Household Economy
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Household Economy
LAURA LEIN and AMANDA TILLOTSON
Abstract
Debates about poverty—the nature of poverty, the measurement of poverty, and
appropriate responses to poverty—are at the core of a great deal of research, policy debate, and political discussion. Since the 1950s the prevalence of poverty in the
United States has been measured against a national poverty income line that is recalculated every year. A great deal of poverty research concentrates on income levels:
how these are assessed, and their implications for family and individual well-being.
Furthermore, access to a number of poverty programs is based on the poverty line
or a related measure of income.
At the same time, there is increasing interest and debate concerning the construction
and meaning of household expenditures—in particular, how poverty households
undertake spending. While the discussion of budgets is just one part of a much larger
literature on household economy, the study of household budgets and expenditures,
particularly for low-income families, illuminates how poverty incomes affect families, and how families in a consumer society cope with the implications of their low
income. Key questions include the following:
• Can households meet basic expenditures on poverty incomes? Are US households in
poverty able to support their basic needs, and, if not, what is that gap between income
and expenditure?
• Do poverty incomes subject households to material hardship, and, if so, what are the
experiences of hardship? To what extent overall does material hardship mark family life
in the United States?
• Along what dimensions do the expenditures of low-income families vary? How do
regional differences, different household needs, and other factors put pressures on
impoverished US families?
INTRODUCTION
Debates over the nature and appropriate responses to poverty are at the
center of political and policy debates in this post-welfare-reform and
post-recession era. These discussions and social responses to poverty are
closely related to how we measure poverty, what we know or think we know
about impoverished people, and how much the presence of poverty in our
Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.
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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
society is a social responsibility. The poverty line, the most common measure
of poverty in the United States, presents many problems. It takes little
account of regional differences, variations in family need, and rural–urban
differences.
On the other hand, while there are good reasons to avoid using expenditure data to determine poverty level, and, in particular eligibility for human
services, how families in poverty spend their limited resources can illuminate the problems they face and the coping strategies they deploy. Through
an understanding of household expenditures we can learn what low-income
families can do for themselves and where are they most in need of assistance
or larger social change.
For example, the amount a household spends on any good or service may
reflect multiple problems including families’ difficulties in purchasing what
they need when the needed goods are not available nearby, as in areas of
scarce food availability (Walker, Keane, & Burke, 2010), scarce medical care,
or scarce low-cost housing (Lein & Shexnayder, 2007). Budget data may
reflect time constraints on families. Low-income households, often trying
to meet the demands of multiple jobs at a distance from home, are short
on both time and transportation resources (Burton, Lein, & Kolak, 2005;
Vickery, 1977) that would allow them to shop more effectively, seek help
from multiple agencies (Edin & Lein, 1998), or reach a larger pool of jobs.
Household budgets and expenditure patterns illuminate the ways in which
expenditure and income interact. While they are neither, taken by themselves, an adequate measure of poverty, together they illuminate the reasons
low-income households cannot make ends meet and the consequences.
A methodological note: The collection of budget and expenditure data
presents a different set of problems than the collection of income data.
Budget and expenditure data are more scattered among data sources, can
vary considerably among households, and vary substantially among regions
of the country. Therefore, budget studies, as we see subsequently, tend
to rely on mixed methods approaches to research, combining small-scale
qualitative work with more quantitative analyses. Such studies have also
been useful in the illumination of the diverse streams of income—some of it
unreported—on which low-income households draw.
FOUNDATIONAL RESEARCH
BUDGET RESEARCH AND “NO-WIN” POVERTY: CAN LOW-INCOME FAMILIES MEET BASIC
EXPENSES?
Low-income households in the United States draw on income from both
welfare programs and low-wage jobs. However, mixed methods approaches
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to understanding household budgets indicate that, in large urban areas,
low-income families can neither sustain their households solely on welfare
income nor on the income from a single low-wage job. Edin and Lein (1997)
interviewed over 400 families in four cities in the United States using a
semistructured set of questions over multiple interviews to understand
the details of low-income families’ income and expenditures. They discovered that there remain substantial gaps between welfare-reliant families’
expenditures and their welfare-based income. Low-income wage-reliant
families faced an even larger gap, largely caused by their increased
expenditures due to the demands of paid employment (e.g., child care,
transportation, workplace clothing). Allegretto (2006) also reported that the
earnings of low-income employment-reliant families often, depending on
the community, fail to meet the demands of expenditure.
Households fill this gap between income and expenditure in complex ways
that have been the subject of a growing body of research. They may draw on a
range of social service agencies to fill the gaps between needed expenditures
and income. These include food and nutrition programs, programs that pay a
portion of utilities, programs that provide specialized medical care, clothing
programs, and a host of others (Edin & Lein, 1998). They may work multiple jobs, some of them informal. They experience, as we see below, material
hardships.
While much of the research in this area contrasts the budgets and experiences of welfare-reliant and wage-reliant women, most studies of these
groups (Burton et al., 2005; Edin & Lein, 1997) find an overlap among
them. Households transition between welfare and paid work, occasionally
combining them. Both their income and expenditure strategies vary over
time. Furthermore, recent studies explore the experiences of “disconnected”
households with neither paid employment nor welfare (Seefeldt & Castelli,
2009; Shaefer and Edin, 2012; Turner, Danziger, & Seefeldt, 2006). These
“disconnected” households overlap with the growing group of American
households subsisting on less than $2/day/person. This group has doubled
in size since 1996 (Shaefer and Edin, 2012), and we know relatively little
about this growing group of households in the United States marked by
disconnection and/or extreme poverty.
A decades-long literature explores—primarily through qualitative
work—the ways in which families move outside the legal and regulatory
system to gain added resources (Bourgois, 1989a, 1989b; Simon & Witte,
1982; Venkatesh, 2006). These strategies range from unreported work (Edin,
1993) to illegal activities such as drug sales and dealing in stolen goods.
Such sources of income usually go unreported—they also entail costs that
may not be clearly understood or related to an interviewer.
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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
Furthermore, while informal household support networks can help vulnerable families meet some challenges (as indicated in ethnographic studies
such as Stack’s All Our Kin, 1974), such strategies leave families vulnerable.
Often household networks cannot provide sufficient resources to truly stabilize a household. The draws on households to support their social networks
can create demands that outstrip the networks’ capacity (Edin & Lein, 1997;
Stack, 1974).
The lack of access to key goods and services makes it more difficult for
the adults in households to sustain work. As mentioned earlier, Edin and
Lein (1997, 1998) identified key areas of extra expenses that support paid
employment—including transportation, workplace clothing, child care. Furthermore, because most public supports, such as public housing and publicly
supported medical care diminish as income increases, even low-income work
can lead to increased expenses in these areas.
Inversely, shortages in food, housing, medical care, transportation, child
care all create barriers to paid employment (Lein & Shexnayder, 2005). In a
mixed methods approach that included work with administrative data, a survey of welfare leavers, and face-to-face interviews with leavers in six Texas
communities, researchers found that lacks in any of these areas not only correlated with employment, but that the presence of multiple barriers was, in
itself, a barrier.
Thus, low-income families deal with expenditures that simultaneously exceed their regular income and are necessary for their sustained
employment. Neither welfare nor low-wage work is sufficient to met their
budgetary demands. Furthermore, their support networks cannot ordinarily
sustain the long-term expenditures necessary for stabilizing a household in
employment.
CUTTING-EDGE RESEARCH
MATERIAL HARDSHIP AND POVERTY: DO AMERICAN HOUSEHOLDS EXPERIENCE MATERIAL
HARDSHIP?
While impoverished households often face difficulties in meeting regular,
ongoing expenses, they are able, in our consumer economy, to purchase
some goods that have been considered luxuries in the recent past. Some
researchers find that poverty is overcounted in the United States, given
the consumer goods to which some impoverished households have access
(Rector & Sheffield, 2011). This assessment of poverty assumes that electronic
goods, for instance, should be considered evidence of an above-poverty
lifestyle. However, detailed studies of household budgets illustrate the
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deeper financial problems faced by impoverished households and the
barriers they face to maintaining economic stability.
Families facing the income/expenditure conundrum of poverty in
the United States often experience some level of material hardship. A
budget-based approach to poverty illuminates different aspects of the
low-income experience, and also raises the question of responsibility for the
experience of poverty—are families in poverty responsible for their inability
to budget and spend appropriately, or are they facing a nearly impossible
set of constraints?
Renwick and Bergmann (1993) examine a budget-based approach to
poverty that deals with regional differences, revealing the magnitude of
those differences, and estimates a higher level of poverty for single working
parents. Moving beyond the notion of a uniform national poverty measure,
they develop a more nuanced Basic Needs Budget that takes account of the
transportation and child care needs required to support work, and considers,
as well, regional differences in housing costs exploring regional vulnerabilities to material hardships. Rector, Johnson, and Youssef (1999) also suggest
that assessments of poverty ought to incorporate considerations of material
hardship such as food insufficiency/insecurity, inadequate housing, and
lack of access to needed medical care. Overall, families, particularly in urban
areas that have been the focus of much of the research on material hardship,
do not have the financial resources to spend their way out of hardship. They
experience food insecurity, housing problems, lack of medical care, and a
range of other shortages. In many cases, these shortages compound each
other in the same household.
HOUSEHOLDS AND FOOD—IS HUNGER PREVALENT IN THE UNITED STATES?
For some decades, qualitative studies have identified food insecurity as a
key factor in the experience of poverty in the United States (Gunderson,
Kreider, & Pepper, 2011). The study of food needs in poor families involves
different definitions of the problem under consideration: food insufficiency
(too little food intake) and food insecurity (the efforts and anxiety related to
times of too little food). Both have ramifications for poor families (Scott &
Wehler, 1998).
Recent mixed methods and qualitative studies indicate that families in
poverty experience food shortages of varying severity. In 1999, drawing
on Michigan data, Corcoran, Heflin, and Seifert (1999) found that 25% of
“welfare leavers”—those families leaving TANF in the post-welfare-reform
era—reported that at times they had insufficient food. Thirty-six percent
of this group experienced one or more of a range of problems, including
food shortages, utility shutoffs, eviction, or homelessness. These figures are
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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
similar to those of a Texas study of welfare leavers (Lein & Shexnayder,
2007).
More specifically, Coleman-Jensen, Nord, Andrews, and Carlson (2010)
reported that 14.5% of households in recession-era United States experienced
food insecurity during the year 2010. Furthermore, households experiencing
food insecurity spent 27% more on food than similar households not experiencing food insecurity. Mammen, Bauer and Richards (2009) discovered that
families in states more susceptible to food insecurity engaged in strategies
the authors describe as “risky” that included eating less or consuming
foods of less nutritional value. Work by McLaughlin, Tarasuk, and Krieger
(2003) demonstrated that cooking and food preparation strategies used by
low-income women facing food insecurity were similar to strategies of more
food-secure women. Thus, habits of food preparation and meal planning
did not appear to protect families from food shortages. Ahluwalia, Dodds,
and Baligh (1998) found that both individual- and network-level approaches
helped families in their North Carolina study cope with food insecurity.
HOUSING COSTS—HOMELESSNESS
Castner and Mabli (2010), in their comparison of families using SNAP (Food
Stamps) and families eligible for the program but not using it, found that
while food accounts for under 25% of household budgets, housing counts
for 40% or more of the budgets of both groups. Under such pressures,
low-income families continue to report evictions and periods of homelessness. Among a sample of women who had received welfare in 1997, 20% had
experienced homelessness at least once in the following six years (Phinney,
Danziger, Pollack, & Seefeldt, 2006).
High housing prices in metropolitan areas also require longer commutes
for low-wage workers. Indeed, the cost burdens of commuting are higher
for the working poor, and highly related to where they live (Tomer, Kneebone, Pentes, & Berube, 2011). In many large metropolitan areas, the cost of
commuting for poor families exceeds the national median. Costs of food and
other goods are also related to place of residence.
INDEBTEDNESS: HEALTH CARE COSTS AND OTHER EXPENDITURES
Health care costs figure in household budgets in ways different from most
other costs. Uninsured families often accrue substantial debt from any
incident of uninsured health treatment, and most impoverished families
face periods when one or another member of the household is without
health insurance (Angel, Lein, & Henrici, 2006). Low-income households
often struggle with the costs of health care and with the management of that
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debt (Seifert & Rukavina, 2006). We are now moving into a new era in health
care, and we have little understanding of the affect the Affordable Care Act
will have on impoverished households, in terms of both expenditures and
access to health care.
MONEY MANAGEMENT IN POOR FAMILIES
There is also a growing literature focused on the shortage of financial institutions that serve low-income families. Blank and Barr (2011) and Barr (2012)
report on the scarcity of institutional resources to assist low-income families
to manage their limited resources. This disparity in access costs low-income
families time, money, and security, as they face difficulties managing their
money, and often pay substantial fees for simple financial transactions.
VARIATION AMONG LOW-INCOME HOUSEHOLDS’ EXPENDITURES
While the trends discussed so far occur among households in almost all parts
of the United States, there are also considerable regional and community
differences in low-income households’ expenditures and budgetary needs
(Allegretto, 2006). Expenditures are related to location—urban versus rural,
southern versus northern—and to the supports available, both formal and
informal. A growing literature explores the differences in expenditure patterns based on locale and other factors. Gringeri (2001) explores the degree
to which poor families cope with poverty by combining the low wages of
multiple jobs with a range of place-based strategies. These strategies depend
on the nature of the labor market (Edin, 1993), the degree to which families
have access to the services of a range of organizations (Edin & Lein, 1998),
and the strength of family support networks.
KEY ISSUES FOR FUTURE RESEARCH
In this post-welfare reform and post-recession economy, it is clear that
households in poverty are drawing on multiple complex strategies to
make ends meet. Structural changes in the social safety net and in the
low-wage job market complicate their situation, particularly in light of
lifetime limits on cash assistance and the difficulty in finding full-time
regular and well-paid employment. Reduced support in some areas for
low-income housing and subsidized child care pose additional challenges
in the context of a low-wage job market characterized by frequent layoffs
and schedule changes and by stagnant pay. Going forward, research on
the interactive effects of these challenges can help to clarify their effects on
family budgets and family well-being. The increased devolution of social
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policy-making authority to states increases the importance of place on the
budgets of low-income families, suggesting another direction for future
research. Finally, the rapidly increasing number of disconnected families
living in extreme poverty suggests a need for mixed methods research that
focuses specifically on their budgetary challenges. We need to continue
to track the ways in which policies support and challenge impoverished
households; the experiences of American families with material hardships;
and the strategies and approaches that both alleviate short-term hardship
and stabilize families for the long term.
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Allegretto, S. (2006). Basic family budgets: Working family incomes often fail to meet
expenditures across the United States. International Journal of Health Services, 36,
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Angel, R., Lein, L., & Henrici, J. (2006). Poor families in America’s health care crisis. New
York, NY: Cambridge University Press.
Barr, M. (2012). No slack: the financial lives of low-income Americans. Washington, DC:
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in the lives of the poor. Housing Policy Debate, 9, 541–574.
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Gunderson, C., Kreider, B., & Pepper, J. (2011). The economics of food insecurity in
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Mammen, S., Bauer, J. W., & Richards, L. (2009). Understanding persistent food
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McLaughlin, C., Tarasuk, V., & Kreiger, N. (2003). An examination of food preparation activities among low-income, food-insecure women. Journal of the American
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LAURA LEIN SHORT BIOGRAPHY
Laura Lein, PhD, was appointed Dean and Katherine Reebel Collegiate
Professor at the School of Social Work at the University of Michigan in
2009, as well as Professor in the Department of Anthropology. She came to
Michigan from the University of Texas at Austin School of Social Work where
she taught for 24 years. She has taught in the areas of social policy, social
work research, and community organization and participatory research.
Her research has concentrated on the interface between families in poverty
and the institutions that serve them. Her research on families in poverty
has extended over three decades. She recently coauthored (with Ron Angel,
Holy Bell, and Julie Beausoleil) Community Lost (Cambridge University
Press, 2012) about Hurricane Katrina survivors, and also has written (with
Ronald Angel and Jane Henrici) Poor Families in America’s Health Care Crisis
(Cambridge University Press, 2006) and Life After Welfare (with Deanna
Schexnadyer, University of Texas Press, 2007). She is the author, with
Kathryn Edin, of Making Ends Meet: How Single Mothers Survive Welfare and
Low-Wage Work (New York: Russell Sage Foundation, 1997).
University of Michigan School of Social Work: ssw.umich.edu
AMANDA TILLOTSON SHORT BIOGRAPHY
Amanda Tillotson is a PhD Candidate in Political Science and Social Work at
the University of Michigan, where she obtained her MSW. She also has an MA
in Political Science from UCLA. Her dissertation examines the way in which
frames around race and class have influenced the development of national
policies to promote Black home ownership. Her research interests include
housing policy and homelessness, the impact of frames around race and class
on the structure of social and economic policy, and organizational theory. She
has published articles in Comparative Politics and in Agora: The Urban Planning
Journal. She has worked as a paralegal advocate in a domestic violence shelter
and as a housing advocate for homeless individuals and families in rural
northwestern Pennsylvania.
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