ship
rates1 in 1989 than in 19842
were in this region. In other regions
home ownershiP. rates decreased.
Seven of sixteen3 States reporting
significantly lower home ownership
rates were in the Midwest; conse­quently,
home ownership for the
region decreased (from 69.8 percent
1States with significantly higher home
ownership rates: Hawaii, New Jersey, New
York, Ohio, Pennsylvania, South Carolina,
Vermont, Virginia, West Virginia, and
Wisconsin.
2State home ownership data became
available in 1984 from the CPS/HVS. Metro­politan
Statistical Areas were redefined in
1984 and these definitions were included in
the 1986 CPS/HVS. Home ownership data by
age of householder became available in 1982.
3States with significantly lower home
~ership rates: Alabama, Colorado, Florida,
lnd1ana, Kansas, Kentucky, Louisiana,
Maryland, Massachusetts, Minnesota,
Missouri, Nebraska, Nevada, New Mexico,
North Dakota, and South Dakota.
in 1980 to 67.7 percent in 1989). In
the South home ownership dropped
from 68.7 percent (1980) to 65.9
percent (1989) and in the West,
from 60.0 percent in 1980 to 57.8
percent in 1989. Only Hawaii, in
the Western region, reported a sig­nificant
increase in home ownership
between 1984 and 1989.
National home ownership rates
in Metropolitan Statistical Areas
(MSA's) increased very little
between 1986 (61.2 percent) and
1989 (61.3 percent). Fourteen of the
61largest MSA's had higher home
ownership rates in 1989 than in
1986, whereas 9 MSA's reported
lower home ownership rates. MSA's
recording a loss of at least 6 percent­age
points in home ownership rates
were Nashville, TN; St. Louis, MO;
and Fort Lauderdale/Hollywood/
Pompano Beach, FL. MSA's with
home ownership rates that had
risen by 6 or more percentage points
were San Jose, CA; Norfolk/Virginia
Beach/Newport News, VA; and
Milwaukee, WI.
Figure 1. Home ownership rates for the United States by age of householder·
1982 and 1989 ' ·
100 r---------------------------------------------------~
80
60
40
20
0
45-49 50-54 55-59 60-64 65+
Age of householder'
1982 1989
26 Family Economics Review
Figure 2. Home ownership rates for the United States, by family status:
1982 and 1989
1991 Vol. 4 No. 3
100 r-----------------------------------------------------~
80
60
40
20
78 78
1982 1989
Sex of householder
II Male
~~ Female
1982 1989
Married Other 1 Person 2 or more
couple persons
Family Households Nonfamily Households
Demographic Trends
Age. As young householders get
older, their tenure status gradually
shifts from predominately renters
to predominately homeowners.
Younger households continued to
have lower home ownership rates
throughout the decade. Home
ownership rates for householders in
all age groups less than 60 years old
were significantly lower in 1989
than in 1982 (figure 1 ). For house­holders
over 60 years old, the home
ownership rate was significantly
higher in 1989 than in 1982.
Family Status. A smaller propor­tion
of nonfamily households own
homes than do family households.
Between 1982 and 1989, the increase
in nonfamily households exceeded
that in family households, contribut­ing
to the lower overall home owner­ship
rate. Although most married­couple
households owned their
homes (78.3 percent in 1989, not
significantly different from 1982),
home ownership declined for non­married-
couple family households
during this period (figure 2). For
male householders in other families,
home ownership dropped from
59.3 (1982) to 55.7 percent (1989).
Corresponding figures for female
householders in other families were
47.1 percent (1982) and 44.1 per­cent
(1989). Females living alone
have a higher home ownership rate
than males living alone. Between
1982 and 1989 home ownership for
both male and female householders
living alone increased, but the rate
for males increased more. Among
householders living with one or
more nonrelatives, the home owner­ship
rate for males was higher in
1989 than in 1982. Overall rate for
their female counterparts was un­changed;
the rate for those under
50 years old increased as the rate for
those over age 50 decreased.
Source: U.S. Department of Commerce,
Bureau of the Census, 1990, Homeownership
Trends in the 1980's, Series H-121, No.2.
27
The Effects of Food
Stamps on Food
Consumption:
A Review of the
Literature
The Food Stamp Program (FSP)
is one of the Nation's largest social
welfare programs, providing benefits
to as many as 20 million Americans
each month. This report is the sixth
in a series, Current Perspectives on
Food Stamp Participation, sponsored
by the Food and Nutrition Service,
U.S. Department of Agriculture.
An overview of 20 years of research
findings on the effects of food stamps
on recipients' food consumption
and diet quality is presented.
The effects of food stamps on
(1) the money value of food used
by households, (2) the availability
of nutrients in the household from
the home food supply, and (3) the
intake of nutrients by individuals
are included. The purpose of the
report is to help the user under­stand
the consensus findings, or the
range of findings from these many
diverse studies by systematically
summarizing the findings into one
document. Data bases and estima­tion
methods used in food stamp
studies are also described.
Findings that relate to the dif­ferences
between FSP recipients
and low-income nonrecipients
include:
28
• FSP participating households
spend a larger portion of their
total expenditures on all food
items than do nonrecipients.
• Nonparticipants spend about
twice as much per household
member on food bought and
used away from home.
• Food used at home by FSP
recipients has a greater money
value per person and provides
more nutrients per dollar than
does food used by nonrecipients.
• Recipients spend a larger per­centage
of the average home
food dollar on meat, poultry,
and fish than do nonrecipients,
whereas nonrecipients spend
a larger percentage on grain
products and on fruits and
vegetables.
• FSP recipients are far more
likely to shop for food on a
monthly basis, whereas most
nonrecipients shop for food
on a weekly basis.
• More recipients than non­recipients
(24 percent vs.
8 percent) report sometimes
or often not having adequate
supplies of food.
Findings from 17 studies confirm
that food stamps have a positive ef­fect
on household food expenditures.
A typical recipient household would
respond to a $1 increase in the value
of food stamp benefits by increasing
its food expenditure by between
$0.17 and $0.47. An additional dol­lar
of regular income would prompt
an average low-income household
to increase its food expenditure by
$0.05 to $0.10. Also, the results of
the 17 studies reviewed strongly
suggest that coupons would be more
effective than cash food assistance
at increasing food expenditures.
Eight studies estimate the effects
of food stamp participation and/or
the size of the food stamp benefit
on the availability of nutrients from
the food used by a household from
its home food supply. The studies
show that food stamp participation
and/or the size of the food stamp
benefit (as well as ordinary cash
income) have positive effects on
the availability of most nutrients
studied. Estimates of the effects on
nutrient availability are roughly two
to seven times greater for a dollar's
worth of food coupons than for a
dollar of cash income.
The average availability of each
of 12 selected nutrients relative
to the Recommended Dietary
Allowances (RDA's) is higher for
recipients than for nonrecipients.
The Joint Nutrition Monitoring
Evaluation Committee has iden­tified
the consumption of three
of these nutrients-Vitamin C,
calcium, and iron-as warranting
priority status in public health
monitoring. Food stamps have
significantly increased their con­sumption.
The increases were 24
percent for calcium, 35 percent for
Vitamin C, 42 percent for iron, and
between 19 to 42 percent for eight
of the other nutrients measured.
It would be expected that a
measure of nutrient intake would
show weaker effects than would a
measure of nutrient availability be­cause
nutrient intake encompasses
dietary behavior (for example, the
consumption of restaurant meals)
that the FSP is not designed to
measure directly. Findings from
eight studies of the effects of food
stamps on the intake of nutrients by
individuals confirm that the effects
are relatively weak. Furthermore,
because diet is only one of many fac­tors
that determine an individual's
nutritional status, findings from
these studies cannot show defini­tively
whether the FSP is successful
at achieving its nutritional objectives.
Source: Fraker, T.M., 1990, The Effects of
Food Stamps on Food Consumption: A Review
of the Literature, U.S. Department of Agricul­ture,
Food and Nutrition Service.
Family Economics Review
Computer Use in
the United States:
1989
Nearly 10 years after their intro­duction,
small personal computers
are an established part of many
lives-at work, at school, and at
home. In 1989, close to one-third
of the population reported using a
computer in some way, and 15 per­cent
of all households owned a com­puter,
compared with 8 percent in
1984.
The level of use and ownership of
computers was first examined in the
October 1984 supplement to the
Current Population Survey (CPS)
conducted by the Bureau of the
Census. A second survey on com­puter
ownership and usage was
undertaken in October 1989, under
the sponsorship of the National
Center for Education Statistics. The
1989 sample included about 56,100
housing units that were selected from
the 1980 decennial census files.
Access and Use by Children
In 1989, 46 percent of children
ages 3 to 17 used a computer at
home or at school, compared with
only 30 percent in 1984. Computer
usage rates were 14 percent for
children ages 3 to 5, 42 percent for
6-year-olds, and 45 percent for
those ages 7 to 17.
White children were more likely
to have a computer at home (27 per­cent)
than Black children (11 per­cent);
however, White children were
not significantly different from
children of other races (28 percent)
in their level of access. Regional
differences first noted in 1984
continued to exist; 30 percent of
children in the Northeast had a
computer at home, as opposed to
21 percent of the children in the
South.
Both family income level and
education level of the household
head had a strong relationship to
the presence of a computer in the
1991 Vol. 4 No. 3
Levels of access and use of computers by age, 1984 and 1989
Access and use 1984 1989
Percent
Households with computer ... . ... ... . ... . 8.2 15.0
3 to 17 years:
15.3 24.2
74.2 71 .1
Access to a home computer .......... . .
Use home computer . . . .. ......... .
Use computer at school 2 . . ... ........ . 28.0 46.0
Use computer at home or school ....... . 30.2 46.0
18 years and over:
9.1 17.3
53.3 58.4
Access to a home computer . .......... .
Use home computer . .. ........ . . . .
Use computer at school 2 .... . ........ . 30.8 43.6
Use computer at work3
............... .
Use computer at home, school, or work
1 Of persons with a computer at home.
2Qf persons enrolled.
3Qf persons with a job.
24.6 36.8
18.3 28.1
Source: Kominski, A., 1991 , Computer Use in the United States: 1989, Current Population
Reports, Special Studies, Series P-23, No. 171, U.S. Department of Commerce, Bureau of
the Census
home. Sixty-three percent of those
children living in homes with incomes
above $75,000 had access to a com­puter,
and nearly half ( 49 percent)
of the children in households where
the householder had 4 or more
years of college had a computer
available to them.
For most children, exposure to
a computer occurred in the class­room,
where usage rose from 28 per­cent
in 1984 to 46 percent in 1989
(see table).Use of a computer at
school was related to both family
income and the education of the
family householder in both 1984
and 1989, indicating a possible
indirect effect of family socio­economic
status on computer use
through the type of schools people
choose for their children or the
schools that are available.
Private schools had consistently
higher levels of computer use at
home (28 percent), in school (50
percent), and in both places (18 per­cent).
Public schools had lower
usage rates at home (17 percent)
and overall (11 percent), but were
similar for school use (46 percent).
Public schools, therefore, seem to
be keeping up with private schools
in providing computer resources to
students.
As in 1984, the most frequently
identified use of computers by
children was for games (84 percent
in 1989). About 40 percent reported
using the computer for homework,
25 percent for word processing, and
12 percent for graphics. In 1984,
71 percent of children reported that
they were "learning to use" the com­puter.
This dropped significantly in
1989 to 25 percent.
Access and Use by Adults
Twenty-eight percent of the adult
population used a computer at home,
at work, or at school in 1989, up
from 18 percent in 1984 (see table).
Within the group of adults who had
a computer in their home (17 per­cent),
persons ages 35 to 44 were
most likely to have a home com­puter
(27 percent), reflecting the
increased likelihood of having
children at home. Family income
and the education of the individual
29
were closely associated with the
probability of having a computer
at home. A computer at home was
reported by 47 percent of persons in
households with annual incomes of
$75,000, as well as 34 percent of
those persons with 4 or more years
of college.
Not all adults who had a computer
in their home actually used it.
Slightly over half (58 percent) of
adults with a home computer re­ported
using it. Some of the "non­use"
of home computers by adults is
because computers are often bought
for children. Computer usage rates
in 1984 were similar for all races.
In 1989, however, usage rates were
higher for Whites (59 percent)
than for Blacks (51 percent), and
Hispanics (54 percent) had lower
rates of use than persons who were
not Hispanic (59 percent).
As with access, use tends to in­crease
with education. By income,
however, use was just as likely for
persons in the lowest family income
category (59 percent of those with
access) as it was for persons in the
highest (60 percent). Home use
rates were very high among persons
who used a computer at work (75
percent), had 4 or more years of
college (71 percent), or held a
managerial or professional position
(71 percent).
The most frequent use of home
computers by adults was for word­processing,
at 62 percent, a substan­tial
increase from 1984's reported
usage of33 percent. Other commonly
reported uses included games ( 44
percent), household record-keeping
(36 percent), work at home or con­nect
to a computer at work (12 per­cent),
and to run a home-based
business (11 percent).
Use of a home computer for
work purposes was related to an
individual's educational level and
type of occupation. Among persons
with 4 or more years of college, 18
percent used a home computer for
work. Usage rates between 18 per­cent
and 32 percent were reported
among those individuals in
30
managerial and professional occupa­tions,
employed in manufacturing,
in real estate, or in agricultural
industries.
The most likely place for an adult
to encounter a computer is at work.
Since 1984 there has been a 50-
percent increase in the proportion
of adults who used a computer in
the workplace (from 25 percent to
37 percent). The highest rates of
computer use at work were found
in managerial and professional
positions (56 percent) and technical
and administrative positions (55
percent).
Overall, women have a higher
rate of computer use at work than
men. Women are more likely than
men to work in technical, sales, and
administrative support occupations,
which include sales clerks,
secretaries, and administrative
clerical workers ( 44 percent of all
employed women, compared with
20 percent of all working men).
The most frequently mentioned
use by all workers was word process­ing,
at 14 percent. Other primary
uses were for bookkeeping,
inventory control, spreadsheets,
communications, and the more
traditional applications, such as
programming and analysis. The
industry with the overall highest
level of computer usage was that of
finance, insurance, and real estate,
where 67 percent of all workers said
they used a computer.
These data indicate a general pat­tern
of increase for virtually all seg­ments
of the population, at home,
school, and work. The leading edge
of computer users falls into two
groups: people who use computers
on a daily basis in their jobs and
people who are trying to better
prepare their children for the work
force of tomorrow.
Source: Kominski, R., 1991, Computer Use
in the United States, 1989, Current Population
Repor!S, Special Studies, Series P-23, No. 171,
U.S. Department of Commerce, Bureau of the
Census.
Pawnshops: The
Consumer's Lender
of Last Resort
Pawnshops are an important
source of credit for many low-income
consumers, especially tl1ose excluded
from mainstream credit markets.
Pawnshops supply only about one­tenth
of 1 percent of total U.S.
consumer credit. However, in 1988,
there were approximately 6,900
pawnshops in the United States
(about one pawnshop for every two
commercial banks) that made about
35 million loans.
Trends and Regulations
The number of pawnshops and
the number of pawnshops per
capita have increased since the
beginning of the century. Over time
the industry has shifted from a con­centration
in older major urban
areas, primarily in the Northeast,
to Southern and Central Mountain
States. In the 1980's, tl1e pawnbroking
industry grew in six of the seven
States for which there are time
series data; growth was extremely
strong in Oklahoma and Texas.
Pawnshop regulations vary from
State to State, but generally follow
a similar pattern. When a customer
pawns an item, terms of the loan
contract must be specified on a pawn
ticket. The customer retains a copy
of the ticket tl1at states tl1e customer's
name and address, type of identifica­tion
provided by the customer, a
description of the pledged item with
applicable serial numbers, amount
lent, maturity date, interest date,
and amount that must be paid to
redeem the good. This last require­ment
ensures the customer under­stands
the consequences of the
interest charge.
Most States regulate pawnshop
interest rates and other charges,
such as storage or insurance fees.
Including these charges, effective
interest rate ceilings vary across
States from 1.5 percent a month to
25 percent a month. Compounding
is not allowed. A few States impose
Family Economics Review
Characteristics of pawnshop loans
Indiana New Jersey
Default rate, number of loans ••••••••• ••••••• 0 20.6% NA
Default rate, value of loans • 0 •• 0 • • ••••• 0 •• • ••• 13.8% NA
Legal interest rate ceiling (monthly) • • • ••• 0 ••••• 3.0% 3.0%
Implicit APR on 2-month $51 loan
(includes storage and other fees) .. . . ... .. .. . 71 .3% 36.0%
Average loan size ...... .. ... ........ . . . ... . . $43.11 NA
Interest charge on 2-month $51 loan • • •• • •• • 0 • • $3.06 $3.06
Permissible storage and insurance fees
(for item left on pledge 2 months) ... . . . .. . ... $3.00 None
NA = Not available.
Source: State regulatory agencies, 1987 and 1988.
no limits, and the legal limits are
widely ignored in some other States.
In most States, the broker has the
right to charge 1 month's interest
if a pledge is redeemed in less than
1 month.
If a customer defaults, the col­lateral
becomes the property of the
pawnshop after the loan is overdue
by a specific amount of time, com­monly
1 to 3 months. Most States
require the broker to notify the
owner of the pledge by mail that
he or she will lose the right to the
property unless it is redeemed
within the stipulated grace period.
In case of default, some States
require the collateral be sold at
public auction.
Characteristics of Pawnshop
Lending
Most pawnshop loans are for rela­tively
small amounts. For example,
in Indiana, Oklahoma, and Oregon,
average loan sizes range from $40
to $60 (see table). In most States,
pawnbrokers make loans with 1-
month or 2-month maturities. It is
not uncommon for customers to
renew these loans by paying the in­terest
on the loan at the end of the
month. The typical pledge, however,
is redeemed in 2 to 3 months.
Default rates on pawnshop loans
are quite high, ranging from 14 per­cent
to 22 percent of the number of
loans. As a percentage of the value
of loans, default rates are somewhat
1991 Vol. 4 No. 3
less, suggesting that default rates
are higher on smaller loans.
To prevent a loss in case of
default, a broker lends a customer a
percentage of the value the broker
believes the collateral would bring
in a sale. The loan-to-collateral
ratio varies over time and across
pawnshops, but typically the amount
loaned is 50 to 60 percent of the
resale value of the collateral. Com­monly
pawned items include jewelry,
electronic and photographic equip­ment,
musical instruments, and
firearms.
Another feature of pawnshop
credit is its high cost. Each of the
States listed in the table imposes a
ceiling on pawnshop interest rates.
The ceiling interest rates in these
States for an average size loan range
from 0.5 percent per month in
Pennsylvania to 20 percent per
month in Oklahoma. In addition,
several of the States allow storage
and insurance fees, which raise the
effective price of the loan. For each
State, the dollar outlay for a 2-month
$51 loan plus applicable fees is
shown. Effective annual percentage
rates (APR's) range from 36 percent
in New Jersey and Pennsylvania to
240 percent in Oklahoma. Such
high rates are not uncommon. In
more than half of the States, pawn­shops
levy effective annual percent­age
rates of 120 percent or more on
average-size loans.
Oklahoma Oregon Pennsylvania
22.2"/o 13.9% NA
19.6% 9.3% NA
20.0% 3.9% 0.5%
240.0% 94.8% 36.0%
$41 .00 $61.31 NA
$20.40 $3.06 $0.51
None $5.00 $2.55
Growth in Pawnbroking
Before 1980, service fees and
minimum-balance requirements
on checking and savings accounts
either did not exist or were much
lower than they are today. After the
enactment of the Depository Institu­tions
Deregulation and Monetary
Control Act of 1980, banks moved
toward pricing services to cover
costs, making it more expensive for
depositors to maintain small-balance
accounts. Banks also closed many
unprofitable branches that were
located in low-income neighborhoods.
From 1977 to 1983 the percentage
oflow-income families that did not
maintain bank accounts increased. Of
the families in the lowest income quin­tile,
28 percent did not maintain any
depository accounts in 1977. By 1983,
36 percent of families in this group had
neither checking nor savings accounts.
Individuals without bank accounts
would be unlikely to pass bank or
finance company credit checks but
could turn to pawnshops for loans.
The decline in average real wages
for production workers and increases
in the national poverty rate also may
have contributed to the growth in
pawnbroking. Low-income consumers
often do not qualify for many sources
of mainstream credit.
Source: Caskey, J.P. and Zikmund, B.J.,
1990, Pawnshops: The consumer's lender of
last resort, Economic Review March/April,
pp. 5-18.
31
id
Poverty Thresholds
Weighted average poverty thresholds 1 for nonfarm families of specified size, 1965-90
Families of 2 persons or more
Unrelated individuals 2 persons
Householder Householder Annual average
Calendar Under Age65 under age65 3 persons 4 persons 5 persons 6 persons CPI, all items
year All ages age65 or older All ages age65 or older (1982-84 = 100)
1965 $1,582 $1,626 $1,512 $2,048 $2,114 $1,906 $2,514 $3,223 $3,797 $4,264 31.5
1966 1,635 1,685 1,565 2,115 2,185 1,970 2,600