Monthly Labor Review September 2000 15

As most parents with teenagers know,

their children between the ages of 14

and 17 receive a major portion of family income. The latest U.S. Department of Agriculture estimates of family expenditures on

children indicate that middle-income families

spend between $9,390 and $9,530 per year on

the typical teenager.1 Although teenagers

are a major expense, they can offset some of

their expense and even contribute toward their

family’s economic well-being by attaining

employment in the labor market and contributing to the family budget. According to a

recent report by the Department of Labor, 2.9

million youths aged 15 to 17 worked during

the school months, and 4.0 million youths

worked during the summer months, over the

1996–98 period.2

Previous research on teen employment has

primarily focused on the incidence and patterns

of work, and the effects on the teenager’s educational attainment, future employment prospects, and other developmental outcomes.3

Some of this research suggests that teenage

employment can have detrimental effects, such

as lower educational attainment. J.G. Bachman

suggests that employment provides youths with

“premature affluence.”4 One marketing study

suggests that in 1999 teens spent $105 billion

of their own money and influenced $48 billion

in family spending.5

Teen Employment and Spending

David S. Johnson is a

research economist in the

Division of Price and Index

Number Research,

Bureau of Labor Statistics.

Mark Lino is an economist

with the U.S. Department

of Agriculture.

Teenagers: employment and

contributions to family spending

Approximately one-third of all teenagers were employed

some time during 1997–98; a closer look into family income

and expenditures reveals that many of those working teens

do not seem to work to contribute toward family necessities

David S. Johnson

and

Mark Lino

Although previous research has examined

the association of husbands’ and wives’ labor

force participation with family expenditures, little

research has been undertaken on the connection between the employment status of teenagers and family expenditures.6 This article does

just that. It examines the role that employed and

nonemployed teenagers play in family expenditures. It specifically looks at the percentage of

teenagers who are employed and not employed,

and the characteristics of each. This is done by

income level because children from low-income

families may be more likely to contribute to family economic well-being than children from

nonlow-income households. Low-income

households are defined as families with beforetax income below 200 percent of the poverty

threshold; this income includes that earned by

all family members, including employed teens.7

In addition, the association of teen employment

with major family expenses is analyzed by testing whether teen employment is associated with

more or less money spent on certain types of

expenses, while controlling for other factors.

Data

Data used for this study are from the interview

component of the 1997–98 Consumer Expenditure (CE) Survey, collected by the Bureau of the

Census for the Bureau of Labor Statistics. The CE
16 Monthly Labor Review September 2000

Teen Employment and Spending

is an ongoing study that collects data on expenditures, income,

and major sociodemographic characteristics of households.8 It

is the most comprehensive source of information on household

expenditures available at the national level. A national sample of

households, representing the civilian noninstitutionalized population, is interviewed over the course of a year. The 1997–98

survey contains information from approximately 44,000 interviews.9

Teens, aged 14 to 17, were selected for this analysis. The

unweighted sample consisted of 2,552 teens. This sample was

restricted to teenagers who were children of the household

head and to households who were complete income reporters. Complete income reporters are households that provide

values for at least one major source of income such as wages

and salary, self-employment income, and Social Security. For

the descriptive analysis of teen characteristics, each teenager

was analyzed separately. About 19 percent of households

contained more than one teenager. For the descriptive analysis of household expenditures, each household was analyzed

separately. In cases in which the household had two teens,

one employed and the other not employed, the household

was classified as having an employed teen; this represented 5

percent of households.

Teenagers were classified as employed or not employed,

based on their answers to the employment questions in the

CE. These questions ask respondents whether they were in

the labor force during the past year, and if so, the number of

weeks per year and hours per week they worked. A teenager

was classified as being employed if he or she reported working sometime during the year for any amount of hours. The CE

questions on employment are similar to those asked on the

Current Population Survey, March supplement (CPS); employment data from the monthly CPS are used to calculate the official U.S. employment and unemployment rates. Statistics on

teen labor force participation are similar in both surveys for

the 1997–98 period. The CPS data show 35 percent of teens

The Consumer Expenditure (CE) Survey and the March

supplement of the Current Population Survey (CPS) both ask

teenagers, ages 15 to 17, about their annual weeks worked,

the average hours worked per week, and their annual earnings. However, the CE also surveys 14 year olds, and the CPS

does not; it focuses on 15 to 17 year olds. As shown below,

both surveys for the 1997–98 period found similar overall

employment rates for teens—36 percent in the CE and 35

percent in the CPS.

1

 The main difference between the two

surveys is that data from the CE indicate a greater percentage

of teens worked more than 10 weeks per year and more than

20 hours per week. Data from the CE and CPS also show similar

distributions of annual earnings for employed teens. The CE

indicates that 61 percent of employed teens earned less than

$2,000 per year, 32 percent earned between $2,000 and $5,000,

and 7 percent earned more than $5,000. The CPS shows that

63 percent of employed teens earned less than $2,000 per

year, 26 percent earned between $2,000 and $5,000, and 11

percent earned more than $5,000. The following are comparisons of the employment status of teenagers by age, from the

1997–98 Consumer Expenditure Survey and the Current Population Survey (in percent):

1 The employment rates are larger using other data and reference

periods. See Report on the Youth Labor Force (U.S. Department of

Labor, June 2000).

2

 Data are from the March 1998 and March 1999 CPS (which applies

to the 1997–98 period) for teenagers who are living with their parents.

Exhibit 1. Teen employment: a comparison of CE and CPS data

Consumer Expenditure Survey Current Population Survey

15–17 15 16 17 15–17 15 16 17

Not employed ................................... 63.7 76.0 63.5 50.7 65.3 83.9 65.4 46.0

Employed:

 10 or fewer weeks per year ........... 10.0 8.1 10.7 11.2 10.9 7.2 14.0 11.6

More than 10 weeks,

1 to 20 hours per week .............. 15.6 8.7 16.0 22.4 18.3 6.8 17.2 31.2

More than 10 weeks,

more than 20 hours per week ...... 10.8 7.2 9.7 15.7 5.6 2.0 3.5 11.3

2

Age Age Age Age Age Age Age Age
 Monthly Labor Review September 2000 17

aged 15 to 17 were employed (the CPS does not have employment data on 14 year olds) and the CE data show 36 percent of

teens aged 15 to 17 were employed. (See exhibit 1 for comparison.)

One limitation of the CE data was that about 42 percent of

teens who reported working did not report an income. Income

was therefore imputed for these teens. (The CPS imputes 16

percent of teenage salaries.)10 This imputation was made

based on age, occupation, gender, and annual hours worked.11

Although the income of a large proportion of teens was imputed for this study, an analysis was also conducted using

only those teens who had a reported income. It was found

Table 1. Characteristics of employed and nonemployed teenagers, aged 14 to 17, Consumer Expenditure Survey,

 1997–98

All households Low-income households

Sample size ...................... 2,552 865 1,687 968 240 728 1,584 625 959

Average age (years) ......... 15.5 15.8 15.3 15.5 15.7 15.4 15.5 15.8 15.3

 Gender (teen)

Male .................................. 53 53 53 54 51 54 52 53 51

Female .............................. 47 47 47 46 49 46 48 47 49

 Race ................

White ................................ 80 85 78 71 77 69 86 88 84

Black ................................ 15 10 17 24 16 27 9 8 11

Other ................................ 5 5 5 5 7 4 5 45

 Hispanic

Hispanic ............................ 14 8 17 26 16 30 7 5 8

Non-Hispanic .................... 86 92 83 74 84 70 93 95 92

 Household income ..... $53,110 $59,000 $50,110 $19,440 $21,550 $18,740 72,860 72,940 $72,810

Less than $10,000 ........... 8 5 10 22 18 24 0 0 0

$10,000 to $15,000 .......... 6 3 7 16 13 17 0 0 0

$15,001 to $30,000 .......... 17 13 20 43 43 43 2 2 3

$30,001 to $45,000 .......... 17 20 16 17 25 14 18 18 18

$45,001 to $65,000 .......... 22 22 21 2 1 2 33 29 35

$65,001 to $80,000 .......... 10 13 9 0 0 0 16 18 14

More than $80,000 ........... 20 24 17 0 0 0 31 33 30

 Family type

Married couple .................. 73 78 70 55 59 54 83 85 83

Single parent .................... 21 18 23 33 30 34 14 13 14

Other ................................ 6 4 7 12 11 12 3 2 3

 Employment of mother

Not applicable ................... 6 4 6 7 4 8 5 45

Employed full time ............ 43 45 42 32 29 32 50 52 50

Employed part time ........... 32 38 30 31 43 28 33 35 31

Not employed ................... 19 13 22 30 24 32 12 9 14

 Employment of father

Not applicable ................... 21 18 23 38 36 39 12 11 13

Employed full time ............ 62 68 59 37 42 35 77 78 76

Employed part time ........... 11 10 11 13 13 13 9 9 9

Not employed ................... 6 4 7 12 9 13 2 2 2

1

 “Other” race includes American Indians, Alaska natives, Asians, and Pacific Islanders.

2

 “Other” family type includes those headed by a grandparent and those residing in extended families.

NOTE: All data weighted to reflect population.

 Nonemployed

teenagers

Employed

teenagers

Nonemployed

teenagers

All

teenagers

Employed

teenagers

All

teenagers

Nonemployed

teenagers

Employed

teenagers

All

teenagers

that study results were similar, using teens who had a reported income and teens who had a reported or imputed income. We, therefore, use all teens whether they had a reported or imputed income. All data were weighted in this

study to represent the U.S. noninstitutionalized population.

Results

To examine the results in detail, this study analyzes the employment status of teenagers in relationship to their individual

and family characteristics. (See table 1.) Data are shown for

teenagers overall and by income level of the family (low inCharacterisitic

 Nonlow-income households

2

1
18 Monthly Labor Review September 2000

Teen Employment and Spending

Table 2. Characteristics of employed teenagers, aged 14

 to 17, Consumer Expenditure Survey, 1997–98

 Weeks worked per year,

 hours worked per week

10 or fewer weeks, any hours ......... 27 29 26

More than 10 weeks, 20 or fewer

hours ............................................ 39 39 39

More than 10 weeks, more than 20

hours ............................................ 34 32 35

........................................................

 Average annual income

 of teenager .................

Level (in dollars) .............................. $2,270 $1,980 $2,380

Income distribution ..........................

 Less than $1,000 ........................ 32 36 30

 $1,000 to $2,000 ........................ 27 28 27

 $2,001 to $3,000 ........................ 13 10 14

 $3,001 to $4,000 ........................ 13 11 14

 $4,001 to $5,000 ........................ 7 7 7

 More than $5,000 ........................ 8 8 8

........................................................

 Type of employment ...........

Services .......................................... 42 38 43

Retail ............................................... 20 24 19

Labor ............................................... 23 22 24

Administrative .................................. 15 16 14

NOTE: All data weighted to reflect population.

Total Lowincome

Nonlowincome

Characteristic

were white (85 percent, versus 78 percent) and were from twoparent households (78 percent, versus 70 percent).13 The same

percentages of employed and nonemployed teens were male

(53 percent) and a smaller percentage of employed than nonemployed teens were Hispanic, who may be of any race (8

versus 17 percent). The average before-tax household income

of employed teenagers was greater than that of nonemployed

teenagers ($59,000, compared with $50,110); this income includes that of parents and teens. Thirty-seven percent of employed teens resided in a household with more than $65,000

before-tax income, compared with 26 percent of their nonemployed counterparts.14 A greater percentage of employed than

nonemployed teens had a mother who worked full time or part

time in the labor force (83 percent, versus 72 percent). The

percentages by father’s employment show that a greater proportion of nonemployed teens lived in families headed by mothers only. In general, the figures on mothers’ and fathers’ employment status suggest that teenagers were more likely to be

employed if one or both of their parents were employed.

Teenagers in low-income families. For teenagers in low-income families, 25 percent were employed during the year. (See

chart 1.) Among these employed teenagers, average annual

earnings were $1,980; 64 percent had annual earnings of $2,000

and less. Twenty-nine percent of employed teenagers worked

10 or fewer weeks per year (any hours per week), 39 percent

worked more than 10 weeks per year and 20 or fewer hours per

week, and 32 percent worked more than 10 weeks per year and

more than 20 hours per week. Most employed teens in lowincome families worked in the service sector (38 percent) or in

retail (24 percent).

In low-income families, a greater percentage of employed

than nonemployed teens were female (49 percent, versus 46

percent), white (77 percent, versus 69 percent), and resided

with both parents (59 percent, versus 54 percent). A higher

percentage of nonemployed than employed teens in low-income families were Hispanic (30 percent, versus 16 percent).

The average before-tax household income of employed teenagers in low-income families was greater than that of nonemployed teenagers ($21,550, versus $18,740)—the earnings of

the teen were the major reason for this higher household income. In low-income families with a working teen, the earnings

of the teen accounted for 9 percent of household income. Also

in these families, a greater percentage of employed than nonemployed teens had a mother who worked full time or part time

in the labor force (72 percent, versus 60 percent).

Teenagers in nonlow-income families. For teenagers in

nonlow-income families, 39 percent were employed during the

year. (See chart 1.) Among these employed teenagers, average annual earnings were $2,380; 57 percent had annual earnings of $2,000 and less. Twenty-six percent of these employed

teenagers worked 10 or fewer weeks per year (any hours per

come, versus nonlow-income). For employed teenagers, data

are presented by income level of the family and by number of

weeks worked per year, hours worked per week, annual income, and type of employment. (See table 2.)

All teenagers. Among all teenagers, 34 percent were employed sometime during the year. (See chart 1.) Employed

teenagers had average annual earnings of $2,270; 59 percent

made $2,000 and less per year and 8 percent made more than

$5,000 per year. Time spent in employment varied; 27 percent

worked 10 or fewer weeks per year for any amount of time

(likely indicating summer employment), 39 percent worked more

than 10 weeks per year and 20 or fewer hours per week, and 34

percent worked more than 10 weeks per year and more than 20

hours per week. Nearly a third of employed teenagers working

more than 20 hours per week and more than 10 weeks per year

may be cause for concern. Some researchers suggest that the

20-hour-per week cut-off represents a threshold above which

there are negative consequences of youth employment, such

as lower educational attainment.12 Type of employment for

teens also varied; 42 percent worked in the service sector

(waiter or waitress, for example), 23 percent as laborers (yard

work, for example), 20 percent in retail (sales associate, for

example), and 15 percent in administrative work (secretarial/

clerical, for example).

A greater percentage of employed than nonemployed teens

Households
 Monthly Labor Review September 2000 19

week), 39 percent worked more than 10 weeks per year and 20

or fewer hours per week, and 35 percent worked more than 10

weeks per year and more than 20 hours per week.

In families with nonlow-income, a greater percentage of

employed than nonemployed teens were male (53 percent, versus 51 percent), white (88 percent, versus 84 percent), and

living with two parents (85 percent, versus 83 percent). A

smaller percentage of employed than nonemployed teens were

Hispanic (5 percent, versus 8 percent). The average before-tax

household income of employed teenagers was similar to that

of nonemployed teenagers ($72,940, versus $72,810). A greater

percentage of employed than nonemployed teens had a mother

who worked full time or part time (87 percent, versus 81 percent).

Employed teenagers: low income, versus nonlow-income.

Among employed teenagers, those in nonlow-income families

had higher average annual earnings than teens in low-income

families ($2,380, versus $1,980). Teen earnings, however, represented a larger share of total income in low-income families

with an employed teen, compared with that of nonlow-income

families with an employed teen (9 percent, versus 3 percent).

Compared with teens in low-income families, a slightly higher

percentage of teens in nonlow-income families worked more

than 10 weeks per year and more than 20 hours per week (35

percent, versus 32 percent) and worked in the service sector

(43 percent, versus 38 percent). A greater percentage of employed teens in low-income families than nonlow-income families lived in a single-parent or other type of family (for example,

headed by a grandparent) (41 percent, versus 15 percent), were

nonwhite (23 percent, versus 12 percent), were Hispanic (16

percent, versus 5 percent), and had a mother who was not

employed (24 percent, versus 9 percent). A slightly higher

percentage of employed teens in low-income families were female, compared with their counterparts in nonlow-income families (49 percent, versus 47 percent).

Average expenditures

Teenage employment may lead families to spend more or less

on some budgetary components. The CE survey collects information on the expenditures of the household. Table 3 presents

the average household expenditures and expenditure shares

of families with a teenager, by employment status of the teen

and household income level (low, versus nonlow-income).

Family size was nearly the same for households in each income

group so this should not have that much influence on expenditures. Regarding all households with a teenager, the total expenditures of those with an employed teen were higher than

the total expenditures of those with a nonemployed teen

($42,450, versus $35,220). This is likely because of the higher

income of families with an employed teen, which can be the

result of the teen’s employment and these families being more

likely to have one or both parents employed. Transportation

accounted for a higher share of the budget and a greater dollar

amount for families with an employed teen, compared with

those with a nonemployed teen. For families with an employed

teen, 26.2 percent of total expenses went to transportation,

compared with 22.5 percent for families with a nonemployed

teen. Teenage employment likely results in families driving more

miles in a vehicle, using public transportation more often, or

even having a second vehicle.

Food away from home makes up a slightly higher share of

the budget for families with an employed teen, compared with

the share of families with a nonemployed teen (4.7 percent,

versus 4.6 percent). Employment outside the home likely entails more consumption of meals away from home. Food at

home made up a lower share of the budget for families with an

employed teen, compared with those with a nonemployed teen

(12.4 percent, versus 14.4 percent). However, the dollar amount

spent on food at home was higher for families with an employed teen. Entertainment expenses accounted for a greater

share of the budget for families with an employed teen, compared with those with a nonemployed teen (6.7 percent, versus

5.9 percent). The higher income of families with an employed

teen and the earnings of the teenager may lead to more spending on nonessential goods and services.

While the expenditure data collected in the CE are primarily

0

10

20

30

40

50

60

70

80

90

100

Nonemployed

Employed

Chart 1. Employment status of teenagers,

 aged 14 to17, Consumer 

 Expenditure Survey, 1997 98 

 All 

households

 Low-

 income

households

 Nonlow-

 income

 households

Percent
20 Monthly Labor Review September 2000

Teen Employment and Spending

1 Housing includes shelter (mortgage interest, property taxes, or rent; maintenance

and repairs; and insurance), utilities (gas, electricity, fuel, telephone, and water), and

house furnishings and equipment (furniture, floor coverings, major appliances, and

small appliances).

Food-at-home includes food and nonalcoholic beverages purchased at grocery,

convenience, and specialty stores.

Food-away-from-home includes dining at restaurants and fast-food establishments,

and household expenditures on school meals.

Transportation includes the net outlay on the purchase of new and used vehicles,

vehicle finance charges, gasoline and motor oil, maintenance and repairs, insurance,

and public transportation.

Nonemployed

teenagers

Nonemployed

teenagers

Nonemployed

teenagers

Item

1

Clothing expenses include apparel items such as shirts, pants, and dresses; footwear;

and clothing services, such as dry cleaning and alterations.

Health care includes medical and dental services not covered by insurance, prescription drugs and medical supplies not covered by insurance, and health insurance premiums not paid by an employer or other organization.

Entertainment includes movie tickets, videos, televisions, and toys.

Other includes personal care items (such as soap and hairbrushes), education, tobacco, alcohol, and reading materials.

NOTE: All data weighted to reflect population.

household-level expenses, the survey does contain information

on the household expenses on clothing for individual members.

The survey, however, does not distinguish whether the parent or

teenager made the particular clothing purchase. Regarding expenditures on teenager’s own clothing, the expenses of employed

teens were about $170 more per year than the clothing expenses

of nonemployed teens ($643, versus $473).15 A similar finding

was reported by M. J. Alhabeeb who studied a sample of high

school students ages 15 to 19 in one city.16

The household expenditure patterns of low-income households with a teenager, by employment status of the teen were

similar to those of all households. The total expenditures of

low-income households with an employed teen were higher

than the total expenditures of low-income households with a

nonemployed teen.17 Transportation and entertainment accounted for higher budget shares for low-income households

with an employed teen than for households with a nonemployed teen. The clothing expenses on the teenager were higher

in low-income families with an employed teen, than in families

with a nonemployed teen ($504, versus $294). While some of

this is because of the higher total apparel expenditures of families with an employed teen, it also represents a larger share of

total apparel expenses.

The expenditure patterns of nonlow-income households

with a teenager by employment status of the teen were also

similar to the spending patterns of all households. Total expenditures of nonlow-income households with an employed

teen were higher than the total expenditures of their counterparts with a nonemployed teen. A closer view of expenditures

for nonlow-income families reveals that transportation and

entertainment expenses accounted for a larger share of the

budget for households with an employed teen than they did

for households with a nonemployed teen. Also, food away

from home accounted for a higher dollar amount for nonlowincome households with an employed teen. The clothing expenses on the teenager were slightly more in nonlow-income

families with an employed teen than in such families with a

nonemployed teen ($697, versus $600).

Multivariate analysis

Although descriptive analysis gives an initial indication of

how the expenditures of families with a teenager differ by employment status of the teen, it could be that these differences

Table 3. Average expenditures of households with teenagers, aged 14 to 17, by income level, Consumer Expenditure

 Survey, 1997–98

All households Low-income households Nonlow-income households

All Employed All Employed All Employed

teenagers teenagers teenagers teenagers teenagers teenagers

Sample size ............. 2,112 772 1,340 785 218 567 1,327 554 773

Total expenditures ... $37,860 $42,450 $35,220 $24,160 $29,950 $21,900 $45,730 $47,310 $44,610

Percent of total

 expenditures1 ...........

Housing ................. 33.8 33.1 34.3 35.0 31.8 36.9 33.5 33.3 33.4

Transportation ........ 24.0 26.2 22.5 22.4 29.0 18.8 24.4 25.5 23.7

Food at home......... 13.6 12.4 14.4 18.5 15.4 20.2 12.1 11.6 12.4

Food away

from home ............ 4.6 4.7 4.6 3.7 3.7 3.7 4.9 4.9 4.9

Health care ............ 5.0 4.9 5.0 4.7 4.5 4.8 5.1 5.1 5.1

Clothing ................. 5.7 5.4 5.9 5.5 5.4 5.5 5.8 5.5 6.1

Entertainment ........ 6.2 6.7 5.9 4.0 4.4 3.8 6.8 7.2 6.6

Other ..................... 7.1 6.6 7.4 6.2 5.8 6.3 7.4 6.9 7.8

Teenager clothing

 (dollars per year) ... $535 $643 $473 $353 $504 $294 $640 $697 $600

Household size

 (number

of members) .......... 4.2 4.2 4.2 4.5 4.5 4.4 4.0 4.1 4.0
 Monthly Labor Review September 2000 21

are due to other factors, such as household income, race, or

family size. Multivariate analysis is a better procedure to determine the association between employment of teenagers and

family expenditures as it controls for these other factors. With

multivariate analysis, the expenditure of interest is termed the

dependent variable and the controlled factors (for example,

teen employment status, household income, race, and family

size) are termed the independent variables. Controlling for these

other variables is often referred to as “holding all else equal.”

Multivariate analysis was performed on the eight major expenditure categories (housing, transportation, food at home,

food away from home, health care, clothing, entertainment,

and other expenses).18 The sample was restricted to marriedcouple and single-parent families with only one teenager in the

family and no older adults present, such as an adult child or

grandparent (the sample size was 825 married-couple households and 306 single-parent households). This was done to

better isolate the association between teen employment and

expenditures because the presence of two or more teens or

more adults in the household may compound the effect of teen

employment on expenditures. The data on married-couple and

single-parent families were examined separately because the

differences in the number of adults and employment status of

these adults may affect family expenditures.

The independent variables included in the multivariate

analysis of each expenditure were 1) demographic: number of

children ages 13 and younger in household, gender of teenager in household (combined with teen employment status),

gender of parent in the cases of single-parent households,

region of residence and urban status (to control for cost of

living in different parts of the country), age of household head

or reference person,19 and race and ethnicity of the household, and 2) socioeconomic: household income, employment

status of parents, total hours parents worked per week, teen

employment status, and total hours teen worked per week.

These variables are traditionally controlled for in multivariate

analysis in which the dependent variable is an expenditure.

The primary variables of interest were teen employment status

and total hours the teen worked. How these two variables

were associated with each expenditure, while controlling for

other factors, is the focus here.20

Because unique factors likely are associated with the expenditures of various budgetary components, each multivariate analysis was not identical. All analyses had standard demographic and socioeconomic variables such as age of household head and household income. However, the amount spent

on housing is probably influenced by whether or not the family is a homeowner and the amount spent on transportation is

likely influenced by the number of vehicles the family owns.

These variables were therefore included in the respective analysis. The variables and the measurement of these variables,

included in each analysis, are described in the box on page 23.

Results of the multivariate analysis for each of the eight

expenditures for husband-wife and single-parent families are

shown in table 4. For married-couple families, teen employment and hours worked had a significant association (at the

.05 level) with housing, food away from home, transportation,

and entertainment expenditures, all else being equal. Teen

employment and hours worked were associated with higher or

lower levels of these expenditures. Households with an employed female teen had lower housing expenses than households with a nonemployed male teen. This may be related to

the teen being a female because households with a nonemployed female teen also had lower housing expenses than

households with a nonemployed male teen. The more hours a

teen worked, the higher housing expenses (such as home appliances) were. It could be that the more hours a teen is employed, the less time he or she has for home chores, so the

household spends more on time-saving home appliances. This

association is similar to the amount of hours parents worked.

The more hours parents worked, the higher housing expenses

were, although the finding was not significant.

Married-couple households with an employed male teen

had higher food away from home and entertainment expenses

than did households with a nonemployed male teen, all else

being equal. The finding regarding food-away-from-home expenses is not surprising. Work outside the home likely results

in the consumption of more meals away from home. As for

entertainment expenses, a survey of high school seniors in

1998 found that 42 percent spent most of their own earnings

on personal needs and activities, such as recreation.21 The

more hours a teen worked, the higher household transportation expenses. Work outside the home probably results in

travel to and from the place of employment and the increased

likelihood of owning an additional vehicle. This finding contrasts with the study by Alhabeeb, which found employed

high school students spent less on transportation.22 The

different results may be because our study included the purchase of vehicles in transportation expenses, whereas the

Alhabeeb study did not.

The factor that was significantly associated with all eight

expenditure categories for married-couple families was household income. The greater the household income, the more families spent on each budgetary category, all else being equal.

Households with an employed father and nonemployed mother

had higher food-at-home expenses than did households in

which both parents were not employed. The more children

ages 13 and under in the family, the more families spent on

food at and away from home. The older the household head,

the more families spent on food at home and health care. Black

households had lower expenses on food (at home and away)

and health care, compared with those of nonblack households.

Hispanic households had lower expenses on food away from

home, health care, and entertainment than those of non-Hispanic households. There were differences in married-couple

family expenditures by area of residence, including higher
22 Monthly Labor Review September 2000

Teen Employment and Spending

Table 4. Results of multivariate analysis, husband-wife families, and single-parent families, Consumer Expenditure

 Survey, 1997–98

Variable Food Transpor- Health Entertainat home tation care ment

Intercept ....................................... 5,604.52 857.31 36.99 78.77 66.81 –1,390.90 –761.46 –461.03

Femunemp .................................... 2

–1,313.36 –66.36 –28.88 819.73 71.71 –203.85 –390.71 –616.96

Fememp ........................................ 2–1,812.45 –535.95 227.17 1,096.30 412.70 –447.82 189.13 –661.88

Maleemp ....................................... –885.01 –47.15 2566.45 240.71 –10.38 174.81 22,207.45 –445.15

Teenhrs ......................................... 2

2.26 .16 –.31 23.74 .02 .08 –.57 –.05

Income ......................................... 2

.12 2.01 2.02 2.09 2.02 2.01 2.03 2.03

Motheremp .................................... 258.11 1,297.07 –109.08 –3,839.65 –712.36 625.88 267.35 472.12

Fatheremp .................................... 1,444.26 2

1,443.39 158.68 –2,009.30 192.07 326.40 1,581.40 181.11

Bothemp ....................................... –1,396.28 1,109.26 –227.65 –6,312.42 –669.99 –303.25 1,248.65 131.55

Parenthrs ...................................... .49 .07 .13 1.05 .13 .12 –.10 .12

Child ............................................. 376.10 2511.57 2173.82 479.16 116.19 78.22 199.41 31.69

Age ............................................... –34.26 243.49 8.88 –54.17 11.27 268.05 4.60 12.72

Black ............................................ –446.43 2

–823.09 2–859.34 1,978.50 106.98 2–814.91 –413.32 818.13

Hispanic ........................................ –103.61 39.64 2–628.04 577.25 22.61 2–1,071.65 2–1,703.15 –657.04

NE ................................................ 21,913.39 –.46 –51.99 –1,401.34 2.99 2–698.95 62.11 835.37

SO ................................................ –478.31 –259.35 29.25 2

4,870.21 123.47 –93.30 –441.67 10.71

WE ................................................ 1,421.65 130.97 183.32 3,775.54 –86.90 –311.30 2

1,864.49 204.67

Rural ............................................. 2–1,633.02 –277.70 –313.00 1,487.56 –94.56 35.54 979.10 123.28

CCity ............................................. 339.58 77.63 –11.45 –3,293.62 253.92 –.73 –283.00 609.23

Home ............................................ 21,314.78 ...... ...... ... ......

Auto .............................................. ... ... ... 23,243.66 ... ... ......

R................................................... .37 .14 .15 .07 .19 .07 .06 .09

Intercept ....................................... 5,973.37 23,427.74 –328.40 –5,641.09 261.70 859.41 –303.49 –125.38

Femunemp .................................... 637.85 –113.06 33.42 699.05 2648.66 –434.00 174.90 123.71

Fememp ........................................ 1,469.91 –470.77 206.22 –505.28 95.83 309.24 –246.41 297.56

Maleemp ....................................... 542.83 –582.60 –309.39 –3,720.68 –823.91 –503.52 –723.96 –659.46

Teenhrs ......................................... –1.07 .44 –.08 –1.06 .47 –.22 .45 .03

Income ......................................... 2

.24 2.02 2.01 .01 2.03 2.01 2.05 2.02

Male .............................................. –1,118.29 56.97 169.10 943.78 33.25 2

–675.22 –191.54 –26.39

Parentemp .................................... –2,206.28 –560.27 361.01 1,516.66 136.87 41.53 884.49 333.71

Parenthrs ...................................... .50 .17 .01 –.12 .11 .23 –.29 .11

Child ............................................. 96.95 2

369.66 10.15 710.94 166.41 –120.80 251.69 230.52

Age ............................................... –27.42 –.13 227.15 125.79 10.84 .38 14.82 27.37

Black ............................................ –853.54 –251.02 2–546.95 930.37 594.31 2–817.98 –249.80 2–1,080.35

Hispanic ........................................ 264.35 –112.37 –281.70 –475.47 546.21 –532.21 –101.45 –791.69

............................................................

NE ................................................ 495.74 2

779.71 38.20 –1,379.29 –639.27 108.71 2–941.41 686.70

SO ................................................ –36.35 –310.93 –48.48 –2,024.20 –550.89 2

775.74 –483.95 319.07

WE ................................................ 352.81 –74.75 2–428.11 –611.10 –366.54 378.97 –644.40 324.96

Rural ............................................. 2

–3,172.27 2864.95 2–631.31 410.36 –575.87 156.67 2–841.86 –504.22

CCity ............................................. –915.82 –84.70 –184.40 –771.91 2–683.37 –158.70 48.54 –641.18

Home ............................................ 1,295.56 ... ... ... ... ... ... ...

Auto .............................................. ... ... ... 2

3,984.93 ... ... ... ...

R................................................... .63 .16 .21 .10 .17 .08 .29 .06

1 See box on page 23, for definition of variables. NOTE: See footnote to table 3 for definitions of individual expenditure items.

2 Statistically significant at .05 level.

Food

away

from home

Housing Other Variable1

Husband -wife families

Single-parent families

Sample N=825

Sample N=306

2

2

Clothing
 Monthly Labor Review September 2000 23

To determine the association between employment of teenagers and family expenditures, all else being equal, a multivariate analysis is useful. Each independent variable used in

the study is identified and defined as follows:

Femunemp = 1 if female teen was nonemployed

Fememp = 1 if female teen was employed

Maleemp = 1 if male teen was employed (the omitted category being “male teen was nonemployed”)

Teenhrs = total hours per week teen in household was employed

Income = total household income (income of parents and

teen)

Motheremp = 1 if only mother was employed

Fatheremp = 1 if only father was employed

Bothemp = 1 if both parents were employed (the omitted

category being “both parents were nonemployed”)

In multivariate analysis of single-parent families, Parentemp

= 1 if single parent was employed and the omitted category was “single parent was nonemployed.”

Parenthrs = total hours per week parent or both parents in

household were employed

Child = number of children ages 13 and under in household

Male = 1 if single parent was male (the omitted category

being “single parent was female”); variable only included

in analyses of single-parent households

Age = age of household head

Black = 1 if household was black (the omitted category being “household was nonblack”)

Hispanic = 1 if household was Hispanic (the omitted category being “household was nonHispanic”)

NE = 1 if household resided in the Northeast

SO = 1 if household resided in the South

WE = 1 if household resided in the West (the omitted category being “household resided in the Midwest”)

Rural = 1 if household resided in a rural area

CCity = 1 if household resided in a central city (the omitted

category being “household resided in a suburban area”)

Home = 1 if household owned their home (the omitted category being “household did not own their home”); variable only included in housing expenditure analysis

Auto = number of vehicles household owned; variable only

included in transportation expenditure analysis

Variables in Multivariate Analysis

transportation expenses for families in the South than those in

the Midwest and lower housing expenses for families in rural

areas, compared with those in suburban areas. Homeowners had

higher housing expenses than nonhomeowners and the more

vehicles a family owned, the greater their transportation expenses.

Regarding the multivariate results for single-parent families, teen employment (specifically teen nonemployment) was

only significantly associated with one expenditure category—

clothing. Single-parent families with a nonemployed female

teen had higher clothing expenses than single-parent families

with a nonemployed male teen, all else being equal. The fact

that a teen was employed and the number of hours he or she

worked had no significant association with any of the budgetary expenditures examined.

As with married-couple families with a teenager, for singleparent families with a teenager, the amount of expenditures on

the eight budgetary components was typically associated with

household income. That is, the higher the income of the singleparent family, the higher expenses were for all budgetary components, except transportation, all else being equal. The more

children ages 13 and younger in the household, the higher

expenses were for food at home, and the older the household

head, the higher expenses were for food away from home.

Single-parent families headed by a male spent less on health

care than did families headed by a female. Black single-parent

households had lower expenses for food away from home,

health care, and other expenses than nonblack single-parent

households. There were differences also in household expenditures by area of residence, including higher food-at-home

expenses for single-parent families in the Northeast than in the

Midwest and lower entertainment expenses for families in rural

areas than in suburban areas. The more vehicles a family

owned, the greater its transportation expenses.

As mentioned earlier, teenagers were more likely to be employed if both parents were employed. An additional analysis,

not presented here, studied these families (married-couple families in which both the husband and wife were employed) separately. The association of teenage employment and hours

worked with family expenditures was similar in these families

to that of married-couple families overall.
24 Monthly Labor Review September 2000

Teen Employment and Spending

Conclusions

Results from this study indicate that nearly one-third of teenagers are employed. Many of these teens do not seem to

work because of economic necessity, because many live in

married-couple families with higher household income, compared with those of their nonemployed counterparts. Thirtyfour percent of employed teens work more than 20 hours per

week (for more than 10 weeks per year). This may be cause for

concern, as prior research has shown that working at this

level is associated with negative consequences.

It appears that having an employed parent increases the

likelihood of a teen being employed. This is further evidence

that teens work for reasons other than economic necessity. It

may be that parents who are employed are more likely to encourage or have a greater expectation that their teenage children will also be employed.

In low-income families with a teenager, the teen was less

likely to be working, compared with teens in nonlow-income

families. However, in low-income families with an employed

teen, the teen’s earnings accounted for a moderate percentage of total family income—approximately 9 percent. Many of

these low-income families are single-parent households.

When we examined the association between teen employment and the expenditures of single-parent families, the employment of the teen did not have a significant association

with expenditures of any budgetary component. The earnings of teens appear to go to their own expenses, such as

clothing. This was evident by the higher personal clothing

expenses of employed teens in low-income families (the income group most single-parent families are in), compared with

nonemployed teens in such families.

For married-couple families, teen employment had a significant association with higher expenses of housing, food away

from home, and entertainment. Two of these three expenses (food

away from home and entertainment) are not typically considered

as family necessities. So, as with single-parent families, employed

teens in married-couple families do not seem to be using their

earnings to contribute to family necessities. Employed teens in

married-couple families are likely using their earnings on workrelated needs and their own personal use.23

 It should be noted that the employment of the teen and

their parents may be determined simultaneously with family

expenditures. A teen may not necessarily decide to work and

then decide on what to spend their earnings. Rather, a teen

may need to cover certain expenses and decide to enter the

labor force. While previous research has examined the simultaneity of parental employment and expenditures,24 this research could be extended to examine the simultaneity of teen

employment, parental employment, and expenditures. 

Notes

1

 Mark Lino, Expenditures on Children by Families, 1999 Annual

Report, Miscellaneous Publication No. 1528–1999 (U.S. Department of

Agriculture, Center for Nutrition Policy and Promotion, June 2000).

2 Report on the Youth Labor Force (U.S. Department of Labor, June

2000).

3

 For a review of this research, see National Research Council, Protecting Youth at Work (Washington, DC, National Academy Press, 1998);

and Department of Labor, Report on the Youth Labor Force.

4 J. G. Bachman, “Premature affluence: Do high school students

earn too much?” Economic Outlook USA, vol. 10(3), 1983, including

updated tables.

5

 “Report of Teen Research Unlimited Study,” Discount Store News,

Jan. 3, 2000.

6

 This research includes M. J. Alhabeeb, “Characteristics of employed teens and their consumption,” Paper presented at the annual

conference of the Eastern Family Economics and Resource Management Association (Champaign-Urbana, IL, 2000); A. W. Bailey, “Teenagers employment, earnings, and spending,” Journal of Home Economics, Summer, 1992, pp. 20–24; V. S. Doss, J. Marlowe, and D. G. Godwin,

“Middle-school children’s sources and uses of money,” Journal of Consumer Affairs, vol. 29(1), 1995, pp. 219–41; M. A. Guadagno, “Impact

of children’s employment on the economic status of two-parent families,” Family Economics Review, vol. 5(4), 1992, pp. 11–16; and C. B.

Meeks, “Factors influencing adolescents’ income and expenditures,”

Journal of Family and Economic Issues, vol. 19(2), 1998, pp. 131–50.

7

 Low-income households being defined as families with before-tax

income below 200 percent of the poverty threshold is in concordance

with prior definitions of low-income families. See America’s Children:

Key National Indicators of Well-Being, 1999 (Washington, U.S. Government Printing Office, Federal Interagency Forum on Child and Family

Statistics, 1999).

8

 The CE actually collects information from consumer units. A consumer unit consists of either: all members of a particular household who

are related by blood, marriage, adoption, or other legal arrangements; two

or more people living together who pool their incomes to make joint

expenditure decisions; or a person living alone or sharing a household with

others or living as a roomer in a private home or lodging house or in

permanent living quarters in a hotel or motel, but who is financially

independent. To be considered financially independent, at least two of the

three major expense categories (housing, food, and other living expenses)

have to be provided by the respondent. For this study, the terms “consumer unit,” “household,” and “family” are used interchangeably.

9

 Data are collected from consumer units over four interviews. The

interviews are conducted at 3-month intervals, and consumer units report expenditures for the 3 months prior to the month of the interview.

There is a rotating sample design such that each month, a portion of the

sample consists of new consumer units introduced to replace consumer

units who complete their participation in the survey. Each 3-month

interval is deemed an independent sample and should be treated as such

to incorporate the weights. Data from each interval were therefore

aggregated and expenditures annualized.

10 The reason a lower percentage of teen earnings are imputed on the

CPS than the CE is likely because with the CPS teens are asked directly about

their earnings, whereas with the CE, the household head is questioned

about teen earnings and this head may or may not consult with the teen

about this.

11 All teenagers who reported positive salaries were used to impute a
 Monthly Labor Review September 2000 25

value to those employed teenagers with missing salaries. We regressed

ln(salary) on age dummies, occupation dummies, gender, dummies for

length of work (summer, full-time) and total annual hours worked. We

obtained an R2

 of 0.30 and many of the coefficients were significant.

These coefficients and values of the regressors were then used to impute

the missing salaries.

Because most working teenagers have hourly wages that are between

$5 and $6 (see Report on the Youth Labor Force), the differences in

total earnings are mostly due to differences in annual hours worked. In

the future, these salaries will be imputed during the production process.

In addition, some of the teenagers do not provide information on their

annual work hours; these are imputed during the production process of

the CE survey. We found similar results whether we used the entire sample

or the restricted sample of teens with reported hours.

12 National Research Council, Protecting Youth at Work (Washington,

National Academy Press, 1998).

13 Although the Consumer Expenditure Survey category to define

two-parent families is “married-couple with children,” one of these

parents may be a stepparent.

14 This is similar to that found in the Report on the Youth Labor Force.

15 The clothing expenses are not totally attributable to one teenager, as some households had two or more teens. However, on average,

households had only one teenager in the family so the teen clothing

expenses represent a single teen.

16 Alhabeeb, “Characteristics of employed teens.”

17 For both low-income households with an employed teen and nonemployed teen, total expenditures exceeded their before-tax income.

The Consumer Expenditure survey publications also show this relationship for the lower-income groups. This result may stem from income

not including in-kind benefits and the Earned Income Tax Credit. Also,

this result may be the case because families with limited income go into

debt or draw on savings to cover expenses.

18 Ordinary least squares analysis was applied to each expenditure. For

the analyses of married-couple families, most families (85 percent or

more) reported a positive expense for each of the eight expenditure

categories. Hence, there was no truncation problem in there being too

many zeros. For the analyses of single-parent families, most families also

reported a positive expense for each of the expenditure categories, with

the exception of health care. In the case of health care, Tobit analysis

may be a more appropriate technique. However, ordinary least squares

analysis was used to be consistent with the other expenditures and the

majority of single-parent households reported positive health care expenses. This should not pose a problem, as the significance and association of independent variables to the dependent variable should be the same

with ordinary least squares and Tobit analyses.

19 The reference person in the Consumer Expenditure Survey is

defined as the person who owns or rents the home; in cases of joint

ownership or renting, the reference person is arbitrarily determined.

In this study, the reference person is also referred to as the household

head. The race and ethnicity of the household was gauged by the race

and ethnicity of the reference person. In most families, the race and

ethnicity of the reference person is the same as that of other family

members.

20 Teen income was not used in the multivariate analysis because of

the use of imputed income for many teenagers.

21 Bachman, “Premature affluence.”

22 Alhabeeb, “Characteristics of employed teens,”

23 C. B. Meeks found that nearly half of adolescents ages 12 to 18

were expected to spend all of their income on whatever they chose. See

Meeks, “Factors influencing adolescents’ income.” In addition, another

study suggests that more than half of teen spending is on clothing and

entertainment. See Matthew Klein, “Teen green,” American Demographics, 1998 February, p. 39.

24 See Marilyn E. Manser, “The allocation of consumption by married-couple families in the U.S.: An analysis conditioning on labor supply” (Annales-d’Economie-et-de-Statistique, January-March, 1993), pp.

83–108; and M. Browning, and C. Meghir, “Testing for separability

between goods and leisure using conditional demand systems,”

Econometrica, July 1991, pp. 925–52.