Households with Children Fall by Nearly 1 Million

The consequences of the ongoing baby bust are readily apparent in the recently released figures from the 2015 Current Population Survey. The number of households with children under age 18 fell by nearly 1 million (965,000) between 2014 and 2015—a substantial 2.4 percent decline.

Numerical (and percent change) in households with children, 2014-15
Total with children: -965,000 (-2.4%)
Married couples: -291,000 (-1.1%)
Female-headed families: -400,000 (-3.8%)
Male-headed families: -274,000 (-8.3%)

Source: Census Bureau, Income and Poverty in the United States: 2014

What Poverty Does to Children

The latest numbers from the Current Population Survey show that 21 percent of children under age 18 were poor in 2014. Even worse, nearly twice as many—39 percent—live in poverty for a period of time before they turn 18. This matters because children who have ever been poor are less likely to succeed than those who have never been poor, according to the Urban Institute.

In a study of Americans born between 1968 and 1989, those who had ever experienced poverty before the age of 18 were less likely than those who had never experienced poverty to graduate from high school, enroll in college, and earn a college degree. While 70 percent of the never-poor were consistently employed between the ages of 25 and 30, the figure was only 57 percent among the ever-poor. Twenty-four percent of the ever-poor had been arrested by age 20 compared with 16 percent of the never-poor.

Source: Urban Institute, Child Poverty and Adult Success

Households by Race and Hispanic Origin in 2015

Overall household growth was sluggish between 2014 and 2015, but that's because the number of non-Hispanic White households fell by more than 200,000—an 0.2 percent decline. In contrast, the number of households headed by Blacks (alone or in combination) grew 2.8 percent, as did the number headed by Asians (alone or in combination). Hispanic households increased just 0.9 percent. Here is the number (and percent distribution) of households in 2015 by race and Hispanic origin...

Households in 2015 by race and Hispanic origin
Total: 124,587,000 (100.0%)
Asian: 6,333,000 (5.1%)
Black: 17,198,000 (13.8%)
Hispanic: 16,239,000 (13.0%)
Non-Hispanic White: 84,228,000 (67.6%)

Note: Numbers do not add to total because Asians and Blacks are those who identify themselves as being of the race alone or in combination. Hispanics may be of any race.
Source: Census Bureau, Income and Poverty in the United States: 2014

Sluggish Household Growth 2014-15

The number of households in the United States grew by just 0.53 percent between 2014 and 2015—from 123.9 million to 124.6 million, according to the Census Bureau's Current Population Survey. This is the fifth slowest rate of growth in more than five decades of keeping score. One factor behind the sluggish growth was the 4.2 percent decline in the number of households headed by the youngest adults. Here is the numerical (and percent) change in households by age of householder...

Change in households, 2014 to 2015 (numbers in 000s)
Total households:  656 ( 0.5%)
Under age 25:      -282 (-4.2%)
Aged 25 to 34:        87 ( 0.4%)
Aged 35 to 44:       -43 (-0.2%)
Aged 45 to 54:       -98 (-0.4%)
Aged 55 to 64:      114 ( 0.5%)
Aged 65-plus:       877 ( 3.0%)

The decline in households headed by people aged 35 to 54 is due to the small Generation X moving into those age groups. The increase in households headed by people aged 55 or older is due to the large Baby-Boom generation in those age groups. 

Source: Census Bureau, Income and Poverty in the United States: 2014

Median Household Income in 2014

Median household income in 2014 was unchanged from 2013, according to the latest release of Current Population Survey income data. This seemingly ho-hum finding is in fact interesting news, revealing how stuck we are in the economic backwash of the Great Recession. The $53,657 median household income of 2014 was not statistically different from the $54,462 median of 2013, the Census Bureau reports. This is the third consecutive year of no statistically significant change in median household income following two years of decline. 

Because the Census Bureau changed the way it asks about income in the Current Population Survey, the 2014 numbers are not comparable with figures prior to 2013 (when respondents were split into two samples for comparative purposes, with one sample asked the new questions and the other the traditional questions). A comparison of 2013 data from the two samples reveals how much better the new questions capture IRA and 401(k) withdrawals, boosting the 2013 estimate of median household income by 3.2 percent.  

One factor that may be suppressing median household income is the aging of the population as millions of boomers retire and live on reduced incomes. But the Census Bureau reports no statistically significant change in median household income for any age group between 2013 and 2014. Here are the 2014 numbers...

Median household income by age in 2014
Under age 25: $34,605
Aged 25 to 34: $54,243
Aged 35 to 44: $66,693
Aged 45 to 54: $70,832
Aged 55 to 64: $60,580
Aged 65-plus: $36,895

Source: Census Bureau, Income and Poverty in the United States: 2014

Inheritance and Retirement Risk

How much do inheritances contribute to retirement readiness? That's the question asked by the Center for Retirement Research (CRR). The answer is not much.

Researchers at the Center for Retirement Research analyzed the impact of inheritances on the National Retirement Risk Index (NRRI) using inheritance data from the Federal Reserve's 2013 Survey of Consumer Finances. The NRRI is a measure of the percentage of households at risk of missing their target retirement income replacement rate. In 2013, the NRRI was 51.6—meaning 51.6 percent of working-age households are at risk at age 65 of being unable to maintain pre-retirement spending after retirement. If inheritances were eliminated, the percentage at risk rises by only 0.8 percentage points—to 52.4 percent.

Why do inheritances have such a small impact on retirement readiness? One reason is that few households receive an inheritance—only 19 percent had ever received an inheritance, according to the 2013 Survey of Consumer Finances. Another reason is that most inheritances are modest. Among householders aged 30 to 59 who had received an inheritance, the median value was just $87,500 (including the value of inherited houses). Finally, inheritances don't have much of an impact because those who receive them are already better prepared for retirement (risk index of 40.4) than those who do not (risk index of 54.2). Among households receiving an inheritance, eliminating the windfall boosts their risk of running out of money from 40.4 to 44.8 percent—still well below average.

Source: Center for Retirement Research at Boston College, How Do Inheritances Affect the National Retirement Risk Index?

Household Income Stable in July 2015

The Census Bureau will release 2014 household income statistics on September 16. Thanks to the efforts of Sentier Research, however, we already know how the median household is doing through July 2015. And the answer is: the median household is doing better than in the aftermath of the Great Recession, but still has some catching up to do.

According to Sentier's monthly tracking of the Current Population Survey, median household income in July 2015 was $55,218. This figure was not statistically different from the June median, after adjusting for inflation. The July 2015 median was 2.0 percent higher than the July 2014 median, however, and 6.5 percent above the $51,872 median of August 2011—the low point in Sentier's household income series.

But median household income in July 2015 was still 0.8 percent below the median of June 2009, the end of the Great Recession. It was 2.6 percent below the median of December 2007, the start of the Great Recession. It was 3.8 percent below the median of January 2000. The Household Income Index for July 2015 was 96.2 (January 2000 = 100.0).

Source: Sentier Research, Household Income Trends: July 2015

ACA = Fewer Abortions

Expect 25,000 fewer abortions per year because of the contraceptive mandate in the Affordable Care Act, according to a study by Karen Mulligan in the journal Demography. 

Although 30 states had already mandated contraceptive coverage in health insurance plans, 20 states were straggling until the ACA kicked in. By extending access to contraception without co-pay to women in all 50 states, according to Mulligan's analysis, birth control use increases by 2.1 percent and the abortion rate declines by 3 percent. The result is fewer abortions.

Source: Demography, Contraceptive Use, Abortions, and Births: The Effect of Insurance Mandates ($39.95)

Spending by Race and Hispanic Origin in 2014

The average household spent $53,495 in 2014—3 percent more than in 2013, after adjusting for inflation. Despite the increase, average household spending was still 5.9 percent below the $56,833 of 2006, the year household spending peaked. Every race and Hispanic origin group spent more in 2014 than in 2013, but less than in 2006. Here is average household spending in 2014 by race and Hispanic origin of householder and the percent change in spending between 2013-14 and 2006-14 (in 2014 dollars)...  

Asian: $62,784
2013-14: +4.3%
2006-14: -7.1% 

Black: $38,543
2013-14: +2.3%
2006-14: -5.1% 

Hispanic: $45,561
2013-14: +6.9%
2006-14: -9.9%

Non-Hispanic White: $57,403
2013-14: +2.8%
2006-14: -4.8%     

Source: Bureau of Labor Statistics, Consumer Expenditure Survey

Spending by Age in 2014

The average household spent $53,495 in 2014—3 percent more than in 2013, after adjusting for inflation. Despite the increase, spending was still 5.9 percent below the $56,833 of 2006, the year household spending peaked. Most age groups spent more in 2014 than in 2013, but only households headed by people aged 65 or older spent more in 2014 than their counterparts did in 2006. Here is average household spending by age of householder in 2014 and the percent change in spending between 2013-14 and 2006-14 (in 2014 dollars)...  

Under age 25: $32,179
2013-14: +4.3%
2006-14: -2.8% 

Aged 25 to 34: $49,547
2013-14: +1.4%
2006-14: -11.3% 

Aged 35 to 44: $62,512
2013-14: +4.6%
2006-14: -7.4%

Aged 45 to 54: $65,651
2013-14: +6.7%
2006-14: -2.9%

Aged 55 to 64: $56,267
2013-14: -0.9%
2006-14: -5.7%

Aged 65 or older: $43,635
2013-14: +3.7%
2006-14: +6.0%    

Source: Bureau of Labor Statistics, Consumer Expenditure Survey

What's Holding Down Wages? Maybe The Lower Rate of Job-to-Job Transitions

Although the unemployment rate has fallen by nearly 5 percentage points since the Great Recession, wages have not grown much. One reason for sluggish wage growth, according to an analysis appearing in the Federal Reserve Bank of New York's Liberty Street Economics blog, is the low rate of job-to-job transitions—workers who leave one job and immediately take another without experiencing a spell of nonemployment. Job-to-job transition workers typically are moving up the job ladder, finding new jobs with higher pay. Unfortunately, the job-to-job transition rate has yet to recover from the Great Recession.

Using data from the Survey of Consumer Expectations, economists from the New York Fed analyzed changes in the wages of job-to-job transition workers and workers who experienced a period of nonemployment before their current job...

Job-to-job transition workers
Current wage: $27.28
Starting wage at current job: $20.09
Ending wage at previous job: $18.79

Period of nonemployment workers
Current wage: $18.31
Starting wage at current job: $14.61
Ending wage at previous job: $17.92

Although both types of workers had similar wages at the end of their previous job, the job-to-job transition workers had a higher starting wage at their current job and a much higher current wage. Because of the lower rate of job-to-job transitions, conclude the researchers, fewer workers are moving up the job ladder. That may be suppressing wage growth.

Source: Federal Reserve Bank of New York, Liberty Street Economics, Searching for Higher Wages

Lifetime Earnings: College vs. High School Grads

A new measure of lifetime earnings by educational attainment finds the earnings gap between college and high school graduates to be smaller than previous studies have estimated—but still worth the expense of going to college. 

In their lifetime, men with a bachelor's degree earn $840,000 more than men with no more than a high school diploma, according to a study in Demography. Their female counterparts earn $587,000 more. These estimates are more realistic than those produced by previous studies, say the authors, because they're based on real earnings over a lifetime: the researchers matched a panel of respondents in the longitudinal Survey of Income and Program Participation to their Social Security earnings records, then compared earnings by educational attainment. Most previous studies of lifetime earnings have been done synthetically, using a snapshot of earnings by age and education from cross-sectional surveys. 

Although the financial benefit of a college degree is not the lofty 84 percent found by previous studies, but only 43 percent for men and 51 percent for women, the authors note that a college education is still worth the expense. The $52,000 tuition price tag for a four-year degree (the average in 2010, according to the National Center for Education Statistics) is only a fraction of the lifetime earnings boost college graduates can expect. 

Source: Demography, Education and Lifetime Earnings in the United States ($39.95)

Generational Labels

Percentage of each generation that identifies with the generation's name...

Millennials: 40%
Generation X: 58%
Baby Boomers: 79%

Source: Pew Research Center, Most Millennials Resist the "Millennial" Label

Average Household Spending Rises in 2014

The average household spent $53,495 in 2014—3 percent more than in 2013, after adjusting for inflation. This is good news and it may signal an energized economy. Household spending reached an all-time high of $56,833 in 2006 (in 2014 dollars). In the years since, average household spending has fallen fairly steadily, reaching a low of $51,929 in 2013. 

Necessities accounted for some but not all of the spending boost between 2013 and 2014. The average household spent 7.5 percent more on rent, after adjusting for inflation, but it also spent 9.6 percent more on apparel—a category that had been in long-term decline. Spending on entertainment climbed 8.2 percent, and spending on food away from home was up 4.5 percent. Spending on gasoline was down 7 percent. Health insurance spending in 2014 is not comparable to earlier years because of changes in the way the Consumer Expenditure Survey collects the data. 

Average household spending (in 2014 dollars)
2014: $53,495
2013: $51,929
2012: $53,042
2011: $52,312
2010: $52,230 
2006: $56,833
2000: $52,303

Source: Bureau of Labor Statistics, Consumer Expenditure Survey

Heart Age vs. Chronological Age

Chances are, your heart is older than you are. That's what the CDC discovered when it estimated the "heart age" of a representative sample of Americans aged 30 to 74. Using the Framingham Heart Study's cardiovascular risk factor system, the CDC estimated the sample's vascular age and compared it to their chronological age. In every demographic segment, heart age exceeded chronological age, sometimes by a wide margin.

Take a look at the findings for men. The average chronological age of men in the sample was 47.8. The average heart age of men in the sample was 55.6. Nearly half (49 percent) of men had a heart age that exceeded their chronological age by at least five years. Here are the results by age group...

Men aged 30 to 39
Average chronological age 34.3
Average heart age: 38.1
Heart age exceeds chronological age by 5-plus years: 33%

Men aged 40 to 49
Average chronological age 44.4
Average heart age: 50.3
Heart age exceeds chronological age by 5-plus years: 41%

Men aged 50 to 59
Average chronological age 54.1
Average heart age: 64.5
Heart age exceeds chronological age by 5-plus years: 58%

Men aged 60 to 74
Average chronological age 65.7
Average heart age: 79.5
Heart age exceeds chronological age by 5-plus years: 73%

Source: CDC, Vital Signs: Predicted Heart Age and Racial Disparities in Heart Age Among U.S. Adults at the State Level

Children Per Household, 1964 to 2014

Remember when neighborhoods were full of children? This is why they aren't anymore: the average number of children (people under age 18) per household peaked in 1964 (also the last year of the baby boom) at 1.24. Since then, the average has fallen in most years. It slipped below 1.0 for the first time in 1974 and reached an all-time low of 0.60 in 2014—less than half of the 1964 level...

Average number of people under age 18 per household
2014: 0.60
2010: 0.64
2000: 0.69
1990: 0.69
1980: 0.79
1970: 1.09
1964: 1.24

Source: Census Bureau, Historical Time Series, Households

The New Income Estimates

The Census Bureau thinks long and hard before tinkering with the all-important Current Population Survey Annual Social and Economic Supplement (CPS ASEC), from which emanates much of what we know about the economic status of the American people. But sometimes change is necessary, and this is one of those times. The Census Bureau has been working on a redesign of the ASEC income questions for 14 years, attempting to improve the accuracy of the nation's official income statistics. When the bureau releases the 2015 CPS ASEC results on September 16 (with income data for 2014), the redesign will be fully implemented. Here's what you need to know...

• A redesign of the CPS ASEC income questions has been sorely needed, in part because the original questions failed to capture most withdrawals from IRAs and 401(k)s. The redesign counts these withdrawals as income. 
• Analyzing income trends will be problematic—at least in the short run. Data from the redesigned questions are not comparable with data from the original questions. To provide a bridge, the Census Bureau has released 2013 income data from a 2014 ASEC sample that was asked the new questions. At the above link, there are two sets of 2013 tables—the original and the redesign, allowing researchers to compare the original numbers with the redesign and also to determine the 2013-to-2014 trend when the 2014 data are released on September 16. 
• The redesigned income questions boosted overall aggregate income in 2013 by 4.2 percent, according to a comparison of data from the original and redesigned questions. While earned income did not change, unearned income was 12.4 percent higher in the redesign. 
• Median household income in 2013 was 3.2 percent greater with the redesigned questions. While there was no statistically significant change in median household income among younger adults, the median income of households headed by people aged 55 or older was about 5 percent higher primarily because of retirement account withdrawals. 
• Many more Americans reported receiving income from an IRA, Keogh, or 401(k)—the figure rising from 1 million in the original to 5 million in the redesign.

It will take a while to digest these changes. The Census Bureau plans to provide a research file with adjusted income data, allowing for historical comparisons. Until then, the starting point for income trend analysis will be 2013.

Source: Census Bureau, 2013 Income, Poverty, and Health Insurance Products Based on Redesigned Current Population Survey Annual Social and Economic Supplement Questions

Walking/Bicycling as Transportation

On an average day, only 10 percent of Americans walk or bicycle as transportation (rather than exercise)—meaning they walk or bicycle to get from point A to point B. Although urban populations have been growing in recent years, the percentage who walk or bicycle as transportation has fallen slightly over the past decade—from 11.8 percent in 2003 to 10.3 percent in 2012, according to the American Time Use Survey. Younger adults are most likely to walk or bicycle as transportation on an average day. Here are the 2012 stats by age...

Percent who walked or bicycled as transportation in past 24 hours
Aged 16 to 39: 14.0%
Aged 40 to 59: 8.4%
Aged 60-plus: 6.9%

Source: CDC, Active Transportation Surveillance—United States, 1999-2012

How Spending Has Changed Since World War II

The average American household spends differently than its counterpart did in the 1940s, according to an analysis in the Monthly Labor Review. Here are the most striking changes in the share of the household budget devoted to...

Food and alcohol (-19.7 percentage points)
2013: 16.2%
1944: 35.9%

Housing (+14.1 percentage points)
2013: 40.2%
1944: 26.1%

Clothing (-12.7 percentage points)
2013: 3.3%
1944: 16.0%

Transportation (+14.1 percentage points)
2013: 20.4%
1944: 6.3%

Medical care (+2.7 percentage points)
2013: 8.2%
1944: 5.5%

The share of household spending devoted to recreation and entertainment climbed from 2.8 to 5.6 percent between 1944 and 2013, and the share devoted to education more than tripled—growing from just 0.6 to 2.1 percent. Conversely, the share of household spending devoted to tobacco fell from 2.0 to 0.7 percent, and the share devoted to reading plummeted from 1.1 to just 0.2 percent. Note: For comparative purposes, spending data are adjusted to exclude gift purchases, cash contributions, personal insurance, and pensions.

Source: Bureau of Labor Statistics, Monthly Labor Review, Consumer Spending in World War II: the Forgotten Consumer Expenditure Surveys

Age Distribution of CEOs

More than 1.6 million American workers are CEOs, according to the Bureau of Labor Statistics. Not surprisingly, CEOs rank among the oldest workers. Their median age is 52.3, well above the median age of 42.3 for all workers. Here is the age distribution of the nation's CEOs...

Under age 25:  0.7%
Aged 25 to 34: 8.4%
Aged 35 to 44: 18.0%
Aged 45 to 54: 32.3%
Aged 55 to 64: 30.4%
Aged 65-plus: 10.2%

Source: Bureau of Labor Statistics, Current Population Survey