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Families’ Financial Stress & Well-Being: The Importance of the Economy and Economic Environments

Terri friedline.

1 University of Michigan School of Social Work, 1080 S. University Avenue, Ann Arbor, MI 48109 USA

2 University of Southern Mississippi School of Social Work, Hattiesburg, USA

So’Phelia Morrow

The Great Recession and the unfolding COVID-19 Pandemic Recession—two major disruptions to the economy that occurred just one decade apart—unequivocally confirm the importance of the economy and economic environments for understanding families’ financial stress and well-being. However, recent published literature places too little emphasis on the economy and economic environments and instead focuses on explanations rooted within individuals and families. In this article, we review research on families’ financial stress and well-being published in JFEI between 2010 and 2019, which analyzed data collected during the Great Recession and were subsequently published in the shadow of the economic downturn. We discuss the economy and economic environments as gaps in the literature and encourage future research to focus on these explanations of stress and well-being, especially in response to the pandemic recession.

Introduction

As one of the most significant macroeconomic events of the last century, the Great Recession that began in 2007 undermined the financial well-being of millions of American families. This widespread economic downturn disrupted families’ financial well-being, defined as being able to “fully meet current and ongoing financial obligations” (Consumer Financial Protection Bureau [CFPB] 2015 , p. 18), when banks’ and financial institutions’ predatory and subprime lending precipitated the foreclosure crisis and forced families into borrowing debt (Mian and Sufi 2014 ; Federal Reserve Bank of New York 2019 ). The extraordinary rise in subprime mortgage lending precipitated the equally extraordinary rise in default rates: Nearly 4 million homes were foreclosed at the height of the Great Recession (Mian and Sufi 2014 ). Suggestive of their need to cope with economic hardship, families increased their borrowing in the years after the economic downturn. Total consumer debt rose from approximately $7 trillion in 2003 to $12 trillion in 2008 and $14 trillion in 2019 in inflation-adjusted dollars (Federal Reserve Bank of New York 2019 ). These effects were experienced more acutely by those who were targeted by banks and financial institutions for subprime lending and that had the fewest financial resources to spare, including Black and Brown families (Faber 2018 ; Hamilton and Darity 2017 ), lower-income families (Pfeffer et al. 2013 ), and families headed by women (Baker et al. 2019 ).

The effects of the recession precipitated by the global pandemic in 2020, caused by the rapid spread of the coronavirus COVID-19, will be far more severe than those of the Great Recession. American families never fully recovered from the Great Recession to begin with, as evidenced by continued rising consumer debt and wealth losses (Baker et al. 2019 ; Federal Reserve Bank of New York 2019 ; Hamilton and Darity 2017 ). Without strong and aggressive government intervention, families are likely to be completely financially devastated by the unfolding Pandemic Recession. It will be years and decades before the full, lasting effects of the Pandemic Recession on all aspects of life are understood; however, early reports of families’ lived experiences are already revealing their immediate financial devastation. While the lessons that are still being gleaned from the Great Recession can inform current and ongoing responses to the Pandemic Recession, much more extensive and grassroots-focused policy responses will be needed to stabilize and shore up families’ financial well-being.

Since its inception in the late 1970s, the Journal of Family and Economic Issues (JFEI) has been dedicated to the important academic mission of exploring and understanding families’ financial well-being within the contexts of their economic environments. The journal’s literature published within the most recent decade—a time period that encompasses the Great Recession—continues this legacy and has made important contributions on a range of topics including income, wealth, and debt (Addo et al. 2019 ; Fan and Chatterjee 2019 ; Hancock et al. 2013 ), economic hardship (Lucero et al. 2016 ; Schieman and Young 2011 ), financial stress (Kramer et al. 2019 ; Valentino et al. 2014 ), and strategies for coping with hardship, like saving money (Fisher and Montalto 2011 ; Fontes 2011 ; Haron et al. 2013 ).

At the same time, we contend that recent published literature on families’ financial stress places too little emphasis on economic environments and, by extension, the economy (Friedline, Nam et al. 2014 ; Lai 2011 ; Rauscher and Elliott 2016 ; Thorne 2010 ; Vesely et al. 2015 ), and often focuses on explanations rooted within individuals and families (Deidda 2015 ; Gjertson 2016 ; Park and Kim 2018 ; Romo 2014 ; Stein et al. 2013 ; Tobe et al. 2016 ; Valentino et al. 2014 ). This lopsided emphasis is common for articles in journals whose scope is similar to that of JFEI, such as journals focused on family or household finance, counseling, and planning. The effects of Great Recession and the unfolding COVID-19 Pandemic Recession on families’ financial well-being—two major disruptions to the economy that occurred just one decade apart—should unequivocally confirm the importance of the economy and economic environments. The gaps created by the focus of JFEI’s recent published literature provide opportunities for the journal to extend its mission and focus on the economy and economic environments in which families are situated.

In this article, we review research broadly captured under the umbrella of financial stress and published in JFEI between 2010 and 2019, and which were mostly conducted in the United States. These 23 articles were assigned to us by the special issue editors to focus on financial stress. The articles analyzed data collected during the Great Recession and were subsequently published in the shadow of the economic downturn. Therefore, a focus on the economy (national and global macroeconomic sites of labor, production, and consumption) and economic environments (local and regional economic sites) is even more consequential. We discuss these gaps in the literature and encourage future research on families’ financial stress and well-being to emphasize the economy and economic environments, especially in response to the Pandemic Recession.

A Literature Review of Financial Stress and Well-Being

The literature we reviewed that broadly focused on financial stress and well-being can be grouped into four categories: income, wealth, and debt; economic hardship; financial stress; and coping strategies. We attempted to create a temporal ordering of families’ financial stress by grouping the literature into these categories. For example, families with inadequate income, wealth, or debt may experience economic hardship that precipitates stress when they struggle to afford their current and ongoing financial obligations. Families use a variety of strategies to cope with these circumstances. Table ​ Table1 1 lists these articles and provides a summary of their research questions and main findings. Given that these articles covered broad and overlapping topics, several were grouped into multiple categories.

Summary of reviewed literature

Income, Wealth, and Debt

The Great Recession weakened the financial well-being of many families, placing them at risk by destabilizing income-producing and wealth-generating mechanisms (Friedline et al. 2014 ; Lee and Kim 2018 ; Rauscher and Elliott 2016 ; Rhine et al. 2016 ). Families experienced significant changes or disruptions to their income, wealth, and debt during and after the economic downturn (Federal Reserve Bank of New York 2019 ). One basic way that families attempted to establish and maintain their financial well-being was through savings account ownership (Rhine et al. 2016 ). Savings provide families with liquidity for supplementing their income and making further investments. Those with savings accounts were able to take better advantage of these assets for buffering against some of the negative effects of the economic downturn (Friedline et al. 2014 ); although, families who were positioned to take better advantage of these assets benefitted from intergenerational wealth transfers (Friedline et al. 2014 ; Rauscher and Elliott 2016 ).

One way families tried to maintain their financial well-being in response to the Great Recession was through opening lines of credit and applying for small loans. However, families’ participation in these types of wealth-building and debt accumulation mechanisms was restricted to those who were able to participate in lower-cost, higher quality financial services. Instead, many families used higher-cost, lower quality financial services like payday, installment, and auto title lenders. For example, households with constrained credit were more likely to use payday loans than those who were not (Lee and Kim 2018 ). In the years following the Great Recession, many households reported that a payday loan was the only option available to them (Lee and Kim 2018 ).

Families struggled to manage their debt during the economic downturn and turned to public welfare for support (Kim and Wilmarth 2016 ). Public welfare can help families avoid debt or help them to repay current debts. Kim and Wilmarth ( 2016 ) found that 54% of the households receiving public welfare were able to meet debt-to-income guidelines compared to only 46% of households who were not receiving assistance, thus showing the government’s role in helping households manage their debt especially during an economic downturn. Some families had been accumulating debt when the Great Recession began and were therefore more vulnerable. In their exploration of the determinants of filing for bankruptcy, Bauchet and Evans ( 2019 ) found that having higher credit card debt was positively associated with filing for bankruptcy while having higher asset amounts was negatively associated. Moreover, having educational debt from student loans was negatively associated with filing for bankruptcy, potentially highlighting that certain types of debt could have differential effects on the likelihood of filing for bankruptcy.

There were also differences in income, wealth, and debt by race, class, and gender identity (Malone et al. 2010 ; Rhine et al. 2016 ; Rauscher and Elliott 2016 ). For example, compared to White families, Black and Latinx families were less likely to own a savings account and had less access to liquid assets like money market, mutual fund, or retirement accounts (Rhine et al. 2016 ). Higher income households had more financial resources to buffer them from income and wealth losses compared to lower income households (Rauscher and Elliott 2016 ). Gender differences in real wages also suggest that the Great Recession affected men’s and women’s wages differently. Women spent more time on activities like cooking meals and childcare than men (Kuehn 2016 ). Time spent caring for children was consistently negatively associated with real wages, such that more time spent caring for children resulted in a decrease in actual wages (Kuehn 2016 ).

Economic Hardship

Economic hardship, also referred to as material hardship, refers to families’ inability to meet their needs such as food, clothing, and health care (Mimura 2008 ; Rios and Zautra 2011 ). Closely related to poverty, economic hardship is a multidimensional construct and has been assesssed by a host of measures that go beyond traditional poverty measures that are based primarily on income thresholds. Because the construct taps into multiple, distinct dimensions of well-being (Iceland and Bauman 2007 ), economic hardship has been frequently examined in the aftermath of the Great Recession to gain nuanced understandings of families’ experiences. Examples of economic hardship reviewed in the literature include food, housing, health care, education, and bankruptcy, which together reflect families’ difficulty in meeting their needs (Heflin 2016 ).

Many Americans experienced abrupt changes in employment, income, and wealth during and after the Great Recession that were associated with their economic hardship (Bauchet and Evans 2019 ; Deidda 2015 ; Heflin 2016 ). For example, Heflin ( 2016 ) found that experiencing income losses and having a person with disability join the household were associated with hardships related to housing, health care, and other essential expenses like food. Analyzing data from five European countries, Deidda ( 2015 ) found that housing costs were a financial burden and were associated with economic hardship, such as preventing families from spending money on health care, education, food, and clothing. Findings from these studies converge to suggest that many families lived in a time of financial instability and were vulnerable to financial shocks. Changes in life circumstances can easily place households at risk of experiencing economic hardship, ranging from diffculty in covering basic needs to filling for bankruptcy (Bauchet and Evans 2019 ; Deidda 2015 ; Helfin 2016 ).

Economic hardship inevitably places stress on family relationships (Masarik and Conger 2017 ; McCubbin et al. 1980 ), which can make some more vulnerable to abuse and violence (Lucero et al. 2016 ; Showalter 2016 ). Lucero, Lim, and Santiago ( 2016 ) examined the link between economic hardship and intimate partner violence with a sample of 941 women in committed relationships. The longitudinal data analyzed in this study allowed for an examination of economc hardship over a 10-year timespan between 1999 and 2010 that included the Great Recession. Continuously high levels of economic hardship over time elevated the risk of intimate partner violence, implying that ongoing economic hardship can be an additive stressor that subjects women to intimate partner violence.

Financial Stress

Families experience financial-related psychological stress or distress when they do not have adequate income, wealth, or debt to afford economic hardship (Lai 2011 ; Park and Kim 2018 ; Thorne 2010 ; Sweet et al. 2013 ). A concept that is related to well-being (CFPB 2015 ), financial stress arises when families are unable to meet their current and ongoing financial obligations. Financial stress is often operationlized as the physical or mental health symptoms that arise from having difficulty meeting basic needs, difficulty paying bills, and money leftover at the end of the month (Afifi et al. 2018 ; Ponnet et al. 2016 ; Romo 2014 ; Valentino et al. 2014 ). These indicators that measure the extent to which families lack the financial resources to afford current or persistent obligations help to explain why greater income and wealth are often associated with lower financial stress (Lai 2011 ; Romo 2014 ; Valentino et al. 2014 ).

Financial stress presented differently among individuals within and across families. Women, for example, experienced the effects of financial stress by having poorer physical and mental health when compared to men (Afifi et al. 2018 ; Lai 2011 ; Park and Kim 2018 ; Stein et al. 2013 ; Thorne 2010 ). In heterosexual couples, women reported higher levels of stress and anxiety than their partners in anticipation of having conversations about money (Afifi et al. 2018 ). Women’s higher levels of financial stress could have been partly due to the fact that they were responsible for managing their households’ finances during economic hardship. Thorne ( 2010 ) interviewed couples who were filing for bankruptcy, finding that women were often solely responsible for financial decision-making during this time and that they experienced severe stress. Overwhelmed with the responsibilities of paying taxes and responding to creditors, one woman prayed she would die during an upcoming surgery to escape her financial stress, “I was to the point where when I went in for surgery, I prayed to God that I didn’t wake up…I just didn’t want to come home…I wanted to have an easy suicide” (Thorne 2010 , p. 194).

There were also differences in financial stress across racial groups (Afifi et al. 2018 ; Park and Kim 2018 ; Serido et al. 2014 ; Valentino et al. 2014 ). For instance, White young adults exhibited higher rates of alcohol use and heavy drinking in the presence of financial stress when compared to their Asian, Black, and Latinx counterparts (Serido et al. 2014 ). In a study that examined the communication patterns and stress levels of White and Latinx heterosexual couples, Latinx couples often presented as a united front, used humor, and blamed the Great Recession for their economic hardship (Afifi et al. 2018 ). Couples that adopted these communication patterns also exhibited lower cortisol levels. A study that examined financial stress longitudinally found that Black mothers displayed higher rates of financial stress over time, whereas White mothers’ stress was stable yet persistent (Valentino et al. 2014 ). For White mothers, their stress could be explained in part by their depressive symptoms. However, depressive symptoms did not predict Black mothers’ stress (Valentino et al. 2014 ), which might be better explained by disparities in income, wealth, and debt (Hamilton and Darity 2017 ; Pfeffer et al. 2013 ) and could indicate that popular scales validated on White populations are inadequate for measuring Black women’s depression (Jones and Ford 2008 ; Watson and Hunter 2015 ; Woods-Giscombé and Lobel 2008 ).

Coping Strategies

Families experienced econonic hardship and mounting financial stress in the post Great Recession era. A stream of research has investigated how individuals and families coped with economic hardship and financial stress, especially focusing on certain demographic groups or social identities such as low-income households (Bauchet and Evans 2019 ; Gjertson 2016 ; Kim and Wilmarth 2016 ; Tobe et al. 2016 ), immigrants (Vesley et al. 2015 ), women (Menclova 2013 ), and young adults (Stein et al. 2013 ). The coping strategies that individuals and families adopted varied to a great extent, with some similarities.

Faith and religious beliefs were a commonly investigated and discussed coping strategy. For example, Tobe et al. ( 2016 ) observed families receiving counseling services and found that they used faith to build support systems through new relationships with others. Similarly, Stein et al. ( 2013 ) described how college students used religious coping strategies to make sense of the economic crisis and loss. College students that responded to surveys perceived the economic crisis as a punishment from God; although their religious perceptions did not appear to be associated with self-reported well-being (Stein et al. 2013 ). Reliance on family and relationships were observed among economically distressed families: Strong family relationships helped to sustain those under emotional and financial stress among Midwest families (Tobe et al. 2016 ) and immigrant mothers (Vesely et al. 2015 ).

Families also coped financially by borrowing from payday loans, filing for bankrutpcy, using government susidies, changing jobs, or saving for emergencies (Gjertson 2016 ; Lebert and Voorpostel 2016 ), espeically among low-income families (Kim and Wilmarth 2016 ) and families with credit constraints (Bauchet and Evans 2019 ; Lee and Kim 2018 , Tobe et al. 2016 ). These coping strategies align with the literature on economic hardship, which concludes that many families remained financially stressed during the illusory economic recovery. Notably, these coping strategies were closely linked to the recession. Specifically, the likelihoods of using payday loans and filing bankrupcy were higher among families with damaged credit and credit card debt (Bauchet and Evans 2019 ; Lee and Kim 2018 , Tobe et al. 2016 ). Studies imply that the magnitudes of these associations increased strongly following the Great Recession. In addition, race and life circumstances seemed to matter when it came to using these strategies. For instance, given the constraints created by discrimination and inequality (Shapiro 2017 ), Black respondents and households with a dependent child had higher likelihoods of using payday loans (Lee and Kim 2018 ). Having a new child enter the family was associated with an increased possiblity of filling for bankrupcy, while retiring was associated with a decreased possiblity of filing for bankruptcy (Bauchet and Evans 2019 ).

Public welfare was an important strategy for families who utilized these government-sponsored programs to cope with economic hardship and financial stress. Studies suggest that public welfare helped families to manage their debt (Kim and Wilmarth 2016 ), as well as to improve their physical health outcomes (Menclova 2013 ). These findings are especially relevant given that participants included low-income families (Kim and Wilmarth 2016 ) and women (Menclova 2013 ), who were disproportionately impacted by the Great Recession (Baker et al. 2019 ; Pfeffer et al. 2013 ). For families that used public welfare, these government programs were just one component of a series of supports that they cobbled together to cope with econimc hardship and financial stress (Vesely et al. 2015 ; Tobe et al. 2016 ), suggesting that public welfare in and of itself was far from sufficient (Edin and Shaefer 2016 ).

The Invisible Hand(s) of Financial Stress

The current focus of JFEI’s published literature aligns with a neoliberal perspective of financial stress, which locates the responsibility for experiencing financial stress with individuals and families as opposed to the economy and economic environments (Abernathy et al. 2019 ; Lin and Neely 2020 ). The market forces of neoliberal capitalism are rendered invisible. This perspective deemphasizes or ignores macroeconomic trends from a capitalist system that raises the stakes on individuals and families and contributes to their financial stress, such as reduced collective bargaining power (Jacobs and Myers 2014 ; Western and Rosenfeld 2011 ) and low and stagnant wages in the labor market (Mishel et al. 2012 ); widening income and wealth inequality (Kim and Sakamoto 2008 ; Piketty 2014 ); subprime financial products promoted by banks and lenders (Baradaran 2017 ); gentrification and rising housing costs (Maharawal 2017 ; Moore 2009 ); and environmental hazards like air pollution and lead-tainted water (Benz 2019 ; Mohai et al. 2009 ; Pulido 2016 ). Moreover, given that the published literature often attempts to understand differences in financial stress by race, class, and gender, a lack of consideration to the economy and economic environments may unwittingly advance harmful stereotypes by placing blame on families for their lived experiences with systemic racism, classism, and sexism (Hamilton and Darity 2017 ; Walsdorf et al. 2020 ).

The Great Recession—as the COVID-19 Pandemic Recession will become—is a critical backdrop in the literature on economic hardship, income, wealth, and debt, financial stress, and coping strategies. Recognizing the importance of the economy and families’ economic environments, most authors of the articles we reviewed justified their current data and analyses in reference to the Great Recession and situated their findings within this context (Bauchet and Evans 2019 ; Thorne 2010 ; Vesely et al. 2015 ). Though, despite this contextualization, authors often explained families’ financial circumstances by using language like choices, preferences, values, and information. This language situates explanations within the individual or family, while deemphasizing the economy and economic environments.

There are numerous examples of the literature’s de-emphasis of the economy and economic environments in favor of adopting individualized explanations. For instance, Kim and Wilmarth ( 2016 ) examined the relationship between receiving public welfare and households’ debt-to-income ratios. By exploring public welfare, Kim and Wilmarth ( 2016 ) explored the potential role of government in supporting families who were experiencing economic hardship. An acknowledgment of government’s role aligns with the perspective that the welfare state adjusts for the failures of capitalism (Azmanova 2012 ). However, in discussing possible interventions, the authors concluded that financial educators, counselors, and coaches could also assist families in managing their debt, writing, “Promoting better financial management for households could assist in saving resources from the government” (Kim and Wilmarth 2016 , p. 357). In other words, individualized interventions like financial education or coaching may assist families in responding to macroeconomic contexts that prevent them from meeting their current and ongoing financial obligations. In another example, Rhine and colleagues (2016) examined whether savings account ownership was associated with preventing wealth losses during the Great Recession, writing “…families recognized the value of possessing a savings account even as wealth or income may have declined to some degree” (p. 345). The authors inferred that there was an individualized, value-based explanation for rates of savings account ownership and or wealth during the Great Recession, despite reporting on disparities by household income and race that were evidence of classism and racism (Rhine et al. 2016 ). In a similar exploration of savings account ownership among young people, Friedline et al. ( 2014 ) wrote: “The wealth and resources of [their] households likely help them establish their savings accounts as children” (p. 406). While employing an explanation that hints at the ways the economy and policies enable intergenerational wealth transmissions, the passive language used by Friedline et al. ( 2014 ) discounts the centrality of this capitalist system.

There are some examples of how the reviewed literature emphasizes the importance of the economy and economic environments. For example, Lai ( 2011 ), Thorne ( 2010 ), and Vesely et al. ( 2015 ) wrote explicitly about the economy in which families were situated. In exploring the experiences of older Chinese immigrants in Canada during the economic downturn, Lai ( 2011 ) wrote: “Challenges related to institutional racism, mistrust of the system, inadequate knowledge of services available…The recession can further contribute to the discrimination against older people, particularly those who come closer to the retirement age in the work force” (p. 521, 522). By first identifying institutional racism and discrimination, Lai ( 2011 ) recognized macroeconomic explanations for older Chinese immigrants’ experiences while acknowledging the existence of individual explanations like knowledge of available services. Vesely et al. ( 2015 ) interviewed low-income immigrant mothers who moved to the US from Latin America and Africa, writing, “…ecocultural theorists account for the ecological factors, including ‘institutional forces’ that impact families’ daily lives, and in turn, individuals’ wellbeing” (p. 515). Vesely et al. identified “institutional forces” to emphasize the importance of the economy and families’ economic environments for understanding their well-being.

Toward an Emphasis on the Economy and Economic Environments

Families are situated within specific historic, cultural, social, political, and economic contexts. An emphasis on the economy and economic environments illuminates or makes visible some of these contexts and policy decisions that are responsible for families’ well-being, which is especially important in the wake of the Great Recession and COVID-19 Pandemic Recession. While explanations rooted in individuals and families—such as focusing on a family’s budgeting or observing their levels of financial knowledge—can decontextualize and flatten families’ experiences, an added emphasis on the economy and economic environments offers more holistic and accurate understandings.

The Economy of Capitalism

Families’ financial stress and well-being are influenced by the economy and associated policy decisions (Baradaran 2017 ; Mian and Sufi 2014 )—the national and increasingly global macroeconomic sites of labor and production, trade, and consumption of goods and services. For example, policy decisions to reduce workers’ collective bargaining power altered how labor for production was compensated and contributed to declines in union membership, decreased wages, and rising inequality (Western and Rosenfeld 2011 ). Over time, families experienced these policy decisions as declines in their income that occurred simultaneously with the rising costs of goods and services, compelling them to borrow debt to cope financially (Federal Reserve Bank of New York 2019 ). Therefore, the economy and related policy decisions are key drivers and explanations of families’ financial stress and well-being.

The United States’ economy is capitalist, and policy decisions are made in relation to capitalism. In its simplest definition, capitalism is an economic system where the means of production are privately owned (Hahne and Wright 2016 ; Wright 2018 ). That is, individuals do not realize the profits produced from their own labor; rather, private companies keep these profits in exchange for paying modest wages. Moreover, the current version of capitalism emphasizes individualism or personal responsibility and relies on finance for economic growth. Capitalism’s neoliberal paradigm emerged in the 1970s to emphasize individualism or personal responsibility, and has been characterized by limited state public welfare provision, privatization, deregulation, and free market competition (Abernathy et al. 2019 ). Neoliberalism’s related policy decisions have intensified financial pressures on families vis-à-vis the state’s withdrawal. Capitalism also requires the pursuit of income and profits for economic expansion (Friedman 1962 ; Romer 2014 ), which is increasingly driven by finance where income and profits are generated through financial channels instead of through labor and production (Lin and Neely 2020 ).

Capitalism pursues and creates profits by assigning difference, using social constructions that confer hierarchies of desirability or worthiness onto traits and characteristics for stratifying economic value (Cottom 2017 ; Robinson 1983 ). Capitalism’s differential economic valuations are discriminatory, enabling and even requiring people or property to be valued differently based on their proximity to social constructions of whiteness, maleness, and other privileged identities (Garrett-Scott 2019 ; Robinson 1983 ; Wang 2018 ). Many scholars criticize capitalism as a racialized and gendered project (Garrett-Scott 2019 ; Wang 2018 ). For example, the use of credit scoring assigns differential economic value to individuals based on a range of factors like borrowing debt and paying bills, and influences how banks make lending decisions (Lauer 2017 ; Nopper 2019 ). Credit scoring models assign higher values to Whites while assigning lower values to Black and Brown peoples that limit their lending options and contribute to their higher likelihoods of using payday loans (Lee and Kim 2018 ). Differential economic value enables a house to be valued more highly when it is located near desirable amenities like a park or central business district, or near socially-constructed desirable traits like communities with wealthier and whiter populations (Rothstein 2017 ; Taylor 2019 ), which has implications for access to credit and net worth accumulation. Therefore, a critical analysis of capitalism is important for understanding families’ financial stress and well-being, particularly for identifying evidence of discrimination in observed the differences by race, class, and gender (Afifi et al. 2018 ; Park and Kim 2018 ; Thorne 2010 ; Lai 2011 ; Vesely et al. 2015 ).

Economic Environments

In addition to the broader macro economy, families are situated within local and regional economic contexts. These economic environments—and the resources and opportunities available within—influence families’ financial stress and well-being. Decades of research in sociology (Sharkey et al. 2017 ; Small and McDermott 2006 ), social work (Green and McDermott 2010 ; Kang et al. 2019 ; Trattner 1999 ), geography (Galster et al. 2016 ; Hedman et al. 2015 ; Pike and Pollard 2015 ), and public health (Dankwa-Mullan and Pérez-STable 2016 ; Pérez and Martinez 2008 ; Shore et al. 2015 ) have emphasized the importance of families’ environments for understanding various aspects of well-being.

Financial services are one type of resource or opportunity within economic environments that may influence families’ financial stress and well-being. Mounting evidence confirms the importance of financial services within local economic environments. For instance, the presence, absence, or relative mix of financial services provide various resources and opportunities for families to supplement income, access credit, accumulate wealth, and cope with economic hardship. Individuals who live or grew up in communities with at least some bank branches are more likely to use these services, have bank accounts (Celerier and Matray 2017 ; Goodstein and Rhine 2017 ), and have higher credit scores (Brown et al. 2016 ). Moreover, the presence and concentration of higher-cost, lower quality financial services like payday lenders in economic environments undermine families’ financial stress and well-being. The concentration of higher-cost, lower quality financial services is associated with increased use of these services, and their use is associated with having lower credit scores and struggling to pay bills (Bhutta 2014 ; Melzer 2011 ).

One reason that a focus on economic environments is so important is because resources and opportunities are highly variable from one community to the next. Racism and classism have created stark geographies of segregation (Faber 2018 ; Rothstein 2017 ), meaning that there are vast differences in families’ economic environments that can explain differences in their financial stress and well-being. Policy decisions like those that created redlining, for example, codified racial and economic segregation into the geographic landscape. Redlining refers to a set of intentionally created and mutually reinforcing policies and practices implemented by banks, lenders, real estate agents, and government that excluded Black and Brown borrowers from the mortgage lending market (Rothstein 2017 ). The Home Owners Loan Corporation’s (HOLC) residential security maps assigned differential economic value to communities, where communities “greenlined” were predominantly White while communities “redlined” as hazardous for were predominantly Black and Brown (Baradaran 2017 ; Rothstein 2017 ). Since banks and lenders would not originate new loans in redlined communities, Black and Brown borrowers were excluded from the mortgage market and from the benefits of wealth via home equity (George et al. 2019 ).

Segregation shapes the resources and opportunities within local economic environments (Faber 2019 ; Rothstein 2017 ). For example, higher-cost, lower quality financial services like payday lenders and check cashers tend to concentrate in Black and Brown communities that are avoided by banks and credit unions (Baradaran 2015 ; Celerier and Matray 2017 ; Faber 2018 , 2019 ; Jorgensen and Akee 2017 ). Even the availability and use of digital technologies are subject to spatially organized segregation. Increases in communities’ Black and Brown populations are associated with decreases in high-speed internet access, online banking, and mobile banking; though, the relationships are opposite for increases in communities’ white population (Author). Whether families can apply for a low-cost loan at a bank or manage their money online depends to some extent on how segregation determines the resources and opportunities within their communities.

Future Directions and Conclusions

The literature on families’ financial stress and well-being can be expanded upon and advanced by focusing on the economy and economic environments. We offer three possibilities for future directions, including applying or developing theories, measuring variables and incorporating them into models, and analyzing policy decisions. These future directions are especially important for research that attempts to understand differences by race (Faber 2018 ), class (Pfeffer et al. 2013 ), and gender (Baker et al. 2019 ).

Future research should develop or apply theories that incorporate the economy and or economic environments into explanations of families’ financial stress and well-being. The existing literature relies on family stress theory, life cycle theory, and ecocultural theory (Kim et al. 2016; Masarik and Conger 2017 ; Tobe et al. 2016 ). While ecocultural theory accounts for economic environments (Vesely et al. 2015 ), neither life cycle theory nor family stress theory were designed to take the economy or economic environments into consideration. By failing to apply theories that incorporate these explanations, research instead focuses on individual-level solutions to larger social and economic problems. For instance, the evolution of the stress paradigm shows that a focus on stressful life events can obscure the role of larger social and economic factors on physical health and well-being (Link and Phelan 1995 ). Theories such as ecological systems theory (Bronfenbrenner 1975 ) can account for the interaction between an individual and their environment. Ecological systems theory posits that an individual’s environment comprises multiple systems, including a macrosystem characterized by rules, laws, and unwritten norms (Bronfenbrenner 1979 ). The economy and an individual’s economic environment are part of this larger macrosystem. Therefore, a focus on theories that do not consider the economy and economic environments can obscure the role they have in explaining families’ financial stress and well-being.

Research can also measure and test macro economic and environmental variables as explanations of families’ financial stress and well-being. The existing literature published in JFEI rarely measures macro economic or environmental variables, despite describing the importance of these contextual factors. The ramifications of the Great Recession such as income and wealth losses, home foreclosures, and rising debt have been widely experienced and contributed to a multitude of families’ economic hardships and financial stress (Mian and Sufi 2014 ). Nevertheless, the literature keeps the macro economy in the background or simply discusses these factors as missing variables (Heflin 2016 ). The absence of variables measuring the economy and economic environments is a critical gap and presents an opportunity for future research. Future research can measure and test variables on the economy and economic environments to more fully understand financial stress and well-being. Examples of such variables include job losses, housing costs, home foreclosure rates, loan originations, and access to financial services.

Future research should also test the effects of policy decisions on families’ financial stress and well-being, such as the policy decisions that codified redlining (Rothstein 2017 ), enable payday lending (Bhutta 2014 ), precipitate home foreclosure (Bauchet and Evans 2019 , or implement public welfare programs (Kim and Wilmarth 2016 , Menclova 2013 ). While extant studies examine home foreclosure and debt (Bauchet and Evans 2019 ; Kim and Wilmarth 2016 ), they fail to test the effects of policy decisions on financial stress and well-being outcomes. Similarly, policies regulating payday lending can have widespread impacts on families’ financial stress and well-being (Melzer 2011 ). However, few studies within the JFEI literature have investigated how payday lending regulations affect financial stress and well-being—even as these lenders expanded during and after the Great Recession (Faber 2018 ). Similarly, as public welfare programs appear to help families cope with economic hardship (Kim and Wilmarth 2016 ; Menclova 2013 ), research should examine how variations in public welfare policy implementation impact financial stress and well-being. Longitudinal studies are usefiul here given that a longitudinal framework is often needed to examine changes in the economy and in policy decisions over time. Future research should address this knowledge gap by testing the impacts of relevant policy decisions.

Lastly, racism, classism, and sexism at systemic levels mean that families experience economic downturns differently. As evidence of disparate impacts (if not discrimination) during the Great Recession, subprime lenders targeted Black and Brown communities for lower-quality, higher-cost loans (Faber 2018 ; Hamilton and Darity 2017 ) and women accumulated significant amounts of debt to support their families (Baker et al. 2019 ). Racial and economic segregation may further force the concentration of these differential experiences. Any future research that attempts to explain differences in families’ financial stress and well-being by race, class, or gender must take into account systemic explanations, like forms of discrimantion and the economy and economic environments. A failure to develop or apply theories, measure variables, or test policy decisions—even while describing these differences—risks blaming families for the discrimination and marginalization that they experience.

In conclusion, this paper fills gaps in the existing JFEI literature on families’ financial stress and well-being by emphasizing the importance of the economy and economic environments. A focus on the economy and economic environments has always been important. However, now, this focus is especially necessary for understanding the immediate and prolonged impacts of the COVID-19 Pandemic Recession given the absence of public welfare and skyrocketing unemployment and debt. Future research must not ignore the contexts and policy decisions with regard to the COVID-19 Pandemic Recession that contribute to families’ stress and well-being. We therefore encourage researchers to incorporate and or investigate explanations of families’ financial stress and well-being that are rooted in the economy and economic environments.

Biographies

is an Associate Professor of Social Work at the University of Michigan. Her research focuses on financial system reforms and consumer protections. She holds an MSW and PhD from the University of Pittsburgh School of Social Work, and is an appointed member of the Consumer Financial Protection Bureau’s (CFPB) Academic Research Council.

is an Assistant Professor at the University of Southern Mississippi School of Social Work. Her research focuses on understanding financial behaviors and decision making and interventions that promote financial inclusion and economic security for low-to-moderate income individuals and families. She holds an MSW and PhD from Louisiana State University, and received postdoc training at the Center on Assets, Education, and Inclusion housed in the University of Michigan School of Social Work.

is a doctoral student in the joint PhD program between Social Work and Sociology at the University of Michigan. Her research interests include understanding the relationship between wealth health among Black women. She holds an MSW (‘17) from the University of Michigan School of Social Work and an MPH (‘17) from the University of Michigan School of Public Health. So’Phelia is also a Rackham Merit Fellow.

No funding was received for this literature review article.

Compliance with Ethical Standards

The authors have no conflict of interest to report for this literature review article.

No animals were involved in this literature review article. This literature review article does not contain any studies with human participants performed by any of the authors.

Informed consent was not applicable for this literature review article.

This is one of several papers published together in Journal of Family and Economic Issues on the “Special Issue on Virtual Decade in Review”.

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Contributor Information

Terri Friedline, Email: ude.hcimu@ildeirft .

Zibei Chen, Email: ude.hcimu@ciebiz .

So’Phelia Morrow, Email: ude.hcimu@eirampos .

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July 12, 2017.

Childcare & Early Education

What is “equitable growth” and how do we measure it? The following essay, part of a series , asks economists, other researchers, and practitioners to explore these questions. Equitable growth means an economy that raises living standards for all families. We have seen decades of economic growth in the U.S.—commonly measured by GDP. Yet that success has not meant significant income growth for most American families. Clearly GDP doesn’t provide the full picture. How do we know we’re on the right track? There is little consensus around what specific of indicators are required to quantify whether the economy is growing on behalf of all Americans. Is it a matter of looking at different already existing measures? Should new data using existing concepts of income and well-being be created? Do our concepts of what’s important to measure need updating as well? A better understanding of equitable growth—and how to measure it—can improve our understanding, inform decisions and lead to better outcomes for all.

Researchers studying income distribution in the United States seem reluctant to acknowledge the family as an important unit of production and distribution. As a result, they often rely on statistics that provide a misleading picture of inequalities based on class, race or ethnicity, and especially gender.

Incomplete definitions of both family and income either obscure or render invisible transfers between and within households, including the value of housework and family care. Evidence from specialized surveys—such as the Health and Retirement Survey, the Panel Survey of Income Dynamics, the Survey of Income and Program Participation, and the American Time Use Survey—clearly demonstrate the quantitative relevance of these omissions.

Conventional measures

What, exactly, do economists mean by income, and what, exactly, is the presumed income-receiving unit? Usually, income refers to direct market income (labor earnings plus income from capital such as interest or dividends, and including, where feasible, indirect market income such as the dollar value of transfers from private pensions or government).

Many shortcomings of this measure are widely recognized. For instance, conventional estimates do not include any valuation of the flow of implicit service income from capital assets such as housing or the increase in wealth due to capital gains appreciation. 1 Sources of income that take the form of in-kind benefits and/or tax expenditures such as the Earned Income Tax Credit are seldom included. These problems, however, have received more attention than those related to largely unmeasured aspects of the family economy.

Most individuals in the United States pool at least some of their income with other family members over a significant portion of their lifecycles. As a result, family income is a better indicator of material living standards than individual earnings. Family-based measures are especially relevant to the economic welfare of children, the elderly, and individuals who are sick or disabled, as well as those supporting or providing direct care for such dependents.

Many unrelated individuals live together in households without pooling income, but benefit from household public goods and economies of scale in household production. That’s why it is difficult to measure the extent to which individuals pool their income and what share of family or household income should be imputed to them. While it is often assumed that married couples equally share their market income, empirical research suggests that is not always the case. 2 The proliferation of informal partnerships such as cohabitation further complicate the story. 3

Intrafamily transfers of money and time—mediated by the public-good aspects of household consumption and economies of scale in household production—potentially affect both the size and the distribution of individual income. For instance, improvements in women’s earnings relative to those of men may be counterbalanced by a decline in intrahousehold or intrafamily transfers related to nonmarriage, loss of household economies of scale, or increases in the percentage of children maintained by women alone. 4

Defining the family in family income

Seeking a practical solution to a complex problem, the U.S. Census Bureau enforces a clear distinction between family and household. Specifically:

A family consists of two or more people (one of whom is the householder) related by birth, marriage, or adoption residing in the same housing unit. A household consists of all people who occupy a housing unit regardless of relationship. A household may consist of a person living alone or multiple unrelated individuals or families living together. 5

Note, however, that the definition of family provided here is limited to family members living in the same household. In this sense, it represents a truncated and, in some respects, misleading definition. While the U.S. Current Population Survey asks some questions relating to intrahousehold family transfers, these are largely been considered a private matter, except where they represent a traditional obligation rendered visible by child support agreements.

By contrast, the Health and Retirement Survey asks respondents to report financial help, defined as:

Giving money, helping pay bills, or covering specific types of costs such as those for medical care OR insurance, schooling, down payment for a home, rent, etc. The financial help can be considered support, a gift or a loan.

This is a much broader definition of intrafamily transfers than that in the Current Population Survey, and a recent empirical analysis of the Health and Retirement Survey finds that households with an adult between the ages of 50 and 64 transferred an average of $8,350 to family members over a two-year period between 2008 and 2010. Both the probability and the size of these transfers were positively correlated with income, and the overall likelihood of such transfers increased substantially between 1998 and 2010. 6 In other words, relatively affluent adults approaching retirement age have provided an increasingly significant economic boost to their adult children, which is not factored into conventional family-income calculations.

This analysis of the Health and Retirement Survey does not break out transfers by race or ethnicity, but other research utilizing data from the 2005 and 2007 Panel Study of Income Dynamics, as well as the Survey of Consumer Finance, shows that middle- and upper-income African Americans are more likely to provide informal financial assistance than whites with similar characteristics. 7 Not surprisingly, black families are more likely to have needy family members and friends—what might be termed a negative network effect. This difference can account for a significant portion of the racial gap in wealth.

Overall, such transfers may have an equalizing effect because they generally flow from those with more market income to those with less. But young white adults are more likely to receive transfers from relatively affluent parents, while young black adults are more likely to transfer income to those closer to the bottom of distribution.

Equivalence scales and intrafamily transfers

Comparisons of family income are often unadjusted for family household composition or are adjusted on a per-capita basis, simply divided by the number of household members. Both approaches are misleading. A family of two is much better off with an income of $50,000 than a family of six. In contrast, a family of six does not need three times as much income to be as well off as a family of two, even though it has three times as many members.

For this reason, family income is often adjusted by an equivalence scale that assigns a different weight to children and adults, and takes economies of scale into account. The U.S. poverty line and benchmarks based upon it—such as the 200 percent of the poverty line—represents an implicit equivalence scale. Another common measure divides family income by the square root of family size. 8 Such scales represent an approximation of what might be termed an intrafamily transfer. 9

Virtually all conventional equivalence scales assume that children are less costly than adults because the cost of feeding and clothing them is lower. 10 Further, virtually all applications of equivalence scales to family income in the United States apply the same scales at every point in time. Since the mid-1960s, however, children have become more costly relative to adults, and family budgets have shifted away from food and clothing toward services such as childcare and education.

A major factor behind increased childcare costs is the significant increase in the labor-force participation of mothers between 1975 and the mid-1990s. Another is the steady climb in the percentage of children living in families maintained by a mother alone, since mothers are required to engage in paid employment in order to even qualify for public assistance.

While longitudinal data are scarce, a recent Census Bureau report based on the Survey of Income and Program Participation estimates that overall expenditures on childcare doubled between 1985 and 2011, from $84 to $143 per week in constant dollars. In the most recent year, families with incomes below the federal poverty line spent about 30 percent of their income on childcare, compared to 8 percent for families not in poverty. 11

Parental spending on higher education has also increased, the combined result of increasing college enrollments (despite relatively stagnant graduation rates) and significant increases in tuition and fees, particularly over the past 15 years. 12 Research also shows that home buyers and renters pay a significant premium for houses in high-quality school districts, indirectly increasing the cost of children. 13

These factors have important implications for considering the distribution of adjusted family income today. Whites in general are less likely than African Americans or Hispanics to live in households with children, and college-educated women are significantly less likely than other women to become single parents. Current equivalence scales significantly understate the economic significance of these demographic differences. Yet many dual-earner families with children sit squarely in the middle of the (conventionally measured) family-income distribution.

In current economic parlance, disposable income is typically defined as income after taxes. One could conceptualize “adult disposable income” as the net of taxes and benefits and transfers to children and other dependents. Instead, current assumptions treat spending on children or other needy family members merely as another form of consumption, no different than spending on restaurant meals or automobiles.

The value of nonmarket work

Housework and family care are now widely recognized as forms of work that yield economic benefits. Recent data from the American Time Use Survey show that productive activities that someone else could, in principle, be paid to perform constitute roughly half of all time devoted to work in the United States. 14

A number of studies impute a market value to this work on the aggregate level, simply multiplying the number of hours by an estimate of quality-adjusted replacement cost. This exercise suggests that the contribution of nonmarket work to an expanded definition of Gross Domestic Product in the United States lies somewhere between 30 percent and 40 percent. 15 Yet, with a few notable exceptions, the value of nonmarket work is largely ignored in estimates of family income on the microeconomic level. 16

Consider two family households of identical composition consisting of two adults and two children under the age of 5, both with a family income of $50,000 (ignoring both taxes and benefits, for the sake of simplicity). Conventional measures would place both of these families at exactly the same place in the distribution of income. But what if the first family includes two wage-earners, both working 40 hours per week and earning $25,000 per year, and the second family includes one wage-earner, working 40 hours per week and earning $50,000 per year, along with one stay-at-home parent who prepares meals, does shopping, and provides childcare.

Surely the second family is significantly better off than the first, if only because it does not incur the childcare costs alluded to in the section above.

What effect does imputation of the value of nonmarket work have on estimates of the distribution of family income in the United States? Empirical work today suggests that it has an equalizing effect in the cross-section, not because low-income families devote more time to it, on average, but because any imputation of the value of that work represents a larger percentage of their market income. 17

The implications for trends over time are quite different. The equalizing effect of valuing nonmarket work was almost certainly greater in the 1960s, when a relatively large percentage of married women were full-time homemakers. As women entered wage employment and substituted market employment for at least some of their nonmarket work, this equalizing effect diminished. Inequality in women’s earnings is also far greater today than it was in the 1960s, with high-earning women likely to marry high-earning men. 18

Whatever the gender implications of the traditional breadwinner/homemaker family, it may well have mitigated some aspects of class inequality among whites (it was never widespread among blacks). But most studies of the impact of women’s increased labor-force participation on income inequality completely ignore the value of nonmarket work, essentially assigning homemakers a contribution of “zero” in their empirical analysis. 19

Implications

Changes in the family economy of the United States have probably had only small effects on the relative income of the top 1 percent or the top 5 percent. They have larger implications for both the reality and the perception of relative income among households with divergent patterns of female labor-force participation and family responsibility.

Many public benefits in the United States—from the Supplemental Nutrition Assistance Program to financial aid for college—are conditioned on conventional measures of family income. Because these measures provide an incomplete and misleading picture of relative well-being of families, reliance on them may breed frustration and resentment. 20

Many of the policy proposals emerging from both political parties speak to concerns about the costs of family care: increased public provision of care and education, as well as child and dependent care tax credits. The potentially equalizing effect of such policies deserves serious consideration. In principle, many of the data sources cited above offer the potential to enlarge appreciation of the family in family income.

—Nancy Folbre is the director of the program on gender and care work at the Political Economy Research Center at the University of Massachusetts, Amherst.

1. See, for instance, the discussion of comprehensive income in Stephen Crystal and Dennis Shea, “The Economic Resources of the Elderly: A Comprehensive Income Approach” (New Brunswick: Rutgers University, 1989), available at https://www.census.gov/sipp/workpapr/wp91_8914.pdf .

2. Sara Cantillon and Brian Nolan, “Are Married Women More Deprived Than Their Husbands?” Journal of Social Policy 27 (2) (1998): 151–171.

3. Helene Perivier and Henri Martin, “Equivalence Scales Challenged by New Family Configurations,” paper presented at the meetings of the International Association for Feminist Economics (Berlin: July 2015).

4. Nancy Folbre, “Measuring Care: Gender, Empowerment, and the Care Economy,” Journal of Human Development 7 (2) (2006): 183–200.

5. “Frequently Asked Questions,” available at https://www.census.gov/hhes/www/income/about/faqs.html

6. Sudipto Banerjee, “Intra-Family Cash Transfers in Older American Households” (Washington: Employee Benefit Research Institute, June 2015), available at http://www.ebri.org/pdf/briefspdf/EBRI_IB_415.June15.Transfers.pdf .

7. Rourke L. O’Brien, “Depleting Capital? Race, Wealth and Informal Financial Assistance,” Social Forces 91 (2) (2012): 375–396.

8. For more discussion, see Nancy Folbre, Marta Murray-Close, and Jooyeoun Suh, “Non-Market Work, Equivalence Scales, and Extended Income in the U.S.” paper presented at the meetings of the International Association for Feminist Economics (Berlin: July 2015).

9. Nancy Folbre, Valuing Children: Rethinking the Economics of the Family (Cambridge: Harvard University Press, 2008).

10. Earlier in the 20th century, it was sometimes assumed that women were less expensive than men because they consumed less food. The intragender distribution of income in the family remains an important topic of study, especially relevant to the calculation of child support requirements imposed on noncustodial parents.

11. “Child Care: An Important Part of American Life,” available at https://www.census.gov/content/dam/Census/library/visualizations/2013/comm/child_care.pdf .

12. Nancy Folbre, Saving State U: Why We Must Fix Public Higher Education (New York: The New Press, 2010).

13. Much of this research is summarized in Elizabeth Warren and Amelia Warren Tyagi, The Two Income Trap: Why Middle-Class Parents are Going Broke (New York: Basic Books, 2004).

14. U.S. Bureau of Labor Statistics, American Time Use Survey (U.S. Department of Labor, 2013), Table A-1, available at http://www.bls.gov/tus/tables.htm .

15. Katherine Abraham and Christopher Mackie, eds. Beyond the Market: Designing Nonmarket Accounts for the United States (Washington: The National Academies Press, 2005); Benjamin Bridgman and others, “Accounting for Household Production in the National Accounts, 1965-2010” Survey of Current Business (2012): 23–36; Jooyeoun Suh and Nancy Folbre, “Valuing Unpaid Child Care in the U.S.: A Prototype Satellite Account Using the American Time Use Survey,” Review of Income and Wealth (forthcoming).

16. Important exceptions include Iulie Aslaksen and Charlotte Koren, “Unpaid Household Work and the Distribution of Extended Income: The Norwegian Experience” Feminist Economics 2 (3) (1996): 65–80; Joachim Frick, Markus M. Grabka, and Olaf Groh-Samberg, “The Impact of Home Production on Economic Inequality in Germany,” Empirical Economics 43 (3) (2012): 1143–1169; Edward N. Wolff, Ajit Zacharias, and Thomas Masterson, “Trends in American Living Standards and Inequality, 1959-2007,” Review of Income and Wealth 58 (2) (2012): 197–132.

17. Harley Frazis and Jay Stewart, “How Does Household Production Affect Measured Earnings Inequality?” Journal of Population Economics 24 (2011): 3–22.

18. For more discussion, see Nancy Folbre and others, “Women’s Employment, Unpaid Work, and Economic Inequality.” In Janet Gornick and Markus Janti, eds., Income Inequality: Economic Disparities and the Middle Class in Affluent Countries (Stanford: Stanford University Press, 2013).

19. See, for instance, Susan Harkness, “Women’s Employment and Household Income Inequality.” In Janet Gornick and Markus Janti, eds., Income Inequality: Economic Disparities and the Middle Class in Affluent Countries (Stanford: Stanford University Press, 2013).

20. Nancy Folbre, “The Resentment Zone,” The New York Times, March 22, 2010, available at http://economix.blogs.nytimes.com/2010/03/22/the-resentment-zone-losing-means-tested-benefits .

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What a new study on college essays and family income really means.

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Main Campus of Stanford University

People concerned about the fairness of college admissions are seizing on a new study from Stanford’s Center for Education and Policy Analysis to argue that colleges should keep using standardized tests to decide who gets in. During the pandemic, some 60% of U.S. colleges made submission of test scores optional.

“Hey let’s dump the SAT bc the rest of the admissions process is so equitable,” tweeted Susan Dynarski, a professor of education and public policy at the University of Michigan. She followed the tweet with an eye-roll emoji.

The 26-page study, “Essay Content is Strongly Related to Household Income and SAT Scores,” appears to support the idea that in addition to scoring consistently above their low-income counterparts on the SAT, students from high-income households submit essays that are more likely to secure them a spot at a selective college. Reported family income is an even better predictor of essay quality than of test scores, according to the study.

“Results show that essays have a stronger correlation to reported household income than SAT scores,” says the study’s abstract. “Efforts to realize more equitable college admissions protocols can be informed by attending to how social class is encoded in non-numerical components of applications.”

But the study has led many readers to an ill-informed conclusion, say admissions aficionados. In a Twitter thread about the study, Paul Tough, author of The Inequality Machine: How College Divides Us , says: “It turns out rich kids use more commas and colons. Poor kids use more verbs and pronouns. Rich kids write about physics and China. Poor kids write about family members and helping others. Cool findings. But.”

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He continues: “This paper tells us absolutely nothing about how those tendencies correlate with admissions decisions.”

William Conley, who spent his 40-year career in admissions and enrollment management at Johns Hopkins, Case Western and Bucknell, agrees. Everyone in the admissions world knows that rich families pay as much as $1,000 an hour to consultants who edit and ghost write essays. Readers can identify such writing in seconds. Words like “plethora” are a giveaway, he says. “They should just use ‘a lot.’”

Admissions officers care much more about grades, course rigor and test scores than they do about essays. A science or math student with a strong record and high scores is unlikely to be rejected because they write a weak essay, says Conley. And a top-notch essay submitted by a weak student is seen as a red flag. “A great essay is not going to mean a school will take somebody who doesn’t measure up academically in performance,” he says, “nor the reverse.”

What’s more, the six academics who wrote the paper, including Mount Holyoke assistant sociology professor Ben Gebre-Medhin, made no attempt to quantify how essays are weighted by admissions offices. “No one knows,” says Gebre-Medhin, who was doing his post-doc at Stanford when work on the paper started.

The authors used software to analyze essays written by nearly 60,000 applicants to the University of California system in 2016. They turned words and phrases into numbers, identifying syntax, word and punctuation choices and correlating those with reported household income. They also looked at essay topics. Lower income students tended to write more about family relationships and school challenges like time management.

That’s not news, says Conley. He adds that many people who read the study are misinformed about how colleges process application essays. “Only 2%-3% of students go to schools that admit fewer than 30% of their applicants,” he says. The other 97%-plus schools hardly count the essay in their admission decision. “This is a first world problem,” he says. “It’s a champagne problem.”

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• Applying For Scholarships

Financial Need Scholarship Essay Examples (2023)

Jennifer Finetti Oct 2, 2022

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Many scholarships are awarded based on financial need. In order to win these scholarships, you must explain the nature of your financial need. In the guide below, we’ll explain how to write these types of essays to increase your chances of winning. Check out these scholarship essay examples for financial need scholarships.

How to write financial need scholarship essays

Here are some tips for writing financial need scholarship essays:

• Maintain a positive tone throughout the essay . You do not want to come across as self-pitying. Focus on ways you learned and grew from past experiences – how they made you stronger.
• Do not diminish other people’s suffering. This is a competition, but that doesn’t mean you should belittle your competitors. In fact, it would be better to say “I know there are many worthy candidates for this scholarship, but…” than to say “I have suffered far more than…” Show respect in everything you write.
• Frame your essay around a specific event. You may add other details if you have space to, but use one experience as the thesis for your essay.
• Avoid controversial statements and opinions. When discussing events from your past, do not belittle someone else or talk negatively about a group of people. You never know who will be reading your essay.
• Tell your story with honesty. Do not fabricate any details to make yourself sound needy. Your past and present circumstances will speak for themselves.
• Don’t try to sound philosophical. Some students will do this because they think it makes them seem smarter, but it rarely has that effect. Focus on proofreading and writing solid content. That is enough intelligence on its own.
• Discuss your career goals, if possible. You may not have room for this if the essay is short. If you do have room though, discussing your career goals will indicate a plan for the future. Review boards reward determination.

You know why you need financial aid. Tap into the key elements of your circumstances and use them to craft the perfect essay.

Many scholarships are awarded based on financial need. In order to win these scholarships, you must explain the nature of your financial need. In the guide below, we’ve provided examples of scholarship essays for financial need scholarships, along with some tips to help you write your own essay.

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Example 1: “Provide a statement of financial need”

Some scholarships will simply ask for a statement of financial need. There are no parameters to follow. You’re left to write whatever you want. Typically, a statement of financial need is two or three small paragraphs. This will come out to roughly 150-200 words, but it could be slightly longer. Think of this as a cover letter for your scholarship application, highlighting the key elements of your financial need. Don’t build up to the thesis. Get directly to the point.

I am the first person in my family to graduate high school, and thus the first to attend college. Both of my parents dropped out of school when they were teenagers. Because of their limited education, they have always worked in entry-level positions, earning barely enough to put food on the table. My first job I got was at the age of 12 delivering papers, and I have worked hard ever since to relieve pressure from my family. I enrolled in Mississippi’s HELP program during my senior year, which covers tuition and fees at select colleges in the state. I also have a Federal Pell Grant to cover my housing. However, I still need funding for books, supplies, and transportation to campus as needed. I am an engineering student, and our classes come with high fees. My parents cannot contribute to my college expenses, and I cannot work much while I’m in school. This scholarship would help me avoid costly student loans that could take years to repay.  

Example 2: “Describe your financial need in 100 words”

This essay is even shorter than the financial need statement. It may be one of several short answer questions you need to fill out. Working with 100 words is tricky. That only leaves room for about 7-10 sentences, depending on length. Make compelling statements using the fewest words possible.

Also note that grammar errors and misspellings will be much more noticeable in this short essay. Carefully proofread your writing before submitting the scholarship application.

I got pregnant and dropped out of high school when I was 15. By the age of 20, I had two more children, and we all shared a one-bedroom apartment. I worked three jobs to pay the bills, but I never earned much. When my oldest started high school, I did the same. I got my GED at 29 and enrolled in nursing school. My financial status has improved now with a GED, but I’m still a single mom with three kids. I want to become a registered nurse to give my children a stable future. I appreciate your consideration.

Word Count: 100

Example 3: “Explain your financial need in 500 or more words”

This scholarship essay prompt is the opposite of the one above. You have much more room to discuss your circumstances. Talk about your family life, your income, and other restraints that contribute to your financial aid . Try not to throw too much in the essay though. You want the information to flow together seamlessly. Edit carefully, and give the readers a full view of your situation.

My name is Brandon Noviello. I am a sophomore on track to earn my Bachelor of Arts in Sociology. I need financial aid because I do not have a family to contribute to my education. I was in foster care for two years before I aged out of the system, and now I am pursuing a degree completely on my own. I was raised by a wonderful woman who didn’t always have a wonderful life. My mother got pregnant after a sexual assault, but she was determined to raise a smart, successful man. She went through an accelerated program to graduate high school before I was born. She devoted the rest of her life to supporting me, both financially and emotionally. My mother’s family cut ties with her the moment she became pregnant. Life wasn’t easy for us, but I never wanted for anything. She always found a way to keep me fed, dressed, and in school. Unfortunately, she lost a long-term battle with depression when I was 16, and I was put into the foster system until I reached adulthood. I did not have a positive experience with foster care, but I admit, I had no desire to. My mother’s passing weighed heavily on my mind, and I felt an overwhelming sense of anger, regret, and frustration. There was one gleam of hope in my experience though. I had a great social worker. I fought her decisions every step of the way, and she still managed to find a family to get me through high school. My social worker was the only person I invited to my graduation ceremony.  She helped me realize how much one person’s efforts can make a difference in the lives of others. I was only one of countless children she had helped over the years. I researched how to become a social worker so I could help other children like me. My plan is to work with the Department of Human Services in the foster care and adoption division after I graduate. In order to make my dreams a reality, I need financial aid. I am working as a server to pay for food, utilities, and basic necessities, but I do not earn enough to pay for college as well. I go to school during the day and work at night. Furthermore, I have a maximum Pell Grant to cover most of my tuition, but I still need help with other expenses. I did not do well in high school as a result of my mom’s passing, but I have done well in college. I have a 3.25 cumulative GPA, and I have never made less than an A in a degree-related course. As such, I am committed to being successful despite my circumstances, and I want to help young people find that motivation within themselves. I look forward to working with children and teens in the foster system, so I can be the hope that someone else was for me.

Word Count: 498

YOU SHOULD ALSO READ

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• Scholarship Essay

Jennifer Finetti

As a parent who recently helped her own kids embark on their college journeys, Jennifer approaches the transition from high school to college from a unique perspective. She truly enjoys engaging with students – helping them to build the confidence, knowledge, and insight needed to pursue their educational and career goals, while also empowering them with the strategies and skills needed to access scholarships and financial aid that can help limit college costs. She understands the importance of ensuring access to the edtech tools and resources that can make this process easier and more equitable - this drive to support underserved populations is what drew her to ScholarshipOwl. Jennifer has coached students from around the world, as well as in-person with local students in her own community. Her areas of focus include career exploration, major selection, college search and selection, college application assistance, financial aid and scholarship consultation, essay review and feedback, and more. She works with students who are at the top of their class, as well as those who are struggling. She firmly believes that all students, regardless of their circumstances, can succeed if they stay focused and work hard in school. Jennifer earned her MA in Counseling Psychology from National University, and her BA in Psychology from University of California, Santa Cruz.

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The Impact of Family Income on Child Achievement

Understanding the consequences of growing up poor for a child's well-being is an important research question, but one that is difficult to answer due to the potential endogeneity of family income. Past estimates of the effect of family income on child development have often been plagued by omitted variable bias and measurement error. In this paper, we use a fixed effect instrumental variables strategy to estimate the causal effect of income on children's math and reading achievement. Our primary source of identification comes from the large, non-linear changes in the Earned Income Tax Credit (EITC) over the last two decades. The largest of these changes increased family income by as much as 20%, or approximately $2,100. Using a panel of over 6,000 children matched to their mothers from National Longitudinal Survey of Youth datasets allows us to address problems associated with unobserved heterogeneity and endogenous transitory income shocks as well as measurement error in income. Our baseline estimates imply that a $1,000 increase in income raises math test scores by 2.1% and reading test scores by 3.6% of a standard deviation. The results are even stronger when looking at children from disadvantaged families who are affected most by the large changes in the EITC, and are robust to a variety of alternative specifications.

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This dissertation considers how families affect economic decisions across two different settings. In Chapters 2 and 3, I use data from Indonesia to understand the role that flexibility plays in job choice for women and how it interacts with children. These chapters take different approaches to the same broad set of questions. In Chapter 2 I ask whether the cost of temporal flexibility varies between wage employment and self-employment, especially for mothers. I find all women are willing to give up a portion of their wage rate to work fewer hours and have more flexible hours. However, the cost to women of fewer hours and more flexible hours varies by whether a woman is self-employed or wage employed and whether she has children. All self-employed women and wage-working mothers are willing to give up more than 10% of their wages for a 10% increase in flexibility but the trade-off is steeper for mothers in wage employment than in self-employment. In Chapter 3, I use qualitative in-depth interviews to better understand the nuances that go into work decisions for both women and men and how these choices affect and are affected by their children. This study echoes the first in that women often discussed the importance of flexibility in their work arrangements, in particular to their choices in self-employment. These findings have implications for policies and programs designed to foster entrepreneurship in developing countries. Chapter 4 asks questions about how parents provide for children- albeit in a very different context. Using panel data from the United States, the paper examines the influence of parental wealth and income on children's college attendance and parental financing decisions, graduation, and quality of college attended, and whether parental financing affects the subsequent indebtedness of parents and children. Higher levels of parents' wealth and income increase the likelihood that children attend college with financial support relative to not attending college, and that parental wealth increases the likelihood that children graduate from college. We show descriptive evidence that parental support for college increases the subsequent level of housing debt that parents hold but does not reduce student debt for children.

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Koegel, Kate Maxwell (2019). Essays in Family Economics . Dissertation, Duke University. Retrieved from https://hdl.handle.net/10161/18759 .

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Dukes student scholarship is made available to the public using a Creative Commons Attribution / Non-commercial / No derivative (CC-BY-NC-ND) license .

Essays on Family Economics and Human Capital Development

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Report | Wages, Incomes, and Wealth

Basic family budgets : Working families’ incomes often fail to meet living expenses around the U.S.

Report • By Sylvia Allegretto • August 30, 2005

Briefing Paper #165

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The ability of families to meet their most basic needs is an important measure of economic stability and well-being. While poverty thresholds are used to evaluate the extent of serious economic deprivation in our society, family budgetsthat is, the income a family needs to secure safe and decent-yet-modest living standards in the community in which it residesoffer a broader measure of economic welfare. 1

The family budgets presented in this report take into account differences in both geographic location and family type. In total, this report presents basic budgets for over 400 U.S. communities and six family types (either one or two parents with one, two, or three children). That the budgets differ by location is important, since certain costs, such as housing, vary significantly depending on where one resides. This geographic dimension of family budget measurements offers a comparative advantage over using poverty thresholds, which only use a national baseline in its measurements.

Basic family budget measurements are adjustable by family type because expenses vary considerably depending on the number of children in a family and whether or not a family is headed by a single parent or a married couple.

The second part of this analysis compares data on actual working family incomes and the associated basic family budgets. Such a comparison can show, for example, what percentage of two-parent families with two children in Pittsburgh, Pa., are actually earning enough income to meet basic family budget thresholds. 2 These comparisons can also show not only the share of families falling below family budget thresholds, but the number of total people —parents and children—that are affected. Given recent policies that emphasize work as the solution to poverty and economic hardship, this analysis is important because it shows that sometimes work simply isn’t enough.

The following are major findings from this analysis:

• The range of basic family budgets for a two-parent, two-child family is $31,080 (rural Nebraska) to $64,656 (Boston, Massachusetts). The median family budget of $39,984 is well above the $19,157 poverty threshold for this size family.
• Over three times more working families fall below the basic family budget levels as fall below the official poverty line.
• Of the six family types examined, over 14 million people (28%) live in families with incomes below the basic family budget thresholds.
• The incorporation of cost-of-living differences into basic family budgets makes them advantageous in many ways. For example, when using poverty thresholds, approximately 37% of families fall below “twice poverty” (i.e., double the poverty line), whether they reside in cities or rural areas. But when using family budget measures, which embody the higher cost of living in cities, one finds that 42% of families living in cities and 30% of families residing in rural areas fall short of basic family budget thresholds.

Beyond measures of poverty to measures of economic hardship

Limitations and problems of poverty thresholds Poverty thresholds are absolute income levels used to measure the number and percentage of those who are the most impoverished and economically deprived in our society. Conceptually, the poverty measure is an important one, and one that is fundamentally different than family budgets. Family budgets are a relative measure of the dollar amount families need to live modestly in the communities where they reside.

It is also the case that the poverty measure is woefully outdated and little has been done officially to remedy the situation. For instance, the current methodology for poverty thresholds was designed over four decades ago in 1963 and has only been updated using the Consumer Price Index. Academics, policy analysts, and social scientists—most of whom overwhelming agree that the Census poverty measure is seriously outdated—have been engaged in dialogue and debate about alternative measures for some time. 3

Most analyses of alternative poverty measures find that an updated poverty measure would increase the percentage of those classified as poor (Bernstein 2001). 4 Hence, one barrier to redefining poverty thresholds is political, with most presidents reluctant to have official poverty numbers revised upward during their administrations. The basic family budgets presented here go beyond measures of severe deprivation to encompass a broader spectrum of economic hardship.

The added value of basic family budgets Basic family budget calculations constitute the income required to adequately afford a safe and decent standard of living for one of six family types living in any of 400 specific U.S. communities. 5 These budgets are calculated for six different family types (one or two parents with one to three children) and incorporate regional, state, or local variations in prices (depending on item). Therefore, cost-of-living differences are built into the budget calculations. The basic budgets are relative measures of what incomes are necessary to attain a specific standard of living. The budget items that are included in the basic family budgets are: housing, food, child care, transportation, health care, other necessities, and taxes. 6

The following is a brief description of each budget item and the restrictions and/or working assumptions employed for basic family budget calculations:

• Housing. Housing costs are based on the Department of Housing and Urban Development’s fair market rents (FMRs). FMRs represent 40th percentile rents (shelter rent plus utilities) for privately owned, decent, structurally safe, and sanitary rental housing of a modest (non-luxury) nature with suitable amenities. Rents for two-bedroom apartments were used for families with one or two children, and rents for three-bedroom apartments were used for families with three children (these assumptions were based on HUD guidelines).
• Food. Food costs are based on the “low-cost plan” taken from the Department of Agriculture’s report, “Official USDA Food Plans: Cost of Food at Home at Four Levels.” The USDA food plans represent the amount families need to spend to achieve nutritionally adequate diets.
• Transportation. Transportation expenses are based on the costs of owning and operating a car for work and other necessary trips. The National Travel Household Survey is used to derive costs that are based on average miles driven per month by size of the metropolitan statistical or rural area multiplied by the cost-per-mile.
• Child care. Child care expenses are based on center-based child care or family child care centers for four and eight year olds, as reported by the Children’s Defense Fund.
• Health care. Health care expenses are based on an amount that recognizes that not all families receive employer-provided health care. We use a weighted average of the employee share of the premium for employer-sponsored health insurance and non-group premium costs from an online insurance quote, plus the cost of out-of-pocket medical expenses.
• Other necessities. The cost of other necessities includes the cost of clothing, personal care expenses, household supplies, reading materials, school supplies, and other miscellaneous items of necessity from the Consumer Expenditure Survey.
• Taxes. Citizens for Tax Justice (CTJ) computed the taxes for tax year 2004. The six line items from above represent after-tax budgets. CTJ determined the amount of tax liability that each after-tax budget would incur. Therefore, the after-tax budget along with the additional tax burden represents the total pre-tax budget. Taxes included federal personal income taxes, federal Social Security and Medicare payroll taxes (direct worker payments only), and state income taxes. Local income or wage taxes were also included. Included in the calculation are federal tax credits for children and the earned-income tax credit.

The 2004 basic family budgets

In all, basic budgets are calculated for six family types: one or two parents with one, two, or three children, for over 400 communities. The budgets reflect the costs that families actually encounter when they form households in specific geographical areas. The budget costs reflect the income that is necessary for a family to enjoy a relatively safe, modest standard of living.

Figure A examined only one community(Pittsburgh, Pa.)but six different family types. This analysis provides insight into how the budgets vary by family size. Figure B, on the other hand, holds the family type constanttwo parents and two childrenwhile varying the geographic location. Figure B illustrates how, given a family type, the budgets differ substantially by location. For example, rental property in Oakland, California is almost three times what it is in Casper, Wyoming. Monthly rent for a two bedroom apartment is $470 in Casper, Wyoming, $888 in Denver, Colorado, and $1,342 in Oakland, California.

Figure B demonstrates the importance of accounting for cost-of-living variations when calculating relative budgets. In other words, these basic family budgets allow for comparisons that hold living standards constant. In contrast, the single poverty threshold for a family of four$19,157 in 2004applies regardless of location. A family of four is deemed to subsist in poverty if its income is below this level, whether it resides in Casper, Wyoming or Oakland, California.

Table 1 provides individual budget item outlays for the geographic locations shown in Figure B. Annual totals are also calculated. Family budgets as a percent of the poverty threshold are given in the last row of the table. For example, Table 1 shows that the annual basic family budget for Casper, Wyoming is 163% of the poverty level, while it is 338% in Boston, Massachusetts.

Family budgets and the budgets of working families

As stated before, family budgets represent the amount of money a family needs to manage at a basic level. These budgets are not based on what families actually spend, but rather on the realistic costs of the seven basic items that constitute the budgets. Using data from the March Current Population Survey (CPS), a nationally representative survey by the U.S. Bureau of the Census, allows for a comparison of reported family incomes and basic family budgets. 7 The CPS contains extensive information on families, including income, geographic location, and number of children. The CPS allows for a comparison of income data for a two-parent, two-child family living in Denver, Colorado to the basic family budget threshold for that family type and location.

Certain family types and demographic particulars add to the likelihood that a family’s income will fall below basic budget levels. Table 2 presents the share of families with incomes that fall short of basic family budget levels. Families headed by single parents, young workers, or workers with less than a college degree are the most likely to face economic hardship. For comparative purposes, the share of families with incomes less than poverty and twice poverty are also shown in Table 2.

Overall, 29.7% of working families in the United States have incomes below basic family budget levels. As for poverty measurements, the CPS data finds that 9.4% of working families are below the official poverty thresholds, and the percentage of families living below twice poverty28.0%is similar to those subsisting below basic family budget levels.

The remainder of Table 2 gives demographic breakdowns of the shares of families that fall below the three threshold measures. A majority of African American and Hispanic working families and over two-thirds of families headed by someone with less than a high school degree earn less than what is needed to meet the basic family budget threshold. Even a college degree does not completely insulate a family from economic struggles, as 8.7% of families headed by someone with at least a bachelor’s degree have incomes below family budget levels.

More than two out of 10 families headed by a full-time, full-year worker fall below basic budget levels. Households headed by single parents rarely attain incomes above family budget thresholds: just 40.1%, 26.3%, and 7.5% of single parent families with one, two, or three children, respectively, have incomes that meet basic family budget thresholds. Single parents face serious challenges to economic sustainability.

Perhaps predictably, families headed by those with less education, by single parents, or by younger workers (or a combination of such) struggle to attain incomes that meet family budget thresholds. But maybe not so expected are the significant percentages of families headed by educated workers, full-time, full-year workers, and older workers who are also finding it difficult to have a standard of living that is above the basic level represented by these family budgets.

Table 2 offers insight into the importance and value of incorporating cost-of-living differences into economic hardship measures. Families living in cities or rural areas are more likely to have incomes that fall below poverty or twice poverty levels, and their percentages are similar for either locale. For example, approximately 37% of families living in a city or a rural area have incomes below twice poverty. These percentages differ significantly when family budget levels are the measure of comparison. Generally, the cost of living in cities is higher than in suburbs or rural areas. Hence, the percentage of families living below family budget levels is much higher in cities (42.5%) compared to those living in suburbs (23.3%) or rural areas (30.5%).

Regional poverty rates are highest in the South. But when hardship is measured using basic family budgets, it is the Western region that has the largest share of families with income less than the family budget threshold (32.7%). The Midwest region has the lowest percentage of families falling below basic family budget levels (23.4%).

Table 3 offers additional insight into cost-of-living variances in the family budgets. It is one thing to discuss the number of families that don’t earn enough to meet their basic budgetary needs, but what does that mean in terms of actual numbers of people ? Table 3 gives, by state and region, the percentage and number of persons in families with incomes less than family budget levels. Of the six family types examined, over 14 million people (about 28% of those examined) live in families with incomes below the basic family budget thresholds. Again, it is the Western region that has the largest percentage of people living below family budget thresholds (32.1%). The Southern region (due to its large share of the overall population) has the greatest number of personsalmost 5.5 millionliving in families with incomes below family budget levels.

States that traditionally have high levels of poverty, such as Arkansas and Mississippi, also have high percentages of people26.8% and 29.6%, respectivelyliving in families with incomes below basic budget levels. However, some high cost-of-living states, such as New York and California, have even higher percentages of people below family budget levels (35.3% and 33.7%, respectively). The District of Columbia, at 48.0%, has the highest share of persons in families with incomes less than family budget levels, and California, at 2 million people, has the greatest number of persons living in families with incomes below basic budget amounts.

Across the country significant numbers of working families are finding it difficult to make ends meet. Something has got to give when families do not have the means to subsist at a basic level. Under such circumstances, health insurance or safe, dependable child care could possibly be out of reach. Public policy, especially in the form of work supports, is critical to help working families attain a safe and decent standard of living.

The role of public policy

Even in the best of times, many parents in low-wage jobs will not earn enough market-based income to meet their family’s basic needs. When work is not enough, publicly provided work supports are needed to assist workers. It is telling that a full-time, full-year worker who is paid $6.00 per hour (.85¢ above the minimum wage) will earn pre-tax about $12,500 a year, which is below the poverty line of $13,020 for a single parent with one child. Work supports such as the Earned Income Tax Credit (EITC), child care subsidies and tax credits, and subsidies for housing, transportation, and health care have been effective in increasing post-tax incomes and consumption for working families. But more needs to be done to assist struggling low- and middle-wage workers. Being a working member of our economy has associated costs, such as transportation to and from work and the expense of child care. As shown in the family budgets, child care costs, on average, account for around 25% of the typical budget for a family with two children. Thus, this particular expenditure is clearly an important leverage point for using work supports to narrow the gap between earnings and needs.

1. For a historical overview of family budgets, see Johnson, et al. (2001).

2. This Briefing Paper may be used in conjunction with the interactive Web-based basic family budget calculator that is available on the Economic Policy Institute’s Web site: http://www.epi.org/content.cfm/datazone_fambud_budget .

3. See Bernstein (2001).

4. For a dissenting view, see Robert Rector, Understanding Poverty and Economic Inequality in the United States , http://www.heritage.org/Research/Welfare/bg1796.cfm .

5. For information on family budget and self-sufficiency budgets, their components, and conceptual issues, see Bernstein, Brocht, and Spade-Aguilar (2000) and Wider Opportunities for Women at www.wowonline.org .

6. A detailed technical documentation that describes the methodological approach employed in the budget calculations of each budget item is available at: http://www.epi.org/page/-/old/datazone/fambud/fam_bud_calc_tech_doc.pdf .

7. For more on CPS methodology, see Boushey, et al. (2001) Appendix B.

Bernstein, Jared. 2001. Let the War on the Poverty Line Commence . Working Paper Series. New York, N.Y.: The Foundation for Child Development.

Bernstein, Jared, Chauna Brocht, and Maggie Spade-Aguilar. 2000. How Much Is Enough? Basic Family Budgets for Working Families . Washington, D.C.: Economic Policy Institute.

Boushey, Heather, Chauna Brocht, Bethney Gundersen, and Jared Bernstein. 2001. Hardships in America: The Real Story of Working Families . Washington, D.C.: Economic Policy Institute.

Johnson, David S., John M. Rogers, and Lucilla Tan. 2001. “A Century of Family Budgets in the United States.” Monthly Labor Review , Vol. 124, No. 5. Washington, D.C.: Bureau of Labor Statistics, Wider Opportunities for Women Self-Sufficiency Standards can be found at: www.wowonline.org .

The author thanks Jared Bernstein for his invaluable assistance and insights. She also thanks Danielle Gao and Jin Dai for their programming assistance and Yulia Fungard for research assistance. This research was funded by the Annie E. Casey Foundation and the Foundation for Child Development (FCD). We thank them for their support but acknowledge that the findings and conclusions presented in this report are those of the author alone, and do not necessarily reflect the opinions of these foundations.

FCD is a national private philanthropy in New York City dedicated to promoting a new beginning for public education from pre-kindergarten through third grade. The Foundation promotes the well-being of children, and believes that families, schools, nonprofit organizations, businesses, and government at all levels share complementary responsibilities in the critical task of raising new generations. To learn more about FCD and its programs, please visit its web site at www.fcd-us.org .

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How to write a financial need statement for your scholarship application (with examples!)

So you’re applying for a scholarship that asks you about your financial need. What do you say? How honest or specific should you be? What is TMI? In this article, we break down how to pen an awesome financial need scholarship essay or statement.

What to include in a financial need scholarship essay

Template to structure your financial need scholarship essay, introduction: your basic profile, body: your financial situation and hardships, conclusion: how you would benefit from this scholarship, was this financial need essay for a college financial aid application , now, reuse that same essay to apply for more scholarships, additional resources to help you write your financial need scholarship essay.

Many scholarships and college financial aid awards are “need-based,” given to students whose financial situation requires additional support. That’s why one of the most common college scholarship essays is a statement of financial need. This might be very explicit (“Explain your financial need”), somewhat explicit (“Describe your financial situation”), or quite open-ended (“Explain why you need this scholarship”).

In all cases, scholarship providers want to get a sense of your family’s financial picture: what your family income is, if you personally contribute to it (do you have a job?), and how much additional money you need to attend your target college (your “financial gap”).

If the essay prompt is a bit more open-ended (“Explain how this scholarship would help you”), your essay should probably be a combination of a financial need statement and a career goals / academic goals essay.  That’s because you want to show how the award will help you financially and in your academic or career goals.

Usually this statement of financial need is a pretty short scholarship essay (150-300 words), so unlike a college essay or personal statement where you have ample word count to tell anecdotes, you’ll likely need to get right to the point. 

Be sure to include: 

• If you are an underrepresented group at college, for instance, part of an ethnic minority or the first in your family to go to college
• Any relevant family circumstances, like if your parents are immigrants or refugees, as well as your parents’ occupation and how many children/family members they support financially
• How you are currently paying for college, including what you personally are doing to contribute financially (like working student jobs)
• What financial challenges/difficulties your family is facing, for instance, if a parent recently lost their job
• How you would benefit from the scholarship–including your academic and career goals (if word count allows)

Also remember to write in an optimistic tone. Writing about your financial situation or hardships might not be the most positive thing to share. But you can turn it around with an optimistic tone by writing about how these challenges have taught you resiliency and grit.

Give a short introduction to who you are, highlighting any family characteristics that might make you part of an underrepresented group at college. 

“I am a first-generation American and the first in my family to go to college. My family moved from El Salvador to New York when I was seven years old, to escape the violence there.”

Example 2: 

“I am from a working-class family in Minnesota. My family never had a lot, but we pooled our efforts together to make ends meet. My parents both worked full-time (my father as a mechanic, my mother as a receptionist at the local gym), while my siblings and I all worked weekend jobs to contribute to the family income.”

Dive into the details. How are you currently planning to pay for college? The idea here is to show that you and your family have made a good-faith effort to earn enough money to pay your tuition, but that it has simply not been enough. 

Make sure you describe your parents’ occupation, any savings (like a 529 College Savings Account), and any student jobs. You might also discuss any sudden changes in fortune (e.g. parent fell ill or lost their job) that have ruined your original financial plans. 

Example 

As immigrants with limited English, my parents have had to accept low-paying jobs. My father is an Uber driver, and my mother is a housekeeper. They earn just enough to pay our rent and put food on the table, so I’ve always known they could not help me pay for college.  So I’ve been proactive about earning and saving my own money. Since age 11, I’ve worked odd jobs (like mowing my neighbors’ lawns). At age 16, I started working at the mall after school and on weekends. Through all these jobs, I’ve saved about $3000. But even with my financial aid grants, I need to pay $8000 more per year to go to college. 

Bring it home by wrapping up your story.  Explain how you plan to use the financial aid if you’re awarded this scholarship. How will you benefit from this award? What will you put the money toward, and how will it help you achieve your academic and/or career goals?

Scholarship review boards want to know that their money will be put to good use, supporting a student who has clear plans for the future, and the motivation and determination to make those plans a reality. This is like a shortened, one-paragraph version of the “Why do you deserve this scholarship?” essay . 

Winning $5000 would help me close the financial gap and take less in student loans. This is particularly important for me because I plan to study social work and eventually work in a role to support my community. However, since these jobs are not well paid, repaying significant student loans would be difficult. Your scholarship would allow me to continue down this path, to eventually support my community, without incurring debt I can’t afford.

My plan is to study human biology at UC San Diego, where I have been admitted, and eventually pursue a career as a Nurse-Practitioner. I know that being pre-med will be a real academic challenge, and this scholarship would help me focus on those tough classes, rather than worrying about how to pay for them. The $2000 award would be equivalent to about 150 hours of working at a student job. That’s 150 hours I can instead focus on studying, graduating, and achieving my goals. 

Sometimes this financial need statement isn’t for an external scholarship. Instead, it’s for your college financial aid office.

In that case, you’re usually writing this statement for one of two reasons:

• You’re writing an appeal letter , to request additional financial aid, after your original financial aid offer wasn’t enough. In this case, you’ll want to make sure you’re being extra specific about your finances.
• You’re applying for a specific endowed scholarship that considers financial need. In this case, your financial need essay can be quite similar to what we’ve outlined above.

Now that you’ve written a killer financial need scholarship essay, you have one of the most common scholarship essays ready on hand, to submit to other scholarships too.

You can sign up for a free Going Merry account today to get a personalized list of hundreds of scholarships matched to your profile. You can even save essays (like this one!) to reuse in more than one application.  

You might also be interested in these other blog posts related to essay writing:

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Well-Being and Stability among Low-income Families: A 10-Year Review of Research

• Published: 25 October 2020
• Volume 42 , pages 107–117, ( 2021 )

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• Yoshie Sano   ORCID: orcid.org/0000-0002-1741-2736 1 ,
• Sheila Mammen 2 &
• Myah Houghten 3  

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A Correction to this article was published on 28 December 2020

This article has been updated

Scholarship on families in poverty, in the last decade, documented various struggles and challenges faced by low-income families and expanded our understanding of their complicated life circumstances embedded within the contexts of community, culture, and policies. The research articles published in the Journal of Family and Economic Issues during this time, that highlighted poverty, focused primarily on three topic areas: economic security, family life issues, and food security. Overall, findings conclude that family well-being and stability cannot be promoted without the consideration of environmental factors. They depend on the interaction among individual (e.g., increased human capital), family (e.g., positive co-parental relationship), community (e.g., affordable childcare), and policy changes (e.g., realistic welfare-to-work programs). Collectively, the articles have provided a road map for future research directions.

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Family, Poverty, and Social Policy Interventions

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Introduction

Family well-being, essential to the smooth functioning of communities and societies, is hindered when there is high incidence of poverty. Poverty rate in the US hovered around 14% prior to the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act (PROWRA) of 1996 (U.S. Census 2019a ). Following welfare reform, the poverty rate started to decline (to a low of 11.3% in 2000) (U.S. Census 2019a ), although scholars have questioned if PROWRA is the cause of this decline. Uncertainties in the economy, including the 2008 Great Recession, caused the poverty rate to climb again and remain at around 15% until 2014. With the fading effects of the recession, the US poverty rate was at 11.8% in early 2020, right before the current Coronavirus pandemic. One group that is most vulnerable to poverty, however, are female-headed households, who consistently comprise 50% of all households living in poverty. Other vulnerable groups include non-Whites [poverty rate in 2018, Blacks: 22%; Hispanics: 19%; Native Americans: 24%] (Kaiser Family Foundation 2020 ); rural communities [poverty rate in 2018, non-metro: 16%; metro: 13%] (Economic Research Service 2020 ); and children [poverty rate in 2018, 16%; i.e. 1 in every 6 children] (US Census 2019b ).

Family well-being is a multidimensional concept that refers to a family’s subjective sense of overall welfare, taking into account the physical and emotional health of family members as well as their interconnectedness, which in turn results in family stability (a sense of consistency, predictability, and continuity). There are many components that contribute to the well-being of families such as income sufficiency, food security, stable family environment, mental and physical health security, safe housing and communities, employment opportunities, and adequate transportation. These components, taken as a whole, provide the necessary foundation for the well-being of families. For low-income families, in particular, the lack of some or all of these dimensions can be severely detrimental to their well-being since this could lead to poverty. Such a direct link between lack of well-being and poverty can ultimately lead to family instability.

In this paper, we will review select research findings of the past decade published in the Journal of Family and Economic Issues from 2010 to 2019 that have increased our understanding of low-income families living in poverty. Each study employed a unique approach to its particular topic. Some studies utilized large secondary datasets including both metropolitan and non-metropolitan residents while others collected their own data from a smaller sample generated by non-probability sampling. However, all studies focused on low-income families in the United States with the exception of one study that examined poverty-related social policy in Columbia. The 29 papers, Footnote 1 while highly diverse, all illustrated the strengths and challenges faced by individuals and families living with limited resources.

Our review was carried out in multiple stages. First, each author independently reviewed the 29 articles, and then the authors qualitatively compared and contrasted the main themes that emerged from these articles. In the last step, the authors identified three specific dimensions of well-being Footnote 2 : economic security, family life, and food security. Our objective was not to provide a comprehensive summary of all poverty-related issues addressed in these articles but, rather, to synthesize the research findings along these three dimensions to see how they have contributed to the current knowledge base regarding low-income families and to provide a path for future research in order to improve family well-being and stability.

Families in Poverty: Decade in Review

Economic security among low-income families.

In the last decade, research on the economic security of low-income families has centered around poverty dynamics, the effectiveness of welfare-to-work programs, employment issues, the Earned Income Tax Credit, and banking behavior.

Poverty Dynamics

Mammen et al. ( 2015 ) developed the Economic Well-Being Continuum (EWC) as a comprehensive measure to describe the circumstances of low-income families in eight specific dimensions (child care, employability, food security, health care security, housing security, transportation, reliance of assistance programs, and capabilities) and establish their level of economic functioning (persistently poor, struggling, and getting by). When certain life circumstances and trigger events experienced by low-income mothers, which contributed to their entry into and exit from poverty, were examined with the EWC, the authors found that family health issues and changes in mothers’ intimate relationships acted as significant trigger events that established or altered the economic functioning of the families. We believe that what mitigated families’ hardships was their support networks. Prawitz et al. ( 2013 ) reported on the centrality of locus of control among low-income individuals who expressed less financial distress and more hopefulness when locus of control was more internal to them. When low-income individuals were able to make financial adjustments, however, they had more financial distress, accompanied with more hopefulness, possibly implying that while the current situation may be bleak, their adaptive responses may have fostered hopefulness that things would improve.

Effectiveness of Welfare-to-Work Programs Among Low-Income Families

One of the goals of PRWORA was to enable recipients of Temporary Assistance for Needy Families (TANF) to exit the program and enter the job market. The transition from welfare to work, however, was not as effective when low-income individuals were trained only through labor force attachment (LFA) programs. Kim ( 2010 , 2012 ) found that former TANF recipients were more likely to obtain employment when LFA programs were combined with human capital development (HCD) programs as participation in HCD programs were related to longer employment durations and lower probability of TANF re-entry.

Participants in Welfare-to-Work programs, who succeeded leaving assistance and obtaining employment, disclosed low wages; informal labor market activity; notable levels of unmet needs; and continued government, community, and social support use (Livermore et al. 2011 ). Those with higher earnings and regular nonmonetary help from family and friends were likely to have more needs met; those who had fewer needs met reported lower wages, had more young children, used government support programs (including childcare subsidies), and engaged in informal labor market activity (Davis et al. 2018 ; Grobe et al. 2017 ; Livermore et al. 2011 ).

Employment Issues

An important way to exit poverty and attain economic security is through employment. Unfortunately, many low-income mothers, especially rural low-income mothers, face daunting challenges to remain employed. Son and Bauer ( 2010 ) reported that mothers who were able to remain in the same job did so because they utilized their limited resources and developed strategies to combine work and family life. These strategies included utilizing social support network for childcare and other household activities as well as relying, where possible, on flexibility at work such as non-standard work hours and supportive supervisors.

One way that low-income mothers were more likely to be employed, and especially employed full-time, was if they were provided state childcare subsidy (Davis et al. 2018 ) and the receipt of childcare subsidy was tied to their employment (Grobe et al. 2017 ). High level of job instability (job loss, major reduction in work hours), however, created a greater likelihood of losing the childcare subsidy. While job changes per se was not related to loss of childcare subsidy, parents required the subsidy to remain employed.

The Earned Income Tax Credit (EITC)

The EITC program, initiated in 1975, is the largest federal assistance program targeted towards working poor families in order to supplement their household wages and to offset their Social Security taxes (Mammen et al. 2011 ). Despite the many benefits of the EITC, a substantial portion of working families, especially in rural communities, do not participate in the program. Mammen et al. ( 2011 ) found that, among rural low-income women, the EITC non-participants were more likely to be Hispanic, be less educated, have larger families, perceive their income as being inadequate, live in more rural counties, and possess little understanding of the EITC. Participating rural working mothers, on the other hand, were more likely to be single, food secure, and satisfied with life.

One important element of the EITC program is the frequency with which the tax credit payments are received by the working families: lumpsum, periodic, or monthly. Kramer et al. ( 2019 ) reported that periodic EITC payment recipients experienced significantly lower levels of perceived financial stress. This relationship was partly mediated by less need to borrow money, lower levels of food insecurity, and fewer unpaid bills. Therefore, periodic EITC payments may enhance the positive association between the EITC and financial well-being of families.

Banking Behavior of Low-Income Families

Having a bank account is more likely to enable low-income families to build assets and to offset unexpected financial expenditures. According to the Federal Deposit Insurance Commission (FDIC), among households with incomes less than $30,000, 38% of them were unbanked in 2017 (Federal Deposit Insurance Corporation 2018 ). Grinstein-Weiss et al. ( 2010 ) found that low-income households who did not have a bank account (unbanked) were more likely to be younger, Black, unpartnered, have more children, and have less income. They were also less likely to have attended college and less likely to be employed full-time. Banked participants, however, were more likely to have better saving performance in Individual Development Accounts (IDA) Footnote 3 programs and lower risks of dropping out the IDA programs. According to Rao and Malapit ( 2015 ), for female-headed households, having an additional child increased their likelihood to be underbanked or unbanked. Such financial behavior is more prevalent among female-headed households compared to couples or male-headed households, likely due to the opportunity cost of time for women and the intimidation they feel, perhaps, based on their lack of banking sophistication.

Family Life Issues

Family is where individuals seek rest and support, take nutrition, promote good health and, perhaps, most importantly, raise the next generation. In this section we will discuss findings from the last decade on work-family balance, parenting dynamics, and child well-being and poverty.

Work and Family Life

Many rural low-income families face daunting challenges to balance work and family life. Katras et al. ( 2015 ) found low-income families were able to juggle the demands of work and family life if they had access to resources such as informal social support, could manage both work and family time, and were in jobs that supported work and family life. Difficulties regarding availability of resources or inflexibility in employment created problems in work and family life balance (Katras et al. 2015 ). As mentioned previously, low-income mothers relied on informal support for childcare and household tasks. They also depended on sympathetic supervisors who provided flexible work hours (Son and Bauer 2010 ).

Work-family life balance that working mothers try to achieve can be easily sabotaged by housing instability. Kull et al. ( 2016 ) reported that higher residential mobility was associated with changes in employment status and relationships, experiences of intimate partner violence, as well as private-market rentals, substandard housing, and bad neighborhoods.

Parenting Dynamics

In their study of unmarried couples who coparented children, Jamison et al. ( 2017 ) documented that the difficulties of living in poverty, combined with the demands of parenting young children, can create stress and chaos. Parents who were successful in coparenting were those who were able to manage their limited resources well. Jamison et al. concluded that the best way of assisting low-income couples manage day-to-day stress is by providing them with adequate resources as well as information on how to use these resources effectively.

Traditionally, poverty research has focused on low-income mothers. Myers ( 2013 ), however, studied how low-income fathers defined responsible fatherhood. Previous findings on middle-class fathers have emphasized the importance of breadwinning and childcare rearing roles (Schoppe-Sullivan and Fagon 2020 ). Low-income fathers, who did not provide finances or primary care, on the other hand, did not consider responsible fatherhood to include provision for either of these two functions. Instead they defined responsible fatherhood as spending time in non-caregiving activities, voluntarily distancing themselves from a child when it is in the child’s interest to do so, acknowledging paternity in non-legal settings, spending money on presents, engaging in fun activities, attending to special needs, keeping abreast of what is going on in the child’s home, and ensuring that they are not absent from the child’s life (Myers 2013 ).

Child Well-Being and Poverty

The association between poverty and negative child outcomes has been well-established. Children growing up in poverty are more likely to experience negative health outcomes, poor academic performance, higher dropout rates, and behavioral issues compared to children in middle- and upper-income households (Brooks-Gunn and Duncan 1997 ). Focusing on three economic indicators (income, material hardship, and non-liquid assets), Kainz et al. ( 2012 ) found an association among them and variations in 36-month old children’s social and cognitive development. Poverty status, measured by income-to-needs ratio, was related to lower cognitive skills while the presence of non-liquid assets was associated with higher cognitive skills. Greater material hardship was correlated with more social problems for these children.

Investing in children’s education produces positive child outcomes (Chaudry and Wimer 2016 ). Child subsidy programs expand childcare options for low-income parents. De Marco and Vernon-Feagans ( 2015 ) found that parents who received child subsidies tended to choose center-based care. They concluded that childcare, regardless of type, was of higher quality when these families received child subsidies. Okech ( 2011 ), whose focus was on parents’ decision to enroll in preschool children’s college education accounts, found that decisions were influenced by parental education level as well as parents’ participation in information sessions about the account.

Another indicator of child well-being is good health. According to Valluri et al. ( 2015 ), low-income mothers chose healthcare visits for themselves and their child simultaneously. Pediatric visits increased with new medical conditions and greater number of chronic conditions among children, and maternal healthcare use increased with higher maternal depression scores, chronic conditions, new medical conditions, more children, more pediatric visits, prenatal/post-partum needs, and having health insurance coverage. Maternal health visits, on the other hand, decreased with maternal depression, pregnancy, being Latina or Black, having more children, and if mothers were covered through private health insurance.

Food Insecurity

Consumption of nutritious food is necessary for a healthy, productive life for both adults and children. Having enough food at home contributes to an enhanced sense of family well-being. In this section, we will discuss findings related to the measurement of food insecurity, factors influencing food insecurity, and food-related assistance programs.

Measurement of Food Insecurity

Balistreri ( 2016 ) argued that the commonly used measure of food security (18-item U.S. Household Food Security Survey) only captures the prevalence of food insecurity, not its depth or severity. He has, instead, proposed the Food Insecurity Index (FII) to assess the degree of food insecurity. Using the FII, Balistreri found that low-income households without children experienced the most rapid increases in the depth and severity of food insecurity since the 2008 Great Recession until 2018. Although White non-Hispanic households, with or without children, had lower food insecurity prevalence rates, they experienced steeper increases in both depth and severity throughout the last decade. Finally, Black non-Hispanic households, with and without children, were most likely to suffer food insecurity.

Factors Leading to Food Insecurity

Guo ( 2011 ) documented that, regardless of socio-economic status, family food security is related to household assets. This is because the interaction between household assets and income loss buffered changes in food consumption patterns. Further, regardless of household income level, the risk of food insecurity increased, when faced with liquidity constraint and asset inadequacy (Chang et al. 2014 ). This relationship was strongest among low-income families. Financial constraint was found to be an exogenous factor in the determination of food insecurity. Food insecurity also resulted partly from the interaction between unstable income and nonstandard work schedules (multiple jobs, part-time, varied hours). While this association differed across household types, it was most pronounced in male- and female-headed households, and weakest among married couples (Coleman-Jensen 2011 ). The above findings, taken together, implies that food insecurity should be considered in the broader context of asset building and work environment.

The food security of Latino immigrant families in rural communities was influenced by multiple ecological layers. This included family characteristics (higher literacy and life skills), community conditions (state of the local economy, embrace of diversity, affordable housing, and access to health care), cultural values (familism), as well as federal immigration policy (Sano et al. 2011 ). The rapidly expanding growth among Latino families in rural areas of the US requires that attention be paid to the food security needs of this mostly vulnerable population (Hanson 2016 ). In rural Colombia, conditional cash transfers (CCT) increased the perception of food insecurity and subjective poverty among marginalized families (Morales-Martínez and Gori-Maia 2018 ). The conditionalities (families’ commitment to education, good health, and proper nutrition) imposed on the beneficiary families reduced their dissatisfaction with health and education.

Food-Related Assistance Programs

In 2005 and 2010, metro and non-metro households had relatively similar levels of food insecurity. Yet, Nielsen et al. ( 2018 ) reported that a higher proportion of non-metro households received government food assistance (Supplemental Nutrition Assistance Program [SNAP], Special Supplemental Nutrition Program for Women, Infants and Children [WIC], free and/or reduced school meals, and related local and/or federal programs) compared to metro households. After the Great Recession, when government resources were expanded, this assistance gap widened even further. Nonetheless, according to Chang et al. ( 2015 ), participation in SNAP and WIC programs increased fruit and vegetable consumption significantly among disadvantaged families. Other factors such as exercise habits, family support, and willingness to adopt a healthy lifestyle played a bigger role in increasing consumption of fruits and vegetables. For some families, however, nutrition knowledge seemed to decrease actual intake of the same.

In a study that identified nonfood needs of low-income households who patronized food pantries, Fiese et al. ( 2014 ) classified product needs into three categories: products for survival (water, food, medicine), products to keep the household together (soap, toilet paper, hygiene products), and products to “make do” (paper plates, dish soap, household cleaning supplies). When households went without these products, it resulted in stress, personal degradation, and in illegal activities.

Overall Summary of Findings

The research findings from JFEI articles presented above have identified multiple challenges and have suggested future research directions to improve the well-being and stability of vulnerable families. Taken together, the findings imply that family economic functioning depends on the interaction among individual, family, and contextual factors (e.g., social network, culture, policies). Additionally, emphasizing employment alone, without consideration of factors such as childcare (availability, accessibility, affordability) or jobs (availability, flexibility), is not adequate to successfully enable welfare recipients to exit the program. Governmental and institutional support also play an important role in the economic security of low-income families, such as participation in the EITC, for those who are eligible, and in the banking sector.

In order to balance work and family life, which would contribute to family well-being, working poor mothers require informal social support, especially for childcare and household tasks. In addition to effective resource management skills, it is important for low-income mothers to have a reliable co-parent who is more likely to decrease day-to-day stress and chaos in the household. Even those low-income fathers, unable to provide finances and primary care, may provide support in non-traditional ways, thereby, contributing to family stability. Utilizing available resources such as childcare subsidies, college savings programs, or local financial institutions enhance child well-being.

Food security is another important aspect of family well-being. New measures combined with traditional approaches should be used to capture the true extent of the depth and severity of food insecurity. Multidimensional in nature, food insecurity is impacted, not only by income, but also by household assets, food management knowledge and skills, cultural values, community resources, as well as federal policies. This is particularly true for racial/ethnic minorities and rural immigrant families.

Future Research Directions

The 29 articles from the Journal of Family and Economic Issues, that are reviewed here, suggest strategies for improved family well-being and increased stability. These strategies incorporate the true needs of low-income families with a variety of support systems at the individual (e.g., increase human capital), family (e.g., positive co-parental relationship), community (e.g., affordable childcare), and policy (e.g., realistic welfare-to-work programs) levels. The findings of these studies have provided a road map for future research directions. In this section, we will present a general direction for future research; detailed research recommendations, tied to specific findings, can be found in Table 1 (Economic Security), Table  2 (Family Life Issues), and Table  3 (Food Security).

Future research should examine life circumstances and trigger events that may affect changes in families’ economic functioning including the size and duration of its impact. Recent examples of trigger events that could cause a cascading effect on low-income families include natural disasters, the opioid crisis, technological displacement of jobs, and the novel Coronavirus pandemic. Research should also look at how such events may be mitigated in vulnerable families by individuals’ agencies such as internal locus of control, hopefulness, and financial literacy. The evaluation of current welfare programs and policies strongly suggest that future research must explore the impact of variations of state welfare policies including work requirements, strategies to incentivize employers to provide flexible work policies, and community-based support systems for parents of young children. Scholars should also explore low-income families’ attitudes, knowledge, and decision-making processes in the area of finances including their reluctance to participate in the banking sector and, for those who qualify, in the EITC program. At the same time, scholars should also not neglect to identify disincentives created by financial institutions that stand in the way of families participating in the banking system.

Previous research has established that work-family balance is vital for low-income mothers to obtain and maintain their employment in order to promote family well-being. Future research should focus on strategies to incentivize employers to provide flexible work policies and to establish community-based support systems. This current pandemic has created a loss of employment opportunities and loss of income especially for low-income working families; future research should, therefore, evaluate the meaning of work flexibility to include off-site work and job sharing.

Positive child development is embedded in family and social contexts. To prevent generational poverty, future lines of inquiry should go beyond mothers’ perspectives alone to include multiple voices of other family members such as co-parents (especially fathers), older and step-children, and grandparents. Additionally, research should focus on the impact of parental decisions regarding childcare enrollment and healthcare visits on the long-term outcome of children. Finally, the association between receipt of governmental assistance and the stigma experienced by low-income families, particularly among rural families, would be another important area of study.

Future research must investigate the role of economic volatility, market conditions, and policy changes in understanding the relationship between family finances and employment of low-income families and food insecurity. For poor immigrant families, the effect of documentation status and immigration policy changes on food insecurity cannot be understated and, to capture the nuances of their food needs, qualitative and mixed-methods studies would be preferred. Future studies should also incorporate geographical information to identify reasons why urban–rural disparity occurs among food insecure families when attempting to access food and possible strategies that would enable food-insecure metro families to access food. It is equally important to assess family income and food budgeting on families’ dietary habits as well as parental modeling and family food environment on healthy food behavior.

Change history

28 december 2020.

A Correction to this paper has been published: https://doi.org/10.1007/s10834-020-09746-0

The 29 articles reviewed in this paper were assigned by the special editor of this issue of the Journal of Family and Economic Issues. More information is in the introduction to the special issue.

Other dimensions of family well-being are being reviewed by other authors in this special issue. A topic of “health” was covered by Chaudhuri and “health and family” issues were covered by Tamborini.

An individual development account (IDA) is an asset building program designed to enable low-income families to connect to the financial mainstream by saving towards a targeted amount usually used for building assets.

Balistreri, K. S. (2016). A decade of change: Measuring the extent, depth and severity of food insecurity. Journal of Family and Economic Issues, 37 (3), 373–382. https://doi.org/10.1007/s10834-016-9500-9 .

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Sano, Y., Mammen, S. & Houghten, M. Well-Being and Stability among Low-income Families: A 10-Year Review of Research. J Fam Econ Iss 42 (Suppl 1), 107–117 (2021). https://doi.org/10.1007/s10834-020-09715-7

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Accepted : 16 September 2020

Published : 25 October 2020

Issue Date : July 2021

DOI : https://doi.org/10.1007/s10834-020-09715-7

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About half of U.S. adults (52%) lived in middle-income households in 2018, according to a new Pew Research Center analysis of government data. Roughly three-in-ten (29%) were in lower-income households and 19% were in upper-income households.

Our calculator below, updated with 2018 data, lets you find out which group you are in – first compared with other adults in your metropolitan area and among American adults overall, and then compared with other adults in the United States similar to you in education, age, race or ethnicity, and marital status.

Our latest analysis shows that the share of adults who live in middle-income households varies widely across the 260 metropolitan areas examined, from 39% in Las Cruces, New Mexico, to 67% in Ogden-Clearfield, Utah. The share of adults who live in lower-income households ranges from 16% in Ogden-Clearfield to 49% in Las Cruces. The estimated share living in upper-income households is greatest in San Jose-Sunnyvale-Santa Clara, California (34%) and the smallest in El Centro, California (7%).

Lower-income adults, already under significant financial pressure , have been especially vulnerable to the economic fallout from the COVID-19 outbreak in 2020, according to a Pew Research Center survey conducted April 29-May 5, 2020. The survey found that 36% of lower-income adults and 28% of middle-income adults said they had lost a job or taken a pay cut due to the coronavirus outbreak, compared with 22% of upper-income adults. In a Center survey conducted in April 2020, only 23% of lower-income adults said they had rainy day funds that could last three months, compared with 48% of middle-income adults and 75% of upper-income adults.

Pew Research Center designed this calculator as a way for users to see, based on the Center’s analysis, where they appear in the distribution of U.S. adults by income tier, as well as how they compare with others in their own demographic profile.

In our analysis, “middle-income” Americans are adults whose annual household income is two-thirds to double the national median, after incomes have been adjusted for household size. Lower-income households have incomes lower than two-thirds of the median, and upper-income households have incomes that are more than double the median.

In 2018, the national middle-income range was about $48,500 to $145,500 annually for a household of three. Lower-income households had incomes less than $48,500 and upper-income households had incomes greater than $145,500 (incomes in 2018 dollars).

These income ranges vary with the cost of living in metropolitan areas and with household size. A household in a metropolitan area with a higher-than-average cost of living or one with four or more people needs more than $48,500 to be included in the middle-income tier. Households in less expensive areas or with less than three people need less than $48,500 to be considered middle income. Additional details on the methodology are available in our earlier analyses .

How the income calculator works

The calculator takes your household income and adjusts it for the size of your household. The income is revised upward for households that are below average in size and downward for those of above average size. This way, each household’s income is made equivalent to the income of a three-person household (the whole number nearest to the average size of a U.S. household , which was 2.5 in 2018).

Pew Research Center does not store or share any of the information you enter.

Your size-adjusted household income and the cost of living in your area are the factors we use to determine your income tier. Middle-income households – those with an income that is two-thirds to double the U.S. median household income – had incomes ranging from about $48,500 to $145,500 in 2018. Lower-income households had incomes less than $48,500 and upper-income households had incomes greater than $145,500 (all figures computed for three-person households, adjusted for the cost of living in a metropolitan area, and expressed in 2018 dollars).

The following example illustrates how cost-of-living adjustment for a given area was calculated: Jackson, Tennessee, is a relatively inexpensive area, with a  price level in 2018  that was 19.0% less than the national average. The San Francisco-Oakland-Hayward metropolitan area in California is one of the most expensive areas, with a price level that was 31.6% higher than the national average. Thus, to step over the national middle-class threshold of $48,500, a household in Jackson needs an income of only about $39,300, or 19.0% less than the national standard. But a household in the San Francisco area needs a reported income of about $63,800, or 31.6% more than the U.S. norm, to join the middle class.

The income calculator encompasses 260 of some 384 metropolitan areas in the U.S., as  defined by the Office of Management and Budget . If you live in an area outside of one of these 260 areas, the calculator reports the estimates for your state.

The second part of our calculator asks you more questions about your education, age, race or ethnicity, and marital status. This allows you to see how other adults who are similar to you demographically are distributed across lower-, middle- and upper-income tiers in the U.S. overall. It does not recompute your economic tier.

Note: This post and interactive calculator were originally published Dec. 9, 2015, and have been updated to reflect the Center’s new analysis.

• Income & Wages
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Jesse Bennett is a former research analyst focusing on social and demographic trends research at Pew Research Center .

Richard Fry is a senior researcher focusing on economics and education at Pew Research Center .

Rakesh Kochhar is a senior researcher at Pew Research Center .

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Household Financial Stability

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Essay No. 1: Race, Ethnicity and Wealth

The Demographics of Wealth How Age, Education and Race Separate Thrivers from Strugglers in Today's Economy Essay No. 1: Race, Ethnicity and Wealth

Hello. The St Louis Fed established a Center for Household Financial Stability in 2013 to research and otherwise draw attention to the balance sheets of struggling American families. A balance sheet shows what a family saves, owns, and owes, their wealth or their net worth. Families with healthy balance sheets are more economically stable and more likely to move up the economic ladder. And when families are economically strong, so is the economy.

This year, the center is examining the demographics of wealth. We will publish several papers on the roles that race, education, and age increasingly play in determining whether someone is a thriver or a struggler. In fact, a new economic divide is emerging between thrivers and strugglers, one that Bill and Bryan will say more about in a minute. Our primary data source is the 40,000 families who have been interviewed over 25 years through the Federal Reserve's Survey of Consumer Finances. This survey provides the nation's most comprehensive picture of American families' balance sheets and financial behavior over time.

Thriving families typically earn above average incomes, make sound financial choices, and accumulate significant wealth in the long run. Typically, these are families headed by someone who is middle aged or older, White or of Asian descent, and with at least a college degree. Families in these groups, whom we call thrivers, represent about one in four families. They own about 2/3 of the economy's wealth, however, despite being just 1/4 of the population.

The other 3/4 of the families are in groups that are struggling. They are accumulating little or no wealth. Together, they own about 1/3 of the country's wealth, far less than they did 25 years ago. In comparison to the thrivers, they are younger and less educated, make less conservative financial choices, and earn average or below average incomes. They are also more likely to be Black or Hispanic.

the focus of our first paper in this series. With few exceptions, the financial patterns evident in 2013, the most recent year for which we have data, echo those apparent throughout the period since 1989, at least among Whites, Hispanics, and Blacks. Asian families have changed the most, moving away from the relatively low wealth levels of Hispanic and Black families toward the higher level of Whites. Given the remarkable increase in educational attainment by younger Asians in recent decades, virtually all measures of their income and wealth will surpass those of Whites eventually.

In 2013, the median wealth estimate for Whites was about $134,000. For Asians, it was $91,000. For Hispanics, it was just $14,000, and for Blacks, it was even less at $11,000.

The picture looks a bit different when you look at just income, which is a major factor in wealth accumulation, but certainly not the same thing, despite what many people think. Black and Hispanic families earn about 40% less income than Whites. This time, Asians rank above Whites. The median family income among Asians has, in general, grown faster than median White incomes since 1989.

Whites and Asians have much more liquid balance sheets than do Hispanics or Blacks, on average. These cash reserves buffer a family against financial shocks that could lead to high-cost borrowing, distressed asset sales, or costly default on debts. White and Asian families also have a greater share of their assets invested in financial assets and business assets, which provide both asset diversification and higher average returns in the long run than a portfolio consisting mostly of tangible assets, like a house or cars.

And whites and Asians have about half as much debt as Hispanic and Black families as a share of total assets.

And it's true that both White and Asian families, on average, have more education than do Black and Hispanic families. But on closer examination, these two factors, age and education, account for only a small part of the difference in wealth accumulation among Whites, Asians, Blacks, and Hispanics. There must be other reasons for these differences.

In our subsequent presentations, we will say more about our research into the roles played by education and age and wealth accumulation. We hope you read the entire report about race and ethnicity and stay tuned for our upcoming reports on education and age. Together, we hope that these reports shed light on who's thriving and struggling today in America and why. Thank you.

Executive Summary

This first essay in the "Demographics of Wealth" series examines the connection between race or ethnicity and wealth accumulation over the past quarter-century. As with subsequent essays, this one is the result of an analysis of data collected between 1989 and 2013 through the Federal Reserve's Survey of Consumer Finances. More than 40,000 heads of households were interviewed over those years.

Our key findings in this essay:

• When looking at median family wealth (assets minus liabilities), the ranking of the four racial or ethnic groups did not change order between 1989 and 2013. White families ranked first, followed by Asian families, Hispanic families and black families.
• In inflation-adjusted dollars, the median wealth of a white family in 1989 was $130,102. In 2013, it was $134,008. For an Asian family, the two medians were $64,165 and $91,440. For a Hispanic family, they were $9,229 and $13,900. For a black family, they were $7,736 and $11,184.
• Although the financial patterns over this period have changed little for whites, for Hispanics and for blacks, they have changed dramatically for families headed by Asians. Asian families' median income already has surpassed that of whites, while Asians' median wealth soon will surpass the white median level, most likely because of the remarkable increase in educational attainment by younger Asians in recent decades.
• Median Hispanic and black wealth levels are about 90 percent lower than the median white wealth level, yet median income levels of Hispanics and blacks are only 40 percent lower. The larger wealth gap could be due to Hispanics' and blacks' investing in low-return assets like housing, as well as to borrowing at high interest rates. Hispanics and blacks could also feel less of a need to save for the future because society's progressive old-age safety-net programs will replace a relatively larger share of the normal incomes they earned during their working years.
• Whites and Asians have stronger balance sheets—a key factor in wealth accumulation—than do Hispanics and blacks. The balance sheets of the former show more liquidity and asset diversification and less leverage (debt as a share of assets).
• On our financial health scorecard—designed to measure whether a family is making sound, everyday-financial decisions—whites and Asians fared much better than Hispanics and blacks. The gap was even wider when restricting the comparison to just middle-aged, well-educated families in each of the four groups.
• Age and education would seem to be logical explanations for the persistent differences in wealth accumulation across the racial and ethnic groups. However, an analysis of the data indicates that these two factors play only small roles in explaining the gaps. In particular, holding constant the age and educational attainment of a family head, racial and ethnic differences in average financial-health scores correspond closely to differences in the groups' median wealth levels.

Read all the essays and watch all the videos in this series »

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5 Ways To Support Your Family on a Single Average Salary

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Since the onset of the COVID-19 pandemic, the cost of just about everything has gone up . From housing to utilities, groceries, and more, most Americans are feeling the financial squeeze these days . Yet, many U.S. households are living on a single income.

A recent GOBankingRates survey from October 2023 posed the following question to 1,021 Americans aged 18 and older: Do you live in a single-income or dual-income household?

The percentages might surprise you: single-income households represented 64.55% of respondents while dual-income households represented only 35.46% of respondents.

With nearly two-thirds of respondents living in a single-income household, there are some methods to consider to increase your household income.

Here are five tips and tricks to provide continued support to your family if you earn a single average salary, according to Navy Federal :

1. Rework Your Budget

Budgeting is key when it comes to saving money and managing your monthly finances. If you find yourself having difficulty making ends meet each month, consider revising your budget. There could be categories where your spending is too high, or where you can eliminate expenses altogether. Sticking to a stricter budget could even leave you with extra cash at the end of each month.

2. Cut Back on Unnecessary Monthly Bills

Unnecessary bills could be eating away at your monthly take-home pay. These could be recurring monthly charges for streaming services you no longer use, for example. Other unnecessary bills could be high-interest student loans or auto loans. Consider reducing (or eliminating) recurring monthly charges that you can do without, and refinancing existing loans to get a lower interest rate.

3. Seek Out Other Ways To Earn Extra Money

If your single average salary just isn’t cutting it, there are many ways to augment your income. You could take on a side hustle such as babysitting, dog walking, or becoming a rideshare driver. You could also start your own business, or pick up some freelance gigs on the side. Increasing the number of monthly income streams is a crucial way to build wealth.

4. Put Your Savings To Work

If you have savings already, you’re off to a good start. Be sure to put any cash savings you might have in an interest-bearing high-yield savings account. These online savings accounts typically bear higher interest rates than the savings accounts offered by traditional brick-and-mortar banks. Your money will be better shielded against the effects of inflation and your wealth will grow thanks to the magic of compounding.

5. Stick to Your Grocery List

Groceries aren’t cheap. It can be easy (and sometimes tempting) to throw a few extra items in your grocery cart, items you probably don’t need. By sticking to a set grocery list each week, you can keep your expenses under control and stay within your budget. You could also commit to only buying the cheaper version of the items you need or only buying items on sale.

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Meet a couple with 5 kids who are barely making it despite working 4 jobs: 'It shocks me that $100k feels like poverty'

• April Schultz and her husband struggle financially despite a $130,000 combined income.
• The couple, once stable with one income, now work four jobs and feel financial strain.
• They spend $200 a week on groceries for their family of seven and cut most subscriptions.

April Schultz, 40, and her husband Kevin, 45, bring in $130,000 a year in gross income combined between their four jobs and side gigs. Still, Schultz said it shocks her that such an income "feels like poverty ."

"With $100,000, I feel like we should be able to do a little extra with it," Schultz said. "We should be able to have a little bit more entertainment. We should be able to shop at Costco and not worry about it."

She said a few years ago, her husband was the sole breadwinner while she stayed home with the kids, and there were few financial worries . However, now they don't have enough to comfortably pay for a Netflix subscription, which costs $15.49 a month for a standard subscription.

"We shouldn't have to have four jobs in one family," Schultz said. "I feel like that's crazy when, in 2017, we had one income and we were doing just fine."

Despite making much more than the federal poverty line — which is $47,340 for a family of 7 — Schultz and her husband are considered at the higher end of ALICE — or asset-limited, income-constrained, employed. This population often makes above the income limits to quality for government social benefits like food stamps but not enough to comfortably afford their daily expenses. Many are living paycheck to paycheck and are forced to cut back spending on some essentials to afford others.

"It's hard to get in data the frustration, the stress, the ongoing day in day out, having to make some really bad choices," Stephanie Hoopes, national director at United For ALICE, previously told BI. "Are you going to get the medicine for your kid, or are you going to have dinner tonight? Are you going to keep the electricity on? Are you going to go to childcare?"

Simpler, less expensive times

For her first two kids, finances were very tight, and they relied on assistance like Medicaid. After her husband got a government contractor job with the Department of Defense, she said finances were much more stable, even after having three more kids.

For 12 years, she was a stay-at-home mom , and she returned to work after her youngest started school in 2016. She's held bookkeeping and secretarial jobs for the last six years while the family moved around for her husband's job to states including California, Arizona, and Minnesota.

"We were able to make those moves on our own dime, and it was really comfortable living," Schultz said. "We made less than we do now."

Her husband took a second job at the airport last year, helping load and unload planes a few nights a week. Schultz took a day job at the local school, a coaching role, and she temporarily held a bookkeeping position.

In October 2023, the family sold their home in Idaho and bought a home in Mascoutah, Illinois , a small city about a half hour from St. Louis and near the Scott Air Force Base. Most residents are either in the military or are married to someone who is, she said. Still, she said the topic of affordability is a "constant conversation" in her city, as she's noticed home prices in her area skyrocket recently.

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Her husband makes slightly over $100,000 before taxes between his two jobs, while she makes around $30,000. She said that while there are job opportunities in her area, most don't pay enough for the area's cost of living. She's content with her current role, which allows her to be in closer proximity to her kids.

She said some of the financial burden comes from their decision to live in Illinois instead of Missouri and to have a larger family. They pay $600 a month in property taxes in Illinois, which has the second-highest effective tax rate of any state. Still, she said the last few years have been jarringly more difficult for them.

"We can pay our bills, but there's never anything extra," said Schultz, noting that they don't go out to dinner, see movies in theaters, or travel. "We've never been on a vacation with our family."

Cutting back on extra costs

They cut cable and canceled subscriptions to platforms like Amazon Prime and Netflix. Their cars are over 15 years old and have over 200,000 miles. While they don't have car payments, they're worried one of them will break down, and they won't be able to buy another one. Additionally, they purchase clothes and furniture secondhand.

They're both still paying off student loan debt , and they've been forced to use credit cards for everyday purchases, which she said they hate doing. They mostly use an all-cash system to budget every single dollar, to see what they can save for an emergency fund. However, there hasn't been much left over, especially with rising utilities costs that are controlled by the city.

Schultz said she's desperately trying to bring food costs for the family down to just $200 a week — less than what the USDA recommends a family of four spend for a thrifty food plan. She shops at Aldi and often watches YouTube recipes for inexpensive meals. They canceled their Costco and Sam's Club memberships since they calculated that they would spend more there even though they would buy ingredients in bulk.

"Ever since COVID, we just never have been able to get ahead," Schultz said. "It's just constantly trying to struggle to get to a place where we can live without always worrying."

A few years ago, she had a cancer scare that cost $500 to get checked out. She said she shouldn't have to take a large amount out of her savings to make sure she's healthy.

She said they will not budge on investing in their kids' sports, which quickly adds up. They will always buy their kids equipment or clothes for cheerleading or choir to allow them to excel academically. However, she's told her kids they have to get scholarships to college if they want to attend or figure out a way to pay for it themselves, as they have no way of paying for any college funds.

She's not too worried about retirement , as her job has a mandatory 401(k), though her employers don't put in anything beyond their requirements. Her husband will receive retirement benefits from the government, which gives them peace of mind. They both anticipate downsizing once their kids have moved out and relocating to a more rural and cheaper place.

Still, she fears they won't be able to give their kids much down the line. She's encouraged her kids to look for ways to make money through odd jobs, as she doesn't give them an allowance and only buys them gifts for their birthdays and Christmas.

"Trying to think of 20 years down the road when we've got kids about to go to college next year, it's kind of a 'future us' problem, unfortunately," Schultz said.

Are you an ALICE struggling to make ends meet? Are you worried about retirement? Reach out to this reporter at [email protected] .

Watch: Why childcare has become so unaffordable

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How Free School Meals Went Mainstream

Over the past decade, many more schools started to offer free meals to all children, regardless of family income.

More than 21 million American children now attend schools that offer free meals regardless of family income — a tenfold increase from 2010. Credit... Will Warasila for The New York Times

Supported by

By Susan Shain

• May 21, 2024

Kurt Marthaller, who oversees school food programs in Butte, Mont., faces many cafeteria-related challenges: children skipping the lunch line because they fear being judged, parents fuming about surprise bills they can’t afford, unpaid meal debts of $70,000 districtwide.

But at nearly half of Mr. Marthaller’s schools, these concerns have vanished. At those schools, all students get free breakfast and lunch, regardless of their family’s income. At one school, West Elementary, children grab milk cartons, cereal bars and bananas from folding tables on their way to class, with almost 80 percent of students eating breakfast there each school day.

“We’ve done a lot of good things to feed kids here in Butte,” Mr. Marthaller said. But introducing universal free meals, he added, was “probably the best thing we ever did.”

Advocates for free school meals have pushed for them to be offered to every student for a long time, but saw significant progress in the last decade and a half. Their first big win came quietly, in 2010, when Congress passed an under-the-radar policy called the community eligibility provision , which made it easier for schools to serve free meals to all. Then, during the Covid-19 pandemic, the federal government let every public school student eat for free, rapidly transforming the nation’s thinking around school meals.

Eight states have passed their own universal free meal legislation since the federal largesse ended in 2022. Dozens more have introduced similar bills or have one in the works. A surge of additional schools — nearly 7,000 — have signed up for the community eligibility program that West Elementary participates in: As of the 2022-23 school year, roughly four in 10 public schools were enrolled.

In total, more than 21 million American children now attend schools that offer free meals to all — a tenfold increase from 2010. “Schools did not want to go back to charging some kids,” said Crystal FitzSimons, the director of child nutrition programs and policy at the nonprofit Food Research and Action Center. “They saw the huge benefits of providing free meals to all students: supporting families, supporting kids, changing the culture of the cafeteria.”

A tale of two lunches

From above, Butte looks as if it were carved out of a mountain range with an ice cream scoop. Once known as “ the richest hill on Earth ” for its copper mines, Butte was one of the largest cities west of the Mississippi in its heyday. Today it has approximately 35,000 residents, many of whom have been there for generations.

Amber Moore lives on the east side of town, in a blue house with a view of Our Lady of the Rockies, a 90-foot-tall mountaintop statue of the Virgin Mary. A stay-at-home mom, she lives with her husband, Jake, a telecommunications technician, and their five children, four cats and two dogs.

The Moores’ house is zoned for Whittier Elementary School, which, unlike West, does not participate in community eligibility and does not have universal free meals. So five nights a week, Ms. Moore clears off a patch of her kitchen counter and sets out five lunchboxes. In goes the SunnyD, the cheese stick, the ham-and-cheese sandwich, the Lay’s, the clementine and the fruit snacks. Ms. Moore uses three loaves of bread each week just on lunches. Add breakfast to the equation and she spends about $250 per month on the two meals.

“That’s like a power bill,” she said. “It’s not a small amount.” That bill was eliminated during the pandemic. For those two years, Ms. Moore’s children ate breakfast and lunch at school every day. Then, like the majority of schools around the country, Whittier returned to charging for meals in August 2022. And Ms. Moore returned to packing lunches.

Though low-income students at all American public schools technically qualify for free and reduced-price meals, one-third of eligible students do not participate, according to a Food Research and Action Center estimate. One reason is stigma: Because the school-provided meal, often called “hot lunch,” has long been viewed as a form of welfare , eating it can be a painful marker of poverty.

Parents may also fail to complete the requisite paperwork because they have volatile incomes, face language barriers or are embarrassed about their finances. (As Mr. Marthaller put it, “I think it’s a pride thing.”) Others may be struggling but ineligible: To receive free or reduced-price meals, a family of four must earn less than $55,500 per year . When meals are free to all, advocates say, these obstacles are eliminated.

The Moores don’t qualify for reduced-price meals: Mr. Moore’s income puts them over the limit by $465 a month. “It’s one of those frustrating things,” Ms. Moore said. “I’m sure a lot of parents are in that middle area where it’s like, well, shoot.”

‘Their brains are fired up’

The push for a national school lunch program initially came during the Great Depression , when children were hungry and farmers had surpluses to sell. In the 1960s, school breakfast was added. School meals have since become the nation’s second-largest food safety net , after food stamps.

As childhood obesity rates soared, however, the lunch program was criticized as a contributing factor. In 2010, the first lady, Michelle Obama, who made childhood obesity a signature issue, pressed for the passage of the Healthy, Hunger-Free Kids Act, which led school cafeterias to serve more fruits, vegetables and whole grains and less salt, sugar and unhealthy fats. Policymakers also saw it as an opportunity to feed more hungry children. So, without much fanfare, they tucked the community eligibility provision, or C.E.P., inside the bill.

Under the C.E.P., offering universal free meals became less cumbersome: If 40 percent of a school or district’s students qualify for programs like food stamps or Head Start or are homeless, migrants or in foster care, it can serve free meals to everyone . It does not need to collect individual applications; it simply applies for the program and is qualified for the next four years.

Even the C.E.P.’s architects have been surprised by its impact. “I certainly did not foresee that a little more than 10 years later, 20 million kids would be enrolled in schools that were doing C.E.P.,” said Cindy Long, administrator of the Food and Nutrition Service of the Agriculture Department, who helped design the 2010 act.

The benefits of universal free meals are myriad, experts say. Most crucially, more children eat , helping to combat hunger in a country where 17 percent of households with children experience food insecurity. They also eat more healthful food . When students are well fed, they learn better: Some research suggests that schoolwide free meals can improve test scores , attendance and behavior . Such programs also help schools, by lessening paperwork, and parents, by reducing food expenses .

Like most people, Amanda Denny, a fourth-grade teacher at West Elementary, had never heard of the C.E.P. But she has seen the difference that universal school meals can make. “In my classroom, when those kids do eat breakfast, they are ready to start their day,” she said. “Their brains are fired up, and they’re ready to learn.”

Last October, the threshold to qualify for the C.E.P. was lowered , making more schools and districts eligible. The Moores’ school, Whittier, is now eligible, as are most other schools in Butte. But because of how the federal government calculates reimbursements for school meals, only schools with high populations of needy students break even using the C.E.P.; the rest usually lose money by participating . Advocates have been pushing for higher reimbursement rates so more schools can afford the program.

But in one draft federal budget, House Republicans proposed ending the C.E.P. altogether, arguing that public funds shouldn’t pay for wealthy children to eat lunch . Jonathan Butcher, an education researcher at the Heritage Foundation, believes school lunch aid has ballooned far beyond its original intent. He would like to see the provision repealed.

“They’re not just saying, ‘How can we better get food to kids that need it? They’re saying: ‘Eh, let’s not bother with the details. Let’s just give it to everybody’,” Mr. Butcher said. “That’s not being respectful to taxpayers, nor is it advancing the idea that we should improve a very wasteful school lunch program.”

Most of the states that have passed their own free school meal legislation did so with bipartisan support. To pay for the programs, California, Maine, Minnesota, New Mexico, Vermont and Michigan tapped general revenue or education funds ; Massachusetts and Colorado raised taxes on their highest earners. (In Colorado, the program has been so popular that it is facing a $56 million funding shortfall this year.)

Ms. FitzSimons, of the Food Research and Action Center, believes food is just as integral to public education as transportation and books, which are typically offered to students at no charge. “We spend billions of dollars on funding for education,” she said. “If kids are sitting in class unable to learn because they’re hungry, because their stomachs are growling, then we’re wasting our money.”

At West Elementary, a stuffed bison head presides over the cafeteria. There is no cash register, and at lunchtime, children whiz through the line, grabbing trays of applesauce and teriyaki-doused “steakettes.” They plop down next to friends eating peanut-butter-and-jelly sandwiches from colorful lunchboxes.

Ryder is a third grader who wants to be a YouTuber or a police officer when he grows up (and, he said, “if that doesn’t work out, NASA”). He was shocked to learn that children at other schools have to pay for lunch. “That’s mean,” he said. His friend Louis agreed: “That is cold.”

Things were different for Kaylee Rabson, a fifth-generation Butte resident whose son attends West. “When we were younger, it was definitely very separated,” she said. “Like, if you went to hot lunch, you were kind of embarrassed.” Now, all her son’s friends eat the school lunch — at least when pizza or walking tacos (ground beef, veggies and cheese in a Doritos bag) are on the menu.

“It’s ‘I eat hot lunch because it sounds good, not because I need to.’ It really has erased the stigma,” Ms. Rabson said. “They’re just there having lunch together.”

What are your experiences with free or reduced-price lunch?

This story was published by The New York Times’s Headway team in partnership with High Country News.

The Headway initiative is funded through grants from the Ford Foundation, the William and Flora Hewlett Foundation and the Stavros Niarchos Foundation (SNF), with Rockefeller Philanthropy Advisors serving as a fiscal sponsor. The Woodcock Foundation is a funder of Headway’s public square. Funders have no control over the selection or focus of stories or the editing process and do not review stories before publication. The Times retains full editorial control of the Headway initiative.

Susan Shain is a reporting fellow for Headway, a section of The Times that explores the world's challenges through the lens of progress. More about Susan Shain

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Ex-South Dakota mayor Jay Ostrem charged in triple homicide after alleged sexual assault of family member

T he former mayor of a South Dakota town is accused of murdering three people after becoming enraged over a neighbor allegedly sexually assaulting a family member.

Jay Edward Ostrem, 64, was arrested on Monday and is currently being held in Minnehaha County Jail on $1 million cash-only bond, according to the South Dakota Attorney General’s Office.

Ostrem was the mayor and city councilor of Centerville in 2010, KELO reported, citing previously filed lawsuits against the suspect.

The incident took place around 9:44 p.m. Monday night, when a “frantic” man called 911 and said that his relative had been fatally shot, court papers obtained by KELO said.

The caller claimed that the shooter was a man from across the street, and said the man had gone back into his home.

The man then said that he had also been shot, and stopped communicating with the dispatcher a short time later.

When police arrived at the scene, they witnessed Ostrem leaving his home, the papers explained.

The former mayor ignored the cops’ asking him to stop and continued walking away until a Game, Fish, and Parks officer who responded to the scene met up with him and demanded he get on the ground.

Ostrem complied, and told the officer he had a gun in his pocket, the court write-up noted.

When officers approached, they noticed that Ostrem had an AR-style rifle on the ground near him. He was also bleeding from his left hand and smelled of alcohol.

Officers then found a .380 handgun in Ostrem’s pocket, as well as spent shotgun shell casings and at least one spent rifle casing.

When the police entered the home where the 911 call was made from, they found three people dead from apparent gunshot wounds.

The investigators moved on to Ostrem’s house, where one of his adult family members told them that a neighbor had been at their home on Thursday night, while Ostrem was sleeping.

The family member claimed that she and the neighbor were drinking, and then he forcibly kissed her, exposed himself to her, and pressed himself against her, the court papers said.

The woman explained that she told Ostrem about the assault on Monday, and then “got up and went raging out of the house.”

Ostrem did not say anything as he left, and she did not know where he was going, the woman claimed.

She also said that she did not see Ostrem again until law enforcement arrived at the scene.

Ostrem was former law enforcement, and had weapons in the home and possibly in his car, the woman added.

The incident is now under investigation by the South Dakota’s Division of Criminal Investigation.

The three victims have not been publicly identified pending family notification, the Attorney General’s Office said.

“Jay Ostrem has been arrested and charged with three counts of First Degree Murder, and law enforcement has secured the scene,” said Attorney General Jackley. “There is no further threat to the public.”

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Process server felt ‘legitimately threatened’ trying to serve kristi noem lawsuit over texas dental practice endorsement.

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The consumer advocacy group behind a recently dismissed lawsuit against Kristi Noem said Tuesday that it plans to continue litigation over her peculiar social media endorsement of a Texas dental practice, noting that the South Dakota Republican governor was “highly evasive” and “threatening” when it tried to serve her legal papers.

The lawsuit, filed by Travelers United in the Superior Court of the District of Columbia, accused Noem of posting an “undisclosed advertisement” on her various social media accounts when she endorsed Smile Texas – the Texas dental practice that put in her veneers – in a five-minute-long infomercial-style testimonial. 

The complaint was dismissed last week on the grounds that Travelers United did not present the court with proof that Noem was served with the lawsuit.

But the group claims it did serve the governor and that Noem’s recent anecdote about killing her “untrainable” 14-month-old hunting dog lended credence to the process server’s concerns. 

“Ms. Noem has recently been in the news for shooting and killing her dog,” a Tuesday filing by Lauren Wolfe, counsel for Travelers United, states. “The process server felt legitimately threatened.” 

Wolfe noted that the process server also alleged that the governor was “highly evasive,” “threatening”  and that her staff “were hostile” throughout the process. 

Even so, Wolfe argued that Noem was “successfully served” and that the case should not be dismissed, including notes from the process server indicating that the paperwork was eventually left with Noem’s staff. 

“The baseless lawsuit filed by Travelers United against me was dismissed by the court last week,” Noem wrote on X Tuesday. “Their actions have exposed them as a fake watchdog group filing frivolous claims to smear me.”

“To be clear, I never received compensation for any alleged ‘advertisements,’” she added. 

“If Travelers United continues to engage in baseless lawfare, then I will use every resource at my disposal to hold them accountable,” Noem wrote in a separate post . 

Wolfe told The Post that Travelers United “100%” plans to press forward with litigation.

“We would be happy to dismiss this case if we got a receipt showing that Gov. Noem paid in full [for the out-of-state dental procedure],” she said. “We have made that clear to her lawyers and we have yet to receive any sort of documentation showing that.” 

It is unclear why Noem cut the testimonial for Smile Dental and posted it widely on social media. 

Her office did not respond to The Post’s request for comment. 

Travelers United had 14 days from May 20 to contest the dismissal of the lawsuit.

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