Changes in Family Spending

was high, workers found it hard to improve their
housing conditions. The average number of
rooms per family during the war years was 5—
the same as in 1901. However, more than half
of these families now had full bathrooms.

By the early 1920's, home construction
began to recover. Row houses, walkup apart-
ments and single-family houses were built in
sufficient quantity to meet demand by the higher
paid industrial workers. The net effect was that
the low-wage factory workers could “move up”
to the old housing vacated by the higher income
families. The 1934-36 consumer expenditure
survey indicates the progress that was made
during the 1920's. Even though the depression
caused many people to lose their houses, among
the families surveyed in 1934-36, 30 percent
were homeowners, compared with 27 percent of
those interviewed in 1917-19. “The home of
the typical wage earner or clerical family with
an annual income above $500 had a bathroom
with inside flush toilet and hot running water. It
had electric lights and gas or electricity for
cooking.” Among all the renter families, 98
percent had running water, 90 percent had
bathrooms, and 96 percent had inside flush toi-
lets. The average number of rooms in rental
homes, however, was 4 to 4.5—the same as in

1917-19. Homeowners had larger homes—
an average of 6.4 rooms, compared with 5 in
1917-19.?

Legislation within the depression environ-
ment of the early 1930’s dealt with the financing
aspects of homeownership. The creation of the
Federal Housing Administration “to encourage
improvement in housing standards and con-
ditions, and to provide a system of mutual mort-
gage insurance,”® resulted in changes in resi-
dential loan practices that stimulated the
construction of medium priced housing. By
1950, the incidence of homeownership had in-
creased to 44 percent for urban worker families.
Homeownership continued its rapid rise through
the 1960’s and 1970’s—reaching 56 percent in
1960 and staying at about that level for worker
families through 1986-87.

The rise in homeownership slowed during the
late 1970's and early 1980’s for the population
as a whole because of changing demographics
and soaring house prices and mortgage interest
rates. Even so, the incidence of homeownership
continued to grow among married couples, as
favorable tax treatment and the advantages of
having a fixed mortgage in times of inflation
made buying a house a good investment.’ The
estimated market value of homes rose faster

The first national expenditure survey was
conducted from 1888 to 1891 as a result of
tariff negotiations between the United
States and European countries. Com-
prehensive surveys were conducted in
1901 and 1917-19 in response to concern
over the effects of rapidly rising prices on
living costs during those periods. It was
from information obtained in the 1917-19
survey, which focused on wage earners
and salaried workers living in urban areas,
that the Bureau of Labor Statistics devel-
oped its first cost-of-living index, which
evolved into the Consumer Price Index
(cri).

Studies in the late 1920’s and early
1930's showed that consumption patterns
of American consumers had changed
markedly since the 1917-19 survey. These
changes, combined with the needs of public
policy planners underscored the necessity
for new information on consumption pat-
terns. Hence, the 1934-36 survey was used
for revision of the CPI and the selection of
a new list of items to be priced in the index.
It covered only the urban population.

Many statistical improvements were in-
corporated in the expenditure survey of

1950. It was the first BLS survey in which
the entire sample population was chosen
using scientific sampling methods. The
1960-61 survey, more ambitious than any
of its predecessors, covered all urban and
rural families and single consumers. Data
were collected in interviews in which re-
spondents were asked to recall the previous
year's expenditures. Detail on food ex-
penditures was obtained from respondents’
recall of purchases over the 7 days pre-
ceding the interview. The release of a
general-purpose public use computer tape
containing findings from the 1960-61 sur-
vey marked the first time microdata had
been released on tape by BLS.

Unlike previous surveys, the 1972-73
survey was carried out by the U.S. Bureau
of the Census under contract to BLS. It
was the first BLS expenditure survey con-
sisting of two separate components: a Quar-
terly Interview panel survey and a Diary
survey. The decision to adopt the diary/
interview format was based on extensive
testing of collection methodology. These
tests revealed that data of high quality
could be obtained if questionnaires were
tailored so that information on larger, more

Historical overview of expenditure survey methodology

easily recalled expenditures was collected
by periodic recall in a quarterly interview,
while that for small, less expensive items
was obtained through day-to-day record-
keeping in a diary.

It had been apparent for a long time that
there was a need for more timely consump-
tion data for different kinds of families than
could be supplied by surveys conducted
every decade. The rapidly changing eco-
nomic conditions of the 1970’s intensified
this need. As a result of concems of policy-
makers, a new Continuing Consumer Ex-
penditure Survey was initiated in 1980, ex-
tending the BLs tradition of providing data

about the consumption behavior of Ameri-

can families.

While the continuing survey and the

1972-73 survey are similar in many re-
spects, there are differences between them.
One major difference is the ongoing nature
of the new survey, with rotating panels of
respondents interviewed on a continuous
basis. Also, in the new survey, students
living in college- or university-regulated
housing report their own expenditures sep-
arately, rather than as members of their par-
ents’ households.

24 Monthly Labor Review March 1990



hour day possible. In addition, it was recog-
nized that time had to be left for the worker and
his family to consume and enjoy the resulting
products and services. In 1926, when Henry
Ford announced the 5-day week for his com-
pany, he said: “The industry of this country
could not exist long if factories generally went
back to the 10-hour day, because people would
not have the time to consume the goods
produced.”0

Increasing free time and incomes meant that
families had more time for sports, once the ex-
clusive province of the “idle rich,” travel, and
entertainment. The introduction of the motion
picture and the nickelodeons after the turn of the
century gave rise to yet another form of enter-
tainment. The nickelodeons permitted workers
to stop on their way home to enjoy a 15-minute
film for 5 cents. Radios were introduced in the
1920’s and televisions in the late 1940’s. Today
there are videocasette recorders, compact disc
players, and new mechanical toys every day.
And the popularity of participatory sports and
spectator sports continues to grow.”!

Footnotes

Although many leisure activities are free of
cost, the expenditure surveys since 1901 do in-
dicate that increasing amounts are being spent
for recreation and for reading. The budget share
spent for these items increased from 5.7 percent
in 1917-19 to 8.3 percent in 1986-87. Table 4
shows the change over time in the distribution of
expenditures for entertainment and reading
items.

THIs ARTICLE has presented a brief history of
changing consumption patterns of the American
worker. Changes in consumption patterns occur
as the result of trends in social and economic
conditions, and demography. The last includes,
among other factors, the age distribution of the
population, and the number of children in
families. All these are likely to change in the
future. Some, like the age distribution of the
population, can be projected under various as-
sumptions; others, particularly changes in
tastes, are unpredictable. It will be interesting to
add to this history for the 100th anniversary of
the Monthly Labor Review. Oo

ACKNOWLEDGMENT: The authors thank Laver James,
William Passero, Geoffrey Paulin, and Julie Schaljo for
their assistance in preparing the tables for this article.

1U.S. Department of Labor, How American Buying
Habits Change (Washington, U.S. Government Printing
Office, 1958).

2Helen Humes Lamale, Study of Consumer Expendi-
tures, Income and Savings: Methodology of the Survey of
Consumer Expenditures in 1950 (University of Pennsylva-
nia, 1959).

3H. S. Houthakker, “An International Comparison of
Household Expenditure Patterns, Commemorating the Cen-
tenary of Engel’s Law,” Econometrica, 1957, pp. 332-551

4 Robert Lynd and Helen M. Lynd, Middletown (New
York, Harcourt, Brace and Co., 1929), p. 156, as quoted in
Richard Osborn Cummings, An American and His Food
(Chicago, University of Chicago Press, 1940), p. 72.

5 Alice Lippert and Douglas Love, “Family Expenditures
for Food Away From Home and Prepared Foods,” Family
Economic Review, No. 3, pp. 9-14.

Cost of Living in American Towns (London, Great
Britain Board of Trade, 1911).

7 Faith M. Williams and Alice C, Hanson, Money Dis-
bursements of Wage Earners and Clerical Workers, 1934—
36, Summary Volume, Bulletin 638 (Bureau of Labor Statis-
tics, 1941), p. 4.

8U.S. Department of Labor, How American Buying
Habits Change (Washington, U.S. Government Printing
Office, 1958), p. 70.

9 Louise Russell, The Baby Boom Generation and the
Economy (Washington, The Brookings Institution, 1982).

‘U.S. Bureau of the Census, Characteristics of New
Housing: 1978 Construction Report, C-25-78 (1979); and
Characteristics of New Housing: 1988 Construction Report,
C-25-88 (July 1989)

"1H. P. Maxim, Horseless Carriage Days (New York,
Harper, 1937).

!2 Wilfred Owen, The Metropolitan Transportation
Problem (Washington, The Brookings Institution, 1956),
p. 282.

'3 How American Buying Habits Change, chapter VIII.

\4 Economic Report of the President, table B-75 (Wash-
ington, U.S. Government Printing Office, 1989).

'S Williams and Hanson, Money Disbursements, p. 41.
\6 How American Buying Habits Change, chapter VII.

\7 Uninsured Americans: A 1987 Profile (Washington,
U.S. Department of Health and Human Services, 1988),
p. 12

'8 C.F, Doehring, Factory Sanitation and Labor Protec-
tion, Bulletin No. 44 (Washington, U.S. Department of
Labor, 1903), pp. 2-3.

'9 Uninsured Americans, p. 12

20“The 5-Day Week in Ford Plants,” Monthly Labor
Review, December 1926, p. 1162.

21 John Robinson, “Where's the Boom?” American De-
mographics, March 1987, pp. 34-37.

Monthly Labor Review March 1990 27



for food and beverages declined from 43 percent
in 1901 to 19 percent in 1986-87. The shrinking
share allocated for the food budget vividly
confirms early studies, which found that the
share of expenditures for food declines as in-
come increases.*

For the working man and his family in the
early 1900's, diets were monotonous. Said one
writer about the customary winter diet: “We
never thought of having fresh fruit or green veg-
etables and could not have got them if we had."*
Today’s diet includes more meat, poultry,
fruits, vegetables, and milk. Improvements in
the food distribution system have freed cities
from depending on produce and meats from
local farms. High-speed refrigerated transporta-
tion has increased the variety and reduced the
cost of purchasing food. Another aspect of the
increasing availability of foods since the early
1900’s is the “revolution in retailing.” Chain
grocery stores began to appear early in the cen-
tury. The supermarket combined into one estab-
lishment the butcher, produce vendor, bakery,
and other specialty stores. The supermarkets
purchased directly from the food producers,
thus reducing the costs of distribution through
large-scale operations. The spread of ownership
of refrigerators allowed families to reduce the
number of food shopping trips. The availability
of foods that are partially or fully prepared con-
tinues to increase to accomodate dual-earner
families and the busier lifestyles of families
today.5

Another important trend has been the increas-
ing share of the food budget allocated for food
away from home. Data from a 1909 report (the
earliest such information available),° show that
only 3 percent of the food budget went for food
away from home. This share has grown steadily
to 29 percent today. (See chart 1.) Even this
increase probably understates the increase in the
number of meals eaten away from home be-
cause of the changing nature of the eating-away-
from-home activity. In 1909 or 1920 or even
1950, a meal away from home was taken in a
restaurant, but the proliferation over the last
three decades of fast-food establishments, with
relatively low prices for a “meal,” has changed
the eating-out habits of the population. More
recently, the increase in the use of “carry-out”
prepared foods is further altering food pur-
chasing habits and obscuring the distinction
between at-home and away-from-home food
consumption.

Shelter. Rising incomes and technological
change have also allowed for the improvement
in housing conditions and the growth in home-
ownership. The 1901 expenditure survey found

that only 19 percent of worker families owned a
home.

Limited income was one of the reasons for
low rates of homeowership in the early years.
The difficulty of borrowing money and the high
cost of financing made owning a home virtually
impossible for many families. Long workdays
(6-day weeks of 9 or 10 hours per day were
normal), lack of good but affordable transporta-
tion, and the need to spend a large share of
income on food also contributed to the inci-
dence of poor, crowded living quarters. Subse-
quently, however, increasing incomes, the
shorter workweek, the spread of auto ownership
and the development of a paved highway sys-
tem, and the availability of less expensive land
in the suburbs led to the expansion of the popu-
lation and workplaces into areas where home-
ownership was more feasible.

By 1917-19, homeownership was enjoyed
by 27 percent of all families, and the share of
the family budget spent on housing had declined
from 18 percent in 1901 to 14 percent in 1917—
18—the only period under study for which such
a decline occurred. However, private building
was virtually suspended during World War I
due to government wartime restrictions. Hous-
ing shortages occurred, and even though income

| Chart 1. Percent distribution of the family food

budget between food at home and away,

1909 to 1986-87

| Percent
100

36

1909 1934- 1950 1960- 1972- 1986-
61 73 8

7

Monthly Labor Review March 1990

23



than the Consumer Price Index during this time,
adding to the incentive to invest in homeowner-
ship.

The share of expenditures allocated for shel-
ter, which includes rent as well as payments on
owned homes, has fluctuated, but the overall
trend has been upward. Working families allo-
cated 14.6 percent of their outlays for shelter in
1960, 16.4 percent in 1972-73, and 20.2 per-
cent in 1986-87. Homes have continued to in-
crease in size as well. According to the U.S.
Bureau of the Census, the median owner-occu-
pied home surveyed in 1985 had 6 rooms, com-
pared with 5.6 rooms in 1970. Homes today
also have many amenities unheard of in the ear-
lier years. For example, in 1988, 79 percent of
all new homes had a garage, up from 64 percent
10 years earlier; three-fourths had central air-
conditioning, an almost 50-percent increase;
and 42 percent had more than 2.5 bathrooms,
almost double the number in 1978.'°

Transportation. In 1909, a forecaster con-
cluded that it was “nothing less than feeble-
mindedness to expect anything to come of the
horseless carriage movement.”'! Despite this
and other predictions to the contrary, automo-
biles have been one of the most significant con-
tributors to the economy and to changes in the
lifestyle of the American family. They have
changed modes of travel, altered leisure time
activities, and broadened the range of residen-
tial and employment opportunities for workers.
Numerous new industries and jobs were created
to produce and service vehicles. These develop-
ments in transportation since the early 1900's
are mirrored in changes in family spending.
Transportation expenditures were collected
as part of “other” goods and services in the 1901
survey and so cannot be identified separately for
analysis, although other studies indicate that
outlays ranged between 1.7 and 2.5 percent of
average income.'? In 1901, an average car cost
$1,000—well above the average family income
of $650. By 1910, the yearly production of cars
had increased to 181,000 from 4,000 in 1900.
As a result of the introduction of the assembly
line, the price of the Ford Model-T fell from
$850 in 1908 to $360 in 1916."?
Transportation expenditures had not in-
creased much by 1917-19, however. Despite
increases in the output of cars, only | out of 18
families in the 1917-19 consumer expenditure
survey owned a car. On average, families
allocated 3.1 percent of their expenditures for
transportation. Only 10 percent reported ex-
penditures on travel for pleasure or personal
business. Expenditures for 1917-19 may have
been low because of the transportation diffi-

Table 3. Percent distribution of medical care
expenditures by wage earner and clerical
families, 1917-19 to 1986-87

tem 1917-19 | 1934-36 | 1950 | 1960-61 | 1972-73 | 1986-87
Total medical care $64 ss | 200 | $357 | $401 $819
Percent distribution . 100 100 | 100} 100 100 100
Health insurance = 7 19 26 32 35
Medical services. 80 n 60 50 54 48
Drugs and
supplies 20 2 a 24 14 7

culties generated by World War I, which espe-
cially affected travel.

Ownership of cars increased dramatically
during the 1920’s, 1930's, and 1940’s, stimu-
lated by lower auto prices, advertising, the in-
troduction of consumer credit, and generally ris-
ing incomes. By 1950, auto installment credit
was 26 percent of total consumer (nonmortgage)
credit outstanding, and increased to nearly 40
percent by 1987.'* The 1934-36 expenditure
survey found that 44 percent of working
families owned a car and that 10 percent had
purchased one during the survey years. This
prompted one analyst to comment that
“nowadays when the family has had a success-
ful year, it is more apt to think of an automobile
as a symbol of success rather than new clothes
or furniture for the parlor.”!5 Working families
during the mid-1930’s alloted 8.5 percent of
their expenditures to transportation.

The purchase of automobiles continued to in-
crease, as did the percent of total expenditures
allocated for transportation, which rose from
8.5 percent in 1950 to 25.7 percent in 1986-87.
During the 1970’s and 1980’s, other vehicles
were added to the family’s driveway—vans,
trucks, recreational vehicles, and motorcycles.
Data from the 1986-87 expenditure survey
show that 91 percent of all worker households
now own a vehicle and that the average number
of vehicles per household is 2.2, for an average
family size of 2.9 persons!

As vehicle ownership became widespread,
related expenditures also increased dramati-
cally. In 1986-87, an average household spent
about as much to and maintain a car—that is, to
pay for gasoline, insurance, repairs, and li-
censes—than it did to feed that household at
home. In 1950, auto-related costs were only
about 20 percent of the food bill.

The automobile has changed lifestyles in a
dramatic way. It has given families freedom of
choice of places to live, work, and travel but at
a cost in terms of the family budget, commuting
time, and the environment.

Monthly Labor Review March 1990 25


Eva Jacobs
and
Stephanie Shipp

Eva Jacobs is chief of the
Division of Expenditure
Surveys, Bureau of Labor
Statistics. Stephanie Shipp
is chief of the Branch of
Information and Analysis
in the same Division

How family spending
has changed in the U.S.

Since the Monthly Labor Review began,

the proportion of family expenditures
allocated for food has dropped by half,

the incidence of homeownership has doubled,
and spending for transportation, medical care,
and recreation has increased significantly

ver the decades since the Monthly Labor
Orie was first published in 1915, sig-

nificant changes have taken place in the
economy and in the demographic composition
of the U.S. population. Wars, the Great Depres-
sion, recessions, booms, and energy crises have
in tum affected the economic status of the
American family. Over the same period, the
Population shifted both by age composition
and geographically. By the 1980’s, the baby-
boomers of the post-World War II period were
themselves entering the family formation years
at the same time that a larger proportion of the
population was entering retirement years. These
changes were accompanied by increases in the
numbers of women—including mothers of
small children—-in the labor force; increased
frequency of single parenthood and one-person
households; and a decline in family size.

This article examines the changing consump-
tion and income patterns of the American family
that resulted from these movements as well as
from change in tastes and preferences and tech-
nological and cultural developments. Two ear-
lier studies, How American Buying Habits
Change ,' and Study of Consumer Expenditures,
Incomes and Savings,” which provide excellent
documentations of consumer expenditure data
through 1950 greatly aided in the development
of our analysis.

20. Monthly Labor Review March 1990

Expenditure surveys: some background

Because expenditure surveys undertaken by the
Bureau of Labor Statistics date back to the late
19th century, they are a particularly rich source
of information for this anniversary study of
changes in the American household. The cur-
Tent, ongoing survey has evolved from a long
tradition of these surveys, which have differed
in specific purpose and design but were all
based on the assumption that factual informa-
tion on family income, expenditures, and char-
acteristics is important for understanding social
and economic conditions. The earliest expendi-
ture studies in the United States were concemed
with the welfare of families at a time of rapid
social and economic change. During the 1870's,
the Massachusetts Bureau of Labor Statistics
carried out the first such studies, which sought
to evaluate the welfare of the worker's family
after immigration to this country, as well as to
evaluate their relative welfare once integrated
into the community.

The early surveys were concerned with the
cost of living of the “working” man and his
family, that is the amount of dollars a family
needed to live. Expenditure surveys have been
broadened over the years to collect data on more
than just expenditures. We now ask numerous
questions about income, family characteristics,



Changes in Family Spending

Health care. Advances in medical research
and health care have also had a revolutionary
effect on families, although changing financing
arrangements make the effect less apparent in
the expenditure statistics. By the beginning of
the 20th century, several of the most severe
contagious diseases—for example, small pox,
yellow fever, typhus, and cholera—had been
brought under control. However, contaminated
water, unpasteurized milk, and unsanitary home
and work conditions still were responsible for a
large number of deaths in the early 1900's.
Medical services were few and a hospital was
viewed as a place one went to die. In addition to
these health problems, the industrial worker
faced dangerous working conditions over which
he or she had little control, and for which
employers and the government accepted little
responsibility.

During the 1920's and 1930’s, changes in the
health field began to occur. The number and
quality of hospitals increased. Nonprofit or-
ganizations that provided services in free
clinics were established. Private-sector firms
began to offer inhouse medical care and provide
health insurance for employees. Other medical
advances, such as improved control of drugs
and scientific breakthroughs, also have con-
tributed to the lengthening of the lifespan from
about 50 years in the early 1900’s to more than
70 years by the 1980's. Longer life expectancy
and improved health have increased the earning
power of the worker. In addition, the emphasis
placed on sanitation, nutrition, and recreation in
health education programs has stimulated the
demand for a variety of consumer goods and
services.!6

The 1901 detailed expenditure survey found
that families spent 2.9 percent of their total out-
lays for products and services in the category
“sickness and death,” that is, medical care and
funeral expenses. This share rose to 6.6 percent
by 1960-61 as improved economic conditions,

education, and the availability of insurance led
households to purchase more health care, and
declined to 4 percent by 1986-87, as practices
of financing health care changed.

In the 1920's and 1930's, unions played a
role in providing much of the insurance cover-
age. Significant changes began to occur during
the 1940’s with the expansion of the concept
of fringe benefits. By the late 1960’s and ex-
tending into the early 1980's, the practice of
employer-provided health insurance had spread.
In 1987, 64 percent of individuals had employ-
ment-related health insurance, some or all of
which was paid for by employers.” These pro-
grams reduced the out-of-pocket medical costs
to households and the share of the household
budget going for health care costs declined.
Table 3 shows how urban worker families have
allocated their medical care expenditures
since the 1917-19 expenditure survey. (Little
is known about the distribution of medical
expenditures in the 1901 survey, other than that
they included burial expenses.) Even though the
data in the table are not strictly comparable from
survey to survey, it is evident that an increasing
share of the family medical budget is being
spent on insurance and less on services and pre-
scription drugs directly.

A 1903 report advised that “more attention be
paid to the improvement of the conditions of the
working class.”'* It took the attention of many
individuals and organizations to achieve the ad-
vances that have taken place since the early
1900’s. There are still issues to be faced, how-
ever, such as the fact that 37 million individuals
currently have no health insurance coverage. '?

Recreation. The increase in leisure time that
resulted from the shortening of the workday to
8 hours and the workweek to 5 days is yet an-
other improvement in the life of the American
family. Unions began to argue for the 8-hour
day late in the 19th century. However, it was
rising productivity that ultimately made the 8-

Table 4. Distribution of entertainment and reading expenditures, 1901 to
1986-87
tem 1901 | 1917-19 | 1934-36 | 1950 | 1960-61 | 1972-73 | 1986-87
Entertainment and reading $17 $44 $53. $21 $269 $455 $1,172
Percent distribution 100 100 100 100 100 100 100
Entertainment:
Televisions, radios, musical instruments - 23 13 32 29 «4 «4
Admissions 59 20 6 22 22 24 23
Other’ oo . _ 32 23 30 30 3 33
Reading a 2 28 16 19 9 10
1 The “other” category is not entirely comparable for 1917-19 and subsequent periods. For the 1917-19 period, it includes travel
expenditures, which are classified elsewhere in the later surveys.

26 Monthly Labor Review March 1990



ownership of durable goods, assets and liabili-
ties, and other nonexpenditure data. In addition,
the scope of the surveys has been expanded to
include everyone—not only the working man
but also retired persons; not only families but
also single persons; not only city dwellers but
also inhabitants of rural areas. In addition to
describing consumption patterns of different
segments of the population, the expenditure
data have also served the very important pur-
pose of providing the weights for Federal in-
dexes of retail prices—from the 1901 survey of
retail food prices, to the 1917-19 cost-of-living
index, to the 1934-36 Consumer Price Index,
similar to the cP! that is published today.

Over time, the consumer expenditure surveys
were expanded to reflect the increasing popula-
tion and the growth in available goods and serv-
ices. Each survey collected data from the
“typical” urban family of the period. In 1901,
data were collected for a family of two or more
persons including boarders, lodgers, and ser-
vants. A “normal” family was limited to white
renter families consisting of an employed hus-
band, a wife, and not more than five children
(the oldest of whom could not be more than 14
years of age), and having no other household
members. In the the 1917-19 survey, a distinc-
tion was made between a “household” and a
“family.” Data were collected for urban wage
eamers and clerical workers. In 1950, the cur-
rently used term “consumer unit” was intro-
duced. The 1950 survey was the first to collect
data for single consumers, but was still limited
to the urban population. Beginning in 1960 and
continuing today, expenditure surveys relate to
the entire urban and rural population. Although
references will be made throughout this article
to “American” families, these units are more
precisely defined as families living in the United
States, including recent immigrants.

To maintain consistent comparisons with ear-
lier studies, the data presented in the tables re-
late to urban workers who are wage earners and
clerical or sales employees. This restriction
yields the longest data series for similarly de-
fined households. These families accounted for
82 percent of the population in 1901 and fewer
than one-third in 1986-87. However, a review
of expenditure survey data for the total popula-
tion from 1960-61 to 1987 shows that the trends
discussed here are applicable to the total popula-
tion. (See table 1.)

Historically, times of crisis, either war or de-
pression, influenced the timing of expenditure
surveys. As was the custom, the early reports
presented a massive array of tables displaying
data in the most minute detail for different types
of families. For example, in 1901, detailed ex-

Table 1. Consumption expenditures
for all consumer units,
1960-61 to 1986-87
tem 1960-61 | 1972-73 | 1986-87
Consumption
expenditures $5,054 $8,271 $19,576
Percent distribution . 100.0 100.0 100.0
Food and alcoholic
. 26.0 21.6 18.8
13.1 16.6 206
15.2 20.7 23.7
67 64 5.2
49 55 6.0

penditures are presented by the country of birth
of respondents by State. There were no statisti-
cal standards of reliability and, at lower levels
of detail, data were shown even if they repre-
sented only one family. Furthermore, the esti-
mates of average expenditures were sample
means, and were not weighted to represent the
total population until 1950.

Despite some lack of comparability of the
detail and the methodology and coverage in ex-
penditure surveys over time, broad trends in
spending patterns can be compared. The follow-
ing discussion summarizes the most important
changes in the spending patterns of families
from 1901 through 1987. Data on expenditures
(in dollars of each period), the distribution of
expenditures, and selected demographic charac-
teristics for the same period are shown in
table 2. (Note that the first expenditure survey
described here—conducted in 1901—predates
the publication of the first issue of the Review in
1915. The earlier survey was chosen as the be-
ginning point for this analysis because the next
survey was conducted in 1917-19, a period
considered atypical because of the Nation’s in-
volvement in World War I.)

Expenditure trends

The distribution of the expenditures in table 2
gives the best picture of the changes that have
taken place since the turn of the century. Food
as a percent of total expenditures has declined
from 46 percent in 1901 to 19 percent of total
current consumption. Within the food budget,
however, spending for food away from home
has increased. Homeownership has increased
dramatically, as have outlays associated with
owning a home. Data from the 1901 survey
show that only 19 percent of the workers’
families owned a home, compared with 44 per-
cent in 1950 and 56 percent in 1986-87. The

Monthly Labor Review March 1990 21



22. Monthly Labor Review

Changes in Family Spending

invention of the automobile has contributed dra-
matically to changes in the lifestyle of the
American family. Outlays for transportation
now account for 26 percent of current consump-
tion—a significant rise from 1901, when they
were included in the “other purposes” (miscella-
neous) category. Advances in health care have
had a revolutionary effect on households. The
1901 survey indicated that families allocated 3
percent of their spending to “sickness and
death,” that is, medical care and funeral ex-
penses. Even as family size has declined over
time, health care expenditures for workers’
families have increased. Finally, the budget
share allocated for entertainment and reading
has increased as the workday and workweek

became shorter and recreational activities be-
came more accessible to more people. The fol-
lowing sections describe in more detail the
major changes in the economy and the society
and their effects on the spending patterns of
working families.

Food expenditures, The increasing command
of purchasing power of the urban wage earners
served a dual function that led to generally im-
proved diets. People were able to buy more and
better foods. Too, increased purchasing power
supported the development of low-cost mass
production techniques and the marketing of new
and better foods, many of them fully processed.
As a result, the percent of expenditure allocated

Table 2. Consumption expenditures of urban wage earner and clerical
consumer units, 1901 to 1986-87
tem 1901 | 1917-19 | 1934-36 | 1950 | 1960-61 | 1972-73 | 1986-87
Income before taxes’ $827 $1,505 $1,518 _ $6,678 $12,771 $27,576
Income after taxes’ = = — | $3,923 | $5,912 $11,054 | $24,986
Average family size 5.3 49 3.6 34 3.2 3.2 29
Percent homeowner 19 27 Ke 44 56 57 56
Current consumption expenditures $791 $1,353 $1,463 | $3,925 | $5,431 $8,601 $20,226
Food and alcoholic beverages ... so 556 508 1,275, 1,414 1,948 3,914
Shetter aeons 11 187 259 415 753 1,411 4,065
Utilities, fuels, and public services . 4 74 108 163 330 597 1,654
Household operations . _ 7 58 155, 226 103 291
Household furnishings and equipment ra 62 60 278 280 414 797
Apparel and services. 107 238 160 453 559 722 1,061
Vehicle expenses - 16 87 472 728 1,968 5,003
Public transportation _ 26 Bw 69 90 99 194
Health care. . 21 64 59 200 (357 401 819
Entertainment and reading 21 44 53 2n1 268 445 4,172
Personal care _ 14 wn oO 156 108 214
Education - 7 7 17 58 96 205
Miscellaneous (sundries) 124 27 6 126 212 285 816
Percent of current consumption 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Food and alcoholic beverages 46.4 41 w7 32.5 26.0 226 19.4
‘Shelter 15.1 13.9 17.7 10.7 13,7 16.4 20.2
Utilities, fuels, and public services 56 5.6 74 43 61 69 8.2
Household operations _ 27 40 39 42 1.2 14
Household fumishings and ‘equipment 35 46 at ral 5.2 48 3.9
Apparel and services 147 176 10.9 11.6 10.3 84 5.2
Vehicle expenses: - 12 59 12.0 13.4 22.9 247
Public transportation - 19 26 18 17 1.2 1.0
Health care 29 47 40 5.1 66 47 40
Entertainment and reading 27 45 5.6 7 67 72 7.3
Personal care =_ 1.0 24 23 29 13 1
Education - 5 5 4 Ww aw 1.0
Miscellaneous (sundries) 9.0 20 25 12 45 33 44
‘income values are derived from data for complete income — ment 2—Part A to Report 237-38 (Bureau of Labor Statistics, July |
feporters—consumer units that provided usable data on house- —_1964) (Data for this article were computed from the 1960-61 Con- |
hold income. sumer Expenditure Survey general purpose public use tape.);
Consumer Expenditure Survey: int Diary and Interview
Note: Dash indicates data not available. Survey Data, 1972-73, Bulletin 1992 (Bureau of Labor Statistics,
1978), pp. 72-77 (Data for this article were computed from the
Source: Eighteenth Annual Report of the Commissioner of 1972-73 Interview public use tape.); Consumer Expenditure Sur-
Labor: Cost of Living and Retail Prices of Food (U.S. Department —_veys: Integrated Data, 1984—86 (Bureau of Labor Statistics, Au-
of Labor, 1903), pp. 20, 84, and 581; Cost of Living in the United gust 1989); and “Comprehensive Picture of Spending Released
‘States, Bulletin 357 (U.S. Department of Labor, 1924), pp. 4,5, by Bureau of Labor Statistics,” uso. 89-330 (Bureau of Labor
333; Consumer Expenditures and Income, Cross Classification of Statistics, July 6, 1989) (Data for this article were computed from
Family Characteristics, Urban United States, 1960-61, Supple- __ internal files.)

March 1990