Transportation moved from being the third largest expenditure in 1960-61 for married-couple families, accounting for 13 to 15 percent of total expenses, to the second largest in 1990, consuming 18 to 21 percent. For single-parent families, transportation increased from 12 percent to 14 percent of their budget over this time and was the third largest expenditure in each period.

The growth in transportation expenses for married-couple families reflects a trend toward multi-vehicle ownership. The average number of vehicles (which includes vans, boats, and motorcycles) owned by married couples with the oldest child over age 17 was 3.5 in 1990 (15), or almost one vehicle per family member. The average number of vehicles owned by single-parent families in 1990 was 1.0. The increase in transportation expenses among single-parent families over the period reflects higher vehicle ownership in 1990–50 percent did not own a car in 1960-61 (16). The 1960-61

CE only reported the percentage owning vehicles; the 1990 CE only reported the average number of vehicles owned.

Clothing declined as a proportion of total expenditures for the four groups of families from 1960-61 to 1990. This is also true for households overall (4). Clothing expenditures also declined in real per capita dollars over this time. Although the price of clothing has risen over the years, families with children are spending less. Such families have to meet other expenses, which are deemed more essential, such as housing. Also, they likely purchase more clothing on sale and styles of clothing that are less expensive.

Health care expenditures, which include only out-of-pocket costs, also fell as a share of total expenses for the four family groups from 1960-61 to 1990. In real per capita dollars, health care expenses remained nearly constant for both married couples with the oldest child

under age 6 and between age 6 and 17, increased for couples with the oldest child over age 17, and declined for single-parent families. This may seem contrary to commonly held perceptions about escalating medical care costs in past years. Much of this cost, however, has been absorbed by employerprovided health insurance. Worker benefits have been a growing part of total employee compensation, accounting for 17 percent of compensation costs in 1966 and 27 percent in 1989 (17). However, an estimated 37 million people in 1990 did not have health insurance coverage (4). Many of these people likely forgo health care because of the cost.

Pension and insurance expenditures, which include Social Security taxes (such taxes are considered an expense in the CE), retirement and pension contributions, and life and personal insurance expenses, rose as a proportion of total expenses for each of the four

family groups from 1960-61 to 1990. Increases in Social Security taxes over the period contributed to much of the rise. From 1970 to 1986, Social Security tax rates increased by nearly 50 percent, and the maximum amount of earnings subject to the tax roughly doubled in real terms (9).

Entertainment expenditures also increased as a percentage of total expenses for the four family groups over the period. The wider availability of goods and services and the introduction of new products in this category, such as color televisions and videocassette recorders, likely account for some of the increase. Other expenses (personal care, cash contributions, and education) fell as a proportion of total expenses and in real terms for all four family groups over the decades.

Expenditures on Children

In addition to examining the economic status of households, since 1961, the Family Economics Research Group has produced annual estimates of parental expenses on children ages 0 to 17 since 1961. When first distributed, these estimates were intended primarily for educational programs to inform prospective parents on the expenses involved in rearing children. Over the years, the estimates have gained wider use. As the number of divorced families increased, the child-rearing expense estimates have been used to determine child support awards. The estimates have also been used to set foster care payments for the growing number of children residing in foster care homes. A study by the American Public Welfare Association found that in 1989, 24 States reported using the Family Economics Research Group's estimates of the cost of rearing a child in calculating foster care reimbursement rates (1).

The 1961 estimates of child-rearing costs produced by the Family Economics Research Group were based on the 1961 portion of the 1960-61 CE (11). Only husband-wife families were included in the analysis. Estimates were provided for urban and rural areas of the United States by age category of children ages 0 to 17. For each area, estimates were calculated for families whose food expenses corresponded to the economy-, low-, moderate-, and liberal-price-level food plans issued by the U.S. Department of Agriculture; these food plans acted as proxies for household income level.

The 1991 estimates of parental expenditures on children, the most recent estimates available, are based on the 1987 CE, updated to the latest year using the Consumer Price Index for all Urban Consumers (10). These most recent expenditure estimates are provided for two- and one-parent families by age category of children ages 0 to 17. The estimates are calculated by family income level for the overall United States, urban areas by region, and overall rural areas.

Changes in Overall and Specific Expenditures on Children

Because the 1961 estimates of the cost of raising a child were based on the U.S. Department of Agriculture's food plans and not income levels directly, only a general comparison between these estimates and the 1991 estimates is possible (table 2). The lower-third income group (before-tax income under $31,200) of the 1991 estimates roughly corresponds to some point between the economy- and low-price food plans of the 1961 estimates. The middle-third income group (income between $31,200 and $50,400) in the 1991 estimates falls between the low- and moderate-price food plans, and the 1991 higher-third income group (income over $50,400) is between the moderate- and liberalprice food plans. Although the original estimates did not contain figures for the overall United States, child-rearing expense estimates for the urban Midwest approximated an average of all regions so may be used as a proxy for overall U.S. figures.

In constant 1991 dollars, the range of expenditures spent on children by married couples at all income levels was narrower and higher at the bottom range in 1991 than 1960-61 (table 2). The figures represent annual expenses on a single child age 0 to 17 in a two-child family. Based on the 1961 estimates, families at the economy- and low-price levels spent between $2,910 and $5,760 (in 1991 dollars) on a child yearly, depending on the age of the child. Based on the 1991 estimates, families in the bottom third income group spent between $4,520 and $5,700 annually on a child.

The generally higher real expenditures on a child in 1991 likely represent purchases of different goods and services. For families in the middle group, a higher proportion of total expenditures

on a child went to housing in 1991 than in 1961 (33 percent compared with 29 percent) and other expenses (18 percent in 1991 compared with 13 percent in 1961) (figure 4). Homes are larger and children may not share rooms with their siblings as much as they used to. In addition, items that did not exist in 1961, such as video games and home computers, are now common among children. In 1991, a lower proportion of total expenses on a child went to food (18 percent compared with 26 percent in 1961) and clothing (8 percent compared with 11 percent in 1961). There was little difference in the shares allocated to transportation and health care for a child in the two periods. The trends in child-rearing expenditure shares in the middle-income group held for the other two income groups.

Discussion

In studying the changes in economic status of families with children from 1960-61 to 1990, can we conclude that these families were better-off in 1990 than in 1960-61? The answer to this question depends on how "better-off" is defined. Typically, it has been defined as an increase in real income. Using this measure, it can be said that marriedcouple families with children were better-off in 1990 than in 1960-61. But because this higher real income was achieved mainly through greater participation in the labor force by wives, with both direct and indirect costs, the answer is not clear-cut.

Another interesting question is whether the growth in real income contributed to or resulted from the rise in real expenditures. Did families work more and then decide to spend more or did the cost of living force them to work more to meet expenses? The answer probably lies somewhere in between. Home ownership has been a goal for most families. Many families may have increased their work effort so they would be able to afford a home. Others have had to work more to keep up with their housing expenses.

Although married couples with children. achieved some increase in their economic status, as measured by a growth in real income and rise in home ownership, the same cannot be said of single-parent families. Such families experienced a decline in real income and home ownership from 1960-61 to 1990. During this time, single-parent families accounted for an increasing proportion of all families with children. The economic status of more and more families with children, therefore, appears to be worsening.

Children are also costing more to rear. Parents generally spent more real dollars on their children in 1991 than in 196061. These higher expenses need to be recognized by States in setting child support guidelines and foster care payments. Child support awards that reflect the cost of rearing a child would inhibit the trend of many female-headed households with children falling into poverty after marital dissolution. It would also reduce the burden on the U.S. public welfare system, which has typically substituted welfare payments for child support awards that are either too small or nonexistent.

References

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2. Canner, G.B. and Luckett, C.A. 1991. Payment of household debts. Federal Reserve Bulletin 77(4):218-229.

3. Fronczek, P.J and Savage, H.A. 1991. Who Can Afford to Buy a House? Current Housing Reports, H121/91-1. U.S. Department of Commerce, Bureau of the Census.

4. Jacobs, E. and Shipp, S. 1990. How family spending has changed in the U.S. Monthly Labor Review 113(3):20-27.

5. Lino, M. 1991. Changes in income and expenditures for families with children in the 1980s. In: J.W. Bauer, editor. Family Economic Well-Being in the Next Century: Challenges, Changes, Continuity, pp. 159-166. Proceedings of the Family EconomicsHome Management Section of the American Home Economics Association Conference. [Minneapolis, MN, June 1991].

6. Lino, M. 1989. Financial status of single-parent households headed by a nevermarried, divorced/separated or widowed parent. In: R. Walker, editor. Families in Transition: Structural Changes and Effects on Family Life, pp. 151-160. Proceedings of the 1989 Pre-Conference Workshop, Family Economics-Home Management Section, American Home Economics Association. [June 1989, Cincinnati, OH].

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9. U.S. Congress, Congressional Budget Office. 1988. Trends in Family Income: 1970-1986.

10. U.S. Department of Agriculture, Agricultural Research Service, Family Economics Research Group. 1992. Expenditures on a Child by Families: 1991.

11. U.S. Department of Agriculture, Agricultural Research Service, Family Economics Research Group. 1961. Annual Cost of Raising a Child.

12. U.S. Department of Commerce, Bureau of the Census. 1992. Household and Family Characteristics: March 1990 and 1989. Current Population Reports, Population Characteristics. Series P-20, No. 447.

13. U.S. Department of Commerce, Bureau of the Census. 1991. Statistical Abstract of the United States: 1991. [111th ed.]

14. U.S. Department of Health and Human Services, National Center for Health Statistics. 1991. Annual summary of births, marriages, divorces, and deaths: United States, 1990. Monthly Vital Statistics Report 39(13).

15. U.S. Department of Labor, Bureau of Labor Statistics. 1991. Consumer Expenditures in 1990. News. USDL No. 91-607.

16. U.S. Department of Labor, Bureau of Labor Statistics. 1966. Consumer Expenditures and Income: Cross-Classification of Family Characteristics. Supplement 2 to BLS Report 237-93 (USDA Report CES 30).

17. Wiatrowski, W.J. 1991. Family-related benefits in the workplace. Monthly Labor Review 113(3):28-33.