Children, Teens, and Money

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Chapter 2: Children, Teens, and Money

FAMILY INCOME
CHILDREN IN POVERTY
CHILD SUPPORT
TEENS AND MONEY

FAMILY INCOME

Almost all children are financially dependent on their parents, with their financial condition directly dependent on how much their parents earn. Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith of the U.S. Census Bureau report in Income, Poverty, and Health Insurance Coverage in the United States: 2007 (August 2008, http://www.census.gov/prod/2008pubs/p60-235.pdf) that real income rose throughout the 1990s and then declined in the early twenty-first century. The median (half were higher and half were lower) household income in 2007 was $50,233, up 1.3% from the previous year. (See Table 2.1.) For married-couple families, the median household income was $72,785, up 1.5% from the previous year.

DeNavas-Walt, Proctor, and Smith find that single-parent families, particularly those headed by single mothers, fared worse than other households in 2007. Families with female heads-of-household and no husband present had a median income of $33,370, up 2% from the previous year, whereas male-headed households with no wife present had a median income of $49,839, 2.9% higher than the year before. (See Table 2.1.)

According to DeNavas-Walt, Proctor, and Smith, the median income varied greatly by race and ethnic group. Asian-American households had the highest median income, at $66,103, followed by non-Hispanic white households at $54,920. (See Table 2.1.) The median income for Hispanic households was $38,679, and the median income for African-American households, at $33,916, was the lowest of any reported race or ethnic group, even though it had risen 3.2% over the previous year, the largest increase of any group.

The Cost of Raising a Child

Since the 1960s the Family Economics Research Group of the U.S. Department of Agriculture (USDA) has provided estimates on the cost of rearing a child to adulthood. The estimates are calculated per child in a household with two children and are categorized by the age of the child using different family income levels. Attorneys and judges use these estimates in determining child-support awards in divorce cases as well as in cases involving the wrongful death of a parent. Public officials use the estimates to determine payments for the support of children in foster care and for subsidies to adoptive families. Financial planners and consumer educators use them in helping people determine their life insurance needs.

INCOME LEVELS . Estimated annual family expenditures for a child vary widely depending on the income level of the household. The estimated amount a family spends on a child also tends to increase as the child ages. The USDA estimates that in 2007 married-couple households that earned less than $45,800 per year spent amounts ranging from $7,830 for very young children to $8,830 for 12- to 14-year-olds. (See Table 2.2.) Estimates for middle-income, married-couple families ranged from $10,930 for 9-to 11-year-olds to $12,030 for 15- to 17-year-olds. Estimates for married-couple families with incomes above $77,100 ranged from $15,980 to $17,500, depending on the age of the child.

Estimated annual expenditures for single-parent families that earned less than $45,800 per year spent slightly less than those of two-parent families, most likely because their average incomes were lower ($19,700 for single-parent families and $28,600 for two-parent families). (See Table 2.3 and Table 2.2.) The USDA estimates that in 2007 these single parents spent an annual average of $6,490 to $8,960, depending on the age of the child. Single-parent families that earned $45,800 or more spent $14,940 to $17,760 per child, slightly more than the middle-income, two-parent families.

Even though the USDA estimates that in 2007 the highest-income households spent about twice the amount on their children than the lowest-income households, this difference varied by the type of expense. For example, the estimated food expenditure for children aged 15 to 17 in the

 
TABLE 2.1 Median income by type of household and race and Hispanic origin of householder, 200607
[Income in 2007 dollars. Households and people as of March of the following year.]
Characteristic20062007Percentage change in real median income (2007 less 2006)
Number (thousands)Median income (dollars)Number (thousands)Median income (dollars)
EstimateEstimateEstimate
Represents or rounds to zero.
*Federal surveys now give respondents the option of reporting more than one race. Therefore, two basic ways of defining a race group are possible. A group such as Asian may be defined as those who reported Asian and no other race (the race-alone or single-race concept) or as those who reported Asian regardless of whether they also reported another race (the race-alone-or-in-combination concept). This table shows data using the first approach (race alone). The use of the single-race population does not imply that it is the preferred method of presenting or analyzing data. The Census Bureau uses a variety of approaches.
About 2.6 percent of people reported more than one race in Census 2000. Data for American Indians and Alaska Natives, Native Hawaiians and other Pacific Islanders, and those reporting two or more races are not shown separately in this table.
SOURCE: Adapted from Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, Table 1. Income and Earnings Summary Measures by Selected Characteristics: 2006 and 2007, in Income, Poverty, and Health Insurance Coverage in the United States: 2007, U.S. Census Bureau, August 2008, http://www.census.gov/prod/2008pubs/p60-235.pdf (accessed September 21, 2008)
Households116,01149,568116,78350,2331.3
All households     
Type of household     
Family households78,42561,59377,87362,3591.2
        Married-couple58,94571,69458,37072,7851.5
        Female householder, no husband present14,41632,72114,40433,3702
        Male householder, no wife present5,06348,4145,10049,8392.9
Nonfamily households37,58729,90838,91030,1760.9
        Female householder20,24924,55321,03824,2941.1
        Male householder17,33836,62417,87236,7670.4
Race* and Hispanic origin of householder     
White94,70552,11195,11252,115
        White, not Hispanic82,67553,91082,76554,9201.9
Black14,35432,87614,55133,9163.2
Asian4,45466,0604,49466,1030.1
Hispanic (any race)12,97338,85313,33938,6790.4

highest-income husband-wife families was $2,970, compared to $2,080 in the lowest-income group. (See Table 2.2.) The estimated annual expense for education and child care for children aged 15 to 17 in these high-income families ($2,120) was nearly four times that for a child the same age in the lowest-income families ($580). These variations among income groups by type of expense held true for single-parent households as well. (See Table 2.3.)

AGE OF CHILD. The 2007 estimates of family expenditures on a child generally increased with the child's age, except for housing, education, and child care. (See Table 2.2 and Table 2.3.) Households with young children are more likely to have recently purchased homes at higher prices and with higher interest rates, which helps explain the higher housing estimates for young children. Estimates for education, child care, and related expenses were also highest for preschoolers (under the age of six) in all income groups. Many women with children this age are in the labor force and must pay for child care. Once children enter school, the child care costs decrease. As school-age children grow up, the need for after-school and summer care also decreases. The estimates do not include expenses related to college attendance, which typically do not occur until the child is at least 18.

FUTURE COSTS . The USDA also estimates the total cost of raising a child born in 2007 who will reach the age of seventeen in 2024, incorporating an average annual inflation rate of 3.1% (the average annual inflation rate over the previous twenty years). The total family expenses for raising a child born in 2007 were estimated to be $196,010 for the lowest-income group, $269,040 for the middle-income group, and $393,230 for the highest-income group. (See Table 2.4.)

CHILDREN IN POVERTY

Children are the largest group of poor in the United States. In 1975 they replaced the elderly as the poorest age group. (See Figure 2.1.) DeNavas-Walt, Proctor, and Smith state that in 2007 the poverty rate for all children younger than 18 years of age was 18%, or 13.3 million children, which was up from 17.4%, or 12.8 million children, in 2006. Children under 18 years old made up a quarter (24.8%) of the population of the United States, but they made up over one-third (35.7%) of the people living below the poverty line. (For population estimates for July 1, 2007, by age, see the Census Bureau's National Population EstimatesCharacteristics [April 30, 2008, http://www.census.gov/popest/national/asrh/NC-EST2007-sa.html.]) Children under the age of six are particularly vulnerable to poverty. According

 
TABLE 2.2 Estimated annual expenditures on a child by husband-wife families, 2007
Age of childTotalHousingFoodTransportationClothingHealth careChild care and educationMiscellaneous*
Notes: Estimates are based on 199092 Consumer Expenditure Survey data updated to 2007 dollars using the Consumer Price Index. For each age category, the expense estimates represent average child-rearing expenditures for each age (e.g., the expense for the 35 age category, on average, applies to the 3-year-old, the 4-year-old, or the 5-year-old). The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.
*Miscellaneous expenses include personal care items, entertainment, and reading materials.
SOURCE: Mark Lino, Table ES1. Estimated Annual Expenditures on a Child by Husband-Wife Families, Overall United States, 2007, in Expenditures on Children by Families, 2007, U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, March 2008, http://www.cnpp.usda.gov/Publications/CRC/crc2007.pdf (accessed November 2, 2008)
Before-tax income: less than $45,800 (average = $28,600)
02$7,830$2,970$1,070$930$340$600$1,220$700
358,0202,9301,1909003405701,370720
688,0002,8301,5301,050370650810760
9117,9502,5601,8301,140420710490800
12148,8302,8501,9301,2907007203401,000
15178,8102,3002,0801,730620770580730
Total$148,320$49,320$28,890$21,120$8,370$12,060$14,430$14,130
Before-tax income: $45,800 to $77,100 (average = $61,000)
02$10,960$4,010$1,280$1,390$410$780$2,000$1,090
3511,2803,9801,4701,3604007502,2101,110
6811,1303,8801,8801,5104408501,4201,150
91110,9303,6002,2101,6004809209301,190
121411,6903,9002,2301,7408209306801,390
151712,0303,3502,4802,2007309801,1701,120
Total$204,060$68,160$34,650$29,400$9,840$15,630$25,230$21,150
Before-tax income: more than $77,100 (average = $115,400)
02$16,290$6,380$1,690$1,950$530$900$3,020$1,820
3516,6706,3401,9101,9105208603,2901,840
6816,3106,2402,3102,0605709902,2601,880
91115,9805,9702,6802,1506201,0601,5801,920
121416,8106,2602,8202,3001,0301,0701,2102,120
151717,5005,7102,9702,7809401,1202,1201,860
Total$298,680$110,700$43,140$39,450$12,630$18,000$40,440$34,320

to DeNavas-Walt, Proctor, and Smith, in 2007 the poverty rate for families with children under the age of six was 20.8%, which was higher than the overall rate of child poverty. In addition, over half (54%) of children younger than the age of six living with a single mother were in poverty, which was more than five times the rate of poverty for children younger than the age of six living in married-couple families (9.5%).

The child poverty rate declined between 1995 and 2000, but the rate of children living in poverty (100% of the poverty line or below) and in low-income families (100% to 200% of the poverty line) began to rise again in 2000. By 2007, 39.1% of children lived in low-income or poor families. (See Figure 2.2.) In Basic Facts about Low-Income Children: Birth to Age 18 (October 2008, http://www.nccp.org/publications/pdf/text_845.pdf), Ayana Douglas-Hall and Michelle Chau of the National Center for Children in Poverty note that even though the largest group of low-income children in 2007 were white (38%), Hispanic and African-American children were disproportionately poor. (See Figure 2.3.) The majority of both African-American children (60%) and Hispanic children (61%) lived in low-income or poor families. Preschoolers were particularly likely to live in low-income families (43%), including poor families (21%). (See Figure 2.4.) Another trend in child poverty emerged in the twenty-first century. The Children's Defense Fund notes in The State of America's Children 2005 (2005, http://www.childrensdefense.org/site/DocServer/Greenbook_2005.pdf?docID=1741) that the number of children living in extreme poverty (below one-half of the poverty level) increased by 20% between 2000 and 2004, almost twice as fast as the number of children in poverty overall. According to Kathy R. Thornburg, Jacqueline L. Scott, and Hailey Stout of the Center for Family Policy and Research, in The State of Children and Families: 2008 (February 2008, http://mucenter.missouri.edu/MOchildfam08.pdf), approximately 5.5 million children lived in extreme poverty in 2006.

Government Aid to Children

Many programs exist in the United States to assist families and children living with economic hardship. Some of these programs are federally run, and others are run at the state level. In many cases the programs are mandated at the federal level and administered by the states, which can make tracking them complicated.

 
TABLE 2.3 Estimated annual expenditures on a child by single-parent families, 2007
Age of childTotalHousingFoodTransportationClothingHealth careChild care and educationMiscellaneous*
Notes: Estimates are based on 199092 Consumer Expenditure Survey data updated to 2007 dollars using the Consumer Price Index. For each age category, the expense estimates represent average child-rearing expenditures for each age (e.g., the expense for the 35 age category, on average, applies to the 3-year-old, the 4-year-old, or the 5-year-old). The figures represent estimated expenses on the younger child in a single-parent, two-child family. For estimated expenses on the older child, multiply the total expense for the appropriate age category by 0.93. To estimate expenses for two children, the expenses on the younger child and older child after adjusting the expense on the older child downward should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.35. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.7 2 after adjusting the expenses on the older children downward. For expenses on all children in a family, these totals should be summed.
*Miscellaneous expenses include personal care items, entertainment, and reading materials.
SOURCE: Mark Lino, Table 7. Estimated Annual Expenditures on a Child by Single-Parent Families, Overall United States, 2007, in Expenditures on Children by Families, 2007, U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, March 2008, http://www.cnpp.usda.gov/Publications/CRC\crc2007.pdf (accessed November 2, 2008)
Before-tax income: less than $45,800 (average = $19,200)
02$6,490$2,660$1,180$870$310$290$760$420
357,3803,0301,2407603304201,040560
688,2603,2201,570890390500940750
9117,6203,0901,820640390630450600
12148,1303,0901,820740660670570580
15178,9603,2801,9801,160770660440670
Total$140,520$55,110$28,830$15,180$8,550$9,510$12,600$10,740
Before-tax income: $45,800 or more (average = $69,600)
02$14,940$5,730$1,820$2,660$440$660$1,870$1,760
3516,1406,0901,9302,5504608802,3401,890
6817,1006,2802,3202,6805301,0102,1902,090
91116,3606,1602,7902,4305401,2201,2801,940
121417,3206,1602,7302,5308901,2801,8201,910
151717,7606,3502,8902,7401,0201,2701,4802,010
Total$298,860$110,310$43,440$46,770$11,640$18,960$32,940$34,800
 
TABLE 2.4 Estimated annual expenditures on children born in 2007, by income group
  Income group
YearAgeLowestMiddleHighest
Note: Estimates are for the younger child in husband-wife families with two children.
SOURCE: Mark Lino, Table 12. Estimated Annual Expenditures on Children Born in 2007, by Income Group, Overall United States, in Expenditures on Children by Families, 2007, U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, March 2008, http://www.cnpp.usda.gov/Publications/CRC/crc2007.pdf (accessed November 2, 2008)
2007<1$7,830$10,960$16,290
200818,07011,30016,790
200928,32011,65017,320
201038,79012,36018,270
201149,06012,75018,840
201259,34013,14019,420
201369,61013,37019,590
201479,91013,78020,200
2015810,21014,21020,820
2016910,46014,39021,030
20171010,79014,83021,690
20181111,12015,29022,360
20191212,74016,86024,250
20201313,13017,39025,000
20211413,54017,92025,770
20221513,93019,02027,660
20231614,36019,61028,520
20241714,80020,21029,410
Total $196,010$269,040$393,230

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES . Under the Temporary Assistance for Needy Families (TANF) program, states receive a fixed amount from the federal government to provide welfare to residents with few federal constraints on how they manage the funds. The Administration for Children and Families (ACF) of the U.S. Department

  

of Health and Human Services (January 8, 2009, http://www.acf.hhs.gov/programs/ofs/data/2006/tableA_spending_2006.html) indicates that the total federal funds spent on TANF expenditures for fiscal year (FY) 2006 were $20.5 billion.

Under TANF each state decides what categories of children receive aid. TANF requires that an adult recipient work in exchange for time-limited assistance. In Temporary Assistance for Needy Families Program (TANF): Seventh Annual Report to Congress (December 2006, http://www.acf.hhs.gov/programs/ofa/data-reports/annualreport7/TANF_7th_Report_Final_101006.pdf), the ACF notes that in FY 2003, the latest year for which detailed data are available, 22.9% of adult TANF recipients were employed, down from 25.3% the year before.

The size of families receiving public assistance was decreasing in 2003. According to the ACF, the average number of people in a TANF family was 2.5 in 2003, down from an average of 2.8 in 1996. Half of TANF families in 2003 included only one child recipient, whereas only 10% had four or more children. More than one-third (38.6%) of TANF families were child-only cases, including no adult recipients.

The amount of government assistance provided to individuals and families was down sharply in the first years of the twenty-first century. The average monthly benefit per

 

TANF recipient in 2005 was $157, down from a high of $228 (in 2005 dollars) in 1978 under the old Aid to Families with Dependent Children program. (See Figure 2.5.) Benefits included cash and work-based assistance, child care, and transportation assistance. In addition, the number of families receiving income assistance continued to decline in 2006. (See Figure 2.6.) In response to the economic recession that began in 2008, Congress allocated additional contingency funds of $5 billion to help states that see increases in families needing TANF assistance. Liz Schott of the Center on Budget and Policy Priorities explains in An Introduction to TANF (March 19, 2009, http://www.cbpp.org/cms/index.cfm?fa=view&id=936) that when TANF comes up for reauthorization in 2010, Congress will likely examine the extent to which TANF assistance programs responded to increased need during the recession and have questions about how well the program prepares families to overcome employment barriers.

Reductions in welfare rolls and expenditures may actually harm poor children. Olivia Golden (1955), the assistant secretary for children and families in the U.S. Department of Health and Human Services under President Bill Clinton (1946), states in Welfare Reform Mostly Worked (Orlando Sentinel, July 24, 2005) that she believes the welfare-to-work model mostly worked in the sense that welfare caseloads had dropped and that most low-income parents began working to support their families. However, this very success brought about additional problems. She notes, In less than a decade, welfare has faded as a means of support for impoverished families. Many of these families are working long hours despite low wages, shrinking health-insurance coverage and serious trade-offs between work and decent care for their children. Yet, neither our politics nor our policies have adjusted to our success at bringing more of these parents into the labor force.

THE SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM . The Supplemental Nutrition Assistance Program, known previously as the food stamp program, which is administered by the USDA, provides low-income households with electronic benefit cards that can be used at most grocery stores, much like debit cards, in place of cash. This assistance is intended to ensure that recipients have access to a nutritious diet. It is available to households that have a gross monthly income of no more than 130% of the poverty line and a net monthly income at or below the poverty line. According to the USDA's Food and Nutrition Service (FNS), in Characteristics of Food Stamp Households: Fiscal Year 2007Summary (September 2008, http://www.fns.usda.gov/oane/menu/Published/snap/FILES/Participation/2007CharacteristicsSummary.pdf), almost nine out of ten (87%) households that received food stamp benefits in 2007 lived in poverty.

The amount of money a family receives on its benefit card is based on the USDA's estimate of how much it costs to provide households with nutritious, low-cost meals, called the thrifty food plan. This estimate changes yearly to reflect inflation. In FY 2007 the FNS indicates that the maximum monthly benefit for a family of four was $506. The average monthly benefit for all households in FY 2007 was $212. Supplemental Nutrition Assistance Program households containing children received an average of $312 in benefits per month, in part because households with children tended to be larger (3.3 people) than households in general (2.2 people). (See Table 2.5.) Because funds provided to nutritional assistance programs are extremely likely to be spent, such funds are considered economic stimulus. On February 17, 2009, President Barack Obama (1961) signed the American Recovery and Reinvestment Act into law in response to the severe economic recession that began in 2008. The legislation provided an additional $500 million to support participation in the State Nutrition Action Plan and to increase benefits up to 113.6% of the value of the thrifty food plan.

According to Kari Wolkwitz and Joshua Leftin, in Characteristics of Food Stamp Households: Fiscal Year 2007 (September 2008, http://www.fns.usda.gov/oane/menu/Published/snap/FILES/Participation/2007Characteristics.pdf), the majority of households that received supplemental nutrition assistance in FY 2007 contained children51.3%, or 5.9 million households. One-third (32.1%) of all Supplemental Nutrition Assistance Program households were single-parent households, most of them headed by single mothers.

 

THE SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN . The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides food assistance and nutritional screening for low-income pregnant and postpartum women and their infants and children under the age of five. This program can help women and young children with household incomes that are too high to receive food stamps. In Frequently Asked Questions about WIC (October 2008, http://www.fns.usda.gov/wic/FAQs/FAQ.HTM), the FNS explains that income eligibility guidelines for the period July 1, 2007, to June 30, 2008, required applicants to have an income at or below 185% of the poverty level and be nutritionally at risk, meaning that to be eligible an individual must have medically or diet-based risks. The income eligibility guidelines state that a family of one (in other words, a single, pregnant woman) could earn up to $1,604 per month and still qualify for WIC. A family of four could earn $3,269 per month and participate in WIC. The FNS states in WIC Participant and Program Characteristics, 2006 Summary (December 2007, http://www.fns.usda.gov/oane/menu/Published/WIC/FILES/PC2006Summary.pdf) that two-thirds (67.4%) of WIC participants in 2006 had household incomes below the poverty line.

According to the FNS, in April 2006 nearly 8.8 million women and children participated in WIC, an increase of 2.2% since April 2004. Twenty-six percent of WIC participants were infants, 49% were children aged one to four years old, and 25% were pregnant, postpartum, or breast-feeding women. Recipients receive food items or vouchers for purchases of certain items in retail stores. The WIC program is federally funded but administered by state and local health agencies. In WIC Program Participation and Costs (December 30, 2008, http://www.fns.usda.gov/pd/wisummary.htm), the FNS states that in FY 2008 the WIC program's estimated food cost was $4.5 billion and its estimated administrative costs were $1.6 billion, for a total cost of $6.2 billion.

SCHOOL NUTRITION PROGRAMS . School nutrition programs offer food assistance to school-age children. The programs provide millions of children with nutritious food each day. Children whose families earn no more than 185% of the poverty level are eligible for reduced-price school meals; children whose families earn no more than 130% of the poverty level are eligible for free school meals. The FNS reports in Federal Cost of School Food Programs (December 30, 2008, http://www.fns.usda.gov/pd/cncosts.htm) that in FY 2007 the U.S. government spent $10.9 billion on school nutrition programs, including the National School Lunch Program, the School Breakfast Program, and the Special Milk Program. In that year 30.5 million children took part in the school lunch program. (See Table 2.6.)

CHILD SUPPORT

Children living in single-parent families are far more likely to be poor than children living in two-parent households, and the number of children living with only one

 

parentusually the motheris increasing. According to Timothy S. Grall of the Census Bureau, in Custodial Mothers and Fathers and Their Child Support: 2005 (August 2007, http://www.census.gov/prod/2007pubs/p60-234.pdf), in the spring of 2006, 13.6 million parents had custody of 21.2 million children under the age of 21 whose other parent lived elsewhere. Mothers accounted for 83.8% of all custodial parents; 16.2% of custodial parents were fathers. These proportions have not changed significantly since 1994.

Grall indicates that 7.8 million (57.3%) of the 13.6 million custodial parents in 2006 had a child support agreement with the other parent. Most of these agreements required child support payments from the noncustodial parent. In 2005, 77.2% of custodial parents due support received at least some payments. (See Figure 2.7.) Almost half (46.9%) received all the payments they were due, up from only a little more than a third (36.9%) in 1993. Grall also notes that noncustodial parents who had either joint custody agreements or visitation rights to their children were more likely to pay child support (84.6% and 77.6%, respectively) than parents who did not have any visitation rights at all (61.5%).

Differences existed in the child support arrangements for custodial mothers and custodial fathers. In 2005 custodial mothers were much more likely than custodial fathers to be awarded child support (61.4% and 36.4%, respectively). (See Table 2.7.) On average, custodial mothers were due $5,660 in child support in 2005, and received $3,660. Custodial fathers were due, on average, $4,895 and actually received $3,491. As noted earlier, fewer than half of all custodial parents actually received the full child support due them; only 47.3% of custodial mothers and 46.2% of custodial fathers received the total amount due.

Grall explains that receipt of child support payments made a significant difference in the household incomes of single-parent families. In 2005 the average family income of custodial parents who received at least some of the child support due them was $29,500, and the child support represented 10.7% of the total household income. Child support represented 18.8% of the total household income for those parents who received all of the child support due them. In contrast, custodial parents who had child support agreements but received none of the child support due had an average income of only $26,000.

Government Assistance in Obtaining Child Support

As demonstrated earlier, inadequate financial support from noncustodial parents contributes to the high incidence

 

of poverty among children living in single-parent families. When custodial parents are not paid the child support due them, their families suffer financially and often must turn to public welfare. Therefore, government agencies have an interest in recovering child support from delinquent parents.

In 1975 Congress established the Child Support Enforcement (CSE) Program, a collaborative effort among local, state, and federal agencies, to ensure that children received financial support from both parents. Under the Child Support Recovery Act of 1992, noncustodial parents delinquent on child support due in another state can be prosecuted. CSE services are automatically provided to families receiving assistance under TANF; any support collected usually reimburses the state and federal governments for TANF payments made to the family. Child support services are also available for a small application fee to families not receiving TANF.

Provisions in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 strengthened and improved child support collection activities. The law established a National Directory of New Hires to track parents across state lines, made the process for establishing paternity faster and easier, and enacted tough new penalties for delinquent parents, including expanded wage garnishment and suspension or revocation of driver's licenses. The law also required single-mother TANF applicants to disclose the paternity of their children and to assign any child support payments to the state. According to the ACF, in Child Support Enforcement FY 2006 Preliminary Report (March 2007, http://www.acf.hhs.gov/programs/cse/pubs/2007/preliminary_report/), these efforts have paid off; in FY 2006 CSE handled 15.8 million cases and collected nearly $24 billion.

TEENS AND MONEY

Teen Employment

The Bureau of Labor Statistics (BLS) reports in the press release The Employment Situation: November 2008 (December 5, 2008, http://www.bls.gov/news.release/pdf/empsit.pdf) that in November 2008, 6.5 million (38.3%) people aged 16 to 19 were employed or looking for work.

 
TABLE 2.5 Income, monthly food stamp benefits, and household size by household composition, fiscal year 2007
 Average values
Households with:Gross monthly countable income (dollars)Net monthly countable income (dollars) aMonthly FSP benefit (dollars)Household size (persons)Monthly FSP benefit per person (dollars)
a Because net income is not used in their benefit determination, 29,916 households participating in the Minnesota Family Investment Program (MFIP) and 321,492 households participating in an SSI Combined Application Project (SSI-CAP) in Kentucky, Louisiana, Mississippi, New York, North Carolina, P ennsylvania, South Carolina, Texas or Virginia are excluded from this column.
b Due to changes in the FSPQC data, the definition of disabled changed in 2003. Beginning with the 2003 report, we are only able to identify households that contain a disabled person. In previous reports, we had additional information that helped to identify which household member was disabled.
c Households not containing children, elderly individuals, or disabled individuals.
SOURCE: Kari Wolkwitz and Joshua Leftin, Table 3.4. Average Values of Selected Characteristics by Household Composition, Fiscal Year 2007, in Characteristics of Food Stamp Households: Fiscal Year 2007, Mathematica Policy Research, Inc., September 2008, http://www.mathematica-mpr.com/publications/pdfs/characteristics2007.pdf (accessed November 2,2008)
Total6913302122.297
Children8264153123.399
Single-adult household7363613033.1100
        Male adult6883432742.8101
        Female adult7393623053.1100
Multiple-adult household1,1546453624.485
        Married head household1,2146773654.583
        Other multiple-adult household1,0465903554.188
Children only5511682442.1123
Elderly individuals735367901.371
Living alone676310721.072
Not living alone9755691632.468
Disabled nonelderly individuals b8594561482.075
Living alone695297761.076
Not living alone1,0806552443.374
Other households c222681501.1139
Single-person household188521421.0142
Multi-person household5882472272.1108
Single-person households5042021001.0100
 

The unemployment rate in this age group was 20.4%, up from 16.4% from the year before. Job loss continued to be heavy in early 2009 due to the global financial crisis. In the press release The Employment Situation: February 2009 (March 6, 2009, http://www.bls.gov/news.release/pdf/emp sit.pdf), the BLS indicates that by February 2009 the rate of unemployment among teenagers had increased to 21.6%; the overall rate for all workers was 8.1%. Employment rates among young people are highest during the summer months, when many full-time students are out of school. For example, in the press release Employment and Unemployment among YouthSummer 2008 (August 28, 2008, http://www.bls.gov/news.release/pdf/youth.pdf), the BLS states that the employment of youth between the ages of 16 and 24 increased by 1.9 million between April and July 2008.

Most teens are employed as hourly workers, and they make low wages compared to other age groups. The BLS reports in Characteristics of Minimum Wage Workers: 2007 (May 7, 2008, http://www.bls.gov/cps/minwage2007tbls.htm) that in 2007, 6.9% of 16- to 19-year-olds earned the federal minimum hourly wage ($5.15 before July 24, 2007, and $5.85 thereafter), compared to only 1.5% of workers aged 25 years and older.

HOW DOES WORKING AFFECT ACADEMIC ACHIEVEMENT? In Employment during High School and Student Achievement (Journal of Educational Research, vol. 95, no. 1, 2001), Kimberly J. Quirk, Timothy Z. Keith, and Jeffrey T. Quirk present the results of a longitudinal study examining the effects of high school student employment on academic achievement. The researchers conclude that working displayed a moderate, significant, and negative effect on high school grades. However, smaller amounts of work (12 hours or less per week) seemed to slightly improve grades. Quirk, Keith, and Quirk also find that the lower a student's grades were, the more likely he or she was to get a job. Nancy F. Weller et al. note in School-Year Employment among High School Students: Effects on Academic, Social, and Physical Functioning (Adolescence, vol. 38, no. 151, 2003) that students who worked longer hours had lower grade-point averages. The researchers state that in light of our findings and those of other studies, we believe that parents and professionals involved with youth should supervise the number of weekly hours that adolescents work while attending school.

 
TABLE 2.6 National School Lunch Program, total participation, 200307
State/territoryFY 2003FY 2004FY 2005FY 2006FY 2007 Preliminary
Participation data are nine-month averages; summer months (June-August) are excluded.
Participation is based on average daily meals divided by an attendance factor of 0.927.
Department of Defense activity represents children of armed forces personnel attending schools overseas.
Data are subject to revision .
FY = Fiscal Year.
SOURCE: National School Lunch Program: Total Participation, U.S. Department of Agriculture, Food and Nutrition Service, October 29, 2008, http://www.fns.usda.gov/pd/01slfypart.htm (accessed November 2, 2008)
Alabama549,241558,455565,932574,060577,931
Alaska52,96252,06952,09153,36353,233
Arizona517,837545,033579,435607,905633,312
Arkansas317,843322,753335,891345,909347,752
California2,732,3032,798,8522,866,2472,896,2092,988,383
Colorado327,775335,266336,565347,945364,749
Connecticut283,625291,886301,773307,389316,382
Delaware75,37778,04581,03283,64885,672
District of Columbia47,96146,53646,97645,22941,501
Florida1,397,5581,463,9711,523,7651,523,3151,536,860
Georgia1,129,5031,170,1161,205,3721,252,7901,272,122
Guam17,40815,95117,05520,19019,052
Hawaii131,954123,721121,189112,822101,584
Idaho148,798152,570155,700161,257165,308
Illinois1,097,4671,079,9491,104,5951,104,9421,121,027
Indiana663,592679,283700,890723,568744,055
Iowa380,864385,111385,011390,385392,976
Kansas317,481323,008326,805336,461344,187
Kentucky511,470528,271534,807542,971548,586
Louisiana626,152629,519615,879571,269583,224
Maine103,840106,064107,685109,152108,738
Maryland435,790426,182438,302444,058439,590
Massachusetts541,767548,522558,107559,612561,853
Michigan842,678858,209869,217884,793896,908
Minnesota577,644583,455590,260597,113607,542
Mississippi395,089399,474398,951404,503405,056
Missouri603,434610,807624,385634,351639,003
Montana77,46478,65179,66483,07383,844
Nebraska222,865225,506228,691232,823237,410
Nevada136,856145,963172,292181,940193,461
New Hampshire109,815111,863113,074112,654113,628
New Jersey604,595616,759629,815638,688654,779
New Mexico201,272208,483211,792213,111221,055
New York1,788,1361,803,6871,823,4541,820,8801,821,469
North Carolina863,716886,274915,560945,601962,768
North Dakota77,23077,92478,41878,38878,909
Ohio1,028,2271,046,4001,060,9381,085,3621,100,214
Oklahoma382,577389,245402,917413,003421,624
Oregon275,713284,467291,326301,199304,241
Pennsylvania1,057,7741,086,6611,121,3831,136,5021,141,571
Puerto Rico392,900379,940369,889362,119384,531
Rhode Island82,16183,18884,08083,80685,009
South Carolina466,847473,208482,820491,154496,534
South Dakota103,592103,809103,986105,036106,222
Tennessee635,613648,215660,282685,621584,437
Texas2,671,9752,776,7752,892,5933,007,5943,079,947
Utah283,627289,402297,669304,678312,438
Vermont54,35654,80855,36355,43155,451
Virginia687,945705,401730,970745,038749,911
Virgin Islands15,45014,28613,47411,06410,552
Washington495,468505,999513,488522,978526,724
West Virginia204,626201,002202,574207,594208,846
Wisconsin561,150569,642583,338591,223598,369
Wyoming49,48549,44951,18752,30553,564
Dept. of Defense33,48931,53431,23728,86628,824
Total28,392,33728,961,61829,646,19030,132,94130,512,921

The BLS finds in The Relationship of Youth Employment to Future Educational Attainment and Labor Market Experience (Report on the Youth Labor Force, November 2000) a correlation between teen employment and future college education. Adults who had worked one to 20 hours per week as 16- and 17-year-olds were more likely than other adults to have completed at least some college education by age 30. In contrast, less than half of adults who had not worked at all or who had worked more than 20 hours per week had completed some college education.

 

These findings suggest that working a limited number of hours during the junior and senior years of high school has a positive effect on educational attainment.

Teens as Consumers

By the last decades of the twentieth century, teens had a big influence on the economyfrom affecting major family purchases to buying groceries. In Spending Power of the Teen Consumer (September 2006, http://www.marketresearch.com), the Mintel International Group indicates that teens had an estimated spending power of $153 billion in 2006. However, the spending power of teens had declined 12% from 2003 to 2006, probably reflecting the economic downturn of the early twenty-first century. The report also examines teens' spending habits. Even though teens were attracted to the youthful image of retailers such as Abercrombie & Fitch, they actually spent their money in more affordable stores such as Old Navy and Target.

 
TABLE 2.7 Comparison of custodial parents and those with child support awarded, due, and received, selected years 19932005
[Numbers in thousands as of spring of the following year. Parents living with own children under 21 years of age whose other parent is not living in the home. Amounts in 2005 dollars.]
Item1993 Number1995 Number1997 Number1999 Number2001 Number2003 Number2005 Number
SOURCE: Timothy S. Grall, Table 1. Comparison of Custodial Parent Population and Those with Child Support Awarded, Due, and Received: 19932005, in Custodial Mothers and Fathers and Their Child Support: 2005, U. S. Census Bureau, August 2007, http://www.census.gov/prod/2007pubs/p60-234.pdf (accessed November 2, 2008)
All custodial parents
Total
Awarded child support7,8007,9677,8767,9457,9168,3767,802
      Percent57.058.156.558.759.160.057.3
      Due child support6,6886,9587,0186,7916,9247,2566,809
        Average child support due$4,764$5,173$5,031$5,570$5,562$5,416$5,584
        Average child support received$3,101$3,409$3,352$3,269$3,485$3,713$3,643
        Received any child support5,0705,2695,2825,0055,1195,5485,259
              Percent75.875.775.373.773.976.577.2
        Received full amount of child support2,4662,9453,2403,0663,0933,2903,192
              Percent36.942.346.245.144.745.346.9
Not awarded child support5,8895,7476,0745,5845,4665,5765,803
Custodial mothers11,50511,60711,87211,49911,29111,58711,406
        Total
Awarded child support6,8787,1237,0807,15071107,4367,002
      Percent59.861.459.662.263.064.261.4
      Due child support5,9136,2246,3426,1336,2126,5166,131
        Average child support due$4,827$5,261$5,054$5,625$6,385$5,176$5,660
        Average child support received$3,166$3,451$3,373$3,361$3,708$3,579$3,660
        Received any child support4,5014,7424,8024,5784,6395,0184,754
              Percent76.176.275.774.674.777.077.5
        Received full amount of child support2,1782,6742,9452,8182,8152,9482,900
              Percent36.843.046.445.945.345.247.3
Not awarded child support4,6274,4844,7924,3494,1814,1514,404
Custodial fathers2,1842,1082,0772,0302,0922,3642,199
        Total
Awarded child support922844796795807940800
      Percent42.240.038.339.238.639.836.4
      Due child support775733676658712740678
        Average child support due$4,290$4,423$4,808$5,055$4,655$4,471$4,895
        Average child support received$2,689$3,059$3,169$2,415$3,177$2,797$3,491
        Received any child support569527479427480530505
              Percent73.471.970.964.967.471.674.5
Received full amount of child support288270295248278342292
              Percent37.236.843.637.739.039.046.2
Not awarded child support1,2621,2631,2811,2351,2851,4241,399

Children, Teens, and Money

views updated May 21 2018

Chapter 2
Children, Teens, and Money

FAMILY INCOME

Almost all children are financially dependent on their parents, with their financial condition directly dependent on how much their parents earn. In Income, Poverty, and Health Insurance Coverage in the United States: 2005 (August 2006, http://www.census.gov/prod/2006pubs/p60-231.pdf), Carmen DeNavas-Walt, Bernadette D. Proctor, and Cheryl Hill Lee report that real income rose throughout the 1990s and then declined in the early twenty-first century. The median (half were higher and half were lower) household income in 2005 was $46,326, up 1.1% from the previous year. For married-couple families the median household income was $66,067, not statistically different from the previous year.

DeNavas-Walt, Proctor, and Hill Lee find that single-parent families, particularly those headed by single mothers, fare worse than other households. Families with female heads-of-household and no husband present had a 2005 median income of $30,650, slightly down from the previous year, whereas male-headed households with no wife present had a median income of $46,756, slightly higher than the year before.

DeNavas-Walt, Proctor, and Hill Lee also find that median income varied greatly by race and ethnic group. They used three-year average medians to compare income between groups. Asians had the highest median income, at $59,877, followed by non-Hispanic whites, at $50,677. (See Table 2.1.) The median income for Hispanics was $35,467, whereas the median income for African-Americans, at $31,140, was the lowest of any race or ethnic group.

Cost of Raising a Child

Since the 1960s the Family Economics Research Group of the U.S. Department of Agriculture (USDA) has provided estimates on the cost of rearing a child to adulthood. The estimates are calculated per child in a household with two children and are categorized by the age of the child using different family income levels. Attorneys and judges use these estimates in determining child-support awards in divorce cases as well as in cases involving the wrongful death of a parent. Public officials use these estimates to determine payments for the support of children in foster care and for subsidies to adoptive families. Financial planners and consumer educators use them in helping people determine their life insurance needs.

INCOME LEVELS

Estimated annual family expenditures for a child vary widely depending on the income level of the household. The estimated amount a family spends on a child also tends to increase as the child ages. The USDA estimates that in 2005 married-couple households that earned less than $43,200 per year spent amounts ranging from $7,300 for young children to $8,290 for fifteen- to seventeen-year-olds. (See Table 2.2.) Estimates for middle-income, married-couple families ranged from $10,220 for infants and young toddlers to $11,290 for fifteen- to seventeen-year-olds. Estimates for married-couple families with incomes above $72,600 ranged from $15,190 to $16,390, depending on the age of the child.

Estimated annual expenditures for single-parent families that earned less than $43,200 per year were slightly less than those of two-parent families, most likely because their average incomes were lower ($18,100 for single-parent families and $26,900 for two-parent families). The USDA estimates that in 2005 these single parents spent an annual average of $6,080 to $8,440, depending on the age of the child. (See Table 2.3.) The single-parent families that earned $43,200 or more spent $14,000 to $16,670 per child, slightly more than the middle-income, two-parent families.

Although the USDA estimates that in 2005 the highest-income households spent about twice the amount on their children than the lowest-income households, this difference varied by the type of expense. For example, the estimated food expenditure for children aged fifteen to seventeen in the highest-income husband-wife families was $2,790, compared with $1,960 in the lowest-income group. (See Table 2.2.) However, the estimated annual expense for education and child care for children aged fifteen to seventeen in these high-income families ($1,890) was nearly four times that for a child the same age in the lowest-income families ($510). These variations among income groups by type of expense hold true for single-parent households as well. (See Table 2.3.)

TABLE 2.1
Median household income by race and Hispanic origin, using 3-year average medians, 2003–05
[Income in 2005 dollars]
Racea and Hispanic origin3-year-average median incomeb 2003–2005c (dollars)
Estimate
aFederal surveys now give respondents the option of reporting more than one race. Therefore, two basic ways of defining a race group are possible. A group such as Asian may be defined as those who reported Asian and no other race (the race-alone or single-race concept) or as those who reported Asian regardless of whether they also reported another race (the race-alone-or-in-combination concept). This table shows data using the first approach (race alone). The use of the single-race population does not imply that it is the preferred method of presenting or analyzing data. The Census Bureau uses a variety of approaches. About 2.6 percent of people reported more than one race in Census 2000.
bThe 3-year-average median is the sum of three inflation-adjusted single-year medians divided by 3.
cThe 2004 data have been revised to reflect a correction to the weights in the 2005 ASEC.
Source: Carmen DeNavas-Walt, Bernadette D. Proctor, and Cheryl Hill Lee, "Table 2. Income of Households by Race and Hispanic Origin Using 3-Year-Average Medians: 2003 to 2005," in Income, Poverty, and Health Insurance Coverage in the United States: 2005, U.S. Census Bureau, August 2006, http://www.census.gov/prod/2006pubs/p60-231.pdf (accessed February 1, 2007)
All races
White48,399
   White, not Hispanic50,677
Black31,140
American Indian and Alaska Native33,627
Asian59,877
Native Hawaiian and other Pacific Islander54,318
Hispanic origin (any race)35,467

AGE OF CHILD

The 2005 estimates of family expenditures on a child generally increased with the child's age, except for housing, education, and child care. (See Table 2.2 and Table 2.3.) Households with young children are more likely to have recently purchased homes at higher prices and, until recently, with higher interest rates, explaining the higher housing estimates for young children. Estimates for education, child care, and related expenses were also highest for preschoolers (under the age of six) in all income groups. Many women with children this age are in the labor force and must pay for child care. Once children enter school, the child care costs decrease. As school-age children grow up, the need for after-school and summer care also decreases. The estimates do not include expenses related to college attendance, which typically do not occur until the child is at least eighteen.

FUTURE COSTS

The USDA also estimates the total cost of raising a child born in 2005 who will reach the age of seventeen in 2022, incorporating an average annual inflation rate of 3.04% (the average annual inflation rate over the previous twenty years). Total family expenses for raising a child born in 2005 were estimated to be $182,920 for the lowest-income group, $250,530 for the middle-income group, and $366,020 for the highest-income group. (See Table 2.4.)

CHILDREN IN POVERTY

Children are the largest group of poor in the United States. In 1975 they replaced the elderly as the poorest age group. (See Figure 2.1.) In 2005 the poverty rate for all children younger than eighteen years of age was 17.6%, or about 12.9 million children, which was statistically unchanged from the previous year. In that year children under eighteen years old made up one-quarter (24.8%) of the population of the United States, but they made up over one-third (34.9%) of the people living below the poverty line. (For population estimates for July 1, 2005, by age, see the Census Bureau's National Population Estimates—Characteristics [May 10, 2006, http://www.census.gov/popest/national/asrh/NC-EST2005-sa. html]). DeNavas-Walt, Proctor, and Hill Lee note that children under the age of six are particularly vulnerable to poverty. In 2005 the poverty rate for families with children under age six was 20%, which was higher than the overall rate of child poverty. In addition, over half (52.9%) of children younger than the age of six living with a single mother were in poverty, over five times the rate of poverty for children younger than age six living in married-couple families (9.9%).

Overall, the child poverty rate declined between 1995 and 2000; however, the rate of children living in poverty (100% of the poverty line or below) and in low-income families (100% to 200% of the poverty line) began to rise again in 2000. (See Figure 2.2.) Even though Figure 2.3 shows that the largest group of low-income children in 2005 was white (39%), Hispanic and African-American children were disproportionately poor. Ayana Douglas-Hall, Michelle Chau, and Heather Koball of the National Center for Children in Poverty report in Basic Facts about Low-Income Children: Birth to Age 18 (September 2006, http://www.nccp.org/media/lic06b_text.pdf) that the majority of both African-American children (61%) and Hispanic children (61%) lived in low-income or poor families in 2005. Another trend in child poverty emerged in the twenty-first century. The Children's Defense Fund notes in The State of America's Children 2005 (2005, http://www.childrensdefense.org/site/DocServer/Green book_2005.pdf?docID=1741) that the number of children living in extreme poverty—below one-half of the poverty level—increased by 20% between 2000 and 2004, almost twice as fast as the number of children in poverty overall.

TABLE 2.2
Estimated annual expenditures on a child by husband-wife families, 2005
Age of childTotalHousingFoodTransportationClothingHealth careChild care and educationMiscellaneous*
Notes: Estimates are based on 1990–92 consumer expenditure survey data updated to 2005 dollars using the consumer price index. For each age category, the expense estimates represent average child-rearing expenditures for each age (e.g., the expense for the 3-5 age category, on average, applies to the 3-year-old, the 4-year-old, or the 5-year-old). The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.
*Miscellaneous expenses include personal care items, entertainment, and reading materials.
Source: Mark Lino, "Table ES1. Estimated Annual Expenditures on a Child by Husband-Wife Families, Overall United States, 2005," in Expenditures on Children by Families, 2005, U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, 2006, http://www.cnpp.usda.gov/Publications/CRC/crc2005.pdf (accessed February 16, 2007)
Before-tax income: less than $43,200 (average=$26,900)
0-2$7,300$2,770$1,000$880$350$550$1,080$670
3-57,4802,7401,1208503405201,220690
6-87,5102,6401,440990380600730730
9-117,4802,3901,7201,080420660440770
12-148,3102,6601,8101,210700660310960
15-178,2902,1501,9601,630620710510710
   Total$139,110$46,050$27,150$19,920$8,430$11,100$12,870$13,590
Before-tax income: $43,200 to $72,600 (average=$57,400)
0-2$10,220$3,750$1,200$1,310$410$720$1,780$1,050
3-510,5003,7101,3901,2804006901,9701,060
6-810,4103,6201,7701,4204407901,2701,100
9-1110,2503,3602,0801,5004908508301,140
12-1410,9903,6402,0901,6408208606101,330
15-1711,2903,1202,3302,0807309101,0401,080
   Total$190,980$63,600$32,580$27,690$9,870$14,460$22,500$20,280
Before-tax income: more than $72,600 (average=$108,700)
0-2$15,190$5,960$1,590$1,830$540$830$2,690$1,750
3-515,5505,9201,8001,8005308002,9301,770
6-815,2505,8302,1701,9405709102,0201,810
9-1114,9705,5702,5202,0306209801,4001,850
12-1415,8005,8502,6502,1601,0409801,0802,040
15-1716,3905,3302,7902,6209401,0401,8901,780
   Total$279,450$103,380$40,560$37,140$12,720$16,620$36,030$33,000

Government Aid to Children

Many programs exist in the United States to assist families and children living with economic hardship. Some of these programs are federally run, and others are run at the state level. In many cases the programs are mandated at the federal level and administered by the states, which can make tracking them complicated.

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES

In 1996 Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act to reform the country's welfare system. The primary goal of the legislation was to get as many people as possible into the paid labor force and off welfare rolls. The law set limits on how long welfare recipients could receive assistance, encouraging them to seek gainful employment. Under Temporary Assistance for Needy Families (TANF), states receive a fixed amount from the federal government with few federal constraints on how they manage the funds. According to the Administration for Children and Families of the U.S. Department of Health and Human Services (HHS), in TANF Financial Data (January 2007, http://www.acf.hhs.gov/programs/ofs/data/2005/tableA_ spending_2005.html), the total federal funds spent on TANF expenditures for fiscal year (FY) 2005 were $20.7 billion.

Under TANF each state decides what categories of children receive aid. TANF requires that an adult recipient work in exchange for time-limited assistance. In Temporary Assistance for Needy Families Program (TANF): Seventh Annual Report to Congress (December 2006, http://www.acf.hhs.gov/programs/ofa/annualreport7/TANF_7th_Report_Final_101006.pdf), the HHS reports that in FY 2003, 22.9% of adult TANF recipients were employed, down from 25.3% the year before.

The size of families receiving public assistance is decreasing. According to the HHS report, the average number of people in a TANF family was 2.5 in 2003, down from an average of 2.8 in 1996. Half of TANF families in 2003 included only one child recipient, whereas only 10% had four or more children. More than a third (38.6%) of TANF families were child-only cases, including no adult recipients.

TABLE 2.3
Estimated annual expenditures on a child by single-parent families, 2005
Age of childTotalHousingFoodTransportationClothingHealth careChild care and educationMiscellaneous*
Notes: Estimates are based on 1990–92 consumer expenditure survey data updated to 2005 dollars using the consumer price index. For each age category, the expense estimates represent average child-rearing expenditures for each age (e.g., the expense for the 3-5 age category, on average, applies to the 3-year-old, the 4-year-old, or the 5-year-old). The figures represent estimated expenses on the younger child in a two-child family. For estimated expenses on the older child, multiply the total expense for the appropriate age category by 0.93. To estimate expenses for two children, the expenses on the younger child and older child after adjusting the expense on the older child downward should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.35. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.72 after adjusting the expenses on the older children downward. For expenses on all children in a family, these totals should be summed.
*Miscellaneous expenses include personal care items, entertainment, and reading materials.
Source: Mark Lino, "Table 7. Estimated Annual Expenditures on a Child by Single-Parent Families, Overall United States, 2005," in Expenditures on Children by Families, 2005, U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, 2006, http://www.cnpp.usda.gov/Publications/CRC/crc2005.pdf (accessed February 16, 2007)
Before-tax income: less than $43,200 (average=$18,100)
0-2$6,080$2,480$1,110$820$310$270$680$410
3-56,8802,8201,170720330390920530
6-87,7203,0001,470840390460840720
9-117,1402,8801,710600390580400580
12-147,6502,8901,710690670620510560
15-178,4403,0601,8601,090780610390650
   Total$131,730$51,390$27,090$14,280$8,610$8,790$11,220$10,350
Before-tax income: $43,200 or more (average=$65,500)
0-2$14,000$5,350$1,720$2,510$450$610$1,670$1,690
3-515,1005,6901,8202,4004708102,0901,820
6-815,9905,8702,1802,5205409301,9502,000
9-1115,3205,7502,6202,2905401,1201,1401,860
12-1416,2305,7502,5702,3808901,1801,6201,840
15-1716,6705,9302,7202,5801,0201,1701,3201,930
   Total$279,930$103,020$40,890$44,040$11,730$17,460$29,370$33,420

The amount of government assistance provided to individuals and families under current welfare regulations is down sharply. The average monthly benefit per TANF recipient in 2004 was $150, down from a high of $221 (in 2004 dollars) in 1978 under the AFDC program. (See Table 2.5.) The average monthly benefit per family was $360, down from a high of $793 (in 2004 dollars) in 1969. Benefits included cash and work-based assistance, child care, and transportation assistance.

The reduction in the welfare roles and expenditures may actually harm poor children. Olivia Golden, the assistant secretary for children and families in the HHS under President Bill Clinton, states in "Welfare Reform Mostly Worked" (Orlando Sentinel, July 24, 2005) that she believes the welfare-to-work model "mostly worked" in the sense that welfare caseloads had dropped and that most low-income parents were now working to support their families. However, this success brought about additional problems. She notes, "In less than a decade, welfare has faded as a means of support for impoverished families. Many of these families are working long hours despite low wages, shrinking health-insurance coverage and serious trade-offs between work and decent care for their children. Yet, neither our politics nor our policies have adjusted to our success at bringing more of these parents into the labor force."

FOOD STAMP PROGRAM

The Food Stamp Program, which is administered by the USDA, provides low-income households with electronic benefit cards that can be used at most grocery stores, much like debit cards, in place of cash. Food stamps are intended to ensure that recipients have access to a nutritious diet. They are available to households that have a gross monthly income of no more than 130% of the poverty line and a net monthly income at or below the poverty line. In Characteristics of Food Stamp Households: Fiscal Year 2005 (September 2006, http://www.fns.usda.gov/oane/menu/Published/FSP/FILES/Participation/2005Characteristics.pdf), Allison Barrett indicates that almost nine out of ten (88%) of all households that received food stamp benefits in 2005 lived in poverty.

The amount of money a family receives on its benefit card is based on the USDA's estimate of how much it costs to provide households with nutritious, low-cost meals. This estimate changes yearly to reflect inflation. According to the USDA, in Food Stamps Make America Stronger (September 2006, http://www.fns.usda.gov/fsp/outreach/Translations/English/313Brochure-06.pdf), between October 1, 2006, and September 30, 2007, the maximum monthly benefit for a family of four was $518. The average monthly benefit for all households in FY 2005 was $209. (See Table 2.6.) Food stamp households containing children received an average of $300 in benefits per month, in part because households with children tended to be larger (3.3 people) than households in general (2.3 people).

TABLE 2.4
Estimated annual expenditures on children born in 2005, by income group
YearAgeIncome group
LowestMiddleHighest
Note: Estimates are for the younger child in husband-wife families with two children.
Source: Mark Lino, "Table 12. Estimated Annual Expenditures on Children Born in 2005, by Income Group, Overall United States," in Expenditures on Children by Families, 2005, U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, 2006, http://www.cnpp.usda.gov/Publications/CRC/crc2005.pdf (accessed February 16, 2007)
2005<1$7,300$10,220$15,190
200617,52010,53015,650
200727,75010,85016,130
200838,18011,49017,010
200948,43011,84017,530
201058,69012,20018,060
201168,99012,46018,250
201279,26012,84018,810
201389,54013,23019,380
201499,79013,42019,600
20151010,09013,83020,200
20161110,40014,25020,810
20171211,90015,74022,630
20181312,27016,22023,320
20191412,64016,71024,030
20201512,99017,69025,680
20211613,39018,23026,470
20221713,79018,78027,270
   Total$182,920$250,530$366,020

Barrett mentions that most households that received food stamps in 2005 contained children—53.8%, or 5.8 million households. A third of all food stamp households (33.5%) were single-parent households, most of them headed by single mothers.

SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN

The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides food assistance and nutritional screening for low-income pregnant and postpartum women and their infants and children under the age of five. This program can help women and young children with household incomes that are too high to receive food stamps. In "Frequently Asked Questions about WIC" (March 13, 2007, http://www.fns.usda.gov/wic/FAQs/FAQ.HTM), the USDA's Food and Nutrition Service reports that income eligibility guidelines for the period July 1, 2006, to June 30, 2007, required applicants to have an income at or below 185% of the poverty level and be nutritionally "at risk," meaning that to be eligible, an individual must have diet- or medically based risks. The income eligibility guidelines stated that a family of one (in other words, a single, pregnant woman) could earn up to $1,511 per month and still qualify for WIC. A family of four could earn $3,084 per month and participate in WIC. Furthermore, Susan Bartlett et al., in WIC Participant and Program Characteristics, 2004 (March 2006, http://www.fns.usda.gov/oane/MENU/Published/WIC/FILES/pc2004.pdf), note that two-thirds (66.9%) of WIC participants in 2004 had household incomes below the poverty line.

According to Bartlett et al., in April 2004 about 8.6 million women and their children participated in WIC, an increase of 7% since April 2002. Twenty-six percent of WIC participants were infants, another 49% were children aged one to four years old, and 25% were pregnant, postpartum, or breastfeeding women. Recipients receive food items or vouchers for purchases of certain items in retail stores. The WIC program is federally funded but administered by state and local health agencies. In "WIC Program Participation and Costs" (March 27, 2007, http://www.fns.usda.gov/pd/wisummary.htm), the Food and Nutrition Service notes that in FY 2006 the WIC program's estimated food cost was $3.6 billion and estimated administrative costs were $1.4 billion, for a total cost of $5 billion.

SCHOOL NUTRITION PROGRAMS

School nutrition programs continue food assistance to school-age children. The programs provide millions of children with nutritious food each day. Children whose families earn no more than 185% of the poverty level are eligible for reduced price school meals; children whose families earn no more than 130% of the poverty level are eligible for free school meals. The Food and Nutrition Service reports in "Federal Cost of School Food Programs" (March 27, 2007, http://www.fns.usda.gov/pd/cncosts.htm) that in FY 2006 the U.S. government spent $10.2 billion on school nutrition programs, including the National School Lunch Program, the School Breakfast Program, and the Special Milk Program. In that year 30.1 million children took part in the school lunch program, up from 28 million in 2002. (See Table 2.7.)

CHILD SUPPORT

Children living in single-parent families are far more likely to be poor than children living in two-parent households, and the number of children living with only one parent—usually the mother—is increasing. According to Timothy S. Grall, in Custodial Mothers and Fathers andTheir Child Support: 2003 (July 2006, http://www.census.gov/prod/2006pubs/p60-230.pdf), in the spring of 2004, 14 million parents had custody of 21.6 million children under the age of twenty-one whose other parent lived elsewhere. Mothers accounted for 83.1% of all custodial parents; 16.9% of custodial parents were fathers. These proportions have not changed significantly since 1994.

Grall notes that six out of ten (60%) of the fourteen million custodial parents in 2003 had a child support agreement with the other parent. Most of these agreements required child support payments from the noncustodial parent. In 2003, 76.4% of custodial parents due support received at least some payments. (See Figure 2.4.) Almost half (45.3%) received all the payments they were due, up from only a little more than a third (36.9%) in 1993. Grall also mentions that noncustodial parents who had either joint custody agreements or visitation rights to their children were more likely to pay child support (85.9% and 76.2%, respectively) than parents who did not have any visitation rights at all (62.5%).

Differences existed in the child support arrangements for custodial mothers and custodial fathers. Custodial mothers were much more likely than custodial fathers to be awarded child support (64.2% and 39.8%, respectively). (See Table 2.8.) On average, custodial mothers were due $5,175 in child support in 2003 and received $3,579. Custodial fathers were due, on average, $4,471 and actually received $2,797. As noted earlier, fewer than half of all custodial parents actually receive the child support due them; in 2003 only 45.2% of custodial mothers and 46.2% of custodial fathers received the total amount due.

Grall notes that receipt of child support payments made a significant difference in the household incomes of single-parent families. In 2003 the average family income of custodial parents who received at least some of the child support due them was $28,600, and the child support represented 9.2% of the total household income. Child support represented 19.3% of the total household income for those parents who received all of the child support due them. In contrast, custodial parents who had child support agreements but received none of the child support due had an average income of only $23,400.

Government Assistance in Obtaining Child Support

As demonstrated earlier, inadequate financial support from noncustodial parents contributes to the high incidence of poverty among children living in single-parent families. When custodial parents are not paid the child support due them, their families suffer financially and often must turn to public welfare. Government agencies, therefore, have an interest in recovering child support from delinquent parents.

In 1975 Congress established the Child Support Enforcement (CSE) Program, a collaborative effort among local, state, and federal agencies to ensure that children received financial support from both parents. Under the Child Support Recovery Act of 1992, noncustodial parents delinquent on child support due in another state can be prosecuted. CSE services are automatically provided to families receiving assistance under the TANF program; any support collected usually reimburses the state and federal governments for TANF payments made to the family. Child support services are also available for a small application fee to families not receiving TANF.

Provisions in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 strengthened and improved child support collection activities. The law established a National Directory of New Hires to track parents across state lines, made the process for establishing paternity faster and easier, and enacted tough new penalties for delinquent parents, including expanded wage garnishment and suspension or revocation of driver's licenses. The law also required single-mother TANF applicants to disclose the paternity of their children and to assign any child support payments to the state. According to the report Child Support Enforcement, FY 2005: Preliminary Report (May 2006, http://www.acf.hhs.gov/programs/cse/pubs/2006/reports/preliminary_report/) by the HHS's Administration for Children and Families, these efforts have paid off; in FY 2005 the CSE Program handled 15.9 million cases and collected more than $23 billion, up 5.2% from the previous year.

TEENS AND MONEY

Teen Employment

The U.S. Bureau of Labor Statistics (BLS) finds in The Employment Situation: December 2006 (January 5, 2007, http://www.bls.gov/news.release/archives/empsit_ 01052007.pdf) that in December 2006, 7.3 million people aged sixteen to nineteen, or a little less then half of the population that age (43.4%), were employed or looking for work. The unemployment rate in this age group was 15.2%. Employment rates among young people are highest during the summer months, when many full-time students are out of school. For example, in the press release "Employment and Unemployment among Youth—Summer 2006" (August 25, 2006, http://www.bls.gov/news.release/pdf/youth.pdf), the BLS reports that employment of youth between the ages of sixteen and twenty-four increased by 2.5 million between April and July 2006.

Studies find that the rate of teens in the labor force is correlated with family income; as a household's income rises, the likelihood that a teen within the household will work also rises. In March 2002 only 17% of teens aged fifteen to seventeen from families with a household income of less than $15,000 were in the labor force, compared with 28% of teens from families with a household income of more than $50,000. (See Figure 2.5.)

TABLE 2.5
Trends in average monthly payment for Aid to Families with Dependent Children (AFDC) and Temporary Assistance for Needy Families (TANF), 1962–2004
Fiscal yearMonthly benefit per recipientAverage number of persons per familyMonthly benefit per family (not reduced by child support)Weighted averagea maximum benefit (per 3-person family)
Current dollars2004 dollarsCurrent dollars2004 dollarsCurrent dollars2004 dollars
Note: AFDC benefit amounts have not been reduced by child support collections. Constant dollar adjustments to 2004 level were made using a Consumer Price Index Research Series Using Current Methods (CPI-U-RS) fiscal-year price index.
aThe maximum benefit for a 3-person family in each state is weighted by that state's share of total AFDC families.
bEstimated based on the weighted average benefit for a 4-person family.
cThe Personal Responsibility and Work Opportunity Reconciliation Act of 1996 repealed the AFDC program as of July 1, 1997 and replaced it with the TANF program. Beginning in 1997, average monthly benefits are calculated from case-level data rather than by dividing aggregate expenditures on cash assistance by aggregate caseloads, as in the past. This change was necessary due to uncertainty about the extent to which states may be reporting non-cash basic assistance as well as cash assistance in the expenditure data formerly used to calculate average cash benefits.
Source: "Table TANF 6. Trends in AFDC/TANF Average Monthly Payments: 1962–2004," in Indicators of Welfare Dependence, Annual Report to Congress, 2006, U.S. Department of Health and Human Services, 2006, http://aspe.hhs.gov/hsp/indicators06/apa.pdf (accessed February 16, 2007)
1962$31$1683.9$121$654 NANA
1963311674.0126672 NANA
1964321684.1131692 NANA
1965341754.2140728 NANA
1966351784.2146741 NANA
1967361794.1150741 NANA
1968401894.1162772 NANA
1969431994.0173793$186b$856
1970462013.9178779 194b850
1971482003.8180755 201b842
1972512083.6187756 205b830
1973532053.5187726 213b827
1974572033.4194693 229b818
1975632063.3209681 243792
1976712163.2226688 257783
1977782213.1241685 271770
1978832213.0250667 284758
1979872133.0257630 301737
1980942082.9274604 320707
1981961932.9277556 326654
19821031932.9300565 331622
19831061922.9311559 336605
19841101912.9322557 352609
19851121882.9329551 369618
19861151892.9339554 383627
19871231962.9359573 393627
19881271952.9370569 403619
19891311942.9381561 413608
19901351902.9389548 420592
19911351822.9388523 424572
19921361792.9389512 419551
19931311692.8373479 414532
19941341682.8376473 416522
19951341652.8376463 418514
19961351612.8374448419502
1997c1301522.8362423 418489
19981301502.7358412 429494
19991331502.7357404 450509
20001331462.6349383 446489
20011371462.6351373 448476
20021461532.5364381 452474
20031401482.5354362 449460
20041501502.5360360 473473

Most teens are employed as hourly workers, and they make low wages compared with other age groups. The BLS reports in Characteristics of Minimum Wage Workers: 2005 (May 19, 2006, http://www.bls.gov/cps/minwage2005tbls.htm#1) that in 2005, 8.9% of sixteen- to nineteen-year-olds earned the minimum hourly wage of $5.15 or less, compared with only 1.5% of workers aged twenty-five years and older.

HOW DOES WORKING AFFECT ACADEMIC ACHIEVEMENT?

In "Employment during High School and Student Achievement" (Journal of Educational Research, September 2001), Kimberly J. Quirk, Timothy Z. Keith, and Jeffrey T. Quirk present the results of a longitudinal study examining the effects of high school student employment on academic achievement. The researchers conclude that "working displayed a moderate, significant, and negative effect on high school grades." However, smaller amounts of work (twelve hours or less per week) seemed to slightly improve grades. Quirk, Keith, and Quirk also find that the lower a student's grades were, the more likely he or she was to get a job.

TABLE 2.6
Average values of selected characteristics of food stamp households, 2005
Households with:Average values
Gross monthly countable income (dollars)Net monthly countable income (dollars)aMonthly food stamp benefit (dollars)Household size (persons)
aBecause net income is not used in their benefit determination, 36,040 households participating in the Minnesota Family Investment Program (MFIP) and 305,045 households participating in an Supplemental Security Income Combined Application Project (SSI-CAP) in Mississippi, New York, North Carolina, South Carolina, or Texas are excluded from this column.
bDue to changes in the food stamp program quality control (FSPQC) data, the definition of disabled changed in 2003. Beginning with the 2003 report, we are able to identify households that contain a disabled person. In previous reports, we had additional information that helped to identify which household member was disabled.
cHouseholds not containing children, elderly individuals, or disabled individuals.
Source: Allison Barrett, "Table 3.4. Average Values of Selected Characteristics by Household Composition, Fiscal Year 2005," in Characteristics of Food Stamp Households: Fiscal Year 2005, U.S. Department of Agriculture, Food and Nutrition Service, Office of Analysis, Nutrition and Evaluation, September 2006, http://www.fns.usda.gov/oane/menu/Published/FSP/FILES/Participation/2005Characteristics.pdf (accessed February 16, 2007)
    Total6483192092.3
Children7683973003.3
Single-adult household6853412913.0
    Male adult6883342632.8
    Female adult6843412923.1
Multiple-adult household1,0686173494.4
    Married head household1,1206433494.4
    Other multiple-adult household9665643484.2
Children only5151852312.1
Elderly individuals690359871.3
Living alone625292701.0
Not living alone9265691512.4
Disabled nonelderly individualsb8024451452.0
Living alone639273751.0
Not living alone1,0046412313.3
Other householdsc205601461.1
Single-person household174441381.0
Multi-person household5252272282.1
Single-person households462185971.0

The U.S. Department of Labor, in "The Relationship of Youth Employment to Future Educational Attainment and Labor Market Experience" (Report on the Youth Labor Force, November 2000), finds a correlation between teen employment and future college education. Adults who had worked one to twenty hours per week as sixteen- and seventeen-year-olds were more likely than other adults to have completed at least some college education by age thirty. In contrast, less than half of adults who had not worked at all or who had worked more than twenty hours per week had completed some college education. The findings suggest that working a limited number of hours in the junior and senior years of high school has a positive effect on educational attainment.

Teens as Consumers

By the last decades of the twentieth century teens had a big influence on the economy—from affecting major family purchases to buying groceries. According to the Mintel International Group, in Spending Power of the Teen Consumer (September 2006, http://www.market research.com), teens had an estimated spending power of $153 billion in 2006. However, the spending power of teens had declined 12% from 2003 to 2006, probably reflecting the economic downturn of the early twenty-first century. The report also examines teens' spending habits; although teens were attracted to the youthful image of retailers such as Abercrombie & Fitch, they actually spent their money in more affordable stores such as Old Navy and Target.

TABLE 2.7
Total participation by state/territory in the National School Lunch Program, fiscal years 2002–06
State/TerritoryFiscal year 2002Fiscal year 2003Fiscal year 2004Fiscal year 2005Fiscal year 2006
Note: Participation data are nine-month averages; summer months (June-August) are excluded. Participation is based on average daily meals divided by an attendance factor of 0.927. Department of Defense activity represents children of armed forces personnel attending schools overseas. Data are subject to revision.
Source: "National School Lunch Program: Total Participation," U.S. Department of Agriculture, Food and Nutrition Service, January 25, 2007, http://www.fns.usda.gov/pd/01slfypart.htm (accessed February 16, 2007)
Preliminary
Alabama545,726549,241558,455565,962570,741
Alaska52,80752,96252,06952,09152,908
Arizona490,039517,837545,033579,438607,537
Arkansas315,263317,843322,753335,891345,734
California2,658,7052,732,0262,798,8522,866,3472,895,262
Colorado325,715327,775335,266336,565348,066
Connecticut280,212283,625291,886301,665307,156
Delaware73,80375,37778,04581,03283,648
District of Columbia50,35047,96146,53646,97645,229
Florida1,369,0131,397,5581,463,9711,523,7541,523,536
Georgia1,112,3751,129,5031,170,1161,205,3721,252,706
Guam15,84917,40815,95116,93220,096
Hawaii135,219131,954123,721121,180112,801
Idaho147,115148,798152,570155,700160,644
Illinois1,090,0231,097,4671,079,9491,104,5951,104,958
Indiana643,464663,592679,283700,742723,583
Iowa380,099380,864385,111385,015389,721
Kansas316,260317,481323,008326,805332,884
Kentucky508,526511,470528,271534,807542,704
Louisiana632,139626,153629,541615,880571,269
Maine107,618103,847106,097107,743109,153
Maryland426,838435,790426,182438,302444,059
Massachusetts541,981541,767548,522558,107557,524
Michigan826,252842,678858,209869,217884,534
Minnesota572,720577,652583,459590,250596,893
Mississippi397,076395,089399,460398,951404,503
Missouri622,416603,434610,807624,385634,282
Montana77,64977,46478,65179,66482,879
Nebraska221,491222,865225,506228,681232,825
Nevada130,314136,856145,963172,292181,944
New Hampshire107,514109,815111,863113,074112,654
New Jersey599,548604,595616,759629,815638,688
New Mexico198,166201,272208,453211,793213,064
New York1,792,5861,788,1361,803,6871,823,4541,819,086
North Carolina843,699863,716886,274915,560945,480
North Dakota77,83377,23077,92478,41878,351
Ohio1,019,3611,028,2271,046,5931,059,9421,085,030
Oklahoma377,254382,606389,270402,962412,994
Oregon267,595275,713284,467291,326300,498
Pennsylvania1,041,1661,057,7741,086,6611,121,3831,135,239
Puerto Rico399,236392,900379,940369,889362,119
Rhode Island68,80282,16183,18884,08083,806
South Carolina469,481466,834473,208482,820491,090
South Dakota103,480103,592103,809103,986104,772
Tennessee636,692635,613648,215660,282670,620
Texas2,582,4612,672,0992,776,7752,892,5933,007,619
Utah278,500283,627289,402297,669304,856
Vermont53,71354,35654,80855,36355,363
Virginia678,369687,945705,401730,950745,036
Virgin Islands15,44015,45014,28614,11313,479
Washington488,212495,468505,999513,526522,950
West Virginia195,950204,626201,002202,574209,128
Wisconsin552,561561,155569,648583,358590,872
Wyoming49,88949,48549,44951,18752,274
Dept. of Defense36,99033,48931,53431,23728,872
   Total28,001,55328,392,22228,961,85729,645,69430,103,719
TABLE 2.8
Award status and child support recipiency for custodial parents due child support, by sex of custodial parent, selected years 1993–2003
[Numbers in thousands as of spring of the following year. Parents living with own children under 21 years of age whose other parent is not living in the home. Amounts in 2003 dollars.]
Award status and child support recipiency199319951997199920012003
*All child support income amounts are adjusted to reflect 2003 dollars using the Consumer Price Index Research Series Using Current Methods (CPI-U-RS).
Source: Timothy S. Grall, "Table 1. Award Status and Child Support Recipiency for Custodial Parents Due Child Support by Sex of Custodial Parent: 1993–2003," in Custodial Mothers and Fathers and Their Child Support: 2003, U. S. Census Bureau, July 2006, http://www.census.gov/prod/2006pubs/p60-230.pdf (accessed February 16, 2007)
All custodial parentsNumberNumberNumberNumberNumberNumber
   Total13,69013,71513,94913,52913,38313,951
Awarded child support7,8007,9677,8767,9457,9168,376
   Percent57.058.156.558.759.160.0
   Due child support6,6886,9587,0186,7916,9247,256
      Average child support due*$4,489$4,875$4,741$5,249$5,242$5,104
       Average child support received*$2,922$3,212$3,159$3,081$3,284$3,499
      Received any child support5,0705,2695,2825,0055,1195,548
         Percent75.875.775.373.773.976.5
      Received full amount of child support2,4662,9453,2403,0663,0933,290
         Percent36.942.346.245.144.745.3
Not awarded child support5,8895,7476,0745,5845,4665,576
Custodial mothers
   Total11,50511,60711,87211,4991129111,587
Awarded child support6,8787,1237,0807,15071107,436
   Percent59.861.459.662.263.064.2
   Due child support5,9136,2246,3426,1336,2126,516
      Average child support due*$4,548$4,958$4,763$5,301$6,017$5,176
      Average child support received*$2,984$3,252$3,178$3,167$3,494$3,579
      Received any child support4,5014,7424,8024,5784,6395,018
         Percent76.176.275.774.674.777.0
      Received full amount of child support2,1782,6742,9452,8182,8152,948
         Percent36.843.046.445.945.345.2
Not awarded child support4,6274,4844,7924,3494,1814,151
Custodial fathers
   Total2,1842,1082,0772,0302,0922,364
Awarded child support922844796795807940
   Percent42.240.038.339.238.639.8
   Due child support775733676658712740
      Average child support due*$4,043$4,168$4,531$4,763$4,386$4,471
      Average child support received*$2,534$2,883$2,986$2,276$2,994$2,797
      Received any child support569527479427480530
         Percent73.471.970.964.967.471.6
      Received full amount of child support288270295248278342
         Percent37.236.843.637.739.046.2
Not awarded child support1,2621,2631,2811,2351,2851,424

Children, Teens, and Money

views updated May 11 2018

chapter 4
CHILDREN, TEENS, AND MONEY

FAMILY INCOME

Almost all children are financially dependent upon their parents, with their financial condition directly dependent on how much their parents earn. The U.S. Census Bureau reports that real income rose throughout the 1990s and then declined from 2001 to 2003. The median (half were higher and half were lower) household income in 2003 was $43,318. For married-couple families it was $62,405—down slightly from the previous year (Carmen DeNavas-Walt, Bernadette D. Proctor, and Robert J. Mills, U.S. Census Bureau, Current Population Reports, P60–226, Income, Poverty, and Health Insurance Coverage in the United States: 2003, U.S. Government Printing Office, Washington, DC, 2004).

Single-parent families, particularly those headed by single mothers, fared worse than other households. Families with female heads-of-household and no husband present had a 2003 median income of $29,307, while male-headed households with no wife present had a median income of $41,959.

Median income varied greatly by race and ethnic group in 2003. Asians had the highest median income, at $55,262, followed by non-Hispanic whites at $47,777. The median income for Hispanics in 2003 was $32,997, while for African-Americans it was approximately $29,689.

CHILDREN IN POVERTY

Children are the largest group of America's poor. In 1975 they replaced the elderly as the poorest age group. (See Figure 4.1.) In 2002 the poverty rate for all children younger than eighteen years of age was 16.7%—about 12.1 million children. In 2002 children under eighteen years old made up one quarter (25.5%) of the population of the United States, but over one third (35.1%) of the people living below the poverty line. Children under the age of six are particularly vulnerable to poverty. In 2002 the poverty rate for families with children under six was 18.5%, higher than the overall rate of child poverty. Among children under six living with a single mother, almost half (48.6%) were in poverty.

While the child poverty rate declined from 1994 to 2000, the rate of children living in poor (100% of poverty line or below) and low-income families (100–200% of poverty line) began to rise again in 2000. (See Figure 4.2.) And the majority of both African-American children (58%) and Latino children (62%) lived in low-income or poor families in 2002. (See Figure 4.3.)

The Children's Defense Fund reported in The State of Children in America's Union: A 2002 Action Guide to Leave No Child Behind (Washington, DC, 2002) that the United States ranks twelfth among industrialized nations in the percentage of children living in poverty, and seventeenth in "efforts to lift children out of poverty." The organization contends that an American child is born into poverty every forty-three seconds, and that one in every three children will be poor at some point in his or her childhood.

FORMS OF AID TO CHILDREN

Welfare Reform, Aid to Families with Dependent Children (AFDC), and Temporary Assistance for Needy Families (TANF)

Many programs exist in the United States to assist families and children living with economic hardship. Some of these programs are federally run, and others are run at the state level. In many cases the programs are mandated at the federal level and administered by the states, which can make tracking them complicated.

In 1996 the U.S. Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act (PL 104–193) to reform the welfare system. The primary goal of the legislation was to get as many people as possible into the paid labor force and off welfare rolls. The law set limits on how long welfare recipients could receive

FIGURE 4.1

FIGURE 4.2

assistance, encouraging them to seek gainful employment. Aid to Families with Dependent Children (AFDC), a guaranteed assistance program for low-income families,

FIGURE 4.3

was eliminated and replaced with the Temporary Assistance for Needy Families (TANF) program. Under TANF, states receive a fixed amount from the federal government based on what they spent on welfare programs in 1994 without regard to subsequent changes in need. TANF frees the states from many federal constraints on how they manage the funds. The program reduced the federal welfare

TABLE 4.1

Total number of families and recipients of Temporary Assistance for Needy Families (TANF), September 1996 and September 2003
TANF familiesTANF recipients
Total families 4th qtr FY03Change from September 1996 to Sep-03Total recipients 4th qtr FY03Change from September 1996 to Sep-03
State3-SepSep-96 families% change3-SepSep-96 recipients% change
source: Adapted from "Temporary Assistance for Needy Families: Total Number of Families and Recipients, July–September 2003," in Welfare Rolls Drop Again, U.S. Department of Health and Human Services, March 30, 2004, http://www.acf.hhs.gov/news/press/2004/TANF_TOTFAM_4th2003.htm (accessed August 24, 2004)
Alabama19,22840,708−52.80%45,52899,818−54.40%
Alaska4,90912,319−60.20%13,65036,033−62.10%
Arizona51,33661,787−16.90%121,271167,410−27.60%
Arkansas10,74522,109−51.40%24,46956,470−56.70%
California449,275870,343−48.40%1,099,6952,550,032−56.90%
Colorado14,21033,554−57.70%37,11493,282−60.20%
Connecticut20,96757,103−63.30%43,844158,454−72.30%
Delaware5,69910,474−45.60%12,95123,743−45.50%
Dist. of Col.16,82525,139−33.10%42,98068,858−37.60%
Florida58,555200,292−70.80%121,921531,485−77.10%
Georgia56,496120,914−53.30%134,819323,471−58.30%
Guam3,0722,25436.30%10,7838,36428.90%
Hawaii9,36721,887−57.20%24,38466,510−63.30%
Idaho1,7278,393−79.40%3,17521,142−85.00%
Illinois34,688217,815−84.10%87,545635,538−86.20%
Indiana51,71149,7473.90%135,339131,7752.70%
Iowa20,13531,088−35.20%52,52884,556−37.90%
Kansas15,85923,386−32.20%41,28862,466−33.90%
Kentucky35,25270,442−50.00%77,697169,822−54.20%
Louisiana23,06966,542−65.30%58,504225,498−74.10%
Maine9,19619,745−53.40%28,19553,205−47.00%
Maryland25,67868,931−62.70%61,168189,342−67.70%
Massachusetts50,87584,333−39.70%112,810225,439−50.00%
Michigan78,549167,529−53.10%210,154494,991−57.50%
Minnesota36,09657,248−36.90%93,508167,362−44.10%
Mississippi19,72245,223−56.40%45,182120,626−62.50%
Missouri41,49479,100−47.50%102,031219,651−53.50%
Montana5,4659,812−44.30%15,01728,299−46.90%
Nebraska11,04914,379−23.20%27,53338,914−29.20%
Nevada9,54713,210−27.70%22,87432,803−30.30%
New Hampshire6,0778,915−31.80%14,04422,340−37.10%
New Jersey43,656100,806−56.70%105,702269,632−60.80%
New Mexico17,42132,974−47.20%45,88598,427−53.40%
New York145,627412,720−64.70%331,1441,127,888−70.60%
North Carolina39,201107,483−63.50%80,956263,093−69.20%
North Dakota3,3364,668−28.50%8,66712,748−32.00%
Ohio85,008201,945−57.90%188,226541,055−65.20%
Oklahoma15,15435,299−57.10%37,16994,239−60.60%
Oregon18,09328,525−36.60%41,30274,320−44.40%
Pennsylvania84,288180,123−53.20%220,136509,430−56.80%
Puerto Rico18,60149,511−62.40%52,295149,944−65.10%
Rhode Island12,96120,489−36.70%34,18755,953−38.90%
South Carolina19,26642,906−55.10%46,281110,837−58.20%
South Dakota2,6905,698−52.80%5,91915,384−61.50%
Tennessee72,34596,206−24.80%191,652251,717−23.90%
Texas117,532238,757−50.80%281,765638,119−55.80%
Utah8,94414,044−36.30%22,94438,564−40.50%
Vermont4,8158,680−44.50%12,24324,045−49.10%
Virgin Islands5261,348−61.00%1,5914,808−66.90%
Virginia8,22560,455−86.40%23,527148,529−84.20%
Washington53,53496,801−44.70%131,721266,591−50.60%
West Virginia16,40537,595−56.40%41,75084,911−50.80%
Wisconsin21,70849,932−56.50%52,280142,746−63.40%
Wyoming3884,343−91.10%69411,783−94.10%
U.S. totals2,006,5974,346,029−53.80%4,880,03712042462−59.50%

commitment by $55 billion. Total TANF expenditures for fiscal year 2002 were $23.4 billion.

Since the inception of TANF, the number of welfare cases has declined. The total number of welfare recipients fell from 14.4 million in March 1994 to 5.3 million in September 2001, a drop of 63%. Between September and December 2001, due in part to the terrorist attacks of September 11, 2001, AFDC/TANF recipient rolls increased by two hundred thousand. At the end of 2001 there were 5.5 million participants. But by September 2003 the number of recipients had once again declined, to about 4.9 million. (See Table 4.1.)

When welfare caseloads are counted by the number of recipient families instead of individual recipients, the same pattern of decline is seen. Participating families peaked at 5.1 million in March 1994. At the end of 2001 there were 2.1 million families enrolled, a 59% decrease. By September 2003 there were only two million families enrolled. (See Table 4.1.) This represents the largest welfare caseload decrease in history, the smallest number of people on welfare since 1968, and the lowest percentage of the population on welfare since 1965. The strong economy and job market during the 1990s played a role in reducing caseloads.

Under TANF each state decides what categories of children receive aid. AFDC required states to aid all families with children eligible under federal rules unless their income was above state-set limits. TANF, on the other hand, requires that a recipient work in exchange for time-limited assistance. Because of this requirement, the number of working recipients reached an all-time high of 34% in 2000, compared with less than 7% in 1992.

Despite such improvements, welfare reform has been attacked for its coercive aspects. The new standards set a number of ineligibility rules. For example, states are not permitted to use TANF to aid unwed mothers under the age of eighteen unless they live in an adult-supervised setting and, if not already a high school graduate, attend school. Mothers are in most cases barred from receiving TANF assistance unless they are willing to name the fathers of their children. And Congress used the welfare law to launch a campaign against "illegitimacy"—and not only among TANF recipients. In both 2000 and 2001 the Department of Health and Human Services offered an award ($100 million in 2000 and $75 million in 2001) to states that had the greatest decrease in their ratio of births to unmarried mothers to total births without an increase in abortion rates.

characteristics of tanf recipients. One of the primary goals of the welfare reform laws enacted in the mid-1990s was to help people receiving public assistance get back into the paid labor force. A count of how many current and former welfare recipients are employed is, therefore, an important measure of the success of welfare reforms. Analysis shows that the employment rate of current and former TANF recipients has increased significantly. In fiscal year 2001 working recipients accounted for 26.7% of adult TANF recipients, compared with 11.3% in fiscal year 1996 (Indicators of Welfare Dependence, Annual Report to Congress, U.S. Department of Health and Human Services, 2003).

Consequently, income levels of TANF recipients also rose. Average monthly earnings of employed adult TANF recipients increased from $466 in fiscal year 1996 to $533 in 1998, $598 in 1999, $668 in 2000, and $686 in 2001—an increase of 47% between 1996 and 2001.

According to the U.S. Department of Health and Human Services, the average number of people in a TANF family was 2.6 in 2001, down from an average of 2.8 in 1996. Almost half (44.8%) of TANF families in 2001 included one child recipient, 28.5% included two child recipients, and 24.7% included three or more child recipients. Two-thirds (66.9%) of these families were headed by a single adult. Only 11.7% of recipients were married.

The average monthly benefit per TANF recipient in 2001 was $137, down from a high of $221 (in 2001 dollars) in 1978 under the AFDC program. The average monthly benefit per family was $351, down from a high of $766 (in 2001 dollars) in 1969. (See Table 4.2.) Benefits included cash assistance, food stamps, and health insurance under Medicaid.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC), originally approved by Congress in 1975, reduces the amount of taxes owed by working people with low incomes and can result in a tax refund. To receive the EIC for 2003, a single person with no children must have had an adjusted gross income of no more than $11,230, with one child no more than $29,666, and with two or more children no more than $33,692. The adjusted gross income levels were $1,000 higher for married couples filing jointly. The maximum credit in 2003 was $2,547 for a family with one child and $4,204 for a family with two or more children. The maximum credit for those without qualifying children was $382.

In 2004 employees with at least one child living with them could file an Earned Income Credit Advance Payment Certificate with an employer to receive the advance EITC payments. The employer paid part of the credit to the employee in advance throughout the year, and the taxpayer could claim the rest when filing a 2004 federal tax return.

The Special Supplemental Nutrition Program for Women, Infants, and Children

The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides food assistance and nutritional screening for low-income pregnant and postpartum women and their infants and children under the age of five. Congress appropriated almost $5 billion for WIC in fiscal year 2004. Participants must have an income below 185% of the poverty level and be nutritionally at risk. The 2004–05 eligibility guidelines stated that a family of one could earn up to $1,436 a month and still qualify for WIC. A family of four could earn $2,907 a month and participate in WIC.

Recipients receive food items or vouchers for purchases of certain items in retail stores. The WIC program is federally funded but administered by state and local health agencies. In April 2002 about eight million women

TABLE 4.2

Trends in average monthly payment for Aid to Families with Dependent Children (AFDC) and Temporary Assistance for Needy Families (TANF), 1962–2001
Monthly benefit per recipientAverage number of persons per familyMonthly benefit per family (not reduced by child support)Weighted average1 maximum benefit (per 3-person family)
Fiscal yearCurrent dollars2001 dollarsCurrent dollars2001 dollarsCurrent dollars2001 dollars
1The maximum benefit for a 3-person family in each state is weighted by that state's share of total AFDC families.
2Estimated based on the weighted average benefit for a 4-person family.
3The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 repealed the AFDC program as of July 1, 1997 and replaced it with the Temporary Assistance to Needy Families (TANF) program.
Note: AFDC benefit amounts have not been reduced by child support collections. Constant dollar adjustments to 2001 level were made using a CPI-U-X1 fiscal-year price index.
source: "Table TANF 6. Trends in AFDC/TANF Average Monthly Payments, 1962–2001," in Indicators of Welfare Dependence, Annual Report to Congress, U.S. Department of Health and Human Services, 2003, http://aspe.hhs.gov/hsp/indicators03/index.htm (accessed August 24, 2004)
1962$31$1683.9$121$634NANA
1963311664126650NANA
1964321674.1131670NANA
1965341744.2140705NANA
1966351784.2146716NANA
1967361794.1150716NANA
1968401884.1162746NANA
19694319841737661862854
1970462003.91787531942848
1971482003.81807302012840
1972512073.61877322052828
1973532053.51877012132824
1974572023.41946702292816
1975632063.3209658243791
1976712163.2226665257782
1977782203.1241662271768
1978832213249644284756
1979872132.9257609301735
1980942072.9274583320703
1981961922.9277536326651
19821031922.9300543331617
19831061902.9311537336600
19841101892.9321534352602
19851121862.9329527369610
19861151862.9339529383618
19871231932.9359546393617
19881271922.9370541404609
19891311892.9381531412593
19901351852.9389516421577
19911351762.9388490425554
19921361722.9389477419530
19931311612.8373444414509
19941341602.8376437420497
19951341572.8376425418487
19961351522.8374410422478
199731301442.8362405420464
19981301422.7358406432469
19991331422.7357439452481
20001331382.6349428453468
20011371372.6351351456456

and their children participated in WIC, an increase of 2% since April 2000 (WIC Participant and Program Characteristics, 2002, U.S. Department of Agriculture, Food and Nutrition Service, September 2003). About two-thirds (75.8%) were infants and children. Two-thirds of WIC participants were at or below the poverty line.

The Food Stamp Program

The food stamp program, administered by the U.S. Department of Agriculture (USDA), provides low-income households with online electronic benefit cards that can be used at most grocery stores much like debit cards in place of cash. Food stamps are intended to ensure that recipients have access to a nutritious diet. They are available to households that have a gross monthly income of no more than 130% of the poverty line and a net monthly income at or below the poverty line. Almost all households that received food stamp benefits in 2002 lived in poverty.

The amount of money a family receives on their benefit card is based on the USDA's estimate of how much it costs to provide households with nutritious, low-cost meals. This estimate changes yearly to reflect inflation. In fiscal year 2002 the maximum monthly benefit for a family of four was $452, while the average monthly benefit for all households was $173. Food stamp households containing children received an average of $254 in benefits per

TABLE 4.3

Average values of selected characteristics of food stamp households, 2002
Average values
Households with:Gross monthly income (dollars)Net monthly income (dollars)Monthly food stamp benefit (dollars)Household size (persons)
*Households not containing children, elderly persons, or disabled persons.
source: Randy Rosso and Melissa Faux, "Table 3.4. Average Values of Selected Characteristics by Household Composition, Fiscal Year 2002," in Characteristics of Food Stamp Households: Fiscal Year 2002, Report No. FSP-03-CHAR02, U.S. Department of Agriculture, Food and Nutrition Service, Office of Analysis, Nutrition and Evaluation, 2003, http://www.fns.usda.gov/oane/MENU/Published/FSP/FILES/Participation/2002Characteristics.pdf (accessed August 24, 2004)
Total6333551732.3
Children7474362543.3
Single-adult household6763812473.1
Male adult6813872232.9
Female adult6763812493.1
Multiple-adult household10226492984.4
Married head household10576672994.5
Other multiple-adult household9456102954.3
Children only5122531902.2
Elderly646368641.3
Living alone589316501.0
Not living alone8765821212.4
Disabled7394541062.0
Living alone596311501.0
Not living alone9426571873.3
Other households*198671281.1
Single-person household174531221.0
Multi-person household4722192012.2
Single-person households460229731.0

month, in part because households with children tended to be larger (3.3 people) than households in general (2.3 people). (See Table 4.3.)

The majority of households that received food stamps in 2002 contained children—54.1%, or 4.4 million households. Two-thirds of these households (34.5%) were headed by a single parent, usually a single mother (32.8%) (Characteristics of Food Stamp Households: Fiscal Year 2002, U.S. Department of Agriculture, Food and Nutrition Service, Office of Analysis, Nutrition and Evaluation, 2003).

Supplemental Security Income (SSI)

The SSI program was enacted in Public Law 92–603 on October 30, 1972, to provide a minimum income for blind or disabled individuals. For children to qualify for SSI, their parents must meet the income requirements, they must be neither married nor the head of a household, must be under the age of eighteen (or under the age of twenty-two if a full-time student), and must meet the SSI definition of disabled. Children are considered disabled if they have "marked and severe functional limitations" because of a physical or mental impairment. Many of these children are automatically eligible for food stamps and Medicaid coverage.

In 1974 70,900 disabled and blind children received SSI benefits, representing 1.8% of all recipients. The program has since expanded to include a greater proportion of disabled children. In 1996 the number of children receiving benefits peaked at 955,174, or 14.4% of all SSI recipients, and then dropped to 846,784 in December 2000. (See Table 4.4.) In December 2002 914,821 children received SSI payments averaging $487.73 per month. These children made up 13.5% of SSI recipients in 2002. By July 2004 the maximum monthly payment per child was $564.

Other Forms of Assistance

The federal government spends billions of dollars on behalf of low-income children. Most services are spread over several major income-tested programs (meaning the family income cannot exceed a certain limit). Many programs are for noncash assistance. These include Medic-aid, subsidized housing, and free or reduced-price school lunch and breakfast programs.

The National School Lunch Program provides millions of children with nutritious food each day. Children whose families earn no more than 185% of the poverty level are eligible for reduced price school lunches; children whose families earn no more than 130% of the poverty level are eligible for free school lunches. In fiscal year 2003 the U.S. government spent $6.3 billion for the National School Lunch Program and another $1.7 billion on the school breakfast program. In that year 28.4 million

TABLE 4.4

Supplemental Security Income (SSI) recipients by age, December 1974–2002
Under age 18Aged 18–64Aged 65 or older
YearTotalNumberPercentage of totalNumberPercentage of totalNumberPercentage of total
source: "Table 3. Recipients by Age, December 1974–2002," in Supplemental Security Income Annual Statistical Report, 2002, U.S. Social Security Administration, 2003, http://www.ssa.gov/policy/docs/statcomps/ssi_asr/2002/ssi_asr02.pdf (accessed August 24, 2004)
19743,996,06470,9001.81,503,15537.62,422,00960.6
19754,314,275107,0262.51,699,39439.42,507,85558.1
19764,235,939125,4123.01,713,59440.52,396,93356.6
19774,237,692147,3553.51,736,87941.02,353,45855.5
19784,216,925165,8993.91,747,12641.42,303,90054.6
19794,149,575177,3064.31,726,55341.62,245,71654.1
19804,142,017190,3944.61,730,84741.82,220,77653.6
19814,018,875194,8904.81,702,89542.42,121,09052.8
19823,857,590191,5705.01,655,27942.92,010,74152.1
19833,901,497198,3235.11,699,77443.62,003,40051.3
19844,029,333211,5875.31,780,45944.22,037,28750.6
19854,138,021227,3845.51,879,16845.42,031,46949.1
19864,269,184241,1985.62,010,45847.12,017,52847.3
19874,384,999250,9025.72,118,71048.32,015,38746.0
19884,463,869255,1355.72,202,71449.32,006,02044.9
19894,593,059264,8905.82,301,92650.12,026,24344.1
19904,817,127308,5896.42,449,89750.92,058,64142.7
19915,118,470397,1627.82,641,52451.62,079,78440.6
19925,566,189556,47010.02,910,01652.32,099,70337.7
19935,984,330722,67812.13,148,41352.62,113,23935.3
19946,295,786841,47413.43,335,25553.02,119,05733.7
19956,514,134917,04814.13,482,25653.52,114,83032.5
19966,613,718955,17414.43,568,39354.02,090,15131.6
19976,494,985879,82813.53,561,62554.82,053,53231.6
19986,566,069887,06613.53,646,02055.52,032,98331.0
19996,556,634847,06312.93,690,97056.32,018,60130.8
20006,601,686846,78412.83,744,02256.72,010,88030.5
20016,688,489881,83613.23,811,49457.01,995,15929.8
20026,787,857914,82113.53,877,75257.11,995,28429.4

children took part in the school lunch program, up from 26.9 million in 1999. (See Table 4.5.)

CHILD SUPPORT

Who Receives Child Support?

Children living in single-parent families are far more likely to be poor than children living in two-parent households, and the number of children living with only one parent—usually the mother—is increasing. According to a report by the U.S. Census Bureau (Custodial Mothers and Fathers and Their Child Support: 2001, 2003), in spring 2002 13.4 million parents had custody of 21.5 million children under the age of twenty-one whose other parent lived elsewhere. Mothers accounted for 84.4% of all custodial parents; 15.6% of custodial parents were fathers. These proportions have not changed significantly since 1994.

More than half (59.1%) of the 13.4 million custodial parents in April 2002 had a child support agreement with the other parent. Most of these agreements required child support payments from the noncustodial parent. In 2001 74% of custodial parents due support received at least some payments. Almost half (44.8%) received all the payments they were due, up from only a little more than a third (36.9%) in 1993. (See Figure 4.4.) Noncustodial parents who had visitation rights to their children were more likely to pay child support (77.1%) than parents who did not (55.8%).

Receipt of child support payments made a significant difference in the household incomes of single-parent families. In 2001 the average family income of custodial parents who received child support was $29,008. In contrast, custodial parents who either had no child support agreements or had agreements but received only part or none of the amount due had an average family income of $24,055 and $23,571, respectively. (See Table 4.6.)

Government Assistance in Obtaining Child Support

Inadequate financial support from noncustodial parents contributes to the high incidence of poverty among children living in single-parent families. When custodial parents are not paid the child support due them, their families suffer financially and often must turn to public welfare. Government agencies, therefore, have an interest in recovering child support from delinquent parents.

In 1975 Congress established the Child Support Enforcement program (CSE), a collaborative effort among local, state, and federal agencies, to ensure that children received financial support from both parents.

TABLE 4.5

National School Lunch Program, total participation, 1999–2003
Data as of June 24, 2004
State/territoryFiscal year 1999Fiscal year 2000Fiscal year 2001Fiscal year 2002Fiscal year 2003
Participation data are nine-month averages; summer months (June–August) are excluded. Participation is based on average daily meals divided by an attendance factor of 0.927. Department of Defense activity represents children of armed forces personnel attending schools overseas. Data are subject to revision.
source: "National School Lunch Program: Total Participation," U.S. Department of Agriculture, Food and Nutrition Service, June 24, 2004, http://www.fns.usda.gov/pd/slfypart.htm (accessed August 24, 2004)
Preliminary
Alabama540,810541,403542,346545,747549,312
Alaska49,88250,42152,31052,80752,962
Arizona443,495446,697470,420489,637517,944
Arkansas310,741311,943312,901315,263317,850
California2,537,5392,566,9242,613,9042,659,3902,732,026
Colorado318,809320,778321,516325,715327,775
Connecticut258,521265,095272,008280,212283,625
Delaware70,26771,54671,67073,80375,377
Dist. of Columbia47,25547,20350,99050,34947,961
Florida1,307,1021,322,4521,342,8001,369,0131,397,558
Georgia1,054,2261,065,3621,083,4341,112,3751,129,514
Guam14,14113,40113,77915,84917,408
Hawaii145,914143,108140,739135,219131,954
Idaho141,624142,779143,895147,111148,927
Illinois1,035,1291,057,8071,071,9301,090,0131,098,525
Indiana613,022622,399630,733643,464663,592
Iowa381,877382,630380,864380,099380,864
Kansas307,285308,414312,712316,260317,481
Kentucky496,734499,368499,733508,526511,470
Louisiana652,265646,083634,852632,139626,153
Maine105,813106,983107,012107,618103,773
Maryland386,356392,414403,446426,838435,790
Massachusetts520,478528,225538,639541,981541,767
Michigan780,189802,805816,753826,252842,600
Minnesota566,210562,471570,852576,121577,211
Mississippi400,699397,111398,519397,076394,883
Missouri583,973586,760591,502622,416603,434
Montana80,97479,00077,91277,64977,621
Nebraska217,617220,042219,261221,491222,865
Nevada108,417113,726120,947130,314136,859
New Hampshire100,808103,961105,864107,514115,808
New Jersey567,684585,571588,152599,548604,595
New Mexico193,935192,374195,228198,166201,272
New York1,773,2761,789,6761,777,9831,792,8041,789,181
North Carolina815,517821,586834,328843,699863,206
North Dakota81,97980,36779,38477,83377,230
Ohio986,279995,968999,0691,012,7191,022,307
Oklahoma371,286374,309373,613377,357382,662
Oregon266,428266,059266,988274,337275,713
Pennsylvania1,007,1621,013,0431,024,5631,041,2541,057,855
Puerto Rico397,160397,842386,977399,236392,900
Rhode Island61,01463,30464,58968,80282,161
South Carolina473,096470,932468,866469,483466,834
South Dakota104,266104,646104,717103,480103,592
Tennessee609,197621,630621,187636,692635,613
Texas2,392,4482,450,5042,494,0542,582,5272,671,907
Utah266,892269,491273,112278,500283,627
Vermont52,04851,97052,72453,71354,356
Virgin Islands17,23216,11615,13515,44015,450
Virginia651,242665,276669,890678,369687,945
Washington457,640465,968473,725488,104495,458
West Virginia204,129201,588196,138195,950204,626
Wisconsin530,915536,099545,827552,574561,176
Wyoming53,39951,68849,80649,88949,485
Dept. of Defense33,93434,17636,23936,99033,488
Total26,946,32727,239,49027,506,53728,005,72628,393,529

Under the Child Support Recovery Act of 1992, noncustodial parents delinquent on child support due in another state can be prosecuted. CSE services are automatically provided to families receiving assistance under the Temporary Assistance for Needy Families (TANF) program; any support collected usually reimburses the state and federal governments for TANF payments made to the family. Child support services also are available for a small application fee to families not receiving TANF.

Provisions in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PL 104–193) strengthened and improved child support collection activities. The law established a National Directory of New Hires to track parents across state lines, made the process for establishing paternity faster and easier, and enacted tough new penalties for delinquent parents, including expanded wage garnishment and suspension or revocation of driver's licenses. The law also requires single-mother TANF applicants to disclose the paternity of their children and to assign any child support payments to the state. These efforts have paid off; in fiscal year 2003 CSE handled more than 15.9 million cases and collected more than $25 billion, up 5.2% from the previous year (Child Support Enforcement FY 2003 Preliminary Data Report, Department of Health and Human Services, Administration for Children and Families, June 2004).

Interstate Child Support

Child-support awards in which the noncustodial parent lives in a state different from the custodial parent are among the most difficult to enforce. In 2001 the government estimated that 30% of all child support cases involved more than one state. Custodial parents in inter-state cases are less likely to receive payments than those in in-state cases, even though about the same proportion are awarded child support.

THE COST OF RAISING A CHILD

USDA Estimates

Since the 1960s the Family Economics Research Group of the U.S. Department of Agriculture (USDA) has provided estimates on the cost of rearing a child. The estimates are calculated per child in a household with two children and are categorized by the age of the child using different family income levels. (See Table 4.7 and Table 4.8.) Attorneys and judges use these estimates in determining child-support awards in divorce cases as well as cases involving the wrongful death of a parent. Public officials use the estimates to determine payments for the support of children in foster care and for subsidies to adoptive families. Financial planners and consumer educators use them in helping people determine their life insurance needs.

Income Levels

Estimated annual family expenditures for a child vary widely depending upon the income level of the household. The estimated amount a family will spend on a child also

FIGURE 4.4

tends to increase as the child ages. The USDA estimates that in 2003 married-couple households earning less than $40,700 a year spent between $6,820 on very young children and $7,770 on fifteen- to seventeen-year-olds. (See Table 4.7.) Estimates for middle-income, married-couple families range from $9,510 for infants and young toddlers to $10,560 for fifteen- to seventeen-year-olds. Estimates for married-couple families with incomes above $68,400 ranged from $14,140 to $15,350, depending on the age of the child.

Estimated annual expenditures for single-parent families earning less than $40,700 a year were slightly less than those of two-parent families, most likely because their average incomes were lower ($17,000 for single-parent families and $25,400 for two-parent families). The USDA estimates that in 2003 these single parents will spend an annual average of $5,770 to $7,960, depending on the age of the child. (See Table 4.8.) The USDA estimates that those single-parent families earning $40,700 or more will spend $13,060 to $15,620 per child, slightly more than the middle-income, two-parent families.

Although the USDA projected that in 2003 the highest-income households would spend about twice the amount on their children than the lowest-income households, this difference varies by the type of expense. For example, the estimated food expenditure for children ages fifteen to seventeen in the highest-income husband-wife families was $2,630, compared with $1,850 in the lowest-income group. (See Table 4.7.) However, the estimated annual expense for education and child care for children ages fifteen to seventeen in these high-income families ($1,670) was almost four times that for a child the same age in the lowest-income families ($450). These variations among income groups by type of expense held true for single-parent households as well. (See Table 4.8.)

Age of Child

The 2003 estimates of family expenditures on a child generally increased with the child's age, except for housing, education, and child care. (See Table 4.7 and Table 4.8.) Households with young children are more likely to have recently purchased homes at higher prices and, until recently, with higher interest rates, explaining the higher housing estimates. Estimates for education, child care, and related expenses were also highest for preschoolers (under the age of six) in all income groups. Many women with

TABLE 4.6

Average income and child support received by custodial parents, by selected characteristics, 2001
(In 2001 dollars)
Supposed to receive child support in 2001
Received paymentsDid not receive paymentsChild support not awarded
Total money incomeChild support incomeTotal money income
source: Adapted from Timothy S. Grall, "Table 5. Mean Total Money Income of People and Child Support Received by Custodial Parents by Selected Characteristics and Sex: 2001," in Custodial Mothers and Fathers and Their Child Support: 2001, Current Population Reports, U.S. Census Bureau, 2003, http://www.census.gov/hhes/www/childsupport/chldsu01.pdf (accessed August 24, 2004)
Custodial parents29,0084,27423,57124,055
Custodial mothers28,2584,27421,83519,339
Custodial fathers36,2554,27335,34839,396
Custodial parents below poverty7,5713,0416,8326,113
Custodial mothers below poverty7,6043,0786,7556,089
Custodial fathers below poverty7,1892,6227,4926,287

TABLE 4.7

Estimated annual expenditures on a child by husband–wife families, 2003
Age of childTotalHousingFoodTransportationClothingHealth careChild care and educationMiscellaneous*
Notes: Estimates are based on 1990–92 Consumer Expenditure Survey data updated to 2003 dollars using the Consumer Price Index. For each age category, the expense estimates represent average child-rearing expenditures for each age (e.g., the expense for the 3–5 age category, on average, applies to the 3-year-old, the 4-year-old, or the 5-year-old). The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.
*Miscellaneous expenses include personal care items, entertainment, and reading materials.
source: Mark Lino, "Table ES1. Estimate Annual Expenditures on a Child by Husband-Wife Families, Overall United States, 2003," in Expenditures on Children by Families, 2003 Annual Report, Miscellaneous Publication No. 1528-2003, Center for Nutrition Policy and Promotion, U.S. Department of Agriculture, 2004, http://www.usda.gov/cnpp/Crc/crc2003.pdf (accessed August 24, 2004)
Before-tax income: Less than $40,700 (average=$25,400)
0–2$6,820$2,620$950$800$350$500$950$650
3–56,9702,5801,0507703404801,080670
6–87,0402,5001,360900380550640710
9–116,9902,2501,620970420600390740
12–147,8402,5101,7101,100710610270930
15–177,7702,0301,8501,480630650450680
Total$130,290$43,470$25,620$18,060$8,490$10,170$11,340$13,140
Before-tax income: $40,700 to $68,400 (average=$54,100)
0–2$9,510$3,540$1,130$1,190$410$660$1,570$1,010
3–59,7803,5101,3101,1604006301,7401,030
6–89,7303,4201,6701,2904507201,1101,070
9–119,6003,1801,9601,3604907807301,100
12–1410,3503,4401,9801,4908307905301,290
15–1710,5602,9502,2001,8807408309201,040
Total$178,590$60,120$30,750$25,110$9,960$13,230$19,800$19,620
Before-tax income: More than $68,400 (average=$102,400)
0–2$14,140$5,620$1,500$1,660$540$760$2,370$1,690
3–514,4705,5901,7001,6305307302,5801,710
6–814,2405,5002,0501,7605808301,7701,750
9–1114,0405,2602,3801,8406309001,2401,790
12–1414,8505,5202,5001,9601,0509009501,970
15–1715,3505,0402,6302,3809509501,6701,730
Total$261,270$97,590$38,280$33,690$12,840$15,210$31,740$31,920

children this age are in the labor force and must pay for child care. Once the child enters school, the cost decreases. And as a school-age child grows up, the need for after-school and summer care also decreases. The estimates do not include expenses related to college attendance, which typically do not occur until the child is at least eighteen.

Future Costs

The USDA also estimated the cost of raising a child born in 2003 who will reach the age of seventeen in the year 2020, incorporating an average annual inflation rate of 3.1% (the average annual inflation rate over the previous twenty years). Total family expenses for raising a

TABLE 4.8

Estimated annual expenditures on a child by single-parent families, 2003
Age of childTotalHousingFoodTransportationClothingHealth careChild care and educationMiscellaneous*
Notes: Estimates are based on 1990–92 Consumer Expenditure Survey data updated to 2003 dollars using the Consumer Price Index. For each age category, the expense estimates represent average child-rearing expenditures for each age (e.g., the expense for the 3–5 age category, on average, applies to the 3-year-old, the 4-year-old, or the 5-year-old). The figures represent estimated expenses on the younger child in a single-parent, two-child family. For estimated expenses on the older child, multiply the total expense for the appropriate age category by 0.93. To estimate expenses for two children, the expenses on the younger child and older child after adjusting the expense on the older child downward should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.35. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.72 after adjusting the expenses on the older children downward. For expenses on all children in a family, these totals should be summed.
*Miscellaneous expenses include personal care items, entertainment, and reading materials.
source: Mark Lino,"Table 7. Estimated Annual Expenditures on a Child by Single-Parent Families, Overall United States, 2003," in Expenditures on Children by Families, 2003 Annual Report, Miscellaneous Publication No. 1528-2003, Center for Nutrition Policy and Promotion, U.S. Department of Agriculture, 2004, http://www.usda.gov/cnpp/Crc/crc2003.pdf (accessed August 24, 2004)
Before-tax income: Less than $40,700 (average=$17,000)
0–2$5,700$2,350$1,050$740$320$240$600$400
3–56,4402,6701,100650330360810520
6–87,2302,8301,390760390420740700
9–116,7102,7201,610540400530350560
12–147,2102,7301,620630670570450540
15–177,9602,8901,760990790560340630
Total$123,750$48,570$25,590$12,930$8,700$8,040$9,870$10,050
Before-tax income: $40,700 or more (average=$61,700)
0–2$13,060$5,050$1,620$2,270$450$560$1,470$1,640
3–514,0805,3701,7102,1804707501,8401,760
6–814,9305,5402,0502,2805408601,7201,940
9–1114,3505,4302,4702,0705501,0301,0001,800
12–1415,2105,4302,4202,1609001,0901,4301,780
15–1715,6205,6002,5602,3301,0301,0701,1601,870
Total$261,750$97,260$38,490$39,870$11,820$16,080$25,860$32,370

child through the age of seventeen years are estimated to be $172,370 for the lowest-income group, $235,670 for the middle-income group, and $344,250 for highest-income group. (See Table 4.9.)

TEENS AS CONSUMERS

By the last decades of the twentieth century, teens had a big influence on the economy—from affecting major family purchases to buying groceries. A Rand Youth poll estimated that in 1997 24.8 million teens spent $82 billion. According to Teenage Research Unlimited, by 2003 teens spent $175 billion annually, most of it from parents, gifts, and jobs (Teenage Research Unlimited Press Release, "New Book Helps Marketers in 'Getting Wiser to Teens,'" June 14, 2004, http://www.teenresearch.com/PRview.cfm?edit_id=214 [accessed July 15, 2004]).

TEEN EMPLOYMENT

The U.S. Bureau of Labor Statistics (BLS) reported that in June 2004 8.1 million people ages sixteen to nineteen, or about half of the population that age (50.2%), were employed or looking for work (The Employment Situation: June 2004). The unemployment rate in this age group was 19.9%. Employment rates among the young are highest during the summer months, when many full-time students are out of school. However, a January 2003 BLS press release ("Employment Experience of Youths during the School Year and Summer") noted that "most teenage students who worked during the summer also worked during the school year."

The rate of teens in the labor force was correlated with family income; as a household's income rises, the likelihood that a teen within the household will work also rises. In March 2002 only 17% of teens ages fifteen to seventeen from families with a household income of less than $15,000 were in the labor force, compared with 28% of teens from families with a household income of more than $50,000. (See Figure 4.5.)

The Jobs Teens Hold

According to the January 2003 BLS press release, the top occupations for youths employed during the 1999–2000 school year varied by age and gender. For boys ages sixteen to eighteen, cashier and cook jobs ranked in the top five jobs for both the school year and the summer. Girls in the same age group tended to work as cashiers, at food counters, in retail sales, and in restaurants.

Most teens are employed as hourly workers. In 1998 the average amount earned by employed teens between the ages of fifteen and seventeen was $5.57 (Report on the Youth Labor Force, U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC, June 2000). In 2003 9.9% of

TABLE 4.9

Estimated annual expenditures on children born in 2003, by income group
Income group
YearAgeLowestMiddleHighest
Note: Estimates are for the younger child in husband-wife families with two children.
source: Mark Lino, "Table 12. Estimated Annual Expenditures on Children Born in 2003, by Income Group, Overall United States," in Expenditures on Children by Families, 2003 Annual Report, Miscellaneous Publication No. 1528-2003, Center for Nutrition Policy and Promotion, U.S. Department of Agriculture, 2004, http://www.usda.gov/cnpp/Crc/crc2003.pdf (accessed August 24, 2004)
2003<1$6,820$9,510$14,140
200417,0309,80014,580
200527,25010,11015,030
200637,64010,72015,860
200747,88011,05016,350
200858,12011,39016,860
200968,46011,69017,100
201078,72012,05017,630
201188,99012,42018,180
201299,20012,64018,480
2013109,49013,03019,050
2014119,78013,43019,640
20151211,31014,93021,420
20161311,66015,39022,080
20171412,02015,87022,770
20181512,28016,69024,270
20191612,66017,21025,020
20201713,06017,74025,790
Total$172,370$235,670$344,250

teenagers earned the minimum hourly wage of $5.15 or less (Characteristics of Minimum Wage Workers: 2003,U.S. Department of Labor, Bureau of Labor Statistics, May 10, 2004, http://www.bls.gov/cps/minwage2003.htm [accessed July 15, 2004]).

How Does Working Affect Academic Achievement?

A September/October 2001 article in the Journal of Educational Research (Kimberly J. Quirk et al., "Employment during High School and Student Achievement") presented the results of a longitudinal study examining the effects of high-school student employment on academic achievement. The researchers concluded that "working displayed a moderate, significant, and negative effect on high school grades." However, smaller amounts of work (twelve hours or less per week) seemed to slightly improve grades. The researchers also found that the lower a student's grades were, the more likely he or she was to get a job.

A 2000 report by the U.S. Department of Labor ("The Relationship of Youth Employment to Future Educational Attainment and Labor Market Experience," in Report on the Youth Labor Force) found a correlation between teen employment and future college education. More than half of adults who had worked one to twenty hours per week as sixteen- and seventeen-year-olds were more likely than other adults to have completed at least some college education

FIGURE 4.5

by age thirty. In contrast, less than half of adults who had not worked at all or who had worked more than twenty hours per week had completed some college education. The findings suggested that working a limited number of hours in the junior and senior years of high school has a positive effect on educational attainment.

Working Teens and Trouble

In November 1998 a committee of the National Research Council and the Institute of Medicine issued a report that warned about the dangers of teenage employment. The national panel of scientists said that young people who worked more than twenty hours a week, regardless of their economic background, were less likely to finish high school and more likely to use drugs and run into trouble with the police.

Risky behaviors may also increase with teen employment. A Centers for Disease Control and Prevention Youth Behavior Risk Survey, reported in the Journal of Child and Family Studies (Robert F. Valois et al., "Association between Employment and Sexual Risk-Taking Behaviors among Public High School Adolescents," June 1998), demonstrated a link between employment and sexual risk-taking for both genders and all races. Students working more than ten hours per week were more likely to have sexually transmitted diseases or unintended pregnancies than other teens.

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