Family Economics Review [1985, Number 2]

              1985 No.2
Contents:
Editor
Katherine S. Tippett
Managing Editor
Sherry Lowe
Editorial Assistant
Nancy J. Bailey
Family Economics Review is
published each quarter by the
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Family Economics Review,
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USDNARS. Federal Building.
Recent Trends in Clothing and Textiles
Joan C. Courtless
Measuring Poverty
Daniel H. Weinberg
In-Kind Income--Effect on Poverty
John M. McNeil
Economic Outlook for Families
June A. O'Neill
Abstracts
1985 Outlook for Food Prices and Expenditures
Outlook for Food Consumption Patterns
New Publications from Human Nutrition Information Service
Current Population Studies
Work Interruptions and Earnings
Regular Features
Some New USDA Publications
Consumer Prices
Updated Estimates of the Cost of Raising a Child
Some New USDA Charts
Cost of Food at Home, U.S. and Regions
Room 442A Hyattsville. Md. 20782. Issued April 1985
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Recent Trends in Clothing and
Textiles
By Joan C. Courtless
Family economist
CLOTHING EXPENDITURES AND PRICES
Apparel and upkeep prices in 1984, as
measured by the Consumer Price Index (CPI),
increased 3.5 percent over 1983 (table 1).
Increasing more than other clothing items
were women's suits; women's coats anq
jackets; women's dresses; and boys' coats,
jackets, sweaters, and shirts. This is the
second consecutive year that women's suits
and dresses increased more than other
apparel categories. These garments are
subject to considerable seasonal variation;
price changes fluctuate from month to month
to reflect new fashion offerings or end-of­season
sales. As measured by the CPI, prices
of boys' furnishings and girls' underwear
and nightwear declined slightly in 1984.
Clothing prices continued to increase at a
lower rate than prices for other items,
explaining in part the decline in the
percentage of total personal consumption
expenditures allotted to clothing and shoes
since 1960 (shown by current dollars in
table 2). When the effect of inflation is
removed, however, (shown by constant
dollars in table 2), the percentage of per­sonal
expenditures for clothing and shoes is
estimated to be at a 25-year high. Also, per
capita expenditures for clothing in constant
dollars doubled since 1960 and increased by
one-third since 1977. These data indicate
that a real increase in clothing purchases
by consumers has taken place over the years·
Annual spending for clothing and shoes in
1984 is estimated at $588 per person, accord­ing
to preliminary figures for the first
three quarters of 1984 (table 2). This
amount exceeds 1983 spending by $46 per
person; 35 percent of this increase can be
attributed to higher prices and 65 percent
to increased buying. This differs from
previous years; only twice since 1974 has
over half of the annual increase in spending
for clothing and shoes been a result of
increased buying.
DEVELOPMENTS IN FIBERS AND FABRICS
An American preference for natural yarns
is continuing. Fabrics of 100 percent wool,
cotton, linen, or silk and those made of
blends of natural fibers are regarded by
many consumers to be of high quality and
worth a premium price. Ramie, grown in
Southeast Asia, is often used in combination
with cotton and other natural fibers. Wide­spread
use of a cotton and ramie blend in
imported apparel is a result of efforts to
circumvent quotas imposed on cotton apparel.
Blends containing natural and manmade fibers
such as mohair and acrylic, or wool and
acrylic, accommodate the market for more
popularly priced merchandise. Rayon is being
promoted as a natural fiber to enhance its
desirability. Used most often in blended
yarns to add luster or to overcome its lack
of wash and wear characteristics, rayon is
often combined with mohair, acrylics, wool,
and cotton and silk blends.
Manmade fiber producers strive to achieve
"natural characteristics" in their acrylic,
polyester, and nylon yarns. Through innova­tive
blending of fibers and application of
finishes, yarns are being produced by
American manufacturers which are available
only in this country. These unique domestic
products are more competitive with imports.
A new Orion acrylic blend called "Comfort
12" is being used for sweaters and active­wear
such as warm-up suits, jogging suits,
and uniforms for various sports. Advantages
of this new blend include year-round comfort,
shape retention, wrinkle resistance, color
fastness, excellent stitch definition, and
the look and hand of cotton. Yarns from
several American spinners have been certi­fied
as Comfort 12 and many American apparel
manufacturers are using it in knitwear for
the 1984-85 season (2).
A polyester capabl-; of accepting cationic
dyes which chemically bond the color to the
fiber became available in 1984. Called
"Colorhold" or "Superfast" Dacron, its chief
advantage is that colors won't bleed when
laundered. It can be knit into stripes or
patterns with yarns of other fibers and,
when dyed with a cationic dye, only the
t L
D.eP.Qsitory
APR 1 9 19~·
amily Economics Review
Table 1. Percentage change in prices of clothing and footwear (annualized)
Category and i ten
All items .................................................. .
Apparel and upkeep ...........................•..........
Men's and boys' clothing ... ............................ .
Men's ••••••••••••••••••••••••••••••••••••••••••••••••
Suits, sport coats, and jackets •••••••••••••••••••••
Coats and jackets •......•.•....••..•.......•...•.•.
Furnishings and special clothing ••••••••••••••••••••
Shirts ............................................. .
Dungarees, jeans, and trousers ••••••••••••••••••••
Boys' .........................•....... · · · · · · · · · · • • · • •
Coats, jackets, sweaters, and shirts ••••••••••••••••
Furnishings ....................................... .
Suits, trousers, sport coats, and jackets •••••••••••
Women's and girls' clothing ............................ .
Women's ..............................................
Coats and jackets ................................. .
Dresses ........................................ · .. .
Separates and sportswear •••••••••••••••••••••••••••
Underwear, nightwear, and hosiery •••••••••••••••••
Suits .............................................. .
Gi rls' .....•...........•••............•...............
Coats, jackets, dresses, and suits
Separates and sportswear •••••••••••••••••••••••••••
Underwear, nightwear, hosiery, and accessories ••••
Infants' and toddlers' clothing .........................
Other apparel com modi ties ••••••••••••••••••••••••••••••
Sewing materials and
Jewelry and luggage
notions ........................ . .................................
Footwear .............................................. .
Men's
Boys'
................................................
and girls' ..................................... .
Women's ............................................. .
Percentage change--
December 1983 to September 1984
+4.7
+3.5
+2.9
+2.6
+3.9
+1.7
+2.3
+2.6
+2.4
+3.6
+10. 3
-1.1
+0.4
+4.9
+6.1
+8.0
+7.2
+4.7
+2.7
+16.1
-0.2
-0.7
+1.5
-2.2
+5.1
+0.5
+2.5
-0.2
+2.1
+3.1
+1.1
+1.8
Source: Calculated from the CPI Detailed Report, December 1983 and September 1984,
U.S. Department of Labor, Bureau of Labor Statistics.
2 family Economics Review 1985 No.2
Table 2. Annual· expenditures on clothing and shoes1
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
Year
1984 3 ••••••••••••
Per capita
expenditures 2
Constant
dollars
(1972)
$203
203
209
209
222
227
239
236
242
245
240
249
264
281
279
288
293
306
331
341
342
359
362
377
407
Current
dollars
$148
149
154
156
166
172
186
192
208
223
227
244
264
291
308
328
345
375
415
440
459
497
511
542
588
Percent of
personal
consunption
expenditures
Constant
dollars
(1972)
8.1
8.1
8.1
7.9
8.1
7.9
8.0
7.8
7.7
7.6
7.4
7.5
7.5
7.7
7.8
7.9
7.7
7.8
8.1
8.3
8.4
8.7
8.7
8.8
9.1
Current
dollars
8.2
8.2
8.1
7.9
8.0
7.8
7.9
7.8
7.8
7.8
7.5
7.6
7.5
7.6
7.3
7.2
6.9
6.9
6.9
6.6
6.3
6.2
6.0
5.9
6.0
Aggregate
expenditures
Billions
of
constant
dollars
(1972)
$36.6
37.3
38.9
39.6
42.6
44.2
46.9
46.9
48.6
49.6
49.2
51.6
55.1
59.2
59.1
61.4
63.8
67 0 5
73.6
76.7
77.9
82.6
84.2
88.5
96.4
Billions
of
current
dollars
$26.7
27.4
28.7
29 0 5
31.9
33.5
36.6
38.2
41.8
45.1
46.6
50 0 5
55.1
61.3
65.3
70.1
75.3
82.6
92.4
99.1
104.6
114.3
118.8
127.0
139.1
1 Includes yard goods, but excludes services such as cleaning and repairing clothing and
shoes.
2 Calculated by dividing aggregate expenditures for each year by population figures for July
of each year.
3 Preliminary figures--average of estimates for first 3 quarters of 1984 (i.e., seasonally
adjusted quarterly totals at annual rates).
Sources: U.S. Department of Commerce, Bureau of the Census, 1984, Population estimates
and projections, Current Population Reports, Series P-25, No. 956. U.S. Department of
Commerce, Bureau of Economic Analysis, 1984, Survey of Current Business 64(7): 36-37
(tables 2.2 and 2.3), and personal communication.
1985 No.2 Family Economics Review 3
Colorhold Dacron is colored and the remain­ing
yarns stay white (~_).
Filaments of Dacron polyester and Antron
Ill nylon are extruded side by side and spun
together in a 60:40 ratio to produce a new
yarn called "Monece". During the finishing
process the two fibers shrink at different
rates to create a lustrous, fine-denier
fabric with a crepe appearance most suitable
for lingerie. Iridescent or heather tones of
infinite variety are possible. Monece pleats
well, is wrinkle-resistant and antistatic,
and can be screen printed (1).
USE OF COMPUTERS IN RESEARCH AND
PRODUCTION OF TEXTILES AND APPAREL
The U.S. Department of Commerce funded
a study to determine ways in which the U.S.
apparel industry could be made competitive
with imports. The study concluded that
American apparel producers need to cut
prices between 30 and 50 percent, and this
could be achieved only by major technolog­ical
breakthroughs, which could result in
the elimination of up to one-half million
jobs. The Amalgamated Clothing and Textile
Workers Union (ACTWU) supports this
research because automation technology is
perceived as the way to save jobs in the
long run; the domestic apparel industry
would survive by becoming more competitive
with imports.
One such technological breakthrough
occurred when the U.S. Department of
Commerce, the ACTWU, and several apparel
and textile firms collaborated on a research
project to develop a robotic sewing machine.
A prototype was built by the C. S. Draper
Laboratory, Inc., in Massachusetts and
tested in 1983 at the Grief clothing plant
in Pennsylvania. With sufficient financing,
production models could be available in
1986. The computerized sewing system is
reported to fold and sew pieces of fabric to
make sleeves and the backs of suit coats and
vests as fast and as accurately as the very
best human clothing workers. Described as
an attempt to boost the productivity of the
U.S. apparel industry, the automatic sewing
machine could perform one-quarter of the
sewing done on a suit coat, replacing about
one-fifth of the workers now needed to
produce the coat.
4 family Economics Review 1985 No.2
In Scotland a computer graphics system has
si~ulated patterns in woven textiles. A
designer can create a two-dimensional image
of a design on the display screen of the
computer. Patterns are developed by specify­ing
yarn colors to be added sequentially,
much as cloth would be woven . The designer
can substitute yarn colors from a standard
database of over 16 million colors . Designs
can be stored in the computer, readily
accessed, and easily modified for a differ-ent
textile design. A "weaver's ticket" is
printed for the mill operator describing the
loom setup for a particular textile, and
stock control of yarn in the mill is
automatic (3).
In Australia a new method of printing
patterns on wool fabrics has been developed
which incorporates computer graphics and a
specially designed ink jet printer. Pattern
design is stored in a computer which con­trols
the printing process. The pattern is
printed directly on the fabric by fine jets
(individual droplets) of dye solution from a
print head, which can be constructed in any
width. This new technology is faster, more
efficient, and cheaper than conventional
methods which require the use of silk
screens (7).
OUTLOOK FOR RAW MATERIALS
The 1984 U.S. mill use of total fibers 1 is
estimated at 46.1 pounds per capita. This
includes 11.4 pounds of cotton, 0.6 pound of
wool, and 34.1 pounds of manmade fibers . Per
capita use in 1983 was 47.4 pounds, includ­ing
12.0 pounds of cotton, 0.6 pound of
wool, and 34.9 pounds of manmade fibers.
Domestic consumption figures include net
imports; per capita domestic consumption of
total fibers in 1984 is estimated at 53.2
pounds with 15.2 pounds of cotton, 1.2
pounds of wool, and 36.8 pounds of manmade
fibers.
World production of fibers was 3 percent
higher in 1983 than in 1982. Natural fiber
1Data for total fibers and manmade fibers
have been revised to exclude nontextile use
of glass fibers.
production decreased by about 1 percent,
however. Manmade fibers rose to 47 percent
of all fibers in 1983 from 44 percent in
1982 (9).
Cotton
The 1984 domestic cotton crop is expected
to be about 12.6 million bales, up 62
percent from last year when USDA's "Payment­in-
Kind" (PIK) program was in effect. 2
Planted acreage is estimated at 11 million
and harvested acreage at 10.4 million.
Yields may average 583 pounds per acre, near
1982's record average yield of 590 pounds.
In 1984 cotton producing farmers were
required to reduce cotton acreage by 25
percent under the acreage reduction program
CARP) in order to be eligible for program
benefits of price and loan rate protection. 3
A bout 71 percent of the base acreage was
enrolled in the program for 1984.
Cotton exports in the 1984-85 season are
estimated to be 19 percent lower than in the
previous year. Production in other countries
is approaching consumption levels; there­fore.
there is less demand for U.S. cotton
abroad. U.S. domestic cotton consumption
(mill use plus net imports of cotton
textiles) is increasing because of popula­tion
growth. a rise in real disposable per
capita income, slower growth in real apparel
prices, and consumer preference. As a
greater proportion of cotton textiles is
imported, the mill use component is declin­ing;
in 1984 about 37 percent of cotton con­sumed
in the United States is expected to be
imported as textiles.
In 1983 only 22 percent of the cotton in
U.S. textile imports had been grown in the
United States, compared with 29 percent in
1982. Almost 60 percent of U.S. cotton
textile imports came from Hong Kong. China,
Taiwan, and Korea; of these countries, only
Korea uses a high percentage (84 percent)
of U.S. cotton.
2 Under PIK, farmers received cotton sur­plus
from previous years in return for re­ducing
acreage by 4.1 million acres in 1983.
This program was not in effect in 1984.
3 In 1983, 2.6 million acres were removed
from cotton production under this acreage
reduction program.
Wool
U.S. wool production for 1984 is estimated
at more than 7 percent below the 1983 yield.
Mill consumption of apparel wool for the
first 6 months of 1984 was 17 percent higher
than that for the same period in 1983. U.S.
farm prices for wool in the first 7 months
of 1984 averaged 18 cents per pound higner
than in January to July 1983, and equaled
the average price received during the last
4 years.
Imports of raw wool for apparel in the
first 6 months of 1984 were 64 percent
higher than a year earlier. More than half
the wool used in U.S. mills is imported. Raw
wool imports have exceeded U.S. wool pro­duction
since 1980. Of the wool textiles
purchased by U.S. consumers during 1983.
about four-fifths were foreign produced or
made from imported raw wool. Much
Australian wool is imported, even though it
is more expensive than U.S. wool, because of
its quality. It is graded and sorted better,
has shorter fibers removed, and has fewer
black fibers; all of these factors reduce
processing costs in U.S. mills.
Mohair
Mohair prices during 1984 are estimated to
exceed 1983 prices by 17 percent. The grow­ing
demand for mohair in Europe and Japan
is causing prices to rise independently of
other fiber prices. U.S. ex ports of mohair
in the first 6 months of 1984 were 26 per­cent
lower than for the same period in 1983.
About 90 percent of U.S. mohair production
is exported; very little mohair is imported
by U.s. mills.
Manmade Fibers
Shipments of manmade fibers by U.S. pro­ducers
during the first 8 months of 1984
were less than 1 percent above shipments a
year earlier (!.!) but were 14 percent above
the 1982 level (8). In 1983 about 75 percent
of all fibers used by U.S. mills were man­made;
about 60 percent of all fibers used
for apparel were manmade (_!_!).
1985 No.2 Family Economics Review 5
PRICE SUPPORT PROGRAMS
Price support programs for wool and mohair were created by provisiOns of the National
Wool Act of 1954. Since that time changes in the programs have included the method used
to compute the incentive or support price on which the incentive payment is based .
Currently it is calculated by a formula which includes farmers' production input costs .
The Economic Research Service reviewed and evaluated the price support programs for
wool and mohair in preparation for new legislation to be considered by Congress in
1985. Among the findings contained in the report Wool and Mohair: Background for 1985
Farm Legislation were the following:
Legislation has not required production cutbacks; production is higher than it
would be without a program.
Support levels for wool have been consistently set above world prices.
The program affects prices only slightly because world prices are the major
determinant for U.S. prices.
The support programs have little impact on consumers; the value of raw wool is
often less than 5 percent of the value of a wool apparel item.
Tariffs on wool textiles and raw wool, rather than price support, increase U. S.
consumer prices.
DEVELOPMENTS IN THE EXPORTING AND
IMPORTING OF TEXTILES AND APPAREL
The trade deficit in 1983 for the U.S.
textile and apparel industries, the largest
in history, was 33 percent greater than in
1982. A result of both lower exports and
higher imports, the textiles and apparel
deficit of $9.6 billion accounted for over
14 percent of the overall U.S. trade deficit
in 1983. The textile and apparel trade
deficit for 1984 should exceed this amount;
for the first 8 months of 1984 it was 51
percent higher than during the same period
in 1983. In square yards equivalent, imports
were 43 percent higher for January to August
1984 than for the comparable period in 1983.
Corresponding increases by fiber were as
follows: Cotton--49 percent, wool--46
percent, and manmade--38 percent.
During the first half of 1984, over 40
percent of the apparel offered for sale in
the U.S. was imported, compared with 34
percent in 1983. Over half of apparel
imports were made of cotton or of blends
containing mostly cotton (_!_Q).
Customs Regulations Amendments Affecting
Textiles and Textile Products
Regulations (~) were formulated by the
U.S. Customs Service which would prevent
textile-exporting countries from evading
6 fam i ly Econom i cs Review 1985 No.2
quotas" by sending partially completed
apparel items to countries with unused
quotas. Interim regulations, effective on
September 7, 1984, 5 provide specific regula­tory
authority for applying "country-of­origin"
rules in determining whether
textiles or textile products are subject to
any multilateral or bilateral textile
agreements.
A textile or textile product is designated
a product of a foreign country by meeting
either of two criteria: It is wholly the
growth, product or manufacture of that
foreign country; or, it has been substan­tially
transformed (by manufacturing or
4Quotas are established under multilateral
or bilateral agreements with the United
States.
5In response to publication of the interim
regulations on August 3, 1984, Customs
received many comments describing severe
financial hardship that would result if
merchandise already ordered could not be
shipped by September 7, 1984. Therefore,
the effective date provision of the interim
Customs Regulations was amended to grant
a limited exception for textiles and textile
products sold to a person in the United
States with a written contract or purchase
order executed before August 3, 1984 (16).
processing) in that country into a new and
different article. Evidence of "substantial
transformation" is to be based on costs of
manufacturing, complexity of the manufactur­ing
operation (time involved and technology
and skill required), and a physical change
in the textile or textile product.
A declaration must be submitted with the
shipment which indicates which of the two
conditions for establishing country of
origin is being employed. If other than
wholly the growth, product, or manufacture
of the country, the declaration must des­cribe
any manufacturing and/or processing
operations, materials used, and costs
involved. Date of exportation is defined as
the date the vessel or carrier leaves the
last port in the country of origin to ensure
enforcement of the date of export provisions
contained in various bilateral agreements.
DEVELOPMENTS IN APPAREL LABELING
Care Labels
In an effort to inform consumers and
apparel manufacturers about the changes in
the Care Labeling Rule which became effec­tive
in January 1984, the Federal Trade
Commission placed public service announce­ments
on television and advertisements in
magazines and newspapers. Also, two booklets
were made available: What's New About Care
Labels 6 is directed toward consumers, and
Writing a Care Label is a manual for busi­nesses
that is designed to assist manufac­turers
in understanding and complying with
the Care Labeling Rule.
What's New About Care Labels lists the
most important changes, has a selection of
questions and answers about the revised Care
Labeling Rule, and contains a glossary of
standard terms most likely to be used by
manufacturers. Writing a Care Label
specifies for the manufacturer or importer
how to comply with the rule; advises how to
write care instructions; answers questions
on where to put the label, what to write on
the label, how to label piece goods, and
exemptions to the rule; reprints the rule;
and includes a glossary of standard terms.
6 For sale (in packets of 50) by the Super­intendent
of Documents, U.S. Government
Printing Office, Washington, DC 20402.
Labeling Requirements for Children's
Sleep wear
The Consumer Product Safety Commission
amended the labeling requirements on care of
children's sleep wear, subject to the
Standards for the Flammability of Children's
Sleep wear, by defining the circumstances in
which those instructions may appear on the
reverse side of a label (1). Effective on
February 24, 1984, the ~endments set forth
the following three conditions that must be
met in order to place precautionary care
instructions (those which advise consumers
of any agents or treatments known to cause
deterioration of flame-resistant properties)
on the reverse side of labels for children's
sleepwear:
1. The label is permanent and readily
visible and accessible to the prospective
purchaser.
2. The "front" of the label bears the
words "Care Instructions on Reverse" or the
equivalent in lettering which is permanent,
prominent, conspicuous, and legible.
3. The item is displayed for sale in a way
that allows the purchaser to manipulate the
label so that the entire text of the pre­cautionary
care instructions can be read.
If this is not possible, care instructions
must also appear on the package or on a
hang tag attached to the item.
Labeling of Wool, Fur, and Textile Products
The Federal Trade Commission (FTC) is
required, under the Regulatory Flexibility
Act, to conduct a periodic review of rules
which have or will have a significant
economic impact upon a substantial number of
small businesses. Comments were solicited
for rules and regulations under the Wool
Products Labeling Act of 1939 (Wool Act),
the Fur Products Labeling Act (Fur Act),
and the Textile Fiber Products Identification
Act (Textile Act) (4).
The Wool Act requires all wool products to
bear a label showing the percentage of wool,
recycled wool, and nonwool fibers contained
in the product and the name of the manu­facturer
or other distributor. The Fur Act
requires fur products to be labeled with the
name of the animal which produced the fur,
country of origin, whether the furs are
natural, dyed or otherwise artificially
colored, and certain other characteristics
1985 No. Z Family Economics Review 7
of the fur product. The Textile Act requires
each household textile product to bear a
label containing the percentage of each
fiber contained in the product, the name of
the manufacturer or distributor, and the
country of origin (if not the United States). 7
All three acts, administered by the FTC,
prohibit misbranding and false advertising.
Animal names must conform to the FTC's Fur
Products Name Guide, and generic names for
manufactured fibers (as defined by FTC)
must be used.
Based on comments received, FTC concluded
there is a continued need for the rules and
that any burdens imposed by the rules are
outweighed by the benefits to consumers and
industry. No suggestions for changes to
minimize economic impact, and no evidence of
conflict with other rules or changed condi­tions
were submitted.
70n June 25, 1984, legislation (S.1816)
was introduced that would amend the Textile
Fiber Products Identification Act, the
Tariff Act of 1930, and the Wool Products
Labeling Act of 1939 to improve the labeling
of textile fiber and wool products. Such
products would be declared misbranded if
country of origin (where processed or manu­factured),
either the United States or else­where,
was not identified on a tag, label,
or other means attached to the products or
product package in a conspicuous place. For
the first time, items made in the United
States would be included in this labeling
requirement.
SELECTED REFERENCES
1. Consumer Product Safety Commission.
1984. Standards for the flammability of
children's sleep wear; sizes 0 through
6X (FF3-71) and sizes 7 through 14
(FF5-74); requirements for labeling of
children's sleepwear. Federal Register
49(17):3062-3064.
2. Cressy, Terrence. 1984. E.I. duPont
de Nemours & Co. Inc. [Personal
communication on October 26, 1984.]
3. Fallon, James. 1984. New computer
system stimulates [sic] cloth pattern.
Daily News Record, January 9 issue.
8 Family Economics Review 1985 No.2
4. Federal Trade Commission. 1984. Rules
and regulations under the Wool Products
Labeling Act of 1939, the Fur Products
Labeling Act, and the Textile Fiber
Products Identification Act; summary of
comments. Federal Register. 49(94):
20304-20305.
5. Federal Trade Commission, Bureau of
Consumer Protection. 1984. Writing a
Care Label--How to Comply With the
Amended Care Labeling Rule.
6. • 1984. What's New About Care
Labels.
7. Scholes, William A. 1983. Launch new
way to print patterns on wool fabrics.
Daily News Record. December 28 issue.
[Personal communication with Lawrence
Easter, Burlington Industries Inc., on
October 31, 1984.]
8. Textile Organon. 1982. Vol. 53, No. 10,
p. 210.
9. • 1984. Vol. 55, No. 5, p. 81.
10. • 1984. Vol. 55, No. 7,
p. 144.
11. • 1984. Vol. 55, No. 8,
pp. 159 and 176.
12. U.S. Department of Agriculture,
Economic Research Service. 1984.
Cotton and Wool Outlook and Situation
Report CWS-36, CWS-38, CWS-39, and
CWS-40; and personal communication with
John Lawler.
13. • 1984. Wool and Mohair:
Background for 1985 Farm Legislation.
Agriculture Information Bulletin No. 466.
14. U.S. Department of Commerce,
International Trade Administration.
1984. Textile and Apparel Import
Report.
15. U.S. Department of the Treasury, U.S.
Customs Service. 1984. Customs
regulations amendments relating to
textiles and textile products. Federal
Register 49(151):31248-31251.
16. • 1984. Customs regulations;
amendments relating to textiles and
textile products; exception to
effective date. Federal Register
49(169):34199-34200.
Measurtng Poverty1
By Daniel H. Weinberg
Economist
U.S. Department of Health and
Human Services
The Federal government first began measur­ing
poverty in the sixties when the con­tinued
existence of Americans living at the
edge of subsistence seemed out of congruence
with the affluence of so many in the United
States. Undertaking a "war on poverty"
required finding out who was poor and, of
?ourse, why they were poor. This knowledge,
1t was hoped, would lead to new and better
programs for alleviating poverty. This paper
attemps both to explain how poverty is cur­rently
measured in the United States and to
present some perplexing measurement issues.
HISTORY
Mollie Orshansky, then at the Social
Security Administration, suggested in the
early sixties that a reasonable measure of a
poverty-level income would be that income
sufficient to purchase a minimally adequate
amount of goods and services. The data
necessary to define and price a full "market
basket" of goods and services did not then
(and do not now) exist. Ms. Orshansky
observed, however, that the data from the
Department of Agriculture's (USDA) 1955
Household Food Consumption Survey showed
that the average family of three or more
persons spent approximately one-third of its
after-tax income for food. She then multi­plied
the estimated cost of the USDA's 1961
economy food plan (a minimal food basket
1This article is taken from a paper
presented at the Agricultural Outlook
Conference in December 1984 at Washington,
DC.
The author would like to thank Gordon
Fisher and Reuben Snipper for their helpful
comments and suggestions. The views expres­sed
in this paper are the author's own and
do not represent those of the Departments of
Health and Human Services or Agriculture.
meeting then currently recommended dietary
allowances) by three. (For two-person
families and unrelated individuals, the cost
of the food plan was multiplied by slightly
more than three in order to take account of
the relatively larger fixed expenses of
smaller households.) These thresholds varied
by the size of the family, the age and sex
of the family head (householder), and
whether it was a farm or nonfarm family.
(Farm family thresholds were set at 70
percent of the nonfarm thresholds.) In
effect, these thresholds defined as poor any
family (or individual) whose after-tax cash
income was not sufficient to purchase a
minimally adequate diet, assuming one-third
of income was spent on food.
CENSUS POVERTY THRESHOLDS
The basic concept of measuring poverty has
remained the same since the Orshansky thres­holds
were adopted in the mid sixties, though
various minor technical revisions have been
made. At first, the thresholds were revised
annually to reflect changes in the cost of
the economy food plan. Since 1969, however,
when the thresholds were officially recog­nized
by the Office of Management and Budget
(OMB), the thresholds have been adjusted for
changes in the overall Consumer Price Index
( CPI). (The farm/ nonfarm differential was
changed to 85 percent at that time as well.)
The most recent revisions were made in 1980.
The farm/nonfarm differential was abolished ,
as were separate thresholds for female­headed
families, and thresholds were estab­lished
for families of eight and of nine or
more persons. (Formerly, the thresholds
were defined only up to seven or more
persons.) Thus, there are currently 48 basic
thresholds (124 prior to 1981) that are
weighted by estimates reflecting the popu­lation
distribution of poor people among
the categories to give the 13 thresholds
usually reported--one each for unrelated
individuals and family sizes two through
nine or more, with four additional thres­holds
for elderly and nonelderly individuals
and elderly-headed and nonelderly-headed
1985 No. Z Family Econom i cs Rev i ew 9
two-person families. Table 1 presents the
weighted average poverty thresholds in 1983
and shows that the poverty threshold for a
family of four is currently $10,178. For
comparison, the weighted average poverty
threshold for a nonfarm family of four in
1968 was $3,553.
Five rules followed by the U.S. Bureau of
the Census (Census Bureau) have an impor­tant
effect on the actual count of the number
of people in poverty:
1. Poverty status is determined for un­related
individuals only if they are 15
years or older.
2. The count is only of poor families and
individuals, not of poor households. Multi­person
households are counted as a single
unit only if the persons are all related.
3. Annual income is used, so no month­to-
month profile of poverty is available.
Table 1. Weighted average poverty
thresholds in 1983
Size of family unit Threshold
1 person (unrelated individual).
15 to 64 years ••••••••••••••••
65 years and over ••••••••••••
2 persons •....••....•....••....
Householder 15 to 64 years •••
Householder 65 years and over
3 persons ..................... .
4 persons •...••••..••..••...•..
5 persons ..................... .
6 persons ..................... .
7 persons ..................... .
8 persons ..................... .
9 persons or more ••••••••••••••
$5,061
5,180
4,775
6,483
6,697
6,023
7 '938
10,178
12,049
13' 630
15,500
17,170
20,310
Source: U.S. Department of Commerce,
Bureau of the Census, 1984, Money income
and poverty status of families and persons
in the United States, 1983 (Advance data
from the March 1984 Current Population
Survey), Current Population Reports,
Series P-60, No. 145.
10 Family Economics Review 1985 No.2
4. Before-tax cash income, not post-tax
disposable income, is used in judging
whether a family is poor.
5. Noncash benefits are not counted in
determining poverty status.
These rules do not all work in the same
direction--some increase and some decrease
the count of poor persons--but all affect
the reported demographic profile of the
poverty population .
OMB POVERTY GUIDELINES
A number of federally supported programs
to assist low-income persons by law or regu­lation
use a variant of the Census Bureau's
poverty thresholds in determining income
eligibility for benefits. This alternative,
known as the OMB poverty guidelines, is a
simplified and rounded-off version of the
thresholds discussed above. The guidelines
were issued from 1965 to 1981 by the Office
of Economic Opportunity and its successor
agency, the Community Services Administra­tion,
and have been published since 1982 by
the Department of Health and Human Services.
Separate guidelines are established for
Alaska and Hawaii. These OMB guidelines are
made available in February or March of a
calendar year. (The Census thresholds are
not published until August.) Although the
OMB guidelines reflect inflation only
through the previous year (as do the Census
thresholds), they are used as guidance for
the upcoming year. (The thresholds are used
only to determine poverty for the previous
year.)
The OMB guidelines (or adaptations of
them) are used by a number of programs
including the following:
Department of Health and Human Services.
Community Services Block Grant, Low-Income
Home Energy Assistance Block Grant, and
Head Start.
Department of Agriculture. Food Stamps,
National School Lunch Program (free and
reduced-price lunches), and Special Supple­mental
Food Program for Women, Infants, and
Children (WIC).
Department of Labor. Job Corps, and
Migrant and Seasonal Farmworker Program.
Department of Education. Upward Bound.
The OMB guidelines are used in a number of
different ways by these programs. For
example, the National School Lunch Program
requires that free meals be made available
to children from families with incomes below
130 percent of the guidelines, and reduced­price
meals to children from families with
incomes between 130 percent and 185 percent
of the guidelines. The Food Stamp program
counts monthly, gross, pretax income against
a monthly version of 130 percent of the
guidelines for nonelderly, nondisabled
households. (A different set of rules apply
to elderly or disabled households.)
CURRENT AND PAST POVERTY
Table 2, adapted from the latest annual
Census publication on poverty, characterizes
the population below the poverty level in
1983. Poverty statistics published by the
Bureau are based on the Current Population
Survey (CPS) taken in March of each year.
The number of persons below the poverty
level in 1983 was 35.3 million, a statistic­ally
significant increase of nearly 900
thousand persons from 1982. Black and
Spanish or1gm families have substantially
higher poverty rates than whites, and
persons in families with a female house­holder
(no husband present) have a much
higher poverty rate than those in other
family types.
The figure on p. 12 presents a picture
of how the poverty rate has changed over
time. The earliest measurement placed the
poverty rate in 1959 at 22.4 percent. Due to
economic growth and the expansion of income
transfer programs, the poverty rate fell to
an historic low of 11.1 percent in 1973,
remaining at or near that level through
1979. The poverty rate has risen since then
to 15.2 percent in 1983.
ISSUES IN MEASURING POVERTY
Poverty as a Social Indicator
How well is poverty defined by the measure
now in use? The original definition of the
poverty thresholds was based on an estimate
of minimum subsistence, making the official
poverty levels in some sense an absolute (as
Table 2. Persons, families, and unrelated individuals below the poverty level, 1983
Olaracteristic
All persons ........................................ .
White ••........•......•.....•.....•.... · · · · · · · · · • •
Black ..........•................. · · · · · · · · · · · · · • · · ·
Spanish origin (of any race) •••••••••••••••••.••••
In metropolitan areas ............................. .
Outside metropolitan areas ••••••••••••.••••••••••••
All families ................................ · · · · · · · · •
Married-couple families ••••••••.•••••••.•••••••••..
Male householder, no wife present •••••••••••••••••
Female householder, no husband present •••••••••••
• All unrelated individuals ••••••••.••.•••.••••••••• •• •
Poverty rate
Percent
15.2
12.1
35.7
28.4
13.8
18.3
12.3
7.6
13.0
36.0
23.4
Persons
Millions
35.3
24.0
9.7
4.2
21.8
13.5
7.6
3.8
.3
3.6
6.8
Source: U.s. Department of Commerce, Bureau of the Census, 1984, Money income and
poverty status of families and persons in the United States, 1983 (Advance data from the
March 1984 Current Population Survey), Current Population Reports, Series P-60, No. 145.
1985 No.2 Family Econom ic s Rev i ew 11
Persona Below Poverty Line, 1959-1983
24
23
22
21
20
~ 19
wz 18
0 17 <r w ~ 16
w 15 .... ~ 14
~
13
<r 12
w 11 > 0
a. 10
9
8
7
6
5
60 65 70 75 80 85
YEAR
Source : U. S . Department of Commerce. Bureau of the Census. Current
Population Reports, various issues. --
opposed to a relative) measure of poverty.
But, there were problems in defining poverty
as an absolute standard. Even in its origi­nal
incarnation, no attempt was made to
measure the subsistence levels of nonfood
items in a poor family's budget because the
data did not (and do not) exist. It was
argued that since the average three-person
family spent approximately one-third of its
income (in 1955) on food and we could calcu­late
the cost of a minimal diet, we could
approximate an absolute poverty level by
multiplying that cost by three. Because real
incomes have risen tremendously since the
midfifties, current families spend approxi­mately
one-fifth of their income for food.
Thus, advocates of the poverty thresholds as
an absolute measure have argued that the
cost of the economy (now called thrifty)
food plan should be multiplied by approxi­mately
five.
Such a position, it seems to me, ignores
the basic purpose of the poverty rate. In my
opinion, that basic purpose is to use the
poverty as a social indicator--a measure of
how well we as a society are doing to help
the less fortunate members of our society.
In that sense, the poverty line has evolved
into a kind of relative measure, that is, a
measure of how well those at the lower end
of the income distribution are doing (or at
least how many of them there are). In that
role, its chief advantage is that it has a
consistent definition (at least since 1969)
12 fam i ly Economics Review 1985 No.2
and uses a commonly accepted method for
accounting for inflation. A true relative
measure might be something like setting the
poverty threshold at a fixed proportion of,
say, the median income for each family size,
and calculating the proportion of families
falling below those thresholds. (The current
thresholds are approximately one-third to
two-fifths of median income, having fallen
from roughly one-half in 1959.) Unfortu­nately,
choosing a relative measure would
likely lead to the truism that "the poor
will always be with us," though that is not
necessarily strictly true under a percentage­of-
median-income definition.
Demographic Changes
The overall poverty rate has shortcomings
as a social indicator. Demographic changes
in the population, specifically the increase
in female-headed families (no husband
present) and in unrelated individuals, tend
to lead to increases in the overall poverty
rate since these two groups have above­average
poverty rates. That is, even if
there had been no change in the poverty
rates of any individual demographic group,
the poverty rate would have risen as these
groups became a larger proportion of the
population. It is only by going behind the
concept of poverty measurement to looking at
demographic change directly that we can gain
an understanding of the social forces at
work.
Inflation and Price Differentials
Inflation and, more broadly, prices create
problems in measuring poverty. For example,
the choice of an inflation index with which
to adjust the thresholds from year to year
is not without controversy. At first,
changes in the price of food were used to
adjust the cost of the minimal diet, with
the multiplier remaining the same (at three).
But changes in food prices change the food
consumption behavior of families, leading OMB
to adopt the CPI as the basis for adjusting
the thresholds. In any case, should the
appropriate index be one for items purchased
by poor people rather than by all persons?
(Some evidence shows that a price index so
defined would probably have risen slightly
less than the CPI actually has.) Should one
adjust the poverty thresholds for regional
cost-of-living differentials? (The current
Census thresholds make no distinction
between a family living in New York City and
one living in rural Mississippi, though the
OMB guidelines do take special note of Alaska
and Hawaii.) Although these alternatives may
seem like reasonable ideas, the data do not
exist to implement either of them.
Taxes
Poverty rates are calculated from sample
survey data (the CPS). Not only is there
underreporting of income by survey respon­dents
(not limited to low-income respondents)
and imputation of missing data, but the tax
liability of the families in the sample is
not asked. This leads to the anomaly of cal­culating
poverty on a pretax basis but using
a definition originally defined on a posttax
basis. Simulating tax liability is an option
but would lend an additional element of
arbitrariness to the calculation.
Accounting Period
Monthly data on income are just now becom­ing
available from the Survey of Income and
Program Participation making it possible to
define a poverty rate for an accounting
period of less than 1 year. However, because
of substantial month-to-month variations in
income flows and expenditures and the
ability of families and individuals to save,
it may not make any sense to define poverty
on a month-to-month basis.
Noncash Benefits
The most important and perhaps most con­troversial
issue is what to do about noncash
benefits. When the thresholds were origi­nally
defined, practically the only source
of noncash benefits of any consequence was
the noncash income of farmers. This was
taken into account by establishing separate
thresholds for farm and nonfarm families. As
the number of farmers has fallen and as
persons on farms have come to derive larger
proportions of their total income from
nonfarming employment, the importance of
noncash income to farmers has fallen as
well, and that distinction was eliminated in
1980. On the other hand, there has been a
tremendous growth in both government and
private sector noncash transfers, for
example, medicare, medicaid, food stamps,
nutrition assistance, housing assistance,
and employer-provided fringe benefits
(mainly health insurance and pension
contributions). How to value these transfers
and whether to change the definition of
poverty to be consistent with the changed
definition of income has been the focus of a
great deal of study. (See article on p. 14.)
Income Distribution
Finally, the number of persons in poverty
is just one aspect of the overall distribu­tion
of economic well-being in this country.
It is apparent that there is a strong trend
towards a more unequal distribution of
income over the past decade. In other words,
even though the American "pie" has become
bigger, the share of the lowest portion of
the income distribution has fallen while the
share of those at the upper end has risen.
Serious students of U.S. economic well-being
would do well to investigate all aspects of
income distribution, not just poverty·
OUTLOOK
What is the outlook for the future? In
terms of poverty itself, the rate will
undoubtedly be lower in 1984 than it was in
1983. How much lower is a matter for specu­lation,
but one competent researcher has .
suggested that based on his model, and usmg
current Congressional Budget Office economic
projections, the poverty rate will fall to
13.6 percent in 1986 (from 15.2 percent in
1983). In other words, economic growth will
help, but the low poverty rates of the
midseventies are not in sight. In terms of
poverty measurement, it is likely, indeed
inevitable, that discussion will focus on
the appropriate treatment of noncash
benefits in determining poverty.
SELECTED REFERENCE
u.S. House of Representatives, Committee
on Ways and Means, Subcommittees on
Oversight and on Public Assistance and
Unemployment Compensation. 98th Congress.
1983. Background Material on Poverty.
Committee Print 98-15.
1985 No.2 Family Economics Review 13
In-Kind Income-Effect on
Poverty~
By John M. McNeil
Chief, Poverty and Wealth Statistics Branch
Bureau of the Census
U.S. Department of Commerce
In September 1980 Congress directed the
Secretary of Commerce to develop and publish
estimates of the effect of in-kind benefits,
such as food stamps and medical assistance,
on the number of families and individuals
below the poverty level. This project was
made possible by the fact that the March
supplement to the Current Population Survey
(CPS) had been modified in 1980 to include
questions about the receipt of food stamps,
school lunches, medicare, medicaid, and
public and subsidized housing. The results
of a study by Dr. Timothy Smeeding were
published by the Bureau of the Census in
March 1982 in Technical Paper 50.2 That
report showed what the poverty rate would
be for various groups within the population
if income were redefined to include the
value of benefits from the government
programs mentioned above. The results were
labeled "experimental," and a careful
reading of the description of the methods
used to value the benefits should convince
users of the appropriateness of that term.
This article reviews the circumstances
that led to the preparation of these esti­mates,
describes the methods used to obtain
them, and discusses concerns about reesti­mating
the number of persons in poverty by
changing the definition of income.
1 This article is taken from a paper
presented at the Agricultural Outlook Con­fe~
ence in December 1984 at Washington, DC.
See "Measuring the effect of in-kind
transfers on poverty," Family Economics
Review 1983(2) :22-23. Updates of these
figures are available in Technical Paper 51
and Technical Paper 52.
14 Family Economics Review 1985 No.2
Background
The definition of poverty that was devel­oped
by Mollie Orshansky and became our
official definition was based on two key
elements. The first key element was a
Department of Agriculture food plan that was
used to define the minimum income needed to
meet food requirements. There were no
similar plans available for nonfood items,
however, so a procedure had to be developed
to define the minimum income needed to meet
nonfood requirements. The procedure chosen
was to multiply the food plan by a factor so
that the resulting dollar value represented
the amount needed to meet both food and non­food
requirements. The use of a multiplier
became the second key element. The value of
the multiplier was set equal to 3, the
reciprocal of the proportion of income spent
by all families on food in the 1955 Food
Consumption Survey. The multiplier approach
and the use of all families as the reference
group had this implication: The proportion of
income spent on food should be the same
for low-income families as for all families.
This definition of poverty, together with
the income data collected in the annual
March supplement to the CPS, allowed the
U.S. Bureau of the Census (Bureau) to
begin publishing in 1969 official estimates
of the number and characteristics of persons
in poverty. The Bureau continues to publish
regular reports, and estimates are available
for the years 1959 through 1983.
The official poverty definition is
relative in the sense that it is based on a
necessarily subjective food plan and on
certain expenditure patterns. It is absolute
in the sense that the levels do not change
over time except for price adjustments.
Because the poverty threshold is fixed in
terms of real dollars, the relative income
of families at the poverty level declines as
real average family income increases. In
1959 the poverty threshold for a family of
four was about one-half of median family
income; in 1983 it was equal to about
one-third (table 1).
During the sixties and seventies the
development of large new noncash benefit
programs led to concerns about the adequacy
of the poverty definition and ultimately to
the congressional directive referred to
earlier. Among the programs initiated during
this period were food stamps in 1964,
medicare and medicaid in 1965, and a major
new housing assistance program in 197 4
(section 8--rental assistance). By 1983
these programs accounted for a large propor­tion
of the assistance going to lower-income
families. In 1983 the amount of means-tested
cash assistance was approximately $28
billion compared to outlays of $11 billion
under the food stamp program, $32 billion
under the medicaid program, and $9 billion
under housing assistance programs (table 2).
It should be noted, however, that noncash
benefits to the nonpoor have also increased
over the past two decades. For example, in
1983 employer contributions for health and
pension plans amounted to $171 billion and
employers contributed another $153 billion
for Federal and State social insurance
programs.
Methods Used to Value Noncash Benefits
The task of preparing estimates for non­cash
benefits is fairly straightforward in
the case of food stamps but very difficult
for other types of benefits. The problem is
Table 1. Median family income and poverty thresholds for 4-person families, 1959-83
[In current dollars]
Year
19 59 • ••••••.••••••••
1960 • ....•....•...•.
1961 . •.•••...••..•••
1962 • .•.......•...••
1963 • .•......•..•..•
1964 • .••..••....•.•.
196 5 • ••••••••••••••.
1966 . .•••.......••..
1967 • .•••••.••...•••
1968 .. •.•...•.....•.
1969 . .•........••.•.
19 7 0 •• ••••••••••••••
1971 • .••.•....•••..•
197 2 •• ••••••••••••••
19 7 3 • •••••••••••••••
197 4 • •.••......•...•
197 5 • •.••••••••••••.
19 76 • •••••••••••••••
19 77 • ••••••.••••.•.•
19 78 • ••••..••.••••••
19 79 • ••••••••••••••.
19 80 • •••••.•.•••••••
1981 • •....••..•.....
19 8 2 • •••••••••••••••
19 83 • ..•..•.•.•...•.
Median
family
incane
Poverty
threshold
- - - - - - Dollars - - - - - -
6,070 2,973
6,295 3,022
6,437 3,054
6, 756 3,089
7,138 3,128
7,488 3,169
7,800 3,223
8,341 3,317
8,994 3,410
9,834 3,553
10,623 3,743
11,167 3,968
11,626 4,137
12,808 4,275
13,710 4,540
14,969 5,038
15,848 5,500
17,315 5,815
18,723 6,191
20,428 6,662
22,579 7,412
24,332 8,414
26,274 9,287
27,619 9,862
29,184 10,178
Source: U.S. Department of Commerce, Bureau of the Census.
Poverty threshold
as a percent of
median family incane
49.0
48.0
47.4
45.7
43.8
42.3
41.3
39.8
37.9
36.1
35.2
35.5
35.6
33.4
33.1
33.7
34.7
33.6
33.1
32.6
32.8
34.6
35.3
35.7
34.9
1985 No.2 Family Economics Review 15
made worse by the limited amount of informa­tion
on noncash benefits that is collected
in the CPS. For example. except for food
stamps. no information is collected on dura­tion
of recipiency. The valuation approaches
make the assumption that the benefit was
received during the entire year.
Smeeding used three approaches to the
valuation of noncash benefits--the market
value approach. the cash equivalence
approach, and the poverty budget share
approach.
The market value approach attempts to
value the good or service at the price the
good or service would command on the open
market. In the case of food stamps, the ap­proach
is straightforward; they are counted
at their face value. The valuation of other
benefits is less straightforward. Benefits
from school lunches are valued according to
Department of Agriculture data on subsidies
per meal for regular price. reduced price,
and free school lunches. The CPS question­naire
does not distinguish between free and
Table 2. Selected sources of noncash income
[In billions of 1983 dollars]
Source
Government programs:
Needy families program (food) ••••••••••••••••••••••••.••••••
School lunch program .......................................•
Food stamps •••••••••.•••••••••••••••••.•.•.•.•••••••••••••••
WI C 1
••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Medicare ................................................... .
Medicaid ................................................... .
Veterans' Administration medical care •••••••••••••••••••••••
Hospital care provided by public assistance or charity •••••••
Housing assistance for low-income persons ••••••••••••••••••.
Energy assistance for low-income persons ••••••••.•••••••••••
Other:
Employer contribution for private health and pension plans ••
Employer contributions for Federal and State social
insurance programs ••••••••••••••••••••••••••.••••••••••••••
Return on equity in own home .............................. .
Tax deductions for business meals and entertainment ••••••••
1959
-$0.4
.7
2.9
8.0
33.3
35.2
34.2
4 13.5
( 5)
1983
$3.2
11.2
.9
55.6
232.2
7.8
170.6
153.1
4 48.8
( 5)
1 Women. Infants, and Children. Food and Nutrition Service, U.S. Department of Agriculture.
2 Includes $5.7 billion for persons in institutions.
3 Includes capital expenditures.
4 Obtained by calculating total equity in owner-occupied residence in 1962 and 1979 and
applying a 3-percent rate of return.
5 Data could not be furnished by Internal Revenue Service. Clotfelter has estimated that the
value of business "lunches" provided by proprietors and partnerships only, not including
corporations, was $10 billion in 1979 (C. Clotfelter, "Business perks and tax-induced
distortions: The case of travel and entertainment," [working paper], Duke University,
Institute of Policy Sciences and Public Affairs).
Source: Data on Government programs obtained from agencies responsible for each program.
Data on employer contributions are from the Survey of Current Business.
16 Family Economics Review 1985 No.2
reduced price lunches, so the assumption is
made that children below 125 percent of the
poverty level receive free lunches.
Because the private sector does not offer
medical care plans that are comparable to
medicare and medicaid, the market value of
these programs is estimated by calculating
program expenditures per enrollee or bene­ficiary.
In the case of medicare, data are
obtained for each State on persons covered
because of age, persons covered because of
disability, benefits paid on behalf of the
aged, and benefits paid on behalf of the
disabled. The estimated money value .of being
covered by medicare, then, depends on the
State of residence and the person's risk
class--whether they are covered because of
age or disability. In 1983 the estimated
money value of being covered by medicare
ranged from $1,016 for a person 65 or over
living in Utah to $4,051 for a disabled
person living in the District of Columbia.
In the case of medicaid, the money value of
coverage depends on the State of residence
and which one of four risk classes the
person falls into--65 or over; disabled; 21
to 64, not disabled; and under 21, not
disabled. The valuation of medicaid also
depends on whether expenditures for persons
in institutions are included when the expen­diture
per beneficiary figures are calcu­lated.
The inclusion of expenditures for
persons in institutions increases the
estimated dollar value of medicaid coverage
substantially for the aged and disabled. In
1983 the estimated dollar value of being
covered by medicaid ranged from $166 for a
nondisabled person under 21 in South
Carolina (institutional expenditures
excluded), to $7,884 for an aged person in
New York (institutional expenditures
included), to $10,243 for a disabled person
in Minnesota (institutional expenditures
included).
Obviously, the values assigned under the
market value approach to disabled persons
and to persons 65 and over who are covered
by medicare and/or medicaid are very sub­stantial.
Because the 1983 poverty threshold
was only $4,775 for a single person 65 or
over and only $6,023 for a 2-person family
with a householder 65 or over, the use of
the market value approach reduces the
poverty rate among persons 65 and over from
14.1 percent to 3.3 percent. In fact, in
some States it would be nearly impossible
for a 65-year-old to be classified as in
poverty under the market value approach
that includes institutional expenditures.
The method used to estimate the dollar
value of housing assistance is especially
complex. Ideally, one would like to know,
for each public or subsidized housing unit,
the actual rent paid and the rent that could
be obtained for the unit on the open market.
The difference would then be the dollar
value of the housing subsidy. Unfortunately,
no data on amount of rent paid are collected
in the CPS. Such data are collected in the
Annual Housing Survey, but of course that
survey does not collect data on the amount
of rent that subsidized units could command
on the open market. The methodology used to
assign a dollar value to housing assistance
involves the following steps: (1) For each
public or subsidized unit in the Annual
Housing Survey, find a nonsubsidized unit
that is similar in terms of certain charac­teristics
of the unit and the household;
(2) compare the subsidized rent with the
nonsubsidized rent and consider the differ­ence
to be the dollar value of the housing
assistance; and (3) use this information to
assign the appropriate subsidy to each CPS
household residing in a public or subsidized
housing unit according to the type, size,
and income of the CPS household.
In the cash equivalent approach the value
of a benefit is the amount at which the
recipient would be indifferent as to whether
he or she received cash or the benefit.
Although this concept is theoretically
attractive as a method of valuing noncash
benefits, the concept is difficult to imple­ment.
It would seem unrealistic to try to
obtain a direct measure of cash equivalence
by asking respondents to place a dollar
value on the benefits from a particular pro­gram
because some recipients lack knowledge
about the various programs. A further
difficulty is the possibility that some
respondents may place a value on certain
benefits (for example, medical care for
themselves or their children) that would be
considered inappropriately low by society.
The approach that was actually adopted was
1985 No.2 Family Economics Review 17
to try to measure the average expenditure an
unsubsidized family of a given income level
and type makes on the good or service in
question. This amount is then considered to
be the cash equivalent value for a recipient
family of the same income level and type.
(The income level of the recipient family is
defined to be the sum of money income plus
the market value of noncash benefits.) The
average expenditure level is then compared
to the market value of the benefit. If the
average expenditure level exceeds the market
value. the cash equivalent value is set
equal to the market value. If the average
expenditure level is less than the market
value. then the cash equivalent value is set
equal to the average expenditure level.
The average expenditure data that were
used in estimating the cash equivalent value
of food stamps were taken from the recent
Consumer Expenditure Survey. There are no
data on average unsubsidized lunch expendi­tures
of school children. so the cash
equivalent value of school lunches was
simply set equal to the market value.
The implementation of the cash equivalent
approach in the case of housing assistance
is difficult and complex. Recall that a sta­tistical
matching technique was required to
transfer estimates of actual housing costs
and the amount of housing subsidy from the
source file. the Annual Housing Survey. to
the file from the CPS. A similar procedure
is used to transfer estimates of average
housing expenditures from households in the
Annual Housing Survey to households in the
CPS. To summarize. we need to know for each
CPS household living in public or subsidized
housing three items of information--actual
housing costs. the value of their housing
subsidy. and average housing costs of fami­lies
with similar characteristics. None of
these data items are available from the CPS.
and only two are available from the Annual
Housing Survey. The estimation procedure.
then. involves the creation of an estimate
of the value of housing subsidies and the
statistical transfer of three critical data
items from one survey to another. Once these
transfers are made. the valuation of the
housing subsidy for a given household under
the cash equivalent approach depends on a
18 Family Economics Review 1985 No.2
comparison of average housing expenditures
for households of this type with the sum of
actual costs plus market subsidy. If average
expenditures are less than this sum. then
the cash equivalent approach values the sub­sidy
at an amount lower than the estimated
market value of the subsidy.
The determination of the cash equivalent
value of medicaid and medicare is made dif­ficult
by the fact that most U.S. households
have health plans that are subsidized by
either government or an employer. As a
result. it is difficult to measure the
average expenditures of unsubsidized house­holds.
The procedure used was to base esti­mates
of average expenditure levels on data
from the 1972-73 Consumer Expenditure
Survey and ignore the fact that because of
an inability to measure government and
employer subsidies the average expenditure
estimates were biased downward.
The final valuation approach. the poverty
budget share approach. is similar to the
cash equivalent approach except that the
"average expenditure level" is replaced by
"average amount spent by households at the
poverty level." If the average amount spent
by households at the poverty level is more
than the market value of the benefit, then
the benefit will be assigned its market
value. If the average amount spent by
poverty households is less than the market
value. then the benefit will be assigned a
value equal to the average expenditure of
poverty households. For the general purpose
of valuing noncash benefits. the poverty
budget share approach has a serious concep­tual
problem. Regardless of the income level
of the recipient family, noncash benefits
cannot be assigned a value higher than the
amount that an unsubsidized poverty family
would spend on the good or service. (The
problem of measuring the expenditures of
unsubsidized poverty families is a separate
issue.) For families above the poverty
level, the poverty budget share approach
puts a lid on the value of noncash benefits
that is generally below the average amount
spent by families of this type on the good
or service in question. That is, the poverty
budget share approach assigns a value of
zero to some goods and services that are
indicated by the cash equivalent approach to
have a positive value.
Issues
There are two general types of issues that
should be discussed concerning the Bureau's
effort to value noncash benefits for the
purpose of reestimating the number of
persons in poverty. The following concerns
fall under the general issue of methodology.
First, it seems unreasonable to value the
benefits of medicare and I or medicaid at such
a level as to practically eliminate poverty
for persons 65 and over. The poverty level
is intended to measure the resources needed
to meet basic food and nonfood requirements.
Assigning a person $6,000 in income . because
he or she is covered by medicare and
medicaid does not help that person to meet
his or her requirements for food, shelter,
clothing, transportation, and personal care.
Second, the large difference between the
market value and the cash equivalent value
of medical care benefits raises serious
questions. The difference is due in part to
an inability to measure the average
expenditures on medical care of unsubsidized
persons and families who are in the same
circumstances as medicare and medicaid
recipients. There is little doubt that the
average expenditure data that were used in
the valuation process had a considerable
downward bias.
Third, there would appear to be a problem
with valuing school lunches at the full
amount of the subsidy. If it could be
measured, the average expenditure level on
lunches for unsubsidized families may fall
well below the cost of government subsidized
school lunches. In fact, if school meals are
designed to be an integral part of the
educational process, there is as much reason
to try to value education as to value school
meals.
Fourth, the method used to value benefits
from public or subsidized housing is complex
and tenuous. The assignment of a value
involves a good many statistical steps but
rests basically on the assumption that it is
possible to find pairs of housing units in
the Annual Housing Survey that are
essentially identical except that one is
subsidized and the other is not. The problem
with making this assumption is underlined by
the fact that the Bureau has essentially
given up on the problem of measuring housing
quality.
The other general issue has to do with the
relationship between the poverty thresholds
and the income definition used to determine
poverty status. The position taken on this
issue would seem to be a reflection of how
one interprets the meaning of today's pov­erty
thresholds. One possible interpretation
is that the poverty level should be viewed
as having a validity independent of the
method used to derive it. According to this
view, the validity of the poverty level is
derived from its general acceptance over
time. A second possible interpretation is
that the validity of the poverty level is
dependent upon the method used to construct
it. That is, the poverty level should be
thought of as the product of a food plan and
a multiplier. Under this view, the size of
the multiplier was based on money relation­ships,
and it is inappropriate to count non­cash
benefits as income without reestimating
the multiplier. Even if this view is
accepted, however, it is not clear for which
reference period the multiplier should be
reestimated. An effort could be made to go
back to the original time period, or the 1
multiplier could be reestimated using the
most recent data available.
Some New USDA Publications
The following is for sale from the Super­intendent
of Documents, U.S. Government
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202-783-3238.
HOUSING OF THE RURAL ELDERLY.
1984. Stock No. 001-019-00335-9. $1.50.
The following is available from the
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Pueblo, CO 81102, 303-948-3334. (There is
a $1 fee when you order two or more free
publications. )
TALKING ABOUT TURKEY: HOW TO
BUY, STORE, THAW, STUFF, AND
PREPARE YOUR HOLIDAY BIRD. 1984.
24 pp. A comprehensive guide that
includes recipes and easy-to-use charts
on thawing, cooking time, and
temperatures. 611M (USDA). Free.
1985 No. '2 Family Economics Review 19
Economic Outlook for Families1
By June A. O'Neill
Director, Program and Research on Women
and Families, Urban Institute; and
U.S. Commission on Civil Rights
The economic outlook for the family
depends on whether the optimists' or
pessimists' scenario is correct. Optimists
are impressed with the recovery and see the
stabilization of inflation as the key ingre­dient
for future steady growth. They regard
the slowdown in the second half of 1984 as a
desirable cooling-off period. Pessimists,
however, are more impressed with sluggish­ness
in the economy and foresee a prolonged
period of slow growth, with possibly even
another recession in the near term. Since
1973 the economy has been in a period of
unusually slow productivity growth. Output
per hour of labor input increased by 3.3
percent a year from 1948 to 1965, by 2. 3
percent a year from 1965 to 1973, and by
only 1.2 percent a year from 1973 to 1978
(~). Between 1978 and 1981 productivity
growth virtually ceased. Output per hour
appears to have increased substantially in
1983 and the first half of 1984. This
situation could, of course, simply reflect a
cyclical recovery pattern. The real question
then is whether productivity growth rates
will return to the level of the fifties and
sixties or remain at the levels of the
seventies. The causes of the productivity
slowdown are not well understood, so it is
difficult to make predictions.
The Recession and the Family's Economic
Status
Between 1979 and 1982 the official poverty
rate for all persons rose from 11.7 percent
to 15.0 percent. This sharp increase, com­bined
with the fact that the rate had barely
declined over the preceding decade, led to
widespread concern that earlier long-term
1 This article is condensed from a paper
presented at the Agricultural Outlook
Conference in December 1984 at Washington,
DC. Complete copies are available from the
Family Economics Research Group. (See inside
front cover for address.)
20 Family Econom i cs Review 1985 No.2
gains in reducing poverty had been eradi­qated
in the space of a few years. Moreover,
while many had expected that the rate would
decline in 1983, it actually edged up
further to 15.2 percent of the population,
adding to the concern.
If we go back in time, what we find is
that the poverty rate for individuals fell
rapidly during the sixties--from 22.2
percent in 1960 to 12.1 percent in 1969. It
was bumped up a bit by the recession of 1970
and then fell to its lowest point histori-cally
(11.1 percent) in the 1971-73 expan­sion.
After that, the deeper recession of
1974-75 raised the rate, and the expansion
that followed lowered it again. Sluggish
economic growth and the high unemployment
years of 1980-83 appear to be the cause of
the recent rise in the poverty rate. More­over,
the poverty rate did not decline in
1983 because unemployment did not -decline in
1983. In fact, the unemployment rate for all
individuals in the labor force was 9. 5 percent
in both 1982 and 1983, 3.7 percentage points
above the 1979 level; and the duration of
unemployment continued to rise in 1983.
Thus, 24 percent of the unemployed had
been unemployed for 27 weeks or more in
1983, compared to 17 percent in 1982.
The upturn in the economy from 1983 to
1984 reduced unemployment substantially. By
the third quarter of 1984 the unemployment
rate had fallen two whole percentage points
below the 1982 and 1983 levels--almost to
the level of 1980. How much the poverty rate
will fall depends, of course, on how much of
the increase in fact can be attributed to
recession. Certain cuts and changes in
transfer programs were implemented in 1981,
and they may have pushed some families into
long-term poverty. To the extent this is the
case, poverty may fall more slowly as the
recovery proceeds.
A recent study by Blank and Blinder sug­gests
that economic recovery will once more
reduce the poverty rate to its prerecession
level (_~). Using statistical time-series
analysis of the relation between the poverty
rate and unemployment, the study shows that
the slow growth and high unemployment of
the 1973-83 decade raised the poverty rate by
4.5 percentage points. This effect is large
and reflects an additional finding of the
Blank and Blinder paper--that the impact of
unemployment is particularly severe on low­income
households. Based on their results,
the authors estimate that the poverty rate
will fall to between 11.1 to 11.5 percent by
1989. (The higher estimate assumes that the
unemployment rate will fall to 7 percent;
the lower estimate assumes an unemployment
rate of 6.3 percent in 1989.)
Will persons in families headed by women
(without a husband present) also share in
the poverty decline? The colorful phrase
"feminization of poverty" refers to the fact
that a disproportionate share of the poor
are in such families or are women living
alone. Persons in female-headed famil:fes
have increased as a percentage of the poor
over the long term, both because they have
increased as a percentage of the population
and because their poverty rate, while having
declined, did not decline as fast as that of
the rest of the population. During the
period 1979-8 3, however, this demographic
group declined as a percentage of the pover­ty
population, even though they continued to
increase their share of the total popula-tion.
This occurred because their poverty
rate did not rise as much as the rate of
other groups. Among the group of women
heading their own families, the increase in
poverty that did occur during the recession
was largely confined to those who are out of
the labor force (primarily full-time home­makers).
This group is more likely to depend
on welfare benefits, and since States have
not increased benefits enough to compensate
for inflation, welfare beneficiaries have
experienced reductions in their real cash
incomes. The percentage of women heading
households who work full time, year round
did not fall between 1979 and 1983
(remaining at about 36 percent of the
group), and poverty for these working
women did not rise significantly.
In terms of income and earnings, one
notable pattern of the recession has been
that women's income and employment has held
up better than men's. During 1982 and 1983
the unemployment rate of adult men was
higher than for adult women, reversing the
usual pattern. In addition, the ratio of
women's earnings to men's earnings rose
between 1979 and 1983, resulting in a
narrowing of the wage gap. For full-time
year-round workers this ratio rose from 60
percent to 64 percent. In terms of hourly
earnings, the ratio rose from 68 percent to
72 percent. One reason for women's relative
gain is that blue collar industrial employment
is more vulnerable in a recession than white
collar employment in the service sector, and
women are disproportionately represented in
the latter. In addition, however, there is
some evidence that women have been increas­ing
their work experience and schooling
relative to men, factors that would create
more lasting gains (!._). The employment of
wives was one factor that prevented family
income from eroding more than it might
during the 1979-83 period. Married-couple
families in which the wife was in the labor
force experienced smaller income loses than
other families. Thus, the decline in income
(after adjusting for inflation) was 10
percent among those families in which the
wife was not in the labor force, compared to
a 6-percent decline among two-earner
families. The increase in the labor force
participation of wives between 1979 and
1982--from 49 percent to 51 percent--also
helped cushion the effects of the recession.
Longer Term Issues
Several important questions have been
raised about the longer term trends that can
be expected once the economy does recover
from the severe recession of the early
eighties. Will the poverty rate, even if it
does decline to the 11.7 percent rate of
1979, remain stuck at this level as it seems
to have done during the seventies despite
increases in government benefits for the
poor? Is the middle class eroding while the
economy becomes polarized into the rich and
the poor? Will the family survive as an
institution?
To start with the last question first, the
structure of the family has undergone con­siderable
change over the past 25 years. In
1960, three-fourths of households consisted
of married couples and their families; in
1984 such families represented only 59
percent of all households. Several develop­ments
account for this statistic. One is the
rise in families headed by women, a group
which increased from 10 percent to 16
percent of all families between 1960 and
1984 (and from 8 percent to 12 percent of
all households). Underlying this trend is a
1985 No.2 Family Economics Review 21
sharp increase in divorce. a rise in out-of­wedlock
births. and an increasing tendency
for women with children to set up their own
households rather than move in with
relatives.
Another pattern that has left its mark on
household structure is the increase in
single individuals. Between 1960 and 1984
the proportion of households consisting of a
person living alone rose from 13 percent to
23 percent. Underlying this change is a
substantial increase in the number of young
adults (the baby boom generation). coupled
with a substantial rise in the age of first
marriage. An increasingly large proportion
of men and women are delaying marriage into
their late twenties and early thirties. In
1984. 21 percent of men from 30 to 34 years
of age had never been married--up from just
9 percent in 1970. Among women. the inci­dence
of singleness rose from 6 percent to
13 percent at ages 30 to 34. and from 11
percent to 26 percent among ages 25 to 29.
All of these trends differ in degree by
race. Marital dissolution has increased more
sharply for blacks than for whites. and both
first marriage and remarriage rates have
been lower for blacks. As a result. the per­centage
of black families headed by a woman
without a husband increased from 22 percent
in 1960 to 42 percent in 1983. compared to
an increase over the same period of
8 percent to 12 percent among whites.
The factors explaining these changes in
family structure are by no means thoroughly
understood. but several possibilities are
worth speculating about. Undoubtedly. the
function of families has shifted since the
beginning of the century. when production in
the home was for the average family
relatively more important that it is today.
Fertility was considerably higher--the
average woman gave birth to 4. 7 children
(compared to less than 2 today). The feeding
and rearing of children and the home produc­tion
of much of the goods consumed by the
family led to a clear division of labor in
the family. which tied women to an 84-hour
work week in the home. In 1900 less than
6 percent of married women had paid jobs
outside the home. Over the century these
circumstances changed, in large measure as a
response to the rise in the market wage and
22 Fam i ly Economics Review 1985 No.2
the availability of technology. which pro­vided
low-cost substitutes for many of the
chores once performed in the home. Today
more than 50 percent of married women are
in the labor force. and among married women
under the age of 45 the percentage well
exceeds 60 percent.
As a result, women can more readily become
financially independent. Some research indi­cates
that the increase in women's earnings
and employment has increased marital disso­lution.
(It is also the case. however. that
divorce and expectation of divorce increase
women's labor force participation.) Finan-cial
independence has also been provided by
the growth in welfare benefits and other
transfer payments. and this too is believed
to have contributed to marital dissolution
among women with lower earnings prospects
(5. 8).
There are two schools of thought about the
possible effects on marriage and family of
an increase in economic growth. One theory
associated with the economist Richard
Easterlin anticipates that productivity
growth and earnings will increase as the
smaller birth cohorts replace the large baby
boom cohort in the labor force market (4).
Easterlin further expects that rising wage
rates for men will lead to increases in
desired family size. a factor that would
inhibit women's continuing development of
careers outside the home. This theory
suggests some retrenchment to earlier family
patterns.
Others. for example the economists William
Butz and Michael Ward. believe that rising
real wages will exert a continuing pull on
women's entry into the labor force. rein­forcing
the tendency for reduced fertility
(_~). Whether families will increasingly
become less stable as a result of such a
trend, is simply not known. It is possible.
for example, that delayed marriages will
eventually prove to be more lasting and that
increased sharing by fathers in the rearing
of children will cement marital bonds.
The changes that have occurred in family
structure have affected other institutions.
including statistics on income and poverty.
Female-headed families. particularly those
with children, are more likely to have low
incomes than husband-wife families. Fathers
do not provide child support in many cases
or such support is low, and it is diffucult
to work full time when small children are
present. Mary Jo Bane (1) has calculated
that if household structure had remained as
it was in 1959, while the poverty rate for
each household type changed as it actually
did, the overall poverty rate in 1979
would have been 7. 8 percent instead of 9 .1
percent for whites, and 24.2 percent instead
of 30.9 percent for blacks (_~).
The failure of poverty to decline in the
face of large increases in transfer programs
during the seventies has also been noted.
Between 1974 and 1983 Federal transfer
programs that were means tested increased
by 60 percent after adjusting for inflation.
(Included in this calculation are Federal
outlays on the Supplemental Security Income
and Aid to Families With Dependent Children
programs, food stamps, child nutrition
programs, housing, and medicaid. State and
local expenditures on these programs are
excluded.) The number of poor persons also
increased but by less (51 percent). One
reason that these increases in government
spending did not reduce poverty is that an
increasing proportion of these transfers
were in the form of noncash benefits that
are not counted as income. Estimates by the
U.S. Bureau of the Census suggest that if
these benefits were included at their market
value, measured poverty rates would be
substantially lower, particularly for
female-headed families with children, whose
poverty rate in 1979 would have been
reduced almost in half.
Economic growth, however, will also help
female-headed families since these families
also depend on earnings. Moreover, rising
and more stable earnings of prospective hus­bands
may prevent dissolution of marriages
and encourge remarriage.
It is sometimes hard to distinguish trends
from cyclical patterns. Some of the income
patterns of the seventies that have been
labeled trends seem likely to have been due
to prolonged high unemployment. One is the
much discussed increase in inequality of
income and the supposed disappearance of
the middle class. While there was a small
increase in inequality of income, it could
hardly be described as a polarization of the
income distribution. Moreover, as the paper
by Blank and Blinder shows (1), high
unemployment can account for the increase
in inequality. In addition, the large size
of the baby boom cohort entering the labor
force produced some inequality both because
of the change in age mix and because the
earnings of the large number of inexperi­enced
workers were at least temporarily
depressed relative to older cohorts.
The future course of the family and of the
incomes of Americans is related to complex
and interrelated changes. It will be fasci­nating
to see how the scenario unravels.
LITERATURE CITED
1. Bane, Mary Jo. 1984. Household composi­tion
and poverty. Paper presented at the
Conference on Poverty and Policy:
Retrospect and Prospects. [Williamsburg,
VA. December 1984.]
2. Blank, Rebecca, and Alan S. Blinder.
1984. Macroeconomics, income distribu­tion,
and poverty. Paper presented at
the Conference on Poverty and Policy:
Retrospect and Prospects. [Williamsburg,
VA, December 1984.]
3. Butz, William, and Michael Ward. 1979.
The emergence of countercyclical U.S.
fertility. American Economic Review
69:318-327.
4. Easterlin, Richard A. 1973. Relative
economic status and the American
fertility swing. ~Eleanor B. Sheldon,
editor. Family Economic Behavior,
pp. 170-223. Lippincott, Philadelphia, PA.
5. Groeneveld, Lyle P., Nancy Brandon
Tuma, and Michael T. Hanan. 1980. The
effects of negative income tax programs
on marital dissolution. Journal of
Human Resources, Vol. 15, fall issue,
pp. 654-674.
6. Norsworthy, J.R., Michael J. Harper,
and Kent Kunze. 1979. The slowdown in
productivity growth: Analysis of some
contributing factors. Brookings Papers
on Economic Activity, Vol. 2.
7. O'Neill, June A. [Forthcoming January
1985.] The trend in the male-female wage
gap in the United States. Journal of
Labor Economics.
8. Sawhill, Isabel, Gerald E. Peabody,
Carol A. Jones, and Steven B. Caldwell.
1975. Income Transfers and Family
Structure. Urban Institute.
1985 No. Z Family Economics Review ZJ
1985 Outlook for Food Prices
and Expenditures~
In recent years food price increases have
trended downward, reflecting abundant
supplies of most foods and the easing of
inflation in the general economy which
helped hold down the costs of labor and
other costs associated with marketing food.
Since 1980, when food prices rose 8.6
percent, prices have risen at successively
lower rates each year. In 1983 food prices
rose 2.1 percent, marking the smallest
increase since 1967. In 1984 food prices
rose about 4 percent, double that of 1983
but equal to the 1982 increase; 1984 was the
9th year of the last 10 years that food
prices have risen less than the general
inflation rate.
The USDA's market basket statistics indi­cate
the underlying cause of food price
changes. The retail cost of the market
1This article is abstracted from a paper
presented by Ralph L. Parlett, agricultural
economist with the Economic Research
Service, USDA, at the Agricultural Outlook
Conference in December 1984 at Washington,
DC. Complete copies are available from the
Family Economics Research Group. (See
inside front cover for address.)
Table 1. Market basket statistics
basket represents domestically produced farm
foods sold in grocery stores, and consists
of two parts--the farm value and the
farm-to-retail price spread. The farm value
represents about one-third of the retail
cost. The farm-to-retail price spread is the
difference between farm value and retail
costs and represents all of the costs
incurred in transforming raw farm products
into finished foods and making them
available to consumers. The market basket
does not include imported foods and fish and
seafood.
The farm value of food rose at a decreas­ing
rate from 1980 to 1982, and then
declined 2. 2 percent in 1983 (table 1). This
trend resulted in part from rising crop
production and weak domestic and foreign
demand for agricultural commodites resulting
from the recession and the loss of some
grain export markets. This, coupled with
large supplies of livestock products, has
depressed farm prices for several years.
Increases in the farm-to-retail price spread
have also slowed in recent years. Since the
farm-to-retail price spread accounts for
about two-thirds of the retail price of the
market basket, smaller increases in food
marketing costs significantly moderate the
rise in food prices.
Average annual changes from previous year
Category
Retail cost •••••••••••
Farm value .........
Farm-to-retail
price spread
1 Preliminary.
2 Forecast.
......
Relative
weight
100
33
67
1980 1981 1982 1983
Percent
7.2 7.7 3.6 0.9
5.5 2.8 1.1 -2.2
8.3 10.5 5.0 2.3
Source: U.S. Department of Labor, Bureau of Labor Statistics.
24 Family Economics Review 1985 No.2
1984
1
4.0 1 - 4
4.8 -2 - 1
3.6 3 - 5
Marketing costs are expected to continue
to rise at moderate rates through 1985. Many
labor contracts of workers employed in food
processing and retailing provide for wage
increases in 1985 in the range of 3 to 4
percent. There is no indication of a rise in
the minimum wage, covering a large number
of the workers in the food service industry.
Slower growth in the economy is expected in
1985, which will moderate the demand for
packaging and transportation. Energy prices
are not expected to increase significantly,
particularly if OPEC oil prices decline,
which seems reasonably likely at this time.
Any increase in energy costs will most
likely be for electricity.
In general, the recent trend in moderate
food price increases will likely continue
through 1985. The Consumer Price Index for
food for 1985 is expected to average 2 to 5
percent above the 1984 average. Most farm
foods are expected to be in good supply.
Little, if any. rise in farm prices is
likely in 1985. Food marketing costs will
rise 3 to 5 percent and consumer demand
will be more moderate in 1985, putting
little pressure on retail prices (table 2).
Based on the expected rise in food prices,
and a rise in food consumption in 1985, per­sonal
consumption expenditures for food will
rise in 1984 and 198 5. The increase will
result from the expected 4-percent rise · in
prices in 1984, some growth in the popula­tion,
and continued large growth in
away-from-home food consumption. In 1985
personal consumption expenditures are
expected to rise 4 to 6 percent.
Disposable personal income is forecast to
increase about 8 percent in 1985, considera­bly
more than the rise in food expenditures.
Consequently, the percentage of income
spent on food will decline to 15 percent
this year and 14.6 percent in 1985.
Table 2. Changes in food price indicators, 1982 through 1985
Consuner Price Indexes 1982 1983 1984 1 1985 1
Percent
All food .................................. · . 4.0 2.1 4.0 2 - 5
Food away from home •• ••••••••••••••••••• 5.3 4.4 4.3 3 - 6
Food at home ••••••••••••••••••••••••••••• 3.4 1.1 3.8 2 - 5
Meat, poultry, and fish ................ 4.0 -0.7 1.7 2 - 5
Meats .................................. 4.8 -1.1 0.4 3 - 7
Beef and veal ........................ 1.4 -1.5 1.4 1 - 4
Pork ..••.....••.......•...........••• 12.9 -0.7 -1.3 5 - 8
Poultry .. ............................... -1.8 1.2 10.2 -5 - -2
Fish and seafood ....................... 3.6 1.2 3.5 2 - 5
Eggs •••••••••••••••••••••••••••• • • • • • • • -2.8 4.7 10.4 -17 - -14
Dairy products ......................... 1.4 1.2 1.4 0 - 3
Fats and oils ........................... -2.8 1.3 9.8 3 - 6
Fruits and vegetables .................. 5.5 0.3 8.7 0 - 3
Sugar and sweets •• ••••••••••••••••••••• -0.2 1.9 4.1 3 - 6
Cereals and bakery products ........... 4.5 3.2 4.6 4 - 7
Nonalcoholic beverages ................. 2.8 1.9 2.7 3 - 6
1 Forecast.
Source: U.s. Department of Labor, Bureau of Labor Statistics.
1985 No.2 Family Economics Review 25
Outlook tor Food Consumption
Patternsl
The outlook for food consumption patterns
among U.S. consumers must recognize a
myriad of different forces which collec-tively
shape consumer purchases. On balance,
the factors affecting consumer demand for
food during 1985 are likely to have positive
influences for poultry, cereals, and fruits
and vegetables. They are expected to be
neutral to slightly negative for beef,
dairy, and sugar demand.
Economic Conditions
For any given food, the primary economic
factors affecting demand are the price of
the food, the prices of other substitute
foods, and consumer incomes. Beyond prices
and incomes, other economic factors also
affect food consumption levels. Income
distribution is important with respect to
the outlook for specific food categories.
Employment levels, or unemployment, not only
impacts income directly but consumer expec­tations
as well. As unemployment levels
increase in response to economic downturns,
consumers tend to feel more uncertain about
the future, and purchase patterns become
more conservative. The money available for
food purchases is also affected by changes
in costs associated with other components of
the consumer's budget, such as interest
rates, housing costs, and transportation
rates. Interest rates may have a different
impact depending on whether the household
is a net borrower or a net saver. For net
savers, higher interest rates will likely
result in increases in unearned income and
could affect food consumption patterns in a
positive manner. Higher interest rates mean
higher financing expenditures for those
families who are net borrowers. For these
families, higher interest rates can result
in reduced income availability for food
1This article is abstracted from a paper
presented by Lester H. Myers, Branch chief,
Economic Research Service, USDA, at the
Agricultural Outlook Conference in December
1984 at Washington, DC. Complete copies are
available from the Family Economics Research
Group. (See inside front cover for address.)
26 family Economics Review 1985 No.2
purchases. At least in the short run, con­sumers
have limited flexibility to offset
higher housing and transportation costs by
changing their spending patterns within
these categories. Thus, for many families,
especially within low-income groups, food
expenditures may represent the most
discretionary budget item.
Assuming other factors constant, the
expected state of the economy during 1985
should have minimal impact on changes in
food consumption patterns from that experi­enced
during 1983 and 1984. Within food
categories, the moderation in economic
growth rates is likely to result in less
positive demand growth for the beef, fats,
and sugar food categories than during 1984.
General economic conditions are likely to
represent a more positive demand force,
compared to 1984, for poultry, pork, eggs,
dairy, and fruits and vegetables. Actual
consumption levels and prevailing price
levels will, however, be heavily influenced
by production performance.
Socio-Demographic Trends
Socio-demographic trends among consumers
tend to affect food consumption patterns
slowly and systematically over time. Thus,
we would not generally expect the outlook
for food consumption in any given year to be
abruptly impacted by changes in demographic
and sociological groups. Nevertheless, it is
appropriate to review recent evidence of
differences in consumption patterns among
various groups, to summarize how these
groups are growing or shrinking in impor­tance
within the United States, and to draw
some general conclusions regarding implica­tions
for positive and negative forces on
food consumption patterns.
Perhaps one of the most dynamic features
concerning the demographic characteristics
of American consumers relates to the makeup
of households. Between 1970 and 1980,
one-person households increased 78 percent,
from 17 percent to nearly 23 percent of all
households. 2 Analysis of the most current
2U.S. Department of Commerce, Bureau of
the Census, 1983, Population profile of the
United States: 1982, Current Population
Reports, Special Studies, Series P-23,
No. 130.
data available, as provided by the Bureau of
Labor Statistics Continuing Consumer
Expenditure Survey, indicates that
single-member households spent 36.8 percent
more per capita for total food and 11.6
percent more for food at home during 1981
than the average for all families. Single­person
households spent an estimated
6 percent less for beef consumed at home
during 1981 than the average beef expendi­tures
by all households. Per capita
expenditures for pork were reported to be
3.4 percent below the average expenditures
for pork. However, this group spent an
estimated 10 percent more than average for
poultry and 11.6 percent more for fish and
seafood consumed at home. At home consump­tion
expenditures for cheese were 28.5
percent higher for single-member households
than the average. Fruit and vegetable
expenditures averaged 32 percent higher for
single-member households than the average
for all households.
Between 1980 and 1982, single member
households grew 5.8 percent, while the total
number of households grew 3.4 percent. The
trend toward more single-member households
is likely to continue and should represent a
positive force for poultry, seafood, cheese,
and fruit and vegetable consumption.
Single-female-parent families with
children under 18 years of age increased
from 4. 5 percent of the total households in
1970 to 6. 7 percent in 1980. Families in
this category spent 26 percent less per
capita for total food and 18 percent less
per capita for food at home during 1981 than
average expenditures for all families.
Families in this category tend to have lower
incomes, which in turn affects food selec­tion.
Expenditures for cereals, processed
meats, and fresh whole chicken are higher
within this group than the average expendi­tures
for all households.
In 1982 an estimated 11.6 percent of the
population was 65 years of age and older.
By 1990 this group is expected to comprise
nearly 13 percent of the population. During
1981 per capita food expenditures for house­holds
where the head was over 64 years old
averaged 6.1 percent, about the average for
all households. Food at home expenditures
were estimated at 18.4 percent above the
average. This group tends to spend rela­tively
more for cereal and bakery products,
pork, poultry, fish, eggs, and fruits and
vegetables. They spend proportionately less
for dairy products, processed meats, and
beef.
In 1981 households reporting incomes of
$5,000 or less spent an estimated 17.4
percent less per capita for food than the
average expenditures by all households. Food
at home expenditures, however, were only
8. 2 percent below the average expenditures
by all households. Expenditures within this
low-income group for poultry and eggs were
higher than average household expenditures.
Average expenditures for beef and pork were
89 percent and 85 percent, respectively, of
all the households average.
Contrasted to the low-income pattern,
families averaging $30,000 and over spent
29 percent more than average for food and
18 percent more for food at home. Beef
expenditures were 29 percent above average,
whereas pork and poultry expenditures were
18 percent and 15 percent above the average,
respectively. Per capita weekly expenditures
for poultry were identical for both the
lowest and the highest income groups.
Food Marketing Initiatives
Consumer demand is not independent of
marketing and promotion initiatives by food
marketing firms and by some agricultural
commodity groups. These activities include,
but are not limited to, promotion and adver­tising,
new product development, packaging
innovations, changes in the services pro­vided
by the food retailer, and product
proliferation. Some activities (services
provided by retailers, for example) may be
neutral with respect to stimulating the
demand for one food group over another but
can affect retailing margins and overall
food costs. The three types of marketing
initiatives likely to have the greatest
impact in 1985 are as follows:
1. Increased advertising by commodity
groups, especially dairy, which may result
in increased demand for dairy products.
2. Product development, including asceptic
packaging of fruit juices in single-serving
1985 No. Z Family Economics Rev iew 27
sizes (which may encourage the use of a
lunch beverage) and the widespread adoption
of aspartame (marketed under the NutraSweet
brand name) as the sweetener in diet soft
drinks, which could inhibit the growth of
sugar consumption.
3. The continuation of a restructuring of
the food retailing sector, including the
rapid expansion of warehouse food stores
and the renegotiation of existing labor
contracts by large retail chains.
New Publications from Human
Nutrition Information Service
The following new publications from USDA's
Human Nutrition Information Service are
available from the Superintendent of
Documents, U.S. Government Printing Office,
Washington, DC 20402:
Your Money's Worth in Foods. HG 183,
39 pp. This bulletin brings together, in
a new attractive form, up-to-date infor­mation
on meal planning and food shopping
to help family food managers get their
money's worth in foods for good nutri­tion.
Many practical guides and cost
comparison tables in the bulletin will
help families spend food money wisely.
Stock No. 001-000-04431-1, price $2.25.
Meat, Poultry, Fish and Eggs: Selection,
Storage, and Preparation. HERR 46,
18 pp. This report presents information
on quality factors, market forms, yields,
home storage, and preparation by broil­ing,
roasting, braising, and simmering.
Time tables for cooking are also pre­sented.
Stock No. 001-000-04430-3, price
$1.50.
Recipes for Quantity Food Service.
HERR 47, 202 pp. Standardized recipes
and preparation information for foods
made in quantity (100 servings) are
presented in a looseleaf notebook format.
Recipes and information on the nutritive.
value of foods per serving are included
for beverages, breads and cereals,
desserts, main dishes, salads and salad
28 Family Econom i cs Review 1985 No.2
dressings, sandwiches, sauces, soups,
and vegetables. This recipe file is espe­[:!
ially useful to inexperienced food
service personnel and people who prepare
food in quantity occasionally. Stock
No. 001-000-04379-0, price $7 .50.
Nutrient Intakes: Individuals in 48
States, Year 1977-78. USDA's Nationwide
Food Consumption Survey 1977-78, Report
No. I-2, 439 pp. This report presents
information on 3-day nutrient intakes for
over 36, 000 individuals. Data are pro­vided
for 22 sex-age groups by 4 income
levels, 3 urbanizations, 2 racial groups,
and 4 seasons in 157 tables, and results
are summarized. Included are contribu­tions
of 14 groups of foods to intakes of
food energy and 14 nutrients, average
intakes of the nutrients compared to the
1980 Recommended Dietary Allowances,
contributions of food eaten away from
home and of meals and snacks and the
frequency and time of day food was eaten,
and use of vitamin and mineral supple­ments.
Stock No. 001-000-04424-9, price
$13.00.
Composition of Foods: Vegetables and
Vegetable Products ••• Raw, Processed,
Prepared. AH 8-11, 502 pp. This report
presents information on the nutrient
content of 470 vegetables and vegetable
products. Data are provided for refuse,
energy; water, protein, fat, carbohy­drate,
and ash; 9 mineral elements;
9 vitamins, individual fatty acids, and
amino acids. Stock No. 001-000-04427-3,
price $16.00.
Composition of Foods: Nuts and Seed
Products ••• Raw, Processed, Prepared.
AH 8-12, 137 pp. This report presents
information on the nutrient content of
117 nut and seed products. Data are
provided for the same dietary compon­ents
as in AH 8-11 described above.
Stock No. 001-000-04429-0, price $5.50.
Current Population Studies
The Bureau of the Census has published
a report titled "Population Profile of the
United States, 1982." This publication
covers many topics in charts, data tables,
and brief text; including population trends,
metropolitan and nonmetropolitan population,
farm population, households and families,
marital status and living arrangements,
fertility and birth expectations, school
enrollment, educational attainment, voting,
labor force and employment, occupation,
industry, family money income, noncash
benefits, poverty, the elderly, and national
population projections. Several topics are
briefly summarized below.
Metropolitan and Nonmetropolitan
Population
The concentration of whites in the cities
has been dwindling since the early 1900's.
This trend of moving from city to suburb
has been popular with the white population
for the past 80 years, but since the
seventies it has also become an increasingly
popular option for the black population. In
the past decade there was also a large
increase in the number of whites moving
beyond suburbia into nonmetropolitan areas.
Twenty-three percent of the white population
lived in central cities in 1982, whereas 43
percent lived in the suburbs and 34 percent
lived in nonmetropolitan areas. These
proportions in 1970 were 28 percent, 40
percent, and 32 percent, respectively. Only
55 percent of the Nation's black population
lived in central cities in 1982, compared
with 59 percent in 1970. The total number of
blacks living in the suburbs grew by about
2 million between ·1970 and 1980.
School Enrollment
In fall 1982, approximately 58 million
persons 3 to 34 years of age were enrolled
in school, about 2.5 million less than the
number enrolled in 1970. This decline in
enrollment was largely due to the decrease
of students in elementary school and high
school; there were substantial increases in
nursery school and college.
Between 1970 and 1982, the 25- to
34-year-old population grew by about 57
percent, while the 18- to 24-year-old group
grew by only 28 percent. As a result, the
college enrollment of persons age 25 to 34
increased faster than that of the younger
group. In the 25- to 34-year-old group, the
number of men enrolled in college increased
55 percent, whereas the number of women
enrolled increased 274 percent. The number
of men and women enrolled in college in the
younger group increased 15 percent and 55
percent, respectively.
Of all 18- to 34-year-olds enrolled in
1982, 74 percent of the men were full-time
students, compared with 67 percent of the
women. Part-time enrollment increased in
popularity for both sexes over the past
decade. In 1982 more women than men were
enrolled part time; the opposite was true in
1970.
Voting
Data from the 1976 and 1980 Presidential
elections and the 1978 and 1982 congres­sional
elections indicate that the decline
in the voting rate that began in the early
sixties has ended. The voting rate for
Presidential elections held steady at 59
percent in 1976 and 1980; the voting rate
for congressional elections increased from
46 percent in 1978 to 48.5 percent in 1982.
Voting rates vary with social and economic
characteristics. In 1982, 67 percent of
college graduates voted, compared with 36
percent of persons who attended only
elementary school and 47 percent of persons
who completed high school.
Employment status is also an important
indicator of voting behavior. Fifty percent
of employed persons voted, although only 34
percent of unemployed persons participated.
Persons employed in white-collar occupations
were more likely to vote than persons in
blue-collar occupations.
Other variables that were found to affect
voter turnout, based on the November 1982
participation, included wealth, race, age,
housing tenure, and region of the country.
Source: U.S. Department of Commerce,
Bureau of the Census, 1983, Population
profile of the United States, 1982, Current
Population Reports, Special Studies, Series
P-23, No. 130.
1985 No.2 Family Economics Review 29
Work Interruptions and Earnings
Results from the 1979 Income Survey
Development Program provide information on
lifetime work interruptions and the relation­ship
between these interruptions and
earnings. 1 Survey questions asked whether
the individual had ever been away from work
for 6 months or longer. Answers were sepa­rated
into the following three categories:
(l) He/ she was unable to find work, ( 2)
he/ she was taking care of home or family,
and (3) he/she was ill or disabled. While
the descriptive data below confirm that the
labor force attachment of women is weaker
than that of men, the study concluded that
work interruptions explain only a small
proportion of the earnings differentials
between men and women.
Large differences between the sexes in
lifetime work attachment patterns were
evident. One-fourth of the men had
experienced a work interruption of 6 months
of more, compared with about three-fourths
of the women. Women experienced more
interruptions due to family obligations;
approximately 67 percent of all the women
interviewed had interruptions for family
reasons, compared with only 2 percent of
the men.
Black women had a stronger attachment to
the work force than did white women; the
opposite held true for men. The stronger
attachment of black women was primarily due
to their low rate of interruption for family
reasons. Of all women, 67 percent of white
women experienced interruptions due to
family reasons, compared with 44 percent of
black women. Black men had a higher inter­ruption
rate than white men due to an
inabilty to find work. Overall, black men
1This survey is part of the development
stage of the forthcoming Survey of Income
and Program Participation (SIPP) to be
conducted by the Departments of Commerce
and Health and Human Services. SIPP is
intended to collect information through
household visits and link it with data from
various administrative record systems to
provide a comprehensive data base with
unique analytical potential for government
policy research, and for academic and
business reseachers.
JO Family Economics Review 1985 No.2
spent about 7 percent of their income­earning
years away from work, compared
with 3 percent for white men.
Higher levels of education for both men
and women were correlated with fewer work
interruptions. Work interruptions due to the
inability to find work were found to
decrease with increasing education. For
women, a relationship existed between the
level of education and interruptions due to
family reasons, but the key variable here
depended on whether the individual gradu­ated
from college. The high level of labor
force commitment necessary to deter family
interruptions is more salient among college
graduates; 67 percent of women without a
college degree experienced interruptions due
to family reasons, compared with 50 percent
of those women who graduated from college.
For all occupations, women experienced
more work interruptions than men, and
women spent a far greater proportion of
their work years away from work. Decisions
concerning education, occupation, and family
interruptions are not independent. Women
who expect to be out of the labor force for
significant periods during their income­earning
years tend to make different
decisions concerning schooling and occupa­tion
than those women who expect to minimize
labor force interruptions.
Life cycle status was found to be an
important determinant of labor force attach­ment.
Life cycle status included age;
marital status; and for women under 45,
the presence of children living at home.
Marriage and childbearing have significant
effects on women's attachment to the labor
force. For each age group, ever-married
women spent a larger proportion of time
away from work than never-married women,
and women with children spent a larger pro­portion
of their time a way from work than
women without children. Among women 21 to
29 years of age, the overall rate of
interruption ranged from about 21 percent
for never-married women with no children
to about 81 percent for ever-married with
children. Among women 30 to 44 years, the
percentages were 33 percent and 85 percent,
respectively.
There was an association between age and
work interruptions for both sexes. This
overall relationship was due to the positive
correlation of both family- and disability­related
interruptions with age. The propor­tion
of women with interruptions due to
family reasons was 43 percent for women
under 30 years and 73 percent for women
over 30 years of age. Approximately
4 percent of women under 30 years of age
had interruptions due to disabilities,
compared with about 7 percent among women
30 to 44 years and 16 percent for women 45
to 64 years. The positive association
between age- and disability-related
interruptions was also evident in the data
Consumer Prices
on men. About 3 percent of men 21 to 29
years of age experienced interruptions due
to disability, compared with 8. 5 percent
among men 30 to 44 years and 18 percent
among men 45 to 64 years of age.
Source: U.S. Department of Commerce,
Bureau of the Census, 1984, Lifetime work
experience and its effect on earnings:
Retrospective data from the 1979 Income
Survey Development Program, Current
Population Reports, Special Studies, Series
P-23, No. 136.
Consumer Price Index for all urban consumers [ 1967 = 100]
Group
All items ................................. .
Food ..............................•. · · • ·
Food at home ...•.•......•....•......•.
Food away from home ••••••••••••••••••
Housing ................................ .
Shelter ............................... .
Rent, residential •••••••••••••••••••
Fuel and other utilities •••••••••••••••
Fuel oil, coal, and bottled gas ••••••
Gas (piped) and electricity ••••••••••
Household furnishings and operation •••
Apparel and upkeep •••••••••••••••••••••
Men's and boys' ...................... .
Women's and girls' .................... .
Footwear ............................. .
Transportation ......................... .
Private .. ............................. .
Public .. .............................. .
Medical care ..•..............•......... · ·
Entertainment ......................... •.
Other goods and services ••••••••••••••••
Personal care .••••••.•.•••.•......•••..
Jan.
1985
316.1
307.3
296.1
339.9
342.0
371.2
257.1
387.2
621.6
441.1
244.2
199.8
193.2
161.3
208.6
314.7
309.1
394.5
391.1
261.0
319.1
277.2
Dec.
1984
315.5
305.1
293.2
339.2
341.2
370.1
256.1
386.0
625.9
442.2
244.2
203.2
196.0
167.2
211.4
315.8
310.4
392.8
388.5
260.1
316.7
276.6
Nov.
1984
315.3
304.1
292.4
337.7
340.9
368.9
254.8
387.5
626.9
444.7
244.2
205.2
197.8
170.4
212.9
316.1
310.8
391.8
387.5
259.0
316.5
276.3
Jan.
1984
305.2
299.4
290.2
327.2
329.2
353.2
242.9
376.0
642.8
427.3
240.4
196.4
189.7
158.8
206.7
306.0
300.9
378.2
369.5
249.9
300.5
266.9
Source: U.S. Department of Labor, Bureau of Labor Statistics.
1985 No.2 Family Econom i cs Rev iew 31
Updated Estimates of Cost of Raising a Child
The cost of raising urban children: 1984 annual average; moderate-cost level 1
Region and
age of child
(years)
NORTH CENTRAL:
Under 1 •••••••••
1 ••••••••••••.•••
2-3 •.••.•••••••••
4-5 ••••••••••••••
6 ••••••••••••••••
7-9 ••.•••••••••••
10-11 ••••••••••••
12 •••••••••••••••
13-15 ••••..••..••
16-17 .......... ..
Total ••••••••••
NORTHEAST:
Under 1 •..••••••
1 .............. ..
2-3 ••••••••••••••
4-5 ••••••••••••••
6 ............... .
7-9 ............ ..
10-11 ••••.•••••••
12 •••••••••••••••
13-15 ••••.•••••••
16-17 ••••••••••••
Total
SOUTH:
Under 1 .••••••••
1 ............... .
2-3 •..•••••••••••
4-5 ••.•••••••••••
6 .............. ..
7-9 ............. .
10-11 ••.•.•••••••
12 •.•••••••••••••
13-15 ••••••••••••
16-17 ••.•••••••••
Total
WEST:
Under 1 •••••••••
1 .............. ..
2-3 •.•.••••••••••
4-5 ••••••••••••.•
6 .............. ..
7-9 •••.••••••••••
10-11 .......... ..
12 ........... .. ..
13-15 ••••••••••••
16-17 ••••••••••••
Total ••.•.•..••
Total
$4,264
4,392
4,089
4,332
4,523
4,703
4,882
5, 211
5,340
5,860
86,845
4,227
4,381
3,264
4, 506
4,838
5, 018
5,248
5,570
5,724
6,138
91,554
4,642
4,770
4,469
4,686
4,969
5,123
5,327
5,677
5,831
6,263
94,410
4,574
4,727
4,483
4,753
5,107
5, 286
5,516
5,819
5,947
6,527
96,484
Food
at
horre 2
$563
691
691
794
768
948
1,127
1,152
1,281
1,434
17.953
666
820
794
896
896
1,076
1,306
1,306
1,460
1,613
20.514
615
743
717
794
794
948
1,152
1,152
1,306
1,434
18,260
615
768
743
845
820
999
1,229
1,229
1,357
1,537
19,208
Food
away
fran
hane
$0
0
0
140
140
140
140
168
168
168
2,128
0
0
0
140
168
168
168
168
168
197
2,354
0
0
0
140
168
168
168
197
197
197
2,470
0
0
0
168
197
197
197
197
197
225
2, 756
Clothing Housing 3 Medical
care
$137
137
223
223
309
309
309
446
446
617
6,038
137
137
240
240
326
326
326
480
480
600
6,310
154
154
240
240
326
326
326
480
480
617
6,378
137
137
223
223
326
326
326
463
463
583
6,140
$1,828
1,828
1,606
1,606
1,523
1,523
r,523
1,578
1,578
1,634
28,798
1,855
1,855
1,689
1,689
1,661
1,661
1,661
1,717
1,717
1,744
30.788
1,966
1,966
1,744
1,744
1,661
1,661
1, 661
1, 717
1,717
1,772
31,286
1, 911
1,911
1, 717
1,717
1,689
1,689
1,689
1, 744
1,744
1,828
31,456
$282
282
282
282
282
282
282
282
282
282
5,076
282
282
282
282
282
282
282
282
282
282
5,076
313
313
313
313
313
313
313
313
313
313
5,634
345
345
345
345
345
345
345
345
345
345
6,210
Educa­tion
$0
0
0
0
130
130
130
130
130
130
1,560
0
0
0
0
162
162
162
162
162
162
1,944
0
0
0
0
195
195
195
195
195
195
2,340
0
0
0
0
162
162
162
162
162
162
1,944
Transpor­tation
$863
863
752
752
752
752
752
808
808
891
14. 260
752
752
696
696
696
696
696
780
780
836
13,256
919
919
808
808
808
808
808
863
863
947
15,264
919
919
808
808
836
836
836
919
919
1,003
15,768
All
other4
$591
591
535
535
619
619
619
647
647
704
11,032
535
535
563
563
647
647
647
675
675
704
11,312
675
675
647
647
704
704
704
760
760
788
12,778
647
647
647
647
732
732
732
760
760
844
13,002
1 Annual cost of raising a child from birth to age 18, by age, in a husband-wife family with no more than 5 children.
For more information on these and additional child cost estimates, see USDA Miscellaneous Publication No. 1411 by
Carolyn S. Edwards, "USDA Estimates of the Cost of Raising a Child: A Guide to Their Use and Interpretation." This
publication is for sale by the U.S . Government Printing Office, Washington, D.C. 20402.
2 Includes home-produced food and school lunches.
3 Includes shelter, fuel, utilities, household operations, furnishings, and equipment.
4 Includes personal care, recreation, reading, and other miscellaneous expenditures.
32 Family Economics Review 1985 No.2
The cost of raising rural nonfarm children: 1984 annual average; moderate-cost level 1
Region and
age of child
(years)
NORTH CENTRAL:
Under 1 •••.•••••
1 ............... .
2-3 ••••.•••••••••
4-5 ••••••••••••••
6 .............. ..
7-9 ............ ..
10-11 .......... ..
12 ••••••.••.•••••
13-15 .......... ..
16-17 .......... ..
Total •••••••.••
NORTHEAST:
Under 1 ........ .
1 .............. ..
2-3 ••••••••••••••
4-5 ••••••••••••••
6 .............. ..
7-9 ............ ..
10-11 •.•••••••..•
12 •..•.••••••••••
13-15 ••.•••••••••
16-17 ••••••••••••
Total
SOUTH:
Under 1 ........ .
1 .............. ..
2-3 ••••..•...•.••
4-5 ••••••••••••••
6 .............. ..
7-9 ............. .
10-11 ••••••••••••
12 •••••••••••••••
13-15 ••••••••••••
16-17 ••••••••••••
Total
WEST:
Under 1 ••••••.••
1 .............. ..
2-3 ••••••••••••••
4-5 ••••••••••••••
6 .............. ..
7-9 ............ ..
10-11 .......... ..
12 .............. .
13-15 ........... .
16-17 •••••••.••.•
Total ••••••••••
Total
$4,029
4,157
3,697
3, 911
4,229
4,383
4,588
4,937
5,065
5,439
8 0. 966
4,679
4,807
4,588
4,859
5,215
5,368
5,599
5, 938
6,091
6,622
98,352
4,837
4,939
4,471
4,742
4,937
5,091
5,296
5,692
5,820
6,319
94,794
5,021
5,149
4,649
4,920
5,297
5,476
5,681
6,076
6,230
6,830
100,821
Food
at
hane 2
$512
640
615
717
717
871
1,076
1,076
1,204
1,332
16,650
615
743
717
820
820
973
1,204
1,204
1,357
1.511
18,876
615
717
691
794
768
922
1,127
1,127
1,255
1,409
17,800
615
743
717
820
794
973
1,178
1,178
1,332
1, 511
18,697
Food
away
frcm
hane
$0
0
0
112
140
140
140
140
140
168
1,960
0
0
0
168
197
197
197
197
197
225
2,756
0
0
0
168
168
168
168
197
197
225
2, 582
0
0
0
168
168
168
168
197
197
225
2, 582
Clothing Housing3
$120
120
189
189
292
292
292
446
446
549
5,630
137
137
223
223
326
326
326
497
497
652
6,414
154
154
240
240
326
326
326
497
497
703
6, 618
137
137
223
223
343
343
343
515
515
600
6,484
$1,744
1,744
1,468
1,468
1,440
1,440
1,440
1,495
1,495
1,523
27,026
1,966
1,966
1,800
1,800
1, 772
1,772
1,772
1,828
1,828
1,883
32,842
1,966
1,966
1,689
1,689
1,634
1,634
1,634
1,689
1,689
1,717
30,682
1,994
1,994
1, 717
1, 717
1,689
1,689
1,689
1,744
1,744
1,855
31,676
Medical
care
$282
282
251
251
251
251
251
251
251
282
4,642
282
282
282
282
282
282
282
282
282
282
5,076
313
313
313
313
313
313
313
313
313
313
5,634
345
345
313
313
345
345
345
345
345
345
6,082
Educa­tion
$0
0
0
0
130
130
130
130
130
130
1,560
0
0
0
0
195
195
195
195
195
195
2,340
0
0
0
0
162
162
162
162
162
162
1,944
0
0
0
0
195
195
195
195
195
195
2,340
Transpor­tation
$836
836
696
696
724
724
724
808
808
836
13,704
975
975
891
891
891
891
891
947
947
1,030
16.708
1,114
1,114
919
919
891
891
891
975
975
1,030
17,210
1,114
1,114
947
947
947
947
947
1,030
1,030
1,170
18,158
All
other4
$535
535
478
478
535
535
535
591
591
619
9,794
704
704
675
675
732
732
732
788
788
844
13,340
675
675
619
619
675
675
675
732
732
760
12.324
816
816
732
732
816
816
816
872
872
929
14,802
1Annual cost of raising a child from birth to age 18, by age, in a husband-wife family with no more than 5 children.
For more information on these and additional child cost estimates, see USDA Miscellaneous Publication No. 1411 by
Carolyn S. Edwards, "USDA Estimates of the Cost of Raising a Child: A Guide to Their Use and Interpretation." This
publication is for sale by the U.S. Government Printing Office, Washington, D.C. 20402.
2lncludes home-produced food and school lunches.
3 lncludes shelter, fuel, utilities, household operations, furnishings, and equipment.
4 1ncludes personal care, recreation, reading, and other miscellaneous expenditures.
1985 No.2 Family Economics Review JJ
Some New USDA Charts
Chart 123
Unemployment Rates
Percent
30
Married, spouse present Widowed, divorced, separated
20
10
0
1974 76 78 80 82 1974
Ages 25 and over. Black no longer includes " other races" group.
Source: Bureau of Labor Statistics.
Chart 126
Distribution of Net Individual Savings
Percent
40 -
30 -
20 -
10 -
0 -
-10 -
Demand
deposits
Savings
accounts
76 78 80
Securities
82 1974
Life insurance
and pension
plans
Single, never married
76 78
Nonfarm
homes
80 82
Other
tangible
assets
Net individual savings is increases in household wealth. Other tangible assets include consumer durables. nonresidential fixed assets, and inventories.
Source: Federal Reserve Board.
J4 Family Economics Review 1985 No.2
Chart 130
Labor Force Participa