How We Live: An Economic Perspective on Americans from Birth to Death
Ending Unemployment: Alternatives for Public Policy
Money Income of Households, Families, and Persons in the United States: 1981 137 (March 1983)
Employment and Earnings (January 1983)
Not so many years ago, “full employment” was regarded as a realistic goal. If certain policies were pursued, all who so desired could have steady work at decent pay. Needless to say, there were disagreements on how to achieve that aim. Conservatives asked that the economy be freed to flourish on its own; given such a climate, private businesses and investors would create sufficient jobs. Liberals and those further to the left were less sanguine on this score. They believed that the government must intervene in the economy: not merely when times were bad, but to plan for full employment as a goal for the future.
The talk we hear today has a less assured ring. We hope to put some people back to work; but no one has clear ideas about what jobs, or how many, can be created for them. Indeed, there is a widespread suspicion that our economy will not expand much beyond its present bounds, and that the parts that will grow will be the ones that depend more on high technology than on labor. If this apprehension is correct, a high level of unemployment may be with us for the rest of this century. One result will be keener competition for such jobs as exist. Who gets them will be a central issue, raising questions of equity and need.
Two recent books consider what might be called the distribution of employment. Victor R. Fuchs, an economist at Stanford University, describes his How We Live as “an economic perspective on Americans from birth to death,” relying largely on statistical studies from governmental sources. He is especially interested in the entry of women into the labor force and their experience there. Melvin R. Levin’s Ending Unemployment is chiefly concerned with the “marginal” men and women who have never gained a foothold in the labor market. However he concludes that they and laid-off workers will have more and more in common if we cannot bring about an industrial revival. Hence his proposal for a permanent program of public works, to include workers of varying experience and skills.
Before turning to these books, however, we might well review the basic facts of employment and its lack. Our most comprehensive source is an annual study issued by the Census Bureau, entitled Money Income of Households, Families, and Persons in the United States. Its most recent edition, released in March of this year, tells us which Americans were employed, how much work they did, and what their earnings were in 1981. While it is true that unemployment averaged 7.5 percent in 1981, as against 10.1 percent for April of 1983, the distributions of earnings and employment are substantially the same. The Census findings come from a survey of 60,000 households, whose members were asked to specify the sources of their income, which the bureau then adjusted to accord with data from other agencies. This sampling is the most reliable we have; in fact it is the same one on which the monthly unemployment rates are based.
During 1981, 117.2 million persons held paying jobs at some point during the year. This is a fairly impressive figure. If we take the ages between eighteen and sixty-five as the approximate employment span, it would appear that almost 85 percent of us had jobs at one time or another. However, appearances can be deceiving. In effect, we have a two-tier employment force as Table 1 shows.
The lower segment largely consists of the 52 million persons who either held part-time jobs or worked only part of the year. Their wages averaged $5,795, which suggests that in most cases they were largely supplemental: women comprised a majority of the group. Most of the unemployed also fell in this stratum. Their number averaged 8.3 million in 1981, but the total of those who were out of work during particular months was actually higher. Thus there were full-time breadwinners who lost their jobs during the year and settled later for part-time work. In most cases, then, the second tier consists of people who fill in when extra hands are needed, taking available work at modest pay.
This leaves the 65.1 million jobholders who worked steadily throughout the year, and who averaged $18,941 in earnings. Of this group, 64.2 percent were men, who made $22,196 as against $13,112 for women. All in all, the men did rather well: 3.6 million earned between $35,000 and $50,000, while another 1.97 million made over $50,000. This top tier displays the best the country can do in the way of employment. Indeed, the 65.1 million regular jobs command 80.3 percent of all wage, salary, and self-employment income earned by Americans in 1981, leaving only 19.7 percent for the 52 million jobholders in the second tier.
While most Americans still live in families, a large and growing group consists of people the Census classifies as “unrelated individuals.” In 1981, it found 17.6 million employed persons who either lived alone or with someone not related to them. By and large these people had fairly comfortable incomes. The 9.6 million men earned an average of $16,916, while the 8 million women made $12,441. Moreover, 59.6 percent of this group had full-time year-round jobs, where the men’s average income was $21,085 and the women’s $15,553. If two such persons decide to share quarters, as an increasing number do, a typical combined income came to $36,638.
Most of these “unrelated” earners are young and single, or if they are divorced they do not have children living with them. (Divorced parents with resident children are assigned to the “family” columns.) Most single people who want to work have little trouble finding jobs at a living wage. Moreover, if they lose one position—and they have a high rate of doing so—they can more easily take another at a lower salary. The need for steady employment looms largest for families, especially those with children.
A “family,” according to the Census, consists of any two or more related people who currently share quarters. In 1981, the bureau counted 60.3 million families, of which 52.5 million had at least one employed member. (Most of the other 7.8 million were older couples receiving Social Security benefits, or women raising children on the welfare rolls.) Table 1 also shows the distribution of family earnings in two different ways: first, the number of households in various income brackets; and then the proportion of all earnings of each income range. Thus the top 27 percent of families with incomes over $35,000 accounted for exactly 50 percent of aggregate family earnings. And the 23.7 percent making under $15,000 received only 6.8 percent of the payroll total. Those who call for more equality in income distribution can draw on strong evidence.
Insofar as some families fare better than others, the determinant is less the major breadwinner’s wages than how many earners the household contains. Of the 51.8 million families analyzed, only 18.5 million had a single earner. Among the others, 24.9 million had two; and another 8.4 million had three or more. Unfortunately, the Census does not tell us how much each member brought in; some may have been teenagers with a paper route. Still, the average income for those families with multiple employment came to $31,919, a substantial 49.7 percent above the $21,320 for households with a sole jobholder.
It is not sheer need that sends additional members to work so much as a desire for a higher living standard. Among the families in the $35,000 to $50,000 range, 83.1 percent had more than one earner, as did 83.6 percent of those in the $50,000 to $75,000 bracket. However, at incomes of $75,000 and above, the proportion with multiple employment dipped to 72.4 percent. Once that level is attained, wives may feel less impelled to work; or their husbands may prefer that they do not. Many working-class husbands also prefer that women stay at home, a sentiment which continues even when the children are grown. Thus among women aged fifty-five to sixty-four, only 25.5 percent had year-round full-time jobs.
The Census has an overlapping analysis of earnings for the nation’s 40.9 million married couples where the husband was employed. In 26.2 million of these marriages, or 64 percent, the wife also worked; while in the other 14.7 million she remained at home. Where the husband was the sole provider, his earnings averaged $22,095. In marriages where both spouses worked, the husbands’ average earnings came to $20,050, while the typical wife made $8,586. This made a total of $28,636 for such a household, to which the wife contributed 30 percent. Clearly these women did not embark on employment to make up the $2,045 difference between their husbands’ wages and those of men with nonworking wives. They took jobs to raise their households even higher, to the $28,636 level.
Still, the wives’ earnings just cited suggest mainly partial employment. Indeed, in only 9.5 million of the two-job marriages—36.2 percent of the total—did both partners have full-time year-round work. However, the women in those marriages made 55.9 percent of the earnings total for all wives. In these favored marriages the husband averaged $21,539 and the wife $13,250, totaling $34,789, of which her contribution rose to 38.1 percent. Moreover, the majority of these households are ones where the couple have no children or where all of the children are grown.
What the state of the economy seems to suggest is that Americans can earn a decent living so long as they remain unmarried or put off having children; and a family can do so if it can add a second member to the employment force. Members of a household also have an even chance of a decent living with a single earner who happens to be a man. Table 2 gives the breakdown by domestic composition of the 61 million families in 1981. (In this analysis, the Census recorded family income from all sources.)
If we subtract the marriages where the husband is sixty-five or over, there remain 14.9 million childless couples whose average income is now $33,298, which is discernibly higher than the $28,734 for their counterparts with children.*
For women raising children without husbands or other men to help, average family income was well under half—40.5 percent—of that for couples who had children; and 84.7 percent of those women had incomes under $20,000. This was so even though a 1981 Bureau of Labor Statistics study found that 55.6 percent of single mothers were engaged in some kind of employment, or at least were at the time the survey was conducted. The report noted that 70.7 percent of divorced mothers worked, compared with 51.8 percent of those who were separated and 36.2 percent of mothers who were never married. The nonworking 44.4 percent were almost all on welfare, since the numbers supported solely by alimony and child support are statistically negligible. Still, if all single mothers were made to work, only a small fraction would find their economic status visibly improved.
The Census confines its count of "children" to young persons under eighteen. Thus the category of "childless" households contains couples who have not yet had children as well as older families whose offspring are grown and living away from home. In addition, it includes those whose children are eighteen or older, but some or all of whom may be attending college. Needless to say, a son or daughter in college can cost a supposedly "childless" family more than an entire brood under college age. Even so, a good plurality of young Americans start work at eighteen or at least begin the search. Of those who do attend college, 56.3 percent live at home and most have part-time jobs. Also, 78.4 percent are enrolled in public institutions, mainly close to home, where they rely on loans and personal earnings for the bulk of their expenses. Only 17.8 percent of students go to out-of-state schools. Middle-class experience not-withstanding, most Americans by eighteen are largely on their own.↩
The Census confines its count of “children” to young persons under eighteen. Thus the category of “childless” households contains couples who have not yet had children as well as older families whose offspring are grown and living away from home. In addition, it includes those whose children are eighteen or older, but some or all of whom may be attending college. Needless to say, a son or daughter in college can cost a supposedly “childless” family more than an entire brood under college age. Even so, a good plurality of young Americans start work at eighteen or at least begin the search. Of those who do attend college, 56.3 percent live at home and most have part-time jobs. Also, 78.4 percent are enrolled in public institutions, mainly close to home, where they rely on loans and personal earnings for the bulk of their expenses. Only 17.8 percent of students go to out-of-state schools. Middle-class experience not-withstanding, most Americans by eighteen are largely on their own.↩