Historic, Archive Document Do not assume content reflects current scientific knowledge, policies, or practices. t amily 1991 Economics Vol. 4 No. 4 United States Department of Agriculture Review Agricultural Research Service The Family Economics Research Group and the Family Economics Review would like to gratefully acknowledge the reviewers of manuscripts for 1991 issues: David Arnaudo Frances Magrabi Office of Child Support Enforcement University of Illinois U.S. Department of Health and Human Services Angela Mayers Jean Bauer Tennessee State University University of Minnesota Robert McClelland Peggy Berger Bureau of Labor Statistics Colorado State University U.S. Department of Labor James Blaylock Jacquelyn McCray Economic Research Service University of Arkansas-Pine Bluff U.S. Department of Agriculture Carol Meeks Sharon Burgess Seiling University of Georgia Ohio State University Leonard Norry Robert Cage Bureau of the Census Bureau of Labor Statistics U.S. Department of Commerce U.S. Department of Labor Joyce M. Pitts Elizabeth Davis Family Support Administration University of Nebraska U.S. Department of Health and Human Services Cecilia Enns William Potts Human Nutrition Information Service Agricultural Research Service U.S. Department of Agriculture U.S. Department of Agriculture Cynthia N. Fletcher Judith J. Putnam Iowa State University Economic Research Service U.S. Department of Agriculture Billie Frazier University of Maryland Velda Rankin Extension Service Thesia Garner U.S. Department of Agriculture Bureau of Labor Statistics U.S. Department of Labor Carolyn C. Rogers Economic Research Service Roderick Harrison U.S. Department of Agriculture Bureau of the Census U.S. Department of Commerce Gladys Shelton North Carolina A&T University Joanne Holden Agricultural Research Service Stephanie Shipp U.S. Department of Agriculture Bureau of Labor Statistics U.S. Department of Labor Arlene Holyoak Oregon State University Jeanne W. Smith University of California-Davis Hazel O. Jackson Ohio State University Marlene Stum University of Minnesota Eva Jacobs Bureau of Labor Statistics Patricia Tengel U.S. Department of Labor University of Maryland Helen Jensen Nayda I. Torres Iowa State University University of Florida John J. Kennedy Gladys Vaughn Ohio State University American Home Economics Association Arthur Kennickell Flora Williams Federal Reserve Board Purdue University John Lawler Cathleen Zick Economic Research Service University of Utah U.S. Department of Agriculture For sale by the U.S. Government Printing Office Superintendent of Documents. Mail Stop: SSOP. Washington. DC 20402-9328 ISBN 0-16-036203-2 Family Economics Review Vol. 4 No. 4 Editor Contents Joan C. Courtless Editorial Assistant Features Jane W. Fleming 2 Economic Status of Two-Parent Families With Family Economics Review is written and Employed Teens and Young Adults published each quarter by the Family Mary Ann Noecker Guadagno Economics Research Group, Product Quality and Development Institute, 11 Money Contributions to Religion, Charity, Education, Agricultural Research Service, United States Department of Agriculture, and Politics Washington, DC. Julia M. Dinkins The Secretary of Agriculture has deter¬ 15 Trends in Savings mined that the publication of this peri¬ odical is necessary in the transaction of Joan C. Courtless the public business required by law of this Department. Research Summaries This publication is not copyrighted. Contents may be reprinted without per¬ mission, but credit to Family Economics 22 Characteristics of People With and Without Review would be appreciated. Use of Health Care Coverage commercial or trade names does not imply approval or constitute endorse¬ 24 Household Wealth and Asset Ownership: 1988 ment by USD A. Family Economics Review is indexed in the following 26 Who Can Afford to Buy a House? databases: AGRICOLA, Ageline, ERIC, Family Resources, and PAIS. 28 Payment of Household Debts Family Economics Review is for sale by 29 What’s It Worth? Educational Background the Superintendent of Documents. Sub¬ scription price is $5 per year ($6.25 for and Economic Status foreign addresses). Send subscription orders and change of address to Super¬ Regular Items intendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. (See subscription form on p. 31.) 31 Recent Legislation Affecting Families Suggestions or comments concerning 32 Current Regional Research Project this publication should be addressed to: Joan C. Courtless, Editor, Family Economics Review, Family Economics 33 Data Sources Research Group, USDA/ARS, Federal Building, Room 439A, Hyattsville, MD 34 Cost of Food at Home 20782. Telephone (301) 436-8461. 35 Consumer Prices 36 Index of Articles for 1991 December 1991 Some older children and young Economic Status of Two-Parent adults work to help their families financially. But unlike previous Families With Employed Teens generations, most teens and young adults do not work to keep their and Young Adults families out of poverty (2). Most of the income earned by employed children is spent for their own needs and activities (9,10,13). Teenage and young adult earners By Mary Ann Noecker Guadagno have generated public interest Consumer Economist among social scientists, educators, Family Economics Research Group parents, family counselors, policy¬ makers, and those interested in the economic status of children. This article examines the economic Hayge (4,5), for example, showed Whereas parents, educators, and status of two-parent families and the there is an increasing proportion of policymakers have traditionally earnings contribution of employed younger wives entering the labor condoned—if not encouraged— teens and young adults. Using data from force and an increasing incidence employment by youth, research the 1989 Consumer Expenditure Survey, of marital breakup. Greenberger suggests that the social and psycho¬ this study describes and compares two- parent families including employed and and Steinberg (5) hypothesize that logical costs of youth employment, nonemployed teens ages 14-17 and increased labor force participation in general, may far outweigh the young adults ages 18-24. Descriptive by women has served as a role benefits.1 results indicate that 5.7 million families, model for teens and young adults, It is beyond the scope of this or about 63 percent of all two-parent encouraging them to work. They article to examine why so many families with an oldest child 14-24 years, found that employed youth fre¬ young people are employed and had an employed teen or young adult in quently neglect their education; the consequent social-psychological 1989. About 47 percent of the families are less able to handle stress, leading impact. This study provides insight with teens, compared with 80 percent of to increased alcohol and drug use; into the economic role of youth, the families with young adults, had an and, because most are working in relative to the economic status of employed child. Average annual earn¬ ings by 14- to 17-year-olds were $1,579, suboptimal work environments, their families. Two major questions or about 5 percent of before-tax family their long-term attitudes about work are addressed: “What are the demo¬ income. Mean annual earnings by 18- to are more cynical than those of their graphic characteristics, income, and 24-year-olds were $7,379, or 16 percent nonemployed counterparts. expenditures of two-parent families of before-tax family income. Family Nevertheless, more and more with employed teens and young economic status differed significantly young people are working either adults versus their counterparts when teens and young adults worked— part time or full time (1,2,3). Es¬ with teens and young adults who as revealed by discriminant analysis. timates of labor force participation are not working?” and “Are two- Employed teens were more likely to be by this group vary widely. As would parent families with child earners from upper socioeconomic, White families than were nonemployed teens. be expected, teens tend to work part significantly different from similar Employed young adults also tended to time after school. Young adults, families without child earners? If be from upper socioeconomic,home- who traditionally left home after so, what demographic, income, and owner families, compared with non¬ high school to attend college or expenditure variables best explain employed young adults. work full time, are more frequently these differences?” choosing to stay at home with parents, as they go to college or 'For a discussion of the social- Xhe Cooperative Extension System work part time (2). psychological costs and benefits of youth recently made “youth at risk” a This trend in increased youth employment, see Greenberger and Steinberg (3). national initiative (15). Changes in employment has been attributed to the employment patterns of family the expansion of job opportunities, members are responsible, in part, especially in the service and retail for the social and economic condi¬ sector; a weakening of the social and tions placing our Nation’s youth practical constraints on employing at risk. (Risk refers to childhood youth; and increased materialism poverty, poor health, physical and among teenagers and young adults (2). substance abuse, teenage pregnancy, depression, and suicide.) 2 Family Economics Review Approach separately from families with young conducted to determine whether adults (18-24 years old). Families the same 13 demographic variables Data and Sample were classified into the above could differentiate between families Data for this study are from the groups, based on the oldest child’s with young adult earners ages 18-24 interview component of the 1989 age. It is important to note, however, (Group 3: unweighted n=758) and Consumer Expenditure Survey that earnings from all employed similar families in which young (CE) (16). Collected by the Bureau children were included in the adults were not employed (Group 4: of the Census for the Bureau of analyses. Second, multivariate unweighted n=174). For greater Labor Statistics, CE is a national discriminant analysis was used to statistical precision, a 25-percent probability sample of about 5,000 determine whether families with random sample of families with consumer units. Data provide a child earners were significantly young adult earners (selected with a detailed account of U.S. consumer different from their counterparts random start) was used in dis¬ units’ demographic characteristics, with nonearner children, based criminant analyses to balance the income, and expenditures. Inter¬ on selected demographic charac¬ sample size between young adult views are conducted in five consecu¬ teristics, including income and earner and nonearner families tive quarters using a rotating sample expenditure patterns. Resultant (6,7,14). design. The 1989 CE had a response significant discriminant functions Demographic variables included: rate of 86 percent with over 20,000 were interpreted to identify the family size, father’s age, mother’s responses. variables that best characterized age, father’s education level (high The final sample consisted of family group differences. school graduate=1/nongraduate=0), 1,920 two-parent families, reflecting Data used in the descriptive mother’s education level (high sampling restrictions made on the analysis were weighted to represent school graduate=l/nongraduate=0), basis of family composition, labor the U.S. population of two-parent employment status of father force characteristics, and complete¬ families with an oldest child be¬ (employed = 1/not employed=0), ness of income reported. Families tween 14 and 24 years—about 9 mil¬ employment status of mother with adult children over 25 years lion families. Sixty-three percent of (employed = 1/not employed=0), old could not be examined because the families had children who were father’s race/origin (White=l/ there were not enough cases. Those employed part or full time. Among minority=0), mother’s race/origin with parents who were retired or families with children 14-17 years (White=1/minority=0), housing students (one or both parents) or old, 47 percent had an employed tenure (own=l/rent=0), residence not living together were deleted child, compared with 80 percent of (urban=l/rural=0), total family because of the uniqueness of their families with young adults 18-24 before-tax income, and total annual financial situation. Incomplete years old. expenditures. income reporters, that is, families In contrast, unweighted data were A third and fourth discriminant who did not provide a value for used in the discriminant analyses. analysis examined whether families major sources of income such as Since these analyses are inferential with and without employed teens wages and salaries, self-employment, in nature, and the precision of in¬ and young adults could be dif¬ or Social Security income, were ference is a function of the number ferentiated on the basis of nine eliminated from the sample to of cases that are free to contribute expenditure variables: housing, minimize distortion in income to variance in the data, the use of transportation, food at home, estimates. unweighted data is appropriate food away from home, clothing, here. education, retirement, entertain¬ Analysis and Variables In all, four separate descriptive ment, and other. A two-part analysis was conducted. discriminant analyses were per¬ First, the demographic charac¬ formed and interpreted using inter¬ teristics, income, and expenditure val level or dichotomous variables. patterns of families with child The first discriminant analysis inves¬ earners were described and then tigated whether 13 demographic compared with similar families variables could distinguish between in which the children were not two-parent families with teen employed. Families with teens earners ages 14-17 (Group 1: (14-17 years old) were described unweighted n=474) and those with teen nonearners ages 14-17 (Group 2: unweighted n=514). A second discriminant analysis was 1991 Vol. 4 No. 4 3 d, e y o pl m e er is h ot m e h s, t e mili a er f h ot n i d d. an clude yed; x o e e mpl er e w e ether her ar ng tog d mot dents or not livi es, the father an stu mili ere retired or ual-earner fa w d ho in w y; Parents he famil s. of t er e Data are for two-parent families who were complete income report2Some child other than the oldest was employed. 3ln traditional families, the father is employed, the mother takes carbut the father is not employed or both parents are not employed. NA = Not applicable. 4 Family Economics Review Characteristics of Families employed teens to be traditional families with young adult earners to With Employed and rather than dual-earner families. be traditional families or a family The parents of teen nonearners type other than dual-earner, Nonemployed Children were the same age (early 40’s) as minorities, renting, or living in Demographic Characteristics their earner counterparts, slightly urban settings. less educated (although a greater Families With Nonemployed Table 1 presents the demographic percentage of mothers were college Teens and Young Adults—Reasons characteristics of two-parent families educated), more likely to be for Not Working. Teens and young with child earners and nonearners minorities, renting, or living in adults gave similar reasons for not in 1989. urban areas. working: student; ill, disabled, un¬ Families With Employed Teens. Families With Employed Young able to work; could not find work; Of two-parent families with children Adults. About 80 percent of the two- homemaker; or doing something 14-17 years old, about 47 percent parent families with an oldest child else. But the percentage of those had an employed oldest child. 18-24 years had an employed young reporting a particular reason for Families with teen earners had adult. Families with young adult not working varied between teens 4.3 family members, on average, earners had 3.9 members, on and young adults. including 1.1 child earner. Most average, including one young adult For example, about half (53 per¬ (82 percent) of the employed teens earner. cent) of the teens ages 14-17 were were from dual-earner families. Parents with employed young not employed. As would be ex¬ Parents of teen earners tended adults were most likely to be in pected, almost all (97 percent) to be middle-aged (early 40’s), their mid- to late-40’s, employed, nonemployed teens were students. employed, high school graduates, high school graduates, White, The other 3 percent indicated they White, homeowners, and living in homeowners, or living in urban could not find work or were doing urban areas. About 43 percent of areas. Most mothers of young something else. the mothers were employed full employed adults were employed In contrast, only about 20 percent time, and 41 percent worked part (34 percent full time and 41 percent of the young adults ages 18-24 living time in paid employment outside part time), but 25 percent did not at home were not working. Most the home. work in paid employment outside nonemployed young adults were In contrast, families with teens the home. students (72 percent) (figure 1). who were not employed were slightly In contrast, families with young Eleven percent of this older age smaller, had fewer earners, and adult nonearners were, on average, group were ill, disabled, or unable were more likely than families with slightly larger, more likely than to work; 8 percent reported they 1991 Vol 4 No. 4 5 were doing something else; 4 per¬ Table 2. Two-parent family Income, children’s earnings, and family cent could not find work; 2 percent expenditures, by age and employment status of oldest child, 1989 were homemakers; and 3 percent _Age of oldest child_ did not indicate a reason for not Income and _14 -17 years_18-24 years_ working. expenditures Employed Not employed Employed Not employed Children’s Earnings and Family Income Before-tax income. $48,926 $41,535 $54,031 $45,776 Table 2 presents children’s earn¬ After-tax income. 44,051 38,301 48,484 41,237 ings and average family income Per capita before-tax income 11,378 10,130 13,854 11,444 estimates. In 1989, 2.2 million Children’s earnings1 . 1,579 0 7,379 0 families with teens and 3.5 million Oldest child's earnings2 .... 1,443 0 6,618 0 families with young adults had at least one employed child. Teen earners worked almost exclusively Expenditures part time (96 percent). On average, Total annual expenditures ... $41,292 $36,003 $42,536 $41,781 they earned $1,579 annually, about Housing. 11,298 10,674 10,483 11,257 $30 a week or $132 each month. Teen earnings were about 5 percent Transportation. 9,703 6,905 10,351 7,717 of 1989 before-tax family income Food at home . 4,636 4,644 4,792 5,037 (calculated on a family-by-family Food away from home . 2,010 1,642 2,040 2,090 basis). Retirement . 4,198 3,675 4,888 4,227 Most young adults also worked part time but about 28 percent of Clothing. 2,358 2,223 2,266 2,462 this group worked full time. Young Entertainment. 2,343 2,208 2,242 3,475 adults, on average, earned $7,379 Education and reading. 820 816 1,348 1,277 annually or 16 percent of 1989 Other3. 3,926 3,216 4,126 4,240 before-tax family income—about $142 a week or $615 a month. 1 Based on wage and salary earnings of 80 percent of all children who indicated full- or part- Children’s earnings, as a percent¬ time employment status, ages 14-24; 20 percent of employed children did not report age of before-tax family income, earnings. varied by family type (figure 2). 2Based on wage and salary earnings of oldest child, ages 14-24; about 80 percent reported Children in dual-earner families earnings. 3Other includes life insurance, health care, tobacco, alcohol, cash contributions, personal earned the lowest percentage of care, and miscellaneous expenses. family income. In contrast, children in traditional families (father employed, mother homemaker) and families other than dual earner or Family Expenditures Notably, families with nonemployed traditional (mother only employed young adults spent proportionately or neither parent employed) tended Average annual expenditures more for entertainment than the to earn a larger percentage of reported by families with employed other family types. family income. and nonemployed teens were Overall, families with teen Overall, families with teen earners $41,292 and $36,003, compared with earners spent about 94 percent of had lower average family income $42,536 and $41,781 in families with their after-tax income. In contrast, than families with young adult employed and nonemployed young families with employed young earners because teens earned less, adults (table 2). Expenditure shares adults spent 88 percent of their on average, than young adults. for food away from home, clothing, after-tax income, indicating they Average annual before-tax income education, and other expenses were had slightly more savings than those of families with teen earners was fairly stable across family types. In with teen earners. $48,926, compared with $54,031 for contrast, families with employed families with young adult earners. children spent proportionately Mean income of families with teen more for transportation and less for earners was about 91 percent of food at home than comparable young adult earners’ family income families with nonemployed children. and 82 percent on a per capita basis. 6 Family Economics Review