(63,818,000)



Average annual expenditures, expenditure shares, and characteristics of consumer units (CUs)1

in the lowest outlay decile compared with those of other CUs, Consumer Expenditure Survey, 1999

U.S. Department of Labor

Bureau of Labor Statistics

Summary 01– 02 April 2001

in Labor Statistics

	
	





	






	








( )(9(

(63,8((18,000)

(63,818,000)

How do poor consumers differ from the average consumer? Typically, consumers’ ability

to purchase goods and services is measured

by their income, and consumers are classified

as “poor” if their income falls below some

standard level, such as the poverty threshold.

However, income is often mismeasured due

to nonresponse or underreporting. Although

the Consumer Expenditure Survey (CE) was

designed primarily to collect expenditure data,

it also collects income and assets data for participating consumer units (CUs).1

 To utilize

the strength of the CE—its expenditure data—

and the positive correlation observed between

income and expenditures, this study uses

total expenditures instead of income as the

classifying variable. This report highlights

the characteristics and spending patterns of

CUs in the lowest 10 percent of the expenditure distribution in 1999.2

Definitions

The measure of expenditures used in this study

is total outlays, which measures regular outof-pocket spending by consumers.3 Total outlays include the transaction costs of goods and

services, excise and sales taxes, personal insurance, retirement and pension payments, and

payments of principal and interest on financed

vehicles and home mortgages. This measure

excludes the net purchase price of financed

vehicles, because it would have a large onetime effect on the expenditure distribution and

therefore not be considered “regular” spending. Also excluded are cash contributions and

occupation-related expense items, which are

collected only in the fifth interview of the survey.

In this study, “poor” consumers are considered to be those with little income and negligible assets. To be consistent with this definition, the CU population analyzed in this study

excludes full-time college students, whose

economic circumstances might be expected to

change in the near future, and homeowners

who no longer have mortgage payments.4 The

remaining 69 percent of CUs in the population were then ranked by their total outlays

and divided into two groups—one consisting

of CUs in the lowest 10 percent of the total

outlays distribution (henceforth referred to as

the lowest “outlay decile”), and the other consisting of all other CUs.

Demographics

The average CU in the lowest outlay decile

differs from other CUs in that it is smaller

in size and has fewer members under age 18,

fewer earners, and a higher proportion of reference persons who are older and are female.5

(See table.)

Husband-and-wife-type families (with and

without children) comprise 11 percent of CUs

in the lowest outlay decile, but 54 percent of

other CUs. The most prevalent family types

in the lowest outlay decile are single CUs (62

percent) and single-parent CUs (14 percent).

1 The single CUs in the lowest outlay decile are A consumer unit includes (1) members of a household related by blood, marriage, adoption, or other legal arrangement; (2) a person living alone or sharing a

household with others, but who is responsible for at

least 2 of the following 3 major types of expenses—

food, housing, and other expenses; or (3) two or more

persons living together who pool their income to make

joint expenditure decisions.

2

 Data presented in this study are for CUs interviewed

from January through December 1999. Due to the 3-

month reference period of the quarterly Interview component of the Consumer Expenditure Survey, the data

for this report include data for October 1998 through

November 1999; this effectively constitutes 12 months

of data due to the rotating sample design of the survey.

3

 The total outlays approach is believed to be a better

measure of the regular out-of-pocket outlays of consumers than is the total expenditures measure. See John

Rogers and Maureen Gray, “CE data: quintiles of income versus quintiles of outlays,” Monthly Labor

Review, December 1994, pp. 32-37. 4

 CUs in the lowest outlay decile could include CUs

who are wealthy, but choose to spend little, and exclude CUs who are poor but spend much using credit.

Excluding homeowners without mortgage payments

could also exclude CUs who are in fact poor.

5

 A reference person is the first member mentioned

by the respondent when asked “to start with the name

of the person or one of the persons who owns or rents

the home.”

Total number of CUs1 (000's) 7,530 67,806

Sample size ........................ 2,024 19,191

Average age of

reference person ........... 49.6 43.2

Average number in CU:

Persons .......................... 1.7 2.8

Children under 18 ........... .4 .9

Earners ........................... .6 1.6

Percent of reference persons:

Female ............................ 60.3 42.5

 Aged 65 and older .......... 28.1 8.5

Working .......................... 46.5 83.6

Percent distribution by

family type:

Husband and wife only .... 7.0 18.5

Husband and wife with

 kids .............................. 3.9 35.0

Other husband and wife

families ......................... .9 4.8

Single parent ................... 13.5 7.4

 Single .............................. 61.8 20.4

Other families .................. 13.0 13.9

Income before taxes .... $7,202 $40,734

Average total outlays ... 8,391 40,937

Major outlay categories:

Housing ..................... 3,766 16,154

Shelter .................... 2,665 11,394

Utilities, fuels, and

public services ....... 957 2,592

Food .......................... 2,127 5,620

Food at home ......... 1,872 3,998

Food away from

 home ................... 255 1,622

Transportation ............ 654 6,984

Vehicles .................. 106 3,108

Gasoline and motor

oil ........................ 256 1,195

Public transportation . 65 446

Health care ................ 470 1,713

Health insurance .... 303 861

Clothing ...................... 279 1,611

Personal insurance and

pensions ................. 333 4,398

Item Item

1 Excluded are full-time college students and homeowners without mortgages.

CUs in

all other

deciles

 CUs in

all other

deciles

CUs in

lowest

outlay

decile

CUs in

lowest

outlay

decile
also generally older—about 36 percent of the

single CUs in the lowest outlay decile are aged

65 and older, compared with 20 percent of other

single CUs. There also is a contrast in the marital status of single-parent CUs—60 percent of

CUs in the lowest outlay decile were never

married, compared with 26 percent of their

counterparts outside the lowest decile.

Thirty-eight percent of reference persons

in the lowest outlay decile were engaged

in retail, service, or manual jobs, and about

three percent in managerial/professional jobs.

In contrast, the proportions for reference persons of other CUs were 54 percent and 18 percent, respectively. About 53 percent of the the

reference persons in the lowest outlay decile

had not worked in the past year, compared with

16 percent of their counterparts in other CUs.

Spending patterns

The reported income before taxes for CUs in

the lowest outlay decile averages $7,202, about

one-sixth the average reported for other CUs.

For the lowest outlay decile, wages and salaries

account for the largest share (46 percent) of

income before taxes; Social Security and Railroad Retirement amount to 31 percent; and

public assistance in the form of welfare, supplementary security income, and Food Stamps accounts for 16 percent. The distribution is substantially different for the other CUs, with the

proportions being 86 percent, 3 percent, and 1

percent, respectively.

The average total outlays per CU in the lowest outlay decile is $8,391, about one-fifth

the total outlays of other CUs. Housing is the

highest outlay category for both groups. (See

chart.) Within the housing component, both

groups allocate about the same proportion

to shelter (71 percent); however, CUs in the lowest outlay decile allocate a larger proportion to

utilities, fuel, and public services (25 percent,

compared with 16 percent for other CUs). The

second largest share of total outlays is food for

CUs in the lowest outlay decile (25 percent)

but transportation for other CUs (17 percent).

While outlays on food and housing represent

70 percent of total outlays for the average CU

in the lowest outlay decile, these categories

make up 53 percent of total outlays for other

CUs. CUs in the lowest decile allocated 5.6

percent of total outlays to health care, while

other CUs allocated 4.2 percent. CUs in the

lowest outlay decile allocated 4 percent to personal insurance and pensions, compared with

11 percent for other CUs.

For further information on the data presented here, contact Lucilla Tan at (202)

691-6900. For general information about

the CE survey, send email to cexinfo@bls.gov.

To find Consumer Expenditure Survey data

on the Internet, access http://stats.bls.gov/

csxhome.htm, the BLS Consumer Expenditure Survey homepage. Material in this publication is in the public domain and, with appropriate credit, may be reproduced without

permission. This information is available to

sensory impaired individuals upon request.

Voice phone: (202) 691-5200; Federal Relay

Service:1-800-877-8339.

U.S. DEPARTMENT OF LABOR

Bureau of Labor Statistics

Postal Square Building, Rm. 2850

2 Massachusetts Ave., NE

Washington, DC 20212-0001

Official Business

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 Allocation of total outlays, 1999 Consumer Expenditure Survey, 1999

Percentage of

total outlays

Percentage of

total outlays

and

pension