Family Budgets

THE FAMILY BUDGET COULD best be described as the bundle or basket of resources that the family uses in its day-to-day activities. For most of the industrialized world, this basket takes the form of money; elsewhere the budget might be thought of as stored foods, available time for labor, and other nonfinancial resources. In the United States, the family budget is typically allocated to a range of family needs, including shelter, food, clothing, transportation, and other obligations like medical care or taxes.

The government statistician Mollie Orshansky devised the original concept of the poverty level by determining the various items a family would require to meet its needs, and then applying the costs of these to a fam-ily's net, or after-tax, income. Orshansky drew on the U.S. Department of Agriculture's model of a minimum budget (called the “economy food plan”) and determined that a family of three would spend approximately a third of its income to meet its basic food needs, and then calculated similar poverty-level budgets for families of differing sizes.

This basic formula remains the marker of poverty today, and is updated yearly by the U.S. Census Bureau so as to account for changes in income, population, and other economic factors. But the poverty level in U.S. families has been distorted by some of the earlier assumptions of the model. During the formulation of what constitutes such a level, most people believed that families could survive on approximately 1.4 times the poverty-level income, while in the contemporary era, citizens think that the poverty-level income is nearly double what families living in poverty actually live on. Households must meet a range of household needs that were rare in the past, including childcare and increased medical, housing, and transportation costs. In fact, food costs are higher than in the original calculation.

The “shrinking dollar” is a symbol of the family budget among the working poor whose paychecks don’t cover basic necessities.

Thus family budget in relationship to poverty has several meanings. It obviously means the specific, often government-defined minimum household income necessary to provide some theoretical combination of basic needs. It also means the stream of resources, not all economic, that a family uses to meet its needs. Thus labor, both paid and unpaid, contribute to the family budget, and so do a range of strategies that similarly achieve those needs without affecting the budget (a child's school lunch program, for example). The term becomes even more awkward when applied to poor families in developing countries, who may rely little on [Page 343]money and much on their own subsistence, labor, and exchanges with family and friends.

Social structure within the family itself plays a role in shaping family budgets. As a family works to stretch meager income, children may contribute to the budget or take over providing for their own needs, a practice common among poor families in the developing world. However, some evidence suggests that this practice also occurs among the poor in the United States. Family members sometimes also keep a small fund for themselves, rather than contributing to the needs of the family as a whole, a pattern that appears particularly common among male family members.

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