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US Census: Fewer marriages and fewer kids in hard times
January 14, 2011, Friday
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Print Edition
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EDITOR'S note: This is the first part of a Wharton article on the US poverty rate in hard times.
ONE of the most striking results of the US Census Bureau's American Community Survey published in September involved the poverty rate.
Compared to the previous year, it rose to 14.3 percent of the population, a total of 43.6 million people. That means one in seven Americans lives in poverty - the highest number recorded since estimates were made available in the 1960s, say the bureau's statisticians.
The Great Recession might have officially ended after two years in mid-2009, but unemployment remains stubbornly high at just under 10 percent, and households that once might have thought they were reasonably prosperous now worry that there is not much keeping them from being added to those stats.
Combined with other Census Bureau survey results, the poverty rate statistic helps paint a picture of what post-recession America is like today.
For one thing, it's a country whose workforce is earning less. The survey found that the median US household income in 2009 was US$50,221, a 2.9 percent drop from 2008 (when adjusted for 2009 dollars), marking the lowest level since 1997.
For another, its population is undergoing lifestyle changes that could have an impact on lives long into the future. A case in point: the number of adults polled who are married is the lowest ever, while the number of unmarried partners and non-relatives living together has been increasing slowly but steadily from pre-recession levels.
Also, fewer women gave birth in 2009, a 2.2 percent decline compared with 2008. "This was a very severe downturn, and the reaction has been unusually strong, especially in household formation," says Peter Cappelli, Wharton management professor and director of its Center for Human Resources.
Yet he and other observers question the extent to which the economic downturn has influenced these trends; after all, fewer Americans have been getting married for a number of years now, and not just for economic reasons.
But these experts agree that, whether directly or indirectly, many of these factors could influence the speed and strength of the country's recovery and perhaps affect longer-term demographic dynamics.
Defining poverty
In determining the weighted average poverty threshold in 2009 - which for a family of four was US$21,756 and for an individual younger than 65 was US$11,161, according to the Census Bureau - its statisticians based their calculations on pre-tax cash income, not taking into account food stamps or other non-cash government assistance.
Critics say the poverty measure needs to be updated to reflect the economic conditions of low-income Americans today, rather than more than 40 years ago when the current measure was introduced.
But whatever the methodology, the bureau's findings form the basis of decisions about how more than US$400 billion of federal and state funds are allocated each year.
Beyond that, "these data are useful not only for researchers, but also state and local government officials and private industry," said Irma Elo, a University of Pennsylvania sociology professor and director of its Population Studies Center.
From a future policy perspective, there could be lessons to draw from the latest poverty findings.
"The poverty rate went up just 1 percent [from 2008]. This is an astonishingly small impact for a very large recession," noted Justin Wolfers, Wharton professor of business and public policy and a research associate at the National Bureau of Economic Research in Cambridge, Massachusetts.
He notes that 2009's poverty rate was not as great as it was after the last major recession, in the early 1980s, when it hit 15.2 percent. "The real implication here is that the 'safety net'" - such as the federal expansion of unemployment insurance - "performed better through this recession than it had through previous ones," he points out.
Others agree.
"The most important programs that corralled the potentially wild increases in poverty were Social Security, Medicaid, unemployment insurance and food stamps," rather than the Obama administration's job and investment stimulus plan, as some suggest, stated Ron Haskins, a senior economic studies research fellow at the Brookings Institution in Washington, DC, in a recent presentation.
But the Census survey results suggest that one segment of society that the various programs didn't benefit enough is the nation's children.
Between 2008 and 2009, the poverty rate of Americans under the age of 18 increased from 19 percent to 20.7 percent. That's a big increase, says Elo. "One in five children is now living in poverty. For the future of poverty eradication, this does not bode well."
'Baby' burden
The increase is happening at a time when the cost of raising children is significant across all households.
According to a 2009 report from the US Department of Agriculture titled, "Expenditures on Children by Families": For a child in a two-child, husband-wife family, annual expenses ranged from US$8,330 to US$9,450, on average ... for households with before-tax income less than US$56,670. Expenses ranged from US$11,650 to US$13,530 for households with before-tax income between US$56,670 and US$98,120, and from US$19,380 to US$23,180 for households with before-tax income more than US$98,120.
If incomes continue to decline, will a couple's decision to have a child be affected? The latest Census Bureau poll found that 4.3 million women gave birth in the 12 months before the 2009 survey, down from 2008's 4.4 million women, but up from the 4.2 million during each of the previous two years.
(To be continued. Reproduced with permission from Knowledge@China, http://www.knowledgeatwharton.com.cn. Trustees of the University of Pennsylvania. All rights reserved.)
ONE of the most striking results of the US Census Bureau's American Community Survey published in September involved the poverty rate.
Compared to the previous year, it rose to 14.3 percent of the population, a total of 43.6 million people. That means one in seven Americans lives in poverty - the highest number recorded since estimates were made available in the 1960s, say the bureau's statisticians.
The Great Recession might have officially ended after two years in mid-2009, but unemployment remains stubbornly high at just under 10 percent, and households that once might have thought they were reasonably prosperous now worry that there is not much keeping them from being added to those stats.
Combined with other Census Bureau survey results, the poverty rate statistic helps paint a picture of what post-recession America is like today.
For one thing, it's a country whose workforce is earning less. The survey found that the median US household income in 2009 was US$50,221, a 2.9 percent drop from 2008 (when adjusted for 2009 dollars), marking the lowest level since 1997.
For another, its population is undergoing lifestyle changes that could have an impact on lives long into the future. A case in point: the number of adults polled who are married is the lowest ever, while the number of unmarried partners and non-relatives living together has been increasing slowly but steadily from pre-recession levels.
Also, fewer women gave birth in 2009, a 2.2 percent decline compared with 2008. "This was a very severe downturn, and the reaction has been unusually strong, especially in household formation," says Peter Cappelli, Wharton management professor and director of its Center for Human Resources.
Yet he and other observers question the extent to which the economic downturn has influenced these trends; after all, fewer Americans have been getting married for a number of years now, and not just for economic reasons.
But these experts agree that, whether directly or indirectly, many of these factors could influence the speed and strength of the country's recovery and perhaps affect longer-term demographic dynamics.
Defining poverty
In determining the weighted average poverty threshold in 2009 - which for a family of four was US$21,756 and for an individual younger than 65 was US$11,161, according to the Census Bureau - its statisticians based their calculations on pre-tax cash income, not taking into account food stamps or other non-cash government assistance.
Critics say the poverty measure needs to be updated to reflect the economic conditions of low-income Americans today, rather than more than 40 years ago when the current measure was introduced.
But whatever the methodology, the bureau's findings form the basis of decisions about how more than US$400 billion of federal and state funds are allocated each year.
Beyond that, "these data are useful not only for researchers, but also state and local government officials and private industry," said Irma Elo, a University of Pennsylvania sociology professor and director of its Population Studies Center.
From a future policy perspective, there could be lessons to draw from the latest poverty findings.
"The poverty rate went up just 1 percent [from 2008]. This is an astonishingly small impact for a very large recession," noted Justin Wolfers, Wharton professor of business and public policy and a research associate at the National Bureau of Economic Research in Cambridge, Massachusetts.
He notes that 2009's poverty rate was not as great as it was after the last major recession, in the early 1980s, when it hit 15.2 percent. "The real implication here is that the 'safety net'" - such as the federal expansion of unemployment insurance - "performed better through this recession than it had through previous ones," he points out.
Others agree.
"The most important programs that corralled the potentially wild increases in poverty were Social Security, Medicaid, unemployment insurance and food stamps," rather than the Obama administration's job and investment stimulus plan, as some suggest, stated Ron Haskins, a senior economic studies research fellow at the Brookings Institution in Washington, DC, in a recent presentation.
But the Census survey results suggest that one segment of society that the various programs didn't benefit enough is the nation's children.
Between 2008 and 2009, the poverty rate of Americans under the age of 18 increased from 19 percent to 20.7 percent. That's a big increase, says Elo. "One in five children is now living in poverty. For the future of poverty eradication, this does not bode well."
'Baby' burden
The increase is happening at a time when the cost of raising children is significant across all households.
According to a 2009 report from the US Department of Agriculture titled, "Expenditures on Children by Families": For a child in a two-child, husband-wife family, annual expenses ranged from US$8,330 to US$9,450, on average ... for households with before-tax income less than US$56,670. Expenses ranged from US$11,650 to US$13,530 for households with before-tax income between US$56,670 and US$98,120, and from US$19,380 to US$23,180 for households with before-tax income more than US$98,120.
If incomes continue to decline, will a couple's decision to have a child be affected? The latest Census Bureau poll found that 4.3 million women gave birth in the 12 months before the 2009 survey, down from 2008's 4.4 million women, but up from the 4.2 million during each of the previous two years.
(To be continued. Reproduced with permission from Knowledge@China, http://www.knowledgeatwharton.com.cn. Trustees of the University of Pennsylvania. All rights reserved.)
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