Lunch Time

The chart above shows the percentage of construction and food service workers on the job during each hour of the day, based on 2003-07 data from the American Time Use Survey. Note how the percentage of food service workers on the job (blue line) peaks at noon, just when the percentage of construction workers on the job (red line) plunges as they break for lunch.

Source: Bureau of Labor Statistics American Time Use Survey

Avoiding the Doctor

Percentage of people aged 18 or older who have not visited the doctor in the past year, by health insurance coverage status, 2007...

Private health insurance: 17

No health insurance: 46

Source: National Center for Health Statistics, Summary Health Statistics for U.S. Adults: National Health Interview Survey, 2007  

Two Million Artists

Two million Americans are trying to make a living as artists, according to a new report by the National Endowment for the Arts. Every decade or so the NEA updates its profile of people whose primary employment is in the arts. The latest report, Artists in the Workforce, 1990-2005, finds 2 million workers who identify their primary occupation as actor, announcer, architect, fine artist, art director, animator, dancer, choreographer, designer, entertainer, musician, singer, photographer, producer, director, writer, or author. The 2 million figure excludes another 300,000 workers whose secondary employment is in the arts.  

Artists have a median age of 40. Most are college graduates. Among those who work full-time, median personal income was $45,200 in 2005--below the $52,500 median income of all professional workers. 

Architects have the highest median income ($63,500 among full-time workers), and actors have the lowest ($31,500). One in three artists is self-employed. Not surprisingly, women artists make less than their male counterparts. Another NEA report, Women Artists: 1990 to 2005 details the differences. 

Many Renters Use Only Cell Phones

Conveniently, every six months the federal government updates the nation on how many households use cell phones only. The latest survey, taken January to June 2008, finds that 16 percent of Americans aged 18 or older use only cell phones. 

Age is the most important factor in determining cell phone only use, with young adults most likely to spurn landlines. Among 18-to-24-year-olds, 31 percent use only cell phones. Among 25-to-29-year-olds, the figure is an even larger 36 percent. 

The demographic segments dominated by young adults are also the ones most likely to use only cell phones. A hefty 34 percent of renters, for example, are cell phone only users (compared with a paltry 9 percent of homeowners). Among Hispanics, 22 percent use only cell phones (versus a smaller 15 percent of non-Hispanic whites). Among unrelated adults who live together (many of them cohabiting couples), the 63 percent majority are cell phone only. 

Source: National Center for Health Statistics, Wireless Substitution: Early Release of Estimates from the National Health Interview Survey, January-June 2008

They Should Have Seen It Coming

The empty cash registers finally got their attention. Businesses large and small are in a panic, wondering where their customers went. Last week the Census Bureau reported that November 2008 retail sales were 7.4 percent below November 2007 sales--a record decline. More than a few captains of industry are expressing surprise at the severity of the downturn. But anyone with an Internet connection, a calculator, and a modicum of curiosity could have seen this coming. Middle Americans are in trouble and so are the businesses that have long ignored them.

Easy money. Entitlement. Short-term thinking. All go a long way toward explaining why businesses are hurting. During the credit expansion of the bubble years, companies grew complacent and lost touch with Middle America. Even as conditions worsened for the average American, there was money to be made by selling bigger houses, bigger cars, and bigger televisions to the small fraction of the population that was living large. A handful of businesses did not abandon their roots, such as Wal-Mart and McDonalds. Their focus on Middle America never wavered. That explains why November sales were higher than expected at Wal-Mart (same-store sales up 3.4 percent) and McDonalds (up 4.5 percent) while almost everyone else reported sharp declines. Now businesses are playing catch-up. They must reacquaint themselves with Middle America, and fast.

American Business, meet Middle America:

• Where men's earnings have been declining for more than two decades. The median earnings of men who work year-round, full-time peaked in 1986.
  
• Where household incomes are shrinking. Median household income fell 1 percent between 2000 and 2007, after adjusting for inflation.
  
• Where, between 2000 and 2006, the average household had already cut its spending on restaurant meals, clothes, new cars, kitchen appliances, outdoor furniture, toys, newspapers and magazines, and a long list of other items.
  
• Where the average home was worth a modest median of $191,000 in 2007, according to the American Housing Survey--and it is worth even less today.
  
• Where, the percentage of people who moved fell to an all-time low of 13 percent in 2006-07 as the housing market seized up.
  
• Where the much vaunted American entrepreneurial spirit is all but dead. The percentage of workers who are self employed fell to an all-time low of 7.1 percent in 2007.
  
• Where the American dream of a college education is fading. The number of students enrolled full-time in four-year colleges fell 4 percent between 2005 and 2006 (the latest data available), according to the Census Bureau.
  
• Where the return on a college degree is shrinking. The median earnings of men and women with bachelor's degrees who work full-time peaked in 2002 and has fallen by 3 to 4 percent since then, after adjusting for inflation.
  
• Where the out-of-pocket cost of health insurance has climbed 27 percent since 2000, after adjusting for inflation.
  
• Where people are scrimping on health care. The number of physician visits fell 6 percent between 2005 and 2006 (the latest data available), according to the National Center for Health Statistics.
  
• Where 60 percent of workers do not have a 401(k) or an IRA, according to the Employee Benefit Research Institute.
  
• Where a growing proportion of older workers cannot afford to retire. The labor force participation rate of men aged 65 or older climbed 3 percentage points between 2000 and 2007.
  

Falling incomes. Rising costs. Spending cuts. Long before the 2008 economic meltdown, Middle America had assumed crash positions. If businesses had been paying attention to their customers rather than their cash registers, they could have positioned themselves for the crash as well. Now all they can do is pick up the pieces.

Cell Phone Spending Tops Landline

Recently released statistics from the 2007 Consumer Expenditure Survey show that average household spending on cell phone service has surged well above spending on residential phone service. Here are the numbers:

Average household spending in 2007
Cell phone service $608
Residential phone service $482

In 2006, spending on residential phone service ($542) was slightly greater than spending on cell service ($524).

Source: Unpublished tables from the 2007 Consumer Expenditure Survey

The Great American Shopping List

Oh, American consumer, how we miss you!

Consumer spending is falling at a 3.1 percent annual rate, according to the latest statistics from the Bureau of Economic Analysis. Many of the nation's retailers reported double-digit declines in October sales, with the New York Times calling it a "collapse" in spending. Since consumer spending accounts for two-thirds of our economy, the belt tightening hurts all of us. To weather what looks like a prolonged economic downturn, businesses large and small need to brush up on consumer spending patterns. There is no better place to start than with The Great American Shopping List.

You can learn most of what you need to know about consumer spending by taking a look at the list--the inventory of every product and service purchased by American households, ranked by how much the average household spends on each item. The federal government collects the information by surveying thousands of households each month, asking them how much they spend on everything from cookies and crackers to video games and recreational vehicles. The Consumer Expenditure Survey data are used to create the all-important Consumer Price Index. Although the list is long, with more than 350 products and services, just 10 items consume more than half of the $50,000 spent by the average household each year. Here they are.

1. Social Security payroll taxes The bad news is that Social Security is our single biggest expense. The average household paid $3,811 into the Social Security trust fund, according to the 2006 Consumer Expenditure Survey. The good news is that this flow of funds reverses direction when you retire. If you don't believe it, join the crowd--only 31 percent of today's workers think Social Security will be their most important source of income in retirement, according to the Employee Benefit Research Institute. The rest will be surprised. The fact is, most American workers do not have a 401(k) or an IRA. Those who do have managed to save very little--and that was before the stock market crash. You don't have to be a number cruncher to realize that Social Security will be even more important tomorrow than it is today. Among people aged 65 or older, 68 percent receive at least half their income from Social Security.

2. Mortgage payments Hyperbole is the word that best describes the media narrative about the dire financial straits of the nation's homeowners. In fact, most homeowners have a manageable, fixed-rate mortgage. Most owe far less on their mortgage than their home is worth. Although there are plans afoot to help homeowners renegotiate their mortgage payment, few will need to take advantage of these efforts. Nevertheless, because mortgage payments are the second largest expense for the average household--an expense that is pretty much non-negotiable--household budget cutting will target items further down the list.

3. Car payments U.S. auto sales are plummeting, down 32 percent in October. Further declines are likely as households cut costs. The automotive industry is caught in a perfect storm--a severe recession, a paradigm shift in what consumers want (hint: better gas mileage), and a demographic transition as SUV-loving baby boomers morph into downsizing empty-nesters. The car payment is one item on which the average household can and is cutting back, forcing car manufacturers to beg the federal government for handouts to stay afloat.

4. Groceries Food prices have been rising at a pace not seen for decades, and forecasters say costs will continue to climb. Americans do not like paying higher prices for food, but they have little choice unless they want to plow up the backyard. Groceries are the fourth largest item in the Great American Shopping List. For grocery stores, the cutback in consumer spending could be good news, since a growing proportion of budget-minded shoppers are likely to head to a grocery store rather than a restaurant. In the grocery aisles, private labels will flourish, as will fresh prepared food--the grocery store's answer to the demand for fast-food convenience. Fresh prepared food is already the single biggest item on America's grocery list. Average household spending on fresh prepared food from the supermarket deli climbed an enormous 53 percent between 2000 and 2006, after adjusting for inflation.

5. Restaurant meals Eating out is a necessity, not a luxury, for busy two-earner and single-parent families with children. Convenience drives them to restaurants and price steers them to fast-food. This is why fast-food restaurants will weather the downturn far better than full-service establishments. At McDonald's, same-store sales were up 8 percent in October. Meanwhile, full-service restaurants such as Bennigan's are filing for bankruptcy.

6. Gasoline Even before prices soared, gasoline was one of the biggest household expenses. Now that Americans are desperately seeking savings, gasoline is an obvious target. Memo to Detroit: Fuel efficiency will be the number-one priority for American car buyers from now on, regardless of the price of a gallon of gas.

7. Federal taxes Taxes are a perennial political issue because they are one of the biggest household expenses. Middle class tax cuts may be on the way, but do not expect this line item to fall much lower in the list.

8. Property taxes With home values declining and local governments strapped for cash, property taxes will become one of the most contentious local issues of the economic downturn.

9. Health insurance The average household devoted $1,465 out-of-pocket to health insurance in 2006, 27 percent more than in 2000 after adjusting for inflation. Most Americans will do just about anything to avoid losing their health insurance, which guarantees budget cutting elsewhere as the cost of health insurance rises.

10. Electricity The average household spent $1,266 on electricity in 2006, placing it 10th on the Great American Shopping List. Consumers are eager for ways to reduce this major expense. This desire will fuel green businesses that can help them save them money.

Every item at the top of The Great American Shopping List is a necessary expense. This is not good news for the hundreds of items further down the list--such as women's clothes in 16th place, television sets in 69th place, ice cream in 123rd place, whiskey in 285th place, or dating services in 359th place. With jobs disappearing, incomes falling, and consumers cutting back, necessities will command a growing share of household spending, leaving less for everything else.

College Enrollment Is Declining

An article in today's New York Times on the rising cost of college includes the following sentence: "Although college enrollment has continued to rise in recent years...it is not clear how long that can continue."

I have posted on this topic before, and I will say it again: college enrollment is already declining. Traditional college enrollment--meaning undergraduates attending four-year schools full-time--fell 4 percent between 2005 and 2006 (the latest data available).

This dramatic reversal of the long-term trend is being masked by an enrollment surge at community colleges. All this was underway BEFORE the current economic collapse. The next few years are going to be very tough indeed for high-priced private four-year colleges.

Women Aged 50 to 59 Weigh the Most

The average American woman weighs 164.7 pounds, according to the latest government measurements. Since she is only 5 feet 4 inches tall, the average woman has a body mass index of 28.4 (calculated as weight in kilograms divided by height in meters squared). This is decidedly overweight. Here is what the scales report, by age:

Women's weight by age (in pounds)
aged 20 to 29: 155.9
aged 30 to 39: 164.7
aged 40 to 49: 171.3
aged 50 to 59: 172.1
aged 60 to 69: 170.5
aged 70 to 79: 155.6
aged 80-plus: 142.2

Source: National Center for Health Statistics, Anthropometric Reference Data for Children and Adults, 2003-2006 For men's weight, see table 6.

Who Needs Social Security?

Percentage of people aged 65 or older who receive at least half their income from Social Security: 68.

Source: Congressional Research Service, Income and Poverty Among Older Americans in 2007

Eating Our Young

Percent change in median weekly earnings of full-time wage and salary workers, 2000 to 2007 (in 2007 dollars)

Men aged 20 to 24: -15.9
Men aged 25 to 34: -12.5
Men aged 35 to 44: -5.7
Men aged 45 to 54: +1.1
Men aged 55 to 64: +12.4
Men aged 65 or older: +17.9

Source: Bureau of Labor Statistics, Highlights of Women's Earnings

Physician Visits Decline

This is news: The number of times Americans went to the doctor fell in 2006, a surprising reversal of a long-term trend--especially considering the aging of the population. According to the National Center for Health Statistics, physician visits fell from 964 million in 2005 to 902 million in 2006 (the latest data available)--a 6 percent decline.

The physician visit rate, or the number of visits per 100 persons per year, fell by an even larger 7 percent between 2005 and 2006--from 331.0 to 306.6.

Because of the decline in physician visits, doctors wrote fewer prescriptions--1.9 billion in 2006, down from 2.0 billion in 2005. The percentage of visits in which the doctor provided a prescription did not change, at 71 percent.

Americans are tightening their belts, and doctors and pharmaceutical companies are feeling the pinch.

Source: National Ambulatory Medical Care Survey: 2006 Summary

Don't Blame Main Street

Americans are standing with their mouths agape as the stock market lurches. They lie awake at night worrying about what the future holds for their jobs, their families, and their communities. Who is to blame for this unfolding financial crisis? The finger of blame is pointing in many directions, but one place that does not deserve the blame is Main Street.

Just in time to provide some perspective, the Census Bureau has released the latest American Housing Survey, with data collected only a few months ago in 2007. You can't get much more current than that. And what do the 2007 numbers tell us? They tell us that the average American has been betrayed by financial institutions that should have known better.

No doubt you have heard many a pundit exclaim--in print and on TV--that Americans did this to themselves. We bought houses we could not afford, we used our homes as ATM machines, and we have fallen so deeply in debt that millions of us face foreclosure. Our bad behavior has brought the nation's financial institutions to their knees.

Just because newspapers and television say so does not make it true. In fact, the average American has been careful with his money. But the institutions in which we entrusted our dollars gambled them away.

The 2007 American Housing Survey provides the evidence.

First, let's take a look at mortgages. In 2007, the 51 million American homeowners with mortgages remained well above water. They owed a modest median of $100,904 on their homes--just 54 percent of their home's value. This statistic has not changed much in years--it was 55 percent 10 years ago in 1997. Granted, home values have dropped since 2007 and are likely to fall even more. Still, for most homeowners a substantial cushion remains. Only 3 percent of homeowners owe more than their house is worth. The great majority of homeowners with mortgages have 30-year fixed-rate loans carrying a median interest rate of 6.4 percent. Things on Main Street appear to be in order.

Second, let's take a look at home equity loans. The way it is reported, you would think everyone has a home equity loan. But among the nation's 76 million homeowners, only 14 million had a home equity loan or line of credit in 2007. Do the math, and that translates into just 19 percent of homeowners. Or put it this way: 81 percent of homeowners do not have a home equity loan. Even those who have tapped into their equity have not been using their home as an ATM machine. The median amount owed on home equity loans is a reasonable $25,934. Again, nothing exciting to report on Main Street.

Third, let's take a look at foreclosures. Most of the foreclosure numbers in the press come from Realtytrac, an online business that sells foreclosed properties--and in the process of doing so, collects foreclosure data. Realtytrac provides foreclosure statistics to much of the media, including the Wall Street Journal. Not surprisingly, its data show a big increase in foreclosures. In 2007, says Realtytrac, "more than 1 percent of all U.S. households were in some stage of foreclosure." That sounds like trouble on Main Street. But read the fine print in the methodology, and you will discover that the definition of Realtytrac's "households" is the Census Bureau's count of "housing units." There is a big difference between the two concepts. When a household faces foreclosure, a family loses its home. A household is defined as an occupied housing unit--meaning that someone lives there. In contrast, many housing units facing foreclosure are vacant, owned by flippers and developers who gambled on rising prices and lost.

In 2007, 14 percent of the nation's housing units were vacant--a record high. Overbuilt, overpriced, and financed by cheap money, these housing units are the crux of the crisis--a crisis caused by lax lending standards. It was not Main Street, but Wall Street that drank the Kool-aid. Main Street, however, is paying the price.

How Many Have Health Insurance Through Their Own Employer?

Surprisingly few Americans have health insurance through their own employer. In 2007, the figure was just 31 percent, according to the Census Bureau's Current Population Survey. The percentage covered through the plan of a parent or spouse's employer is almost as large, at 28 percent. Another 28 percent of Americans are covered by government health insurance--either Medicaid, Medicare, or military. Just 9 percent buy their own private plan.

By age, only 45-to-54-year-olds are likely to be covered by their own employer's health insurance plan. Fifty-one percent of people aged 45 to 54 have their own employment-based health insurance. In every other age group, less than half have insurance in their own name.

Males are more likely than females to have their own insurance--35 versus 27 percent. Among non-Hispanic whites, 35 percent have health insurance through their own employer. The figure is 31 percent among Asians and 27 percent among blacks. Hispanics are least likely to have health insurance through their own employer, at 20 percent. A larger 32 percent of Hispanics have no health insurance.

Since 2000, the percentage of Americans covered by their own employer's health insurance plan has fallen by 2 percentage points.

Percentage of people covered by their own employer's health insurance plan by age, 2007:

under age 18 0.3%
aged 18 to 24 19.0
aged 25 to 34 47.3
aged 35 to 44 48.9
aged 45 to 54 51.2
aged 55 to 64 49.9
aged 65 or older 25.7

Fewer Nuclear Families

Percentage of U.S. households headed by
married couples with children under age 18: 21

Percentage of U.S. households headed by
people who live alone: 27

Source: Census Bureau, 2007 American Community Survey

Bet You Didn't Know

Percentage of homeowners who do not have
a home equity loan or second mortgage: 82.

Source: Census Bureau, 2007 American Community Survey

Only 13 Percent Moved

The latest geographical mobility statistics from the Current Population Survey were released last week. The nation's mobility rate—the percentage of people aged 1 or older who moved—fell to an all-time low of 13 percent between 2006 and 2007.

The 38 million who moved was the smallest number since 1982-83.

Source: Census Bureau, Geographical Mobility

Household Income Gains—The Bad News

With the economy in a tailspin, the Census Bureau reported in a news conference this morning that median household income in 2007 had grown over the past year. What a surprise. The $50,233 median of 2007 was 1 percent greater than the $49,568 median of 2006, after adjusting for inflation. This is good news, right?

Wrong. A look at the factors that are driving median household income reveals more bad news than good. The only reason for the increase in the overall median is the rise in the incomes of householders aged 55 to 64. Between 2006 and 2007, this age group was the only one to experience a statistically significant increase in median household income (up 2.2 percent, after adjusting for inflation).

A longer view provides a better understanding of the dynamics at work. Take a look at household income trends by age since 2000:

Percent change in median household income, 2000 to 2007 (in 2007 dollars):

Total households -0.6
Under age 25 -5.2
Aged 25 to 34 -4.6
Aged 35 to 44 -4.0
Aged 45 to 54 -5.7
Aged 55 to 64 +6.3
Aged 65 or older +1.8

Note that householders aged 55 or older are the only ones who made any gains since 2000. Householders aged 55 to 64, in particular, experienced the biggest increase in income between 2000 and 2007. During those seven years, the number of households in the age group increased by an enormous 42 percent as it filled with baby boomers, boosting the share of households headed by 55-to-64-year-olds from 13 to 17 percent. The growing share of householders in the age group, coupled with their rising incomes, explains why overall median household income increased between 2006 and 2007 and fell by just 0.6 percent between 2000 and 2007.

What accounts for the rising incomes of 55-to-64-year-olds? In a word, work. Between 2000 and 2007, the labor force participation rate of men aged 55 to 64 climbed by 2.3 percentage points, to 69.6 percent, as boomer men postponed retirement. The labor force participation rate of women aged 55 to 64 climbed by an even larger 6.4 percentage points, to 58.3 percent, as the working women of the baby-boom generation filled the age group. Without the increasing labor force participation of 55-to-64-year-olds, their household incomes would not have grown, nor would the nation's median household income.

The rise in overall median household income between 2006 and 2007 may look like good news, but looks can be deceiving. In fact, most of the nation's households are losing ground.

Source: Census Bureau

Who Cares about Polar Bears?

Global warming could cause the extinction of the polar bear, but do Americans really care? Maybe not so much.

When asked how much it would bother them if global warming caused polar bears to become extinct, only 46 percent of the public says it would bother them "a great deal," according to the General Social Survey. An almost equally large 44 percent say the extinction of polar bears would bother them only "some" or "a little," and 10 percent say it would not bother them at all.

It takes something more personal to alarm the American public. When asked whether it would bother them a great deal if global warming caused sea levels to rise more than 20 feet, a much larger 71 percent of the public says yes. No one wants to give up their week at the beach.

When the General Social Survey probed the public's attitude toward five global warming problems, the rise in sea level was the issue that concerned Americans the most. Number two was the melting of the northern ice cap. The extinction of polar bears ranked a lowly fourth, behind the threat to the Inuit way of life. Worries about arctic seals came in last.

The General Social Survey also asked the public how much influence environmental scientists should have in formulating global warming policy. The results are disturbing: only 49 percent of Americans think environmental scientists should have a "great deal" of influence on global warming policy.

The Middle Class Just Blinked

The back-to-school season is losing its luster. The traditional college student population is shrinking, according to the Census Bureau--an unexpected development that may be a harbinger of worse times to come for the higher education industry. The number of full-time students attending four-year colleges fell by 337,000 between 2005 and 2006 (the latest data available). This 4 percent decline, to 7.7 million, is unprecedented and occurred although the number of high school graduates is at a record high. The decline also defied projections by the National Center for Education Statistics, which had forecast a rise in full-time enrollment at four-year schools to 8.2 million.

The drop in traditional college enrollment is a sign that the increasingly strapped middle class has reached the tipping point. According to Pew Research Center, 79 percent of Americans say it is harder than it was five years ago for the middle class to maintain its standard of living. That is putting it mildly. Staring down depreciating houses, gas guzzling cars, rising food prices, stagnant wages, unaffordable health insurance, tightening credit standards, and spiraling college costs, the middle class just blinked. It can no longer afford to keep up appearances--even for the sake of the kids. You know families are in crisis when parents are forced to cut back on their investment in their children. The downturn in full-time college enrollment marks the beginning of a new era for the middle class as it reevaluates the costs and benefits of the traditional college experience.

It's about time. For decades, the nation's 2,600 four-year colleges have brazenly raised prices much faster than the cost of living and still had students knocking down their doors. The college experience became yet another bubble market. The question was not whether the kids would go to college, but which college they would go to. College brands were as much of a status symbol as a Lexus in the driveway. In the competitive frenzy to get their children into the best school at any cost, parents ceased to consider the fundamentals. This explains why the cost of a college education could double between 1976 and 2006 while median family income grew by only 16 percent, after adjusting for inflation. It also explains why two-thirds of bachelor's degree recipients graduate with debt. The biggest increase in debt has occurred among students from the middle class, according to the National Center for Education Statistics.

With the economy teetering on recession, credit tightening, and housing values falling, the cost of the traditional college experience now far exceeds what the middle class can afford. The bubble has burst. To be sure, millions of young adults still yearn for the traditional college experience and are scrambling to pay the bills. Applications for federal student aid were up 17 percent through the first six months of this year, according to U.S. News & World Report. But many will be disappointed with the increasingly meager federal handouts. Four-year colleges have become so expensive that the maximum Pell grant covers only 32 percent of the average price of a public school--down from 52 percent two decades ago, according to the College Board.

The American middle class is rearranging its priorities. This may be bad news for overpriced four-year schools. But it is not necessarily bad news for financially savvy families, who have boosted the number of full-time students at two-year colleges to an all-time high.