USDA's Expenditures on Children by Families Project: Uses and Changes Over Time - Statistical Data Included

Family Economics and Nutrition Review, Wntr, 2001 by Mark Lino

For 40 years, the U.S. Department of Agriculture (USDA) has provided annual estimates of family expenditures on children. These expenditure estimates have important policy applications. This research brief reviews these applications and compares the most recent child-rearing expense estimates with those first produced in 1960. A description of the methods used to derive the expense estimates is reported elsewhere (2).

Some people wonder why the USDA, and not another Federal department such as the Department of Health and Human Services, produces the childrearing expense estimates. Improving the economic well-being of American families has long been a goal of USDA, and the Expenditures on Children by Families report is one example of the Department's commitment to this purpose. Other examples include the USDA Thrifty Food Plan, which is used to determine food stamp allotments, and the USDA Food Guide Pyramid, which is used to help people make nutritious food choices.

Uses of Expenditures on Children Report

The Expenditures on Children by Families report has three primary uses. The significance of these uses has changed over time, in line with the changing structure of American families.

Child Support

One of the primary uses of the expense estimates is in determining child support. When the expense estimates were first produced in 1960, only 9 percent of families with children under age 18 were headed by a single parent (fig. 1), and many of these parents were widows. In 1998, 27 percent of families with children under age 18 were headed by a single parent, many becoming single-parent families as the result of divorce (5). These figures represent families at a given point in time. The percentage of children residing in a single-parent household at some point in their childhood is greater because many single parents remarry. In 1998, 52 percent of children lived with their original two parents; the remaining 48 percent of children lived with either a single parent, a parent and stepparent, or in some other arrangement (7).

Figure 1. Families, by presence of own children under age 18, 1960
versus 1998

                          1960    1998

One-parent families         9%     27%
Married-couple families    91%     73%

Note: Table made from bar graph.

Because so many children make their primary residence with only one of their biological parents, child support (legally mandated payments from a noncustodial parent to a custodial parent) has become important. It has become even more important in recent years because many single-parent families are in poverty, and payment of child support is seen as one way to reduce poverty among these families.

The Family Support Act of 1988 required States to implement numeric child support guidelines that are to be followed unless their application would be unjust or inappropriate. In addition, States are required to review their guidelines every 4 years: (1) to ensure that application of the guidelines results in appropriate award amounts for child support and (2) to consider economic data on the cost of raising children in this review by the States. As a result of this act, USDA's Expenditures on Children by Families report has influenced the economic well-being of millions of children in the United States. A 1998 study titled "Interstate Comparisons of Child Support Orders Using State Guidelines" found that the USDA child-rearing expense estimates are usually consulted by States when calculating typical expenditures on children for State child support guidelines (3).

Foster Care

In 1982 about 262,000 children were in foster care. (Figures for earlier years are not available.) By 1998 about 520,000 children were in foster care (6). A child is placed in foster care when a court determines that his or her family cannot provide a minimally safe environment. This determination often follows an investigation by a State or county child protective services worker. Most children in foster care live in the home of a relative or nonrelative who is compensated monetarily to help cover the cost of the children living with them.

The USDA child-rearing expense estimates are often used by States in setting the levels of foster care rates. A 1989 study by the American Public Welfare Association found that nearly half the States used the USDA childrearing expense report to calculate foster care rates (1).

Educational and Other Uses

One of the original intents of the child-rearing expense estimates was to "provide budgetary guidance to individual families" who had children or were planning to have children (4). A recent cover story by U.S. News & World Report used the USDA childrearing expenses to inform people of the cost of children (8). Many financial advisors and personal finance textbooks use the estimates as a guide to how families may allocate their expenditures. In addition to providing budgetary guidance, the USDA childrearing expenses are used in many high schools to educate teenagers on how much raising children really costs. One intent of providing this information is to encourage teenagers to wait until they are adults and more financially secure before having children.