[Economic Report of the President (2000)]
[Administration of William J. Clinton]
[Online through the Government Printing Office, www.gpo.gov]


[[Page 165]]

 
CHAPTER 5
The Changing American Family


Among the trends that have shaped the American family over the course
of the century, one of the most important has been the rise in female
participation in the labor force as more opportunities have opened up
for women to work and more women have taken advantage of those
opportunities.


For most of the 20th century, the prototypical American family was a married
couple with children in which the wife did not work for pay. But for decades
now this traditional one-breadwinner, one-homemaker family has made up a
declining share of families, as more wives have entered the paid labor force
and as single-parent families have become more widespread. At the beginning of
the 21st century, fewer than a third of all families are married couples in
which the wife does not work outside the home. This means that a majority of
American families face_and in consequence the Nation faces_different
opportunities and different challenges from those of a society of
``traditional'' families.

The changes in the American family, viewed over the entire span of the 20th
century, have been dramatic (Table 5-1). In 1900, for example, about

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80 percent of children lived in two-parent families with a mother or
stepmother who worked on the farm or at home. Fewer than 10 percent of
American children lived in one-parent families. The typical home had few of
today's conveniences (only 8 percent of dwelling units had electricity in
1907), and many women sewed their own clothes and gave birth in the home
rather than in a hospital. Women early in the century married younger, had
more children, and died younger than women today. Ten percent of children died in infancy, and average life expectancy for both men

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and women was less than 50 years. The average household had close to five
members, and a fifth of all households had seven or more. Job opportunities
for women who did not live on farms were limited as much by custom as by
physical demands: only a fifth of all women worked for pay, and those who did
were mainly single and poor.

The average family today enjoys many advantages that its counterpart of a
century ago did not. As we have seen in earlier chapters, the material
standard of living of the average family is much higher now than it was then.
People are more likely not only to live longer but to remain healthy into
retirement as well. It is partly because of these very advances, however, that
families today face a different set of challenges than did families 100 years
ago. In particular, the expansion of opportunities for women to work for pay,
and the greater desire of women to seek such work, have added a new challenge
to the perennial one of having adequate resources to meet family needs. That
new challenge is how to balance the material gains from more hours of paid
employment against the desire to reserve time for the responsibilities and
enjoyments of family life.

This chapter examines these two challenges. It begins with an overview of
some of the key trends that have created the modern American family: the rise
in female labor force participation, changes in family formation and
dissolution, and improvements in health and longevity. It then explores the
emergence of a diverse set of family types, focusing on differences in incomes
and in time spent at work. The remainder of the chapter explores the
challenges these different kinds of families face_and their policy
implications. This discussion is organized in two parts. The first discusses
the ``money crunch'': the financial constraints that still burden many
families despite the remarkable growth in the American standard of living.
This problem is more likely to confront single-mother families and one-earner
couples than two-earner couples. The second part discusses the ``time
crunch'': the shortage of time to devote to family needs that results from the
increased participation of parents, especially mothers, in the paid labor
market. This problem affects a vast number of families, including many for
whom the money crunch is less pressing. The chapter also discusses recent
favorable trends in family incomes and reviews some of the Administration's
policies designed to address the money and time crunches.


Key Trends Shaping the American Family


Among the many trends that have affected the American family over the course
of the century, three have been particularly important. The first is the rise
in female participation in the labor force as more opportunities have

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opened up for women to work and as more women have taken advantage of those
opportunities. The second is not a single trend but a set of related changes
in how families form and dissolve, which have contributed to the growing
prevalence of single-parent families. The third is improvements in health and
life expectancy that have made care for older relatives_and providing for
their own retirement_increasingly important issues for heads of families
today. Many other kinds of households_including people living alone_are also
part of American society and face challenges of their own, but this chapter
focuses primarily on those challenges that affect families with children.


Female Labor Force Participation

Women have always worked, whether on the family farm, in the home, or in the
paid labor force. What distinguished the 20th century was the enormous
increase in the proportion of women who work for pay. In 1999 about
three-fifths of the female population aged 16 and over were in the labor force
(either employed or looking for work). This is three times as high as the
female labor force participation rate in 1900. And the participation rate of
women aged 25-44_those most likely to be balancing work and child rearing_has
risen severalfold, from less than 20 percent in 1900 to over 75 percent today
(Chart 5-1).  The participation rate of women in this age group with children
under age 18 has been somewhat lower than the overall rate but has shown a
similar pattern of increase. Over the past 25 years the share of working
mothers in this age group who were employed full-time has been roughly 71
percent.

Many factors have contributed to this growth in women's participation in the
paid labor market, including increases in education and wages for women, the
opening up of more opportunities for women to work, and changes in family
structure. As a result of higher labor force participation rates and later
marriages, a larger proportion of women than ever before experience a period
of independent living and employment before marriage. This gives them greater
attachment to the labor force and increases the chances that they will
continue to work, or return to work, after they marry and start a family.


Family Formation and Dissolution

Marriage remained a fairly universal experience throughout the 20th century.
Among the population 15 years old and over, the proportions of both men and
women who are married are roughly the same today as a century ago, although
lower than in the 1950s and 1960s. Only 6 percent of women aged 45-64 in 1998
and 12 percent of women aged 35-44 had never been married.

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However, one study found that women today are spending a smaller fraction of
their adult lives married than did their counterparts a few decades ago. A
much larger proportion of children are being born to unmarried mothers. As a
result, the share of children living in one-parent families increased from 9
percent in 1900 to 28 percent in 1998.

Several strands of evidence suggest that people are spending a smaller
fraction of their lives married than in 1900. First, people are marrying
slightly later. In 1900 the typical first marriage was between a woman of 22
and a man of 26; now the typical bride is 3 years older and the groom nearly a
year older. Second, divorce rates are much higher today than at the beginning
of the century. In 1900, among those aged 35-54, widowhood was far more common
than divorce. Over the century, the probability of being a widow in this age
range declined markedly, while the probability of being divorced rose (Chart
5-2). The divorce rate, which jumped from around 10 per 1,000 married females
per year in the mid-1960s to more than 20 per 1,000 in the mid-1970s, has
drifted down slightly since then but remains high. A third reason why people
spend a smaller fraction of their lives married is that life expectancy is
longer today relative to the typical duration of a marriage. The net result of
all these forces is that only 56 percent of the population aged 15 and over
are married today, rather than 68 percent as in 1960. Thus it is probably not
surprising that the proportion of children living in single-parent households has risen dramatically.

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The increased prevalence of single-parent households is also related to the
rise in out-of-wedlock births. For unmarried females aged 15-44, the number of
births per 1,000 women increased dramatically from 7.1 in 1940 to 46.9 in
1994, but it has since stabilized and begun to decline, reaching 44.3 in 1998
(Chart 5-3). In contrast, this measure of the birth rate among married women
has been dropping since the baby-boom of the 1950s and 1960s, although it
remains nearly twice that of unmarried women. As a result of these trends, the
share of all births that were to unmarried women of all ages increased
eightfold, from 4.0 percent in 1950 to 32.8 percent in 1998, although this
figure has begun to level off in recent years. Some of this increase reflects
lower marriage rates generally, and some reflects the rapid increase in the
late 1980s and early 1990s in out-of-wedlock births, including those to teens.
(The Administration's efforts to reduce teen pregnancy are discussed later in
this chapter.)


Life Expectancy and Health

The life expectancy and health of Americans increased dramatically over the
20th century. Major public health initiatives (such as immunization campaigns,
better sewage systems, and education about hygiene) as well as medical
advances (from antibiotics to pacemakers to bone marrow transplants) have led
to the virtual eradication of numerous diseases and conditions that once
contributed to high death rates and low life expectancy. For example,
technological innova-

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tions, better obstetrical care and nutrition, more widespread access to
prenatal care, and greater use of antibiotics all contributed to tremendous
improvements in the health of mothers and infants. The infant mortality rate
dropped by more than 90 percent over the century, from 99.9 per 1,000 live
births in 1915 to 7.2 per 1,000 in 1998. The maternal mortality rate dropped
similarly: whereas in 1900 more than 80 women died from pregnancy-related
complications for every 10,000 live births, by 1997 this  rate had fallen to
less than 1 death for every 10,000 live births_more than a 98 percent decline.
Advances also have been seen in other areas. Death rates from coronary disease
have declined by 51 percent since 1972, improved sanitation has dramatically
reduced typhoid and cholera in the United States, and the widespread use of
vaccines has eliminated smallpox and polio.

These improvements have meant longer life spans for most Americans. Over the
century, the average life span in the United States increased by 30 years, and
one study attributes five-sixths of that increase to advances in public health
such as vaccinations and food safety. Life expectancy at birth for a woman
rose from 48.3 years in 1900 to 79.4 years by 1998. For men it rose over the
same period from 46.3 years to 73.9 years. Older Americans now have longer
remaining life expectancies as well. Whereas the average 60-year-old white man
in 1900 could expect to live almost to age 75, by 1998 a man of that age could
expect to live almost to age 80. Combined with the recent declines in
fertility behavior, these changes in life expectancy have led



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to an increasing share of the population that is elderly_a trend that will
continue as the baby-boom generation ages.


Increasing Diversity Across Families

Income and the time to enjoy it are two key components of economic
well-being. In principle, the strong growth in productivity and the resulting
growth in real wages over the past century, described in Chapter 1, could have
allowed material standards of living to increase while simultaneously allowing
families to work shorter hours. But in fact, the substantial increase in
female labor force participation and the increase in the proportion of
households headed by single females mean that there are more families with
working women, and many women are working more hours. These trends also mean
that there is now a greater diversity in family structure as well as
differences in incomes and hours of work among family types.


Diversity in Family Structure

Traditional one-breadwinner, one-homemaker married couples have been
declining as a share of all families, from 67 percent in 1952 to 27 percent in
1999 (Chart 5-4). Rising female labor force participation has increased the
proportion of all married-couple families in which the wife works, and these



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now account for roughly half of all families. Reflecting the trends in
marriage and divorce discussed above, the share of all families headed by a
single householder with no spouse present (predominantly single-parent
families) increased from 13 percent to 23 percent between 1949 and 1999.
Although most children living in single-parent families live with their
mothers, the share of single-parent families headed by fathers has more than
doubled since 1975 and stood at 19 percent in 1999. It is estimated that more
than a third of all children do not live with their biological fathers (Box
5-1).


Box 5-1. The Importance of Fathers

Although the proportion of single-parent families headed by the father is
rising, the mother has typically been the custodial parent in such families.
For this reason, and because of the higher incidence of poverty in
female-headed families, the discussion of single-parent families in this
chapter focuses on single mothers. An important issue for such families is the
link between children's well-being and the absence of the father.

It is estimated that 36 percent of American children live apart from their
biological fathers; about 40 percent of children in fatherless households have
not seen their fathers in at least a year. Before they reach age 18, more than
half of America's children are likely to have spent a significant portion of
their childhood living apart from their fathers.

Yet there is strong evidence suggesting that the presence of a father
matters:

  Children under age 6 who live apart from their fathers are about
five times as likely to be poor as children with both parents at home.

  Girls without a father in their life are two and a half times as
likely to get pregnant and 53 percent more likely to commit suicide.

  Boys without a father in their life are 63 percent more likely to
run away and 37 percent more likely to abuse drugs.

  Children without father involvement are twice as likely to drop out
of high school, roughly twice as likely to abuse alcohol or drugs, twice as
likely to end up in jail, and nearly four times as likely to need help for
emotional or behavioral problems than those with father involvement.

The absence of a father has effects beyond those on his own children: it can affect communities as well. About 4.5 million children in 1990 resided in predominantly fatherless neighborhoods in which more than half of all families with children were headed by single mothers.

continued on next page...

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Box 5.1._continued

Although most fathers can afford to pay child support (an estimated 74
percent of noncustodial fathers have incomes above the poverty level), about
2.8 million men are ï¿½dead-broke,ï¿½ noncustodial fathers, most of whom do not
pay child support. Administration efforts aimed at helping these fathers to
work and support their children are detailed later in this chapter.


Increasing life expectancy has also changed the structure of the family. For
example, over 70 percent of adults aged 30-54 in the early 1990s had living
relatives who spanned three or more generations, and over 40 percent of adults
aged 50-59 had living family members from four or more generations. In
addition, nearly 2.4 million families now have more than two generations
living under one roof. Longer life expectancy has meant that more grandparents
are able to watch their grandchildren grow to adulthood. And younger
generations are facing caregiving responsibilities for older relatives. A 1997
survey estimated, for example, that 22 percent of all U.S. households provide
care for an elderly person.

At the same time, grandparents have also become more important as
caregivers_including primary caregivers. Over the last three decades, for
example, the share of children under age 18 living in a household headed by a
grandparent has risen by more than 70 percent (Chart 5-5). Most of the



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increase in this share during the 1990s was from an increase in the share of
children living in households with neither parent present. Between 1980 and
1990, by contrast, the increase came mostly from children living in
grandparent-headed households with just a single parent present. The share of
such households with a single father present, although small, continued to
grow in the 1990s.

Consistent with the focus of the chapter, this discussion has emphasized
family types likely to have children present. It is important to recall,
however, that American households cover a much wider range of diversity than
this (Box 5-2).


Diversity of Income and Hours of Work

An examination of income growth among families with children by family type
reveals important differences among two-earner married couples, one-earner
married couples, and families headed by single females. To some extent these
differences represent choices about how many hours to work and how many to
leave free for other things. But they may also reflect underlying differences
in education or other factors that affect earnings opportunities.


Box 5-2. The Diversity of American Households

The Census Bureau defines a family as two or more people related by birth,
marriage, or adoption who reside together. A household, by contrast, is
defined as any person or group of people who occupy a single housing unit.
Thus households include single people and groups of unrelated people who
reside together.

In 1970 the proportion of households fitting the traditional definition of a
family (a husband, a wife, and their children) was 40 percent; by 1998 only 25
percent of households fit that definition. The number of Americans living in
unmarried-partner households is large and growing rapidly. From 1994 to 1998
the number of married-couple households increased by 2 percent, while the
number of unmarried-partner households increased 16 percent. In 1998 about 1.7
million, or 1.6 percent, of households were same-sex partnerships.

The fraction of individuals choosing to live together outside of a formal
marriage rose dramatically in the second half of the 20th century. One study
reports that only 3 percent of women born between 1940 and 1944 had lived in a
nonmarital cohabitation by age 25, whereas for women born 20 years later, 37
percent had cohabited by that same age. In fact, despite lower marriage rates
and a later age of first marriage now than several decades ago, evidence
indicates that individuals are still forming coresidential relationships at
about the same point in their lives.

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For the past 50 years, the median income of two-earner couples has been
higher than that of one-earner couples, which in turn has been higher than
that of families headed by a single female (Chart 5-6). Moreover, the gap
between the median income of two-earner couples and that of the other family
types has widened, both in absolute dollars and in percentage terms.



Although many measures of income inequality have stopped rising in recent
years, the real median income of married-couple families where the wife is not
in the paid labor force is less than three-fifths that of married-couple
families where the wife works for pay. Recent increases have brought the real
median income of female-headed families in 1998 above its previous peak in
1979, although that income is only a little more than a third the median for
two-earner couples. To a great extent, of course, these differences reflect
factors other than family type. As emphasized below, wives in two-earner
couples are likely to have greater earnings opportunities than wives in
single-earner couples. And single mothers tend to be younger and less educated
than married mothers, with the result that their earnings are likely to be
lower as well.

Median incomes provide one perspective on differences in income by family
type, but they necessarily conceal the extent of income variation within each
family-type grouping. Among families with children, there is considerable
overlap between the distributions of income for each family type, par-

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ticularly in the lower income ranges (Chart 5-7). The distribution of
female-headed families with children, however, is more concentrated in the
lower income range.




The income differences across families shown in Chart 5-7 are due largely to
differences in earned income from employment, not differences in wealth or
transfer payments (such as welfare payments). In 1998, wage and salary
earnings represented 87 percent of income for the average married-couple
family with children and 69 percent for the average female-headed family with
children.

Differences in hours worked are a major factor accounting for differences in
income across family types. Not surprisingly, dual-earner couples devote more
total hours to work than the other family types, on average, and have the
highest concentration of families in the portion of the distribution with the
most hours worked (Chart 5-8). Among single-earner family types, husbands in
single-earner couples work more hours on average than single mothers.


The Rising Earnings of Women with Children

The typical mother today now contributes significantly more earnings to
family money income than did her counterpart several decades ago. The median
earnings of single mothers with children rose from $4,800 to $12,000 (in 1998
dollars) between 1968 and 1998, and among working sin-

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gle mothers the median rose from $11,300 to $15,000. The median earnings of
all wives with children rose from zero (more than half had no earnings) to
$10,400 during this same time period, and from $7,600 to $18,000 for working
mothers. As a result, married working mothers' earnings today represent 30
percent of the couple's combined earnings, compared with only 15 percent in
1968. In addition to raising average family income, mothers' earnings have
dramatically increased the proportion of families who are well off. The share
of working wives earning more than $20,000 rose from 14 percent to 43 percent
between 1968 and 1998, and the share of single working mothers earning above
$20,000 rose a smaller (although still sizable) amount, from 21 percent to 37
percent. Among married couples, wives' earnings have had a big effect in
increasing the proportion of wealthy families: in 1998 only 18 percent of all
men earned more than $60,000, but when wives' earnings are included, 37
percent of all married couples with children had combined earnings above
$60,000. In contrast, among families headed by single women, only 2 percent
had earnings above $60,000.

Thus, although most women now contribute to family income, there are
pronounced differences across different types of families. These differences
in mothers' contributions can be traced to differences both in wages and in
hours of work.

As discussed in Chapter 4, women's wages have risen over time, in part
because of rising skill levels. But single mothers have experienced slower
wage

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gains and have considerably lower wage rates, on average, than married
mothers who work. The lower wages of single mothers are related in large
measure to their lower average educational attainment than married mothers who
work. Across all family types, about one-third of mothers have a high school
diploma but no college. However, single mothers and wives who are not working
are much less likely than working wives to have graduated from high school,
although as a group each has made substantial strides in raising their
educational attainment over the past three decades (Table 5-2). Furthermore, a
smaller share of single mothers than of married mothers who work have at least
some college,



although the increase in the single mothers' share since the late 1960s has
been large. In contrast, employed wives have strikingly higher levels of
education than all others, so that a portion of the stronger growth in median
incomes for these families shown in Chart 5-6 is due to their higher and
rising educational attainment, which feeds into their higher wage rates.

The rising incomes of mothers are also a function of their rising hours of
work, and here, too, single mothers differ from married mothers on average.
Thirty years ago single mothers worked longer hours than married mothers, and
thus their hours have risen less over time. For example, the share of single
mothers working full-time rose 11 percentage points, to 67 percent, between
1968 and 1998, whereas the share of married mothers working full-time rose 18
percentage points, to 52 percent. The increase in full-time work arose almost
entirely from women entering the labor force in greater numbers, not from a
switch from part-time to full-time work: between 1968 and 1998 the proportion
of single mothers who worked rose from 69 percent to 82 percent (Table 5-3); that of married mothers increased from 51 percent to

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75 percent. (The proportion of married mothers working part-time increased
substantially less, from 17 percent in 1968 to 23 percent in 1998.) Married
mothers have dramatically increased their hours of work, but they continue to
work somewhat less than single mothers.

A portion of the higher average earnings growth for married mothers relative
to single mothers arises from the positive correlation between education and
hours of work: well-educated women work longer hours. Well-educated women have
also increased their hours of work the most over time. From 1968 to 1998, the
proportion of mothers with less than a high school education who worked
increased from 52 percent to 57 percent. For mothers with at least some
college, in contrast, the proportion increased from 55 percent to 82 percent.
Several factors shape the decision to work for pay. On the one hand, the
potential to earn a high wage makes work attractive, and thus the
well-educated should have greater incentive to work. On the other hand, higher
earnings and higher husbands' incomes tend to lessen the need to work long
hours_this ``income effect'' provides an incentive for women to consume more
leisure or home time with their children. Highly educated women tend to be
married to high-income men, and thus the husband's higher income induces the
family to place a greater value on the wife's home time relative to paid
employment. Over time, however, the effect of husbands' incomes on wives'
hours of work has declined. Thus, highly educated women with children have
increased their employment rate the most over time, and today they have the
highest rate among women with children. The outcome is that highly educated
women, working many hours and earning high wages, have contributed very
significantly to the number of families

[[Page 181]]

in the upper tail of the income distribution. For these families, incomes are
high, but so, too, are hours of work (Box 5-3).

In sum, the growth of female hours of work and female earnings has had
different effects on different family types. For married mothers, strong
growth in wages and hours worked have been a primary source of family


Box 5-3. Women Professionals, the Rat Race, and the Time Crunch As shown in
Table 4-1, the proportion of women in many professional occupations has risen
dramatically since 1950. As recently as 1979 only 10 percent of doctors and 13
percent of attorneys were women, but by 1999 these percentages had increased
to 25 percent and 29 percent, respectively. The female share of enrollment in
professional schools has been rising and exceeded 40 percent in 1996. To the
extent that female professionals who are married have husbands who work full
time, this growing professionalization of the female work force has created a
time strain for many American families. There is little evidence that human
resource systems originally designed for men with stay-at-home wives have
adapted to ease this strain by offering jobs with shorter working hours. On
the contrary, work hours among college-educated employees have been trending
upward over the last several decades.

One of the reasons for some firms' reluctance to abandon existing work norms
is their use of ``rat race'' work practices. In many professional settings,
members of the professional group benefit from the productivity of other group
members, yet these contributions to productivity are difficult to measure and
reward directly. Firms instead find that a worker's willingness to work long
hours often serves as a proxy for valuable yet hard-to-observe characteristics
such as commitment and ambition. In response to this use of work hours as a
screening device, workers will tend to overwork as a means of signaling to
management their ability and willingness to contribute.

For example, in a survey conducted at two large Northeastern law firms,
associates (young attorneys) and partners alike were in agreement that
``billable hours'' and especially `'willingness to work long hours when
required'' were important factors in promotion to partner. Not surprisingly,
associates at these firms worked long hours. Also not surprisingly, associates
felt overworked: most indicated that they would gladly forgo their next raise
in exchange for the opportunity to work fewer hours. Nonetheless, most
associates indicated that they would be much more willing to work fewer hours
if all other associates also agreed to cut back. Of course, firms might be
reluctant to abandon these work practices unless they can develop other
effective means of screening junior employees.

[[Page 182]]

income growth over the last 30 years, even though married women's earnings on
average still account for less than a third of the couple's earnings. The
wages of female family heads have not grown as rapidly over time, so that,
despite working many hours, their earnings lag behind those of married women.


Challenges Families Face

Over the century just ended, the American family experienced many positive
changes that have resulted in richer lives for many parents and their
children. Family income has increased dramatically and poverty has decreased.
People live longer and are much healthier. Over the past few years, the gains
from a strong labor market have been shared widely and fairly equally. Other
favorable recent developments include a fall in teen pregnancy and
out-of-wedlock birth rates and a stabilization of divorce rates. Despite this
general prosperity, however, family income inequality remains high, and many
families are experiencing a ï¿½money crunchï¿½ that makes it difficult to meet
basic family needs. Many of these families have incomes that fall below the
poverty threshold, but the perception of a ï¿½money crunchï¿½ is by no means
limited to families officially classified as poor.

Perhaps an even greater number of families today are experiencing a ``time crunch.'' With more women working more hours, the amount of family time
devoted to work has increased, while that available for leisure and other
family activities has declined. This time crunch affects a wide range of
families from poor single mothers to prosperous two-earner couples.

This section explores the challenges facing American families as they deal
with the money crunch and the time crunch. In each case, an analysis of the
dimensions of the challenge and how it affects different kinds of families is
followed by a discussion of policies that address that challenge.


The ``Money Crunch''

Despite the increases in female labor supply and earnings discussed above, a
large number of families with children_both married and female-headed_belong
to what are sometimes called the working poor. Those families with incomes in
the lower tail of the distribution in Chart 5-7 are the most likely to suffer
from the money crunch. Based on the distributions in the chart, in 1998, 8
percent of families with working wives, 27 percent of families without working
wives, and 64 percent of female-headed families had incomes below $25,000
(about 1.5 times the poverty line for a family of

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four). These families, whose incomes have lagged behind the general advance,
are at the epicenter of the money crunch.

Families headed by single females tend to have fewer financial resources
than other families, and the number of children living in such families has
grown substantially. Whereas families headed by single females made up only 10
percent of all families with children in 1970, in 1998 that figure was 22
percent. In 1970, just 11 percent of all American children under 18 years of
age lived in such families; in 1998, 23 percent did. About half of all African
American children under age 18 live in single-mother households, up from 30
percent in 1970. The fraction of white children living in single-mother
households rose from 8 percent in 1970 to 18 percent in 1998. And as discussed
earlier, the percentage of children living with grandparents has also been
increasing in recent decades.

Divorce and out-of-wedlock childbirth are two events that contribute
directly to lower incomes for female-headed families. It is estimated that 22
percent of women who get divorced experience a 50 percent or more decline in
family income. Also, never-married mothers are much less likely to have a
child support award than divorced mothers (44.1 percent versus 75.6 percent in
1995), and for those who have received child support payments, the annual
amount received by never-married mothers is much less than that received by
divorced mothers ($2,271 versus $3,990 in 1995).

Reflecting these low income levels, poverty rates for families headed by
single females with children under age 18 are very high: 38.7 percent of these
families were poor in 1998, compared with 6.9 percent of married-couple
families with children. Although the job is not finished, this Administration
has championed policies to increase the rewards from work and reduce poverty,
including the expansion of the earned income tax credit, welfare reform, and
the creation of the State Children's Health Insurance Program. These policies
have contributed to improving living standards for lower income families, and
the overall poverty rate has dropped from 15.1 percent in 1993 to 12.7 percent
in 1998. These official poverty rates are based on a definition of income that
does not include the earned income tax credit, Medicaid, food stamps, or other
noncash benefits. An experimental poverty measure incorporating improvements
proposed in a 1995 report by the National Academy of Sciences (a measure that
does include the earned income tax credit and noncash benefits) shows an even
larger drop.

Adequate income is certainly essential for families to develop a sense of
economic well-being, but that sense of well-being may also be influenced by
whether the family can meet what it perceives to be its consumption needs. As
technological change has lowered the relative cost of food and freed up income
for other expenditures over the course of the century, incomes have risen and

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consumption patterns have changed, resulting perhaps in a perception of
increased consumption needs.  In 1950 about 30 percent of a typical family's
expenditures were for food, and about 10 percent were for clothing. By 1997
those percentages had fallen to 14 percent and 5 percent, respectively. But
other expenses have taken up the slack. The typical family now spends a
greater share of its income on housing than in the past, and entirely new
forms of consumption have become standard. Today, about 90 percent of
households have automobiles, up from 59 percent in 1950, and the typical
family has two motor vehicles and two television sets. Consumers have had the
discretionary income to buy such goods as CD players, videocassette recorders,
and personal computers. It is estimated that, in 1997, 35 percent of
households owned a personal computer, 61 percent had a cordless phone, and 88
percent had a video recorder. Some of these goods that might once have been
thought luxuries have become increasingly difficult for a family to do
without. For example, to the extent that newly created jobs are in the
suburbs rather than the inner cities, a car becomes a near necessity. And children who lack access to a computer at home may suffer an increasing educational disadvantage compared with their peers who have computers.
Meanwhile the same health and demographic trends that have increased longevity
also confront many more families with the need to care for their elderly
relatives. Although the elderly at any particular age are healthier today than
in the past, they are likely to require more care over more years, in part
because they are living longer and because medical advances can keep the very
ill alive longer than before. This care often becomes the responsibility of
their adult offspring.

Consumption of formal and informal care by the elderly has increased
substantially. From 1987 to 1996 the number of nursing homes increased 20
percent, and the use of home and community-based care is growing rapidly. The
population receiving such care is becoming older and increasingly frail. The
proportion of nursing home residents over age 85 increased from 44 percent in
1987 to 49 percent in 1996, and that of residents with limitations in three or
more standard activities of daily living (a common measure of frailty) rose
from 72 percent to 83 percent over that period. The average cost of a nursing
home is now more than $40,000 per year, and for those admitted to a nursing
home at age 65 or older, the average length of stay is 29 months for women and
23 months for men. Nearly 50 percent of the costs of long-term care are paid
out of pocket by nursing home patients and their families, and Medicaid bears
most of the remaining costs. The implications for family time of increased
care for elderly relatives are discussed in the next section.

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Thus, as the typical market basket affordable by most families changes, it
may be appropriate in characterizing the money crunch to expand our notion of
family needs beyond such traditional, basic purchases as food and clothing to
the acquisition of certain standard consumption goods like automobiles and
telephones. The crunch is even tighter when the rising costs of educating
children and caring for elderly parents is factored in.

Finally, the changing trends in the labor force participation of family
members have given rise to increasing costs of working outside the home, such
as child care, additional work expenses (for meals in restaurants, dry
cleaning services, and so on), and transportation costs. It is estimated, for
example, that just from 1986 to 1993 direct expenditure on child care rose 23
percent, after adjusting for inflation, for families with a preschool-age
child and a working mother.


Boosting the Financial Resources of Families to Lessen the Money Crunch

Since 1993, families in each fifth of the income distribution have
experienced solid and roughly equal percentage gains in income. In part this
balance reflects the strong overall performance of the economy, but it also
reflects a number of specific policies to make work pay for lower income
working families facing a money crunch.


Expansion of the Earned Income Tax Credit

In 1993 the President signed into law a major expansion of the Earned Income
Tax Credit (EITC), a refundable credit that is designed to reduce the overall
tax burden of low-income workers. Because it is refundable, workers can
receive the full credit to which they are entitled even if it exceeds the
income tax they owe, and people generally receive the credit as part of their
income tax refund. The EITC is not currently included in the definition of
money income used to compute the official poverty rate. However, calculations
based on an alternative income concept that does include the EITC show that
the credit lifted more than 4.3 million Americans out of poverty in 1998_more
than double the number in 1993. The EITC lifted more than 2.3 million children
out of poverty in 1998. And over 40 percent of the decline in child poverty
(computed using the alternative income concept) between 1993 and 1998 can be
explained by progressive tax relief, especially the EITC. The President has
proposed a major expansion of the EITC in his fiscal 2001 budget, to make the
credit even more effective in rewarding work for families.

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Increases in the Minimum Wage

The minimum wage was increased in two steps in 1996 and 1997 from $4.25 per
hour to $5.15 per hour, boosting the wages of 10 million workers. The combined
effects of the minimum wage and the EITC have dramatically increased the
returns to work for families with children. For example, between 1993 and
1998, families with two children and one wage earner who worked full-time at
the minimum wage experienced a 26 percent ($2,700) increase in their real
income as a result of these two policies alone. Research examining the impact
of minimum wage increases has shown that about two-thirds of workers affected
by earlier minimum wage increases were adults_predominantly women and
minorities_and that about one-third of the increase went to families in the
lowest tenth of the family earnings distribution. Thus minimum wage increases
can help reduce poverty among low-wage workers. Given recent tight labor
markets, job opportunities are plentiful, and American families are benefiting
from the higher minimum wage.


Welfare Reform

The welfare reform law signed by the President in 1996 dramatically changed
the Nation's welfare system into one that requires work in exchange for
time-limited assistance. The law contains strong work requirements,
comprehensive enforcement of child support awards, and support for families
moving from welfare to work. To assist people making this move and to support
low-income working families, the Administration has addressed a range of
logistical and financial challenges typically faced by such families.

Welfare-to-work grants help move long-term welfare recipients (mainly
mothers) and certain noncustodial parents (mainly fathers) in poor areas into
unsubsidized jobs, enabling them to work and support their families. Recent
efforts have extended these services to a broader group of low-income
noncustodial fathers, many of whom may have been wanting to contribute to the
support of their children but lacked the means to do so. To encourage hiring
and retention of long-term welfare recipients, employers are eligible for the
welfare-to-work tax credit equal to 35 percent of the first $10,000 in wages
in the first year of employment, and 50 percent in the second year.

New housing vouchers that subsidize the rents of low-income Americans are
helping families move closer to new jobs, reduce a long commute, or secure
more stable housing; new transportation grants are helping communities and
States develop flexible transportation alternatives for welfare recipients and
other low-income workers. New policy guidance allows States to use the more
generous welfare rather than food stamp asset tests in determining food stamp
eligibility for those on welfare, making it easier for low-income working
families to own a car and still receive food stamps.

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The 1996 welfare reform law invested an additional $4 billion over 6 years
to provide more child care assistance for families moving from welfare to work
and for other low-income parents. (Child care assistance is discussed further
below.) The new State Children's Health Insurance Program provides funds to
help States expand health care coverage of uninsured children, and new
Medicaid rules allow States to expand Medicaid to cover more low-income
families who work, including more two-parent families.

Finally, Individual Development Accounts (IDAs) empower low-income families
to save for a first home, to enroll in postsecondary education, or to start a
new business.

As a result of welfare reform and the strong economy, by June 1999 the
number of welfare recipients nationwide had fallen to 6.9 million, 51 percent
less than in 1993. That number represents 2.5 percent of the total population,
the lowest proportion since 1967. All 50 States met the overall work
participation requirements of the welfare reform legislation. Twenty-seven
States were awarded bonus funds for their superior results in reforming
welfare. Reports by the 46 States competing for the bonus indicate that more
than 1.3 million welfare recipients nationwide went to work in the 12-month
period from October 1997 through September 1998. Retention rates are also
promising: 80 percent of those who got jobs were still working 3 months later.
States reported an average earnings increase of 23 percent for former welfare
recipients, from $2,088 in the first quarter of employment to $2,571 in the
third quarter. Among those remaining on welfare, the proportion working has
nearly quadrupled, from 7 percent in 1992 to 27 percent in 1998.

At least one independent study confirms these conclusions, finding that
almost 70 percent of welfare leavers said they went off welfare because of
increased earnings or a new job. When women move to paying jobs, they develop
the skills needed to produce higher sustainable incomes over their lifetimes
and to reduce the intergenerational cycle of dependency. In addition, the
Administration's initiative to reduce teen pregnancy (Box 5-4) plays a role in
breaking the cycle of dependency and increasing the well-being of families by
reducing the number of children born to teen mothers.


Social Security and Medicare

Social Security is a key source of income for most recipients: in 1996 it
was the main source of income for 66 percent of beneficiaries; it represented
at least 90 percent of income for 30 percent of beneficiaries; it was the sole
source of income for 18 percent. Social Security benefits provide 81 percent
of total income for those in the lowest fifth of the income distribution of
the elderly, and they are the largest single source of income for all but the

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Box 5-4. The National Strategy to Reduce Teen Pregnancy

From 1980 to 1991 the overall birth rate to teens aged 15-19 rose from 53.0
to 62.1 per 1,000. Since then, however, this trend has been improving.
Nationwide, this rate declined by 18 percent from 1991 to 1998, and teen birth
rates have fallen in every State and across ethnic and racial groups.  For a
subset of this group, girls aged 15-17, the 1998 birth rate was at its lowest
on record. In addition, teen pregnancy rates are at their lowest since 1976,
the earliest year for which data on this group are available. Yet despite
these recent improvements, teen pregnancy remains a problem, since the
financial resources and opportunities of unwed teens and their children are
significantly less than those of other families.

Each year more than 900,000 pregnancies occur among American teenagers. A
collection of studies on teen parenthood found that roughly four-fifths of
teen mothers end up on welfare. The children of adolescent mothers were found
to have poorer health outcomes and were 50 percent more likely to be of low
birthweight. In addition, the sons of adolescent mothers were found to be 2.7
times as likely to be incarcerated as the sons of mothers who delayed
pregnancy, and the daughters of adolescent mothers were one-third more likely
to become teen mothers themselves.

On January 4, 1997, the President announced a comprehensive national
strategy to reduce teen pregnancy in this country. The new initiative, led by
the Department of Health and Human Services (HHS), responded to a call from
the President and the Congress for a national strategy to prevent
out-of-wedlock teen pregnancies. It also responded to a directive, under the
welfare reform act, to ensure that at least 25 percent of communities in this
country have teen pregnancy prevention programs in place. Key efforts under
this initiative include the following:

  Implementing New Efforts Under Welfare Reform. Under the welfare
reform law signed by the President on August 22, 1996, unmarried minor parents
are required to stay in school and live at home, or in an adult-supervised
setting, in order to receive assistance. The law encourages the creation of
Second Chance Homes, supportive and supervised living arrangements that
provide teen parents with the skills they need to become good role models and
providers for their children, giving them guidance in parenting and in
avoiding repeat pregnancies.

  Supporting Promising Approaches and Building Partnerships. The
Administration continues to support innovative teen pregnancy prevention
strategies tailored to the unique needs of communities. HHS-funded programs
supporting teen pregnancy prevention have been established in about 34 percent
of the 4,752 Census-defined communities in the United States. In addition, HHS
has built part-

continued on next page...

[[Page 189]]

Box 5-4_continued

nerships aimed at reducing teen pregnancies with national,
State, and local organizations.

  Disseminating Information on Innovative and Effective Practices. On
October 25, 1999, the Secretary of Health and Human Services unveiled a
comprehensive guide, developed in partnership with the National Campaign to
Reduce Teen Pregnancy, to help communities and nonprofit organizations
establish successful local teen pregnancy prevention programs.

  Improving Data Collection, Research, and Evaluation. The national
strategy is working to improve data collection, research, and evaluation to
further understand the magnitude, trends, and causes of teen pregnancies and
births. Efforts are also under way to develop targeted teen pregnancy
prevention strategies and to assess how well these strategies work.

  Sending a Strong Abstinence Message. The welfare law also
provides million a year for 5 years in new funding for State abstinence education programs.


highest fifth. Although only 9 percent of aged beneficiaries are poor, an
additional 41 percent would be poor based on their non-Social Security income.
Recognizing the importance of Social Security to the elderly, the President
has proposed using the benefits of fiscal discipline and debt reduction to
strengthen Social Security, extending its solvency from 2034 to at least 2050.
Medicare is the main source of health insurance for the elderly and people
with disabilities, insuring nearly 40 million Americans. The elderly
population is projected to double in the next 30 years as the baby-boom
generation retires. At the same time the ratio of elderly persons to workers
who pay payroll taxes that help fund Medicare will increase. In addition, some
Medicare payments systems and benefits are outdated. On June 29, 1999, the
President unveiled his plan to modernize and strengthen the Medicare program
to prepare it for the health, demographic, and financing challenges it will
face in the 21st century. The plan proposes to make Medicare more competitive
and efficient; to modernize and reform Medicare benefits, including adding a
prescription drug benefit; and to make a long-term financing commitment to the
program, and in doing so extend the solvency of the Medicare trust fund until
at least 2025.

Assistance with Long-Term Care

Millions of adults and a growing number of children have long-term care
needs arising from a health condition present at birth or from a chronic
illness developed later in life. Moreover, with the number of Americans aged
65

[[Page 190]]

or older, and of those 85 or older, both projected to double by 2030,
long-term care is a need that will become more pressing in the 21st
century.

The fiscal 2001 budget contains, as the centerpiece of the President's
long-term care initiative, a $3,000 tax credit for people with long-term care
needs or their caregivers. The President's initiative contains several
features in addition to the credit. It would provide funding for services that
support family caregivers of older persons; improve equity in Medicaid
eligibility for people in home- and community-based settings; encourage
partnerships between low-income housing for the elderly and Medicaid; and
encourage the purchase of good-quality private long-term care insurance by
Federal employees. This initiative complements the Administration's effort to
improve the quality of care in nursing homes.


Other Policies to Help Families

Millions of families with children have benefited from the $500-per-child
tax credit enacted in 1997, and the 2001 budget includes additional tax relief measures, including expansion of the child and dependent care tax credit. The
2001 budget also addresses another financial concern of American
families_access to affordable health care coverage_by proposing a 10-year,
$110 billion investment in expanding health insurance coverage.

Tougher enforcement of child support has helped ease the economic burden on
single mothers and stresses the responsibility of both parents for the
economic support of their children. In 1998, Federal and State child support
enforcement efforts collected an estimated $14.3 billion from noncustodial
parents, a nearly 80 percent increase since 1992. In 1998, 4.5 million
families received child support, an increase of 59 percent since 1992.
Finally, a primary means of reducing the money crunch is to provide more
individuals with the skills and education they need to raise their incomes.
The Administration has therefore placed great emphasis on policies to invest
in skills, as discussed in Chapter 4.


The ``Time Crunch''

The historic entry of millions of women into the labor force has resulted in
higher incomes for families and a new sense of career satisfaction for many
women. But it has also resulted in a significant jump in the total hours that
parents spend at work. Around 4,000 hours per year total, or 2,000 hours for
each parent, is common for families where both parents work full-time. Those
families who work that many hours or more_that is, the upper tail of the hours
distribution in Chart 5-8_are most likely to

[[Page 191]]

suffer from the time crunch. The share of married couples in which both
spouses work full-time rose from 32 percent to 48 percent between 1968 and
1998. As the sole support of their children, single parents working long
hours also are likely to suffer from a time crunch; the share of these parents
working full-time rose from 56 percent to 67 percent from 1968 to 1998.

Thus, although the choice to enter the labor market results in more
material goods for families, these benefits come at the expense of home time.
Evidence that families are feeling a time crunch comes from a 1995 national
survey that asked whether respondents ï¿½always feel rushed, even to do the
things you have to do.ï¿½ Thirty-three percent said yes, compared with 24
percent in 1965. The analysis of changes in parents' allocation of time in
this section provides a closer look at how patterns of family care have
changed as women have entered the labor force.


Time Use and Child Care

As women spend more time in paid employment and a larger share of families are
headed by single parents, families have less time to devote to unpaid
activities, including time with children. Between 1969 and 1999, for example,
the total amount of parental time available outside of work fell in both
married-couple and single-parent families (Chart 5-9). This conclusion comes
from analyzing the trend in time reported in the Current Population Survey
(CPS) as spent at work. To construct the time available on a daily basis, the
analysis starts with 48 hours per day for married couples and 24 hours for
single parents. It then subtracts the average daily amount of time spent
atwork plus 8 hours per parent per day for sleep. Because the proportion



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of single-parent families increased over this period, the average amount of
family time available outside of work fell overall by even more than it did
for either family type. Note that this analysis is only about time potentially
available to spend with children, because the CPS does not contain information
about how parents actually spend time outside of work. The best source of
information on time use comes from an analysis of time-use diary surveys
conducted from 1965 to 1995. These surveys ask individuals to keep a daily
record of how they spend their time during a designated day. Although rich in
detail, these surveys cover a fairly small number of individuals and thus
cannot be used to examine trends for subgroups of the population. To build a
more comprehensive data base, the 2001 budget includes funding for the Bureau
of Labor Statistics to start regular collection of time-use diaries from a
probability sample large enough to provide data on subgroups.

Existing time-use diaries show that employed women spend about one-third
less time on child care and household tasks than do women who are not in paid
employment. The primary change in time use for women is that their increase in
paid hours has been nearly equally offset by a reduction in time devoted to
housework. Although men have increased their time spent on housework by about
5 hours per week, this is far less than the 11-hour-per-week reduction by
women. (The study does not, however, report separate data for those who are
parents.) Nevertheless, despite the assistance of husbands and despite the use
of purchased inputs into home care, employed women in the aggregate still have
a third less free time today than nonworking women.

The data display a 32 percent reduction in women's time spent on child care
and household tasks between 1965 and 1995. This decline is mainly driven by
reductions in housework activities. However, data from 1985 (the most recent
year for which a detailed breakdown is available) indicate that working
mothers spend 5 fewer hours per week on child care activities than do
nonworking mothers (6.7 hours versus 12 hours). This suggests that the
increase in the proportion of mothers working has played a role as well.
Meanwhile men's time spent on child care has been constant at roughly 3 hours
per week.

Undoubtedly the time crunch is worse for single-parent families (although,
again, existing time-use evidence does not isolate data for this group). These
families typically have lower incomes and thus are less able to purchase
substitutes for their time in the home, such as home-based child care,
cleaning services, or labor-saving products and appliances for the home. They
also lack the assistance that a spouse provides. They may instead rely more on
care provided by older relatives.

As a result of improvements in health and longevity, grandparents are
increasingly a resource that parents_whether single or married_can draw on for
help with child care. In a survey of grandparents caring for their
grandchildren in a noncustodial relationship, over 60 percent cited the

[[Page 193]]

employment of the grandchild's parents, the desire to help the grandchild's
parents financially, or both as reasons for providing care. In addition, in a
sample of working mothers aged 19-26 with a youngest child under 5, nearly 25
percent utilized a grandmother as the principal caregiver. As discussed in the
next section, however, responsibilities for taking care of older relatives may
compound the time crunch for many families.


Time Use and Parental Care

In 1997, more than 5 percent of households spent over 20 hours a week in
caregiving for the elderly. And since nearly two-thirds of family caregivers
are working, the need to balance work and family will likely increase in the
21st century. Caregivers of the elderly who are also in the paid labor force
report making adjustments to work schedules and forgoing promotions, new
assignments, transfers, relocations, and training opportunities. One recent
study estimates that, by 2002, 42 percent of workers will provide some form of
elder care.

Most of the discussion in this chapter has focused on the time and money
costs of raising children and the stresses that these costs impose on
families. Layered on top of this is the generational crunch: the need to
stretch resources further when families have multiple caregiving
responsibilities to consider as they try to maintain a delicate balance
between work and family. With parents living longer, and with their
daughters_the traditional providers of their care_now largely in the paid
labor force, the costs of parental care are likely to become even greater in
the 21st century. However, Social Security and other retirement benefits, as
well as the availability of assisted living facilities, also permit more
elderly people to live independently for longer.

The last 10 years have witnessed an explosion of care for the elderly
outside of nursing homes, and this care is largely provided by women. From
1987 to 1997 the number of U.S. households that provided unpaid care to
elderly adults more than tripled, from 7 million to more than 21 million, or
from 8 percent to 22 percent of households. To the extent that more elderly
adults are living on their own, much of this care will likely take place in
the parent's home. The typical caregiver is a married woman with only a high
school diploma and a household income of about $35,000, and the typical care
recipient is most likely her mother, grandmother, or mother-in-law. However,
even as more households are providing in-home care, they appear to be spending
somewhat less time on that care. Today a typical caregiver spends fewer hours
per week giving care. In addition, the caregiver is less likely to be
residing with the recipient, and is more likely to use paid services than
caregivers a decade ago.

The explosion in caregiving responsibility for parents s contributing to the
time crunch that the American family is facing: 43 percent of surveyed

[[Page 194]]

caregivers for the elderly say their caregiving has left them with less time
for other family members. These changes surely arise in
part because today's average caregiver is balancing work and family: half of
all caregivers are working full-time outside the home. Among employed
caregivers, one-fifth had to give up work at least temporarily, and half
reported making changes to work schedules to accommodate caregiving. Surveys
of caregivers underestimate the demand for parental care, however, because
they cannot measure the frequency with which employed potential caregivers
choose not to provide care.

In the future, the time and money commitments associated with parental care
may become even more confining, given the trends identified above. The
increase in the labor supply of women has been accompanied by an increase in
their wages and thus the opportunity cost of their time. As employed women age
and as their parents require more care, those higher wages may make these
women increasingly reluctant to curtail their paid employment_thus they will
face an even greater time crunch as they care for their parents. To the extent
that these women have had children later in life, they may also experience the
double generational crunch of caring for both children and parents
simultaneously. And among those women whose children are already adults, many
will have grandchildren to care for. During the 21st century, the increasing
cost of elderly care will also fall on fewer children, because of the drop in
fertility rates of the baby-boom generation and the rising population of the
elderly relative to the working-age population. This looming increase in the
time crunch may result in more substitution toward formal care, as the greater
wealth of the baby-boom generation and their children may make such care more
affordable. However, if the cost of that care rises relative to prices
generally, these same baby-boomers are likely to experience a tightening money
crunch as well.


Increasing the Flexibility of Paid Work to Lessen the Time Crunch

With a record high share of the population employed, many workers find
themselves struggling to balance work and family. Women have less flexibility
to respond to family needs than they once did, and men are increasingly being called on to take a greater role in child care and other responsibilities
Recognizing these changes, the Administration has supported a number of
policies to increase flexibility at work and help families address the time
crunch.


The Family and Medical Leave Act

The Family and Medical Leave Act (FMLA) of 1993 requires employers with 50
employees or more to provide up to 12 weeks of unpaid, job-

[[Page 195]]

protected leave a year to eligible employees under certain defined
circumstances. These include the need to care for a newborn, newly adopted, or
foster child; for a child, spouse, or parent with a serious health condition;
or for a serious health condition of the employee himself or herself,
including maternity-related disability. The FMLA also requires employers to
continue the employee's health benefits during leave. Employees are eligible
to take such leave if they have worked for a covered employer for at least 1
year and have worked for at least 1,250 hours over the previous 12 months.
Since 1993, millions of workers have taken advantage of the FMLA to spend
necessary time with their families.

The experiences of both employers and employees with the FMLA were
documented in national surveys sponsored by the Department of Labor. The
employer survey found that one-third of employers (and two-thirds of employers
in larger worksites) believed that the FMLA had had positive effects on their
employees' ability to care for family members. Most employers also reported
that compliance costs were small or negligible and that there was no
noticeable effect on either business or employee performance. The employee
survey found that the majority of those who took family or medical leave found
it relatively easy to arrange; few reported concerns about job-related
consequences of taking leave. This survey also found that employees with
annual family incomes between $20,000 and $30,000 were more likely to take
leave than employees with higher incomes, highlighting the importance of the
FMLA to lower income workers.

Today, 92 million workers are covered by the FMLA. It has proved to be a
significant advance in helping a larger cross section of working Americans
meet their medical and family caregiving needs for children and for elderly
parents while maintaining their jobs and their economic security.

The President has proposed expanding the FMLA to cover businesses with more
than 25 employees (currently the threshold is 50 employees). This would extend
coverage to almost 12 million more workers. He has also proposed requiring
employers to allow FMLA-covered workers to take up to 24 hours of leave per
year to attend parent-teacher conferences or routine doctors' appointments.


Work Arrangements That Promote Flexibility

The desire for greater job flexibility is also leading to new work
arrangements between workers and their employers regarding when and where paid
work is performed. An increasingly popular work arrangement is ``flextime,''
which allows workers to vary the time they begin and end work. In 1997, 28
percent of full-time wage and salary workers had flexible work schedules. This
was up sharply from 15 percent in 1991. The Federal Government has led by
example in instituting flextime, allowing employees greater discretion in when
they work. The President has also proposed a flextime initiative that

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would allow all workers who get time-and-a-half pay for working overtime
to be compensated in the form of time off for family and medical leave
purposes or vacation instead of in cash.

Another approach to allowing greater flexibility on the job is working at
home for pay. This arrangement is used by a small but growing share of
workers. In 1997, for example, 3.3 percent of all wage and salary workers were
working at home for pay, up from 1.9 percent in 1991. Another way parents
share child care is by working different shifts. In order for shift work to
make it easier to combine paid work and child care, however, the choice of
shifts must be the worker's. In 1997, 83 percent of full-time wage and salary
workers were on regular daytime schedules, 4.6 percent were on evening shifts, 3.9 percent were on employer-arranged irregular schedules, 3.5 percent were
on night shifts, and 2.9 percent were on rotating shifts.


Improving Access to High-Quality, Affordable Child Care

Many parents are likely to adjust to an increase in their paid work time by
increasing their use of nonparental child care providers. The availability,
cost, and quality of child care are crucial to the well-being of children and
to the ability of parents to balance the needs of work and family. Primary
child care arrangements for preschool-age children of employed mothers in the
fall of 1994 were divided roughly equally among care in the child's home (by a
relative or nonrelative), care in another home (by a relative or nonrelative),
and care in an organized child care facility. Since 1985 the trends have been
toward a slight increase in the proportion of children receiving care in their
own homes, relatively fewer children receiving care in another home, and
relatively more children receiving care in an organized facility.

The Administration has consistently emphasized the importance of child care
availability, affordability, and quality. Since 1993, child care funding for
low-income families has more than doubled. The budget for fiscal 2001
supports a $3.3 billion increase in resources for child care, including more
funding for programs benefiting poor and near-poor children and an expansion
of the child and dependent care tax credit. The proposal would gradually make
the credit refundable, so that it would be available to low-income working
families for the first time. And it would increase the amount of the credit
for middle-income families struggling to afford child care. As discussed in
Chapter 4, funding for Head Start has likewise increased substantially during
this Administration, and progress continues to be made toward the President's
goal of enrolling 1 million children by 2002.

After-school care for children is another concern of working parents. In
1998, 68 percent of married couples with children were ones in which both

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parents were in the labor force, compared with 28 percent in 1970. Today, 28
million school-age children are in either married-couple families where both
parents are employed or single-parent families where the parent works
outside the home; an additional 10 million children are in married-couple
families where only one parent is employed. This has led to strong demand for
quality programs to ensure that children are safe and learning during the
hours when they are not supervised by a parent. In fact, experts estimate that
during a typical week at least 5 million school-age children spend time
unattended at home. This Administration has responded to this situation by
increasing its investment in after-school and summer programs from $40 million
in 1998 to $453 million in fiscal 2000. The President has called for a
doubling of this investment in fiscal 2001.


Conclusion

The American family in the 21st century faces a different world and a
different set of challenges than the family of 100 years ago. The twin
problems of scarce time and scarce resources are not, of course, new, but
their manifestations in our turn-of-the-millennium economy may well be. Thanks
in part to greater participation of women in paid employment, families today
enjoy a much higher standard of living than did families a century ago. But
expectations also appear to be different today. Great changes in the economy
have opened up great opportunities as well as great challenges. As people
aspire to take advantage of those opportunities, changes in workplace arrangements and well-designed Federal policies can help them overcome the challenges.