|
The basic indicators of household
well-being—average (or median) income and wealth—do
not adequately convey information about how financial
well-being is distributed among the population or about
nonfinancial measures of well-being. Of special interest,
for example, are farm households that are experiencing
financial hardship. Indicators that contribute to our
understanding in measuring the size of this population
include:
Other indicators of well-being include:
Poverty
The U.S. Bureau of the Census establishes an annual poverty
threshold to measure the share of the population with
low incomes. In 1959, about half of all farm residents—defined
simply as residing on a farm—were below the official
poverty line, compared to 20 percent of nonfarm residents.
The gap in poverty rates narrowed considerably over time.
By the late 1980s, poverty rates of farm residents were
at or below the rates for nonfarm residents (see figure).
The farm resident population gradually ceased to be
representative of the farm operator household population
(since not all operators live on their farm and others
who are not operators live on farms). Since 1991, poverty
rates have been calculated for farm operator households.
(For the years when data are available for both populations,
farm residents have lower poverty rates than do farm
operator households.) In the last decade, the poverty
rate for farm operator households varied a lot,
from a low of 12.1 percent in 2005 to a high of 17.6
percent in 2008 (see figure).
Based on the official poverty threshold, 16.9 percent
of persons in farm operator households were in poverty
in 2009, compared to 14.3 percent of the general U.S.
population. Poverty rates are higher in nonmetropolitan
areas than in metropolitan areas for both the general
population and the farm household population. However,
poverty rates are incomplete indicators of well-being
since they look only at income sources, not wealth. Many
farm operator households with incomes below the official
poverty thresholds have wealth on par with other farm
operator households (see table).
Farm Households' Well-Being Includes
Income and Wealth
In a variable-income/high-wealth sector such as farming,
well-being measures based on both income and wealth can
provide a better indication of a household's capacity
to maintain its standard of living than a measure of income
taken in a single year. During downturns in income, farm
households may be able to borrow against, or liquidate,
assets. To jointly consider both income and wealth, farm
households are divided into four groups, separated into
low and high levels of income, and low and high levels
of wealth, with the median levels of U.S. household income
or wealth as the dividing lines between low and high.
Median income (or wealth) is the level at which 50 percent
of households have greater income (wealth) and 50 percent
have less. The Federal Reserve Board collects information
on the wealth of U.S. families once every 3 years, with
2007 being the most recent year for which data are available.
d
There is a difference between farm and other U.S. households
in the pattern of wealth compared to income. In 2009,
less than 9 percent of all farm households—in contrast
to 50 percent of all U.S. households—had wealth
less than the U.S. median household level. The 92 percent
of farm households with high wealth are split into two
groups, with more having incomes above the U.S. median
than below the U.S. median. On average, the low-income/high-wealth
group tended to have incurred farm losses during the year,
with insufficient off-farm income to offset these losses.
So who is in the small group of low-wealth farm households?
On average, the low-wealth group is younger (virtually
none are retired), operates substantially fewer acres,
and generates lower farm sales than the farm operator
population as a whole (see table).
Among low-wealth households, those in the high-income
subgroup disproportionately report their primary occupation
as "other than farming/ranching." Those in
the low-income subgroup were more likely to have operators
that reported farming as a primary occupation, but most
still relied on nonfarm work as the major source of income.
It is not surprising that farm operator households have
more wealth than the average U.S. household because capital
assets, like farmland and equipment, are generally necessary
to operate a successful farm business. In general, households
with self-employed heads have greater wealth than the
average U.S. household. Farm operator households have
greater wealth than nonfarm U.S. households with a self-employed
head, on average.
d
The distribution of farm households in each income/wealth
group has been relatively consistent over time. However,
the share of households falling into the higher wealth
categories seems to be increasing.
Access to Health Care
Several factors affect a person's access to health
care, including the proximity to health care providers,
health insurance coverage, and the expense of health insurance
and out-of-pocket health expenses.
Compared to the general U.S. population, farm operator
households generally have to travel greater distances
to receive health care, especially specialized care. About
60 percent of farm operator households live in nonmetro
areas, and, compared with other nonmetro residents, they
are more likely to reside in remote areas. Farm households,
therefore, are less likely to have access to nearby medical
care. Based on the DHHS' Health Professional Shortage
Areas, 17 percent of the farm population lived in shortage
areas for primary care access in 2004, compared to less
than 4 percent of the U.S. population.
d
Health insurance provides individuals or groups with
a contractual arrangement for personal medical expenses
to be covered (usually, in part) in exchange for a fee
paid to insurance companies. The terms and expense of
health insurance plans vary widely. Because medical attention
is relatively expensive and can significantly affect morbidity
and mortality, the incidence of health insurance among
populations is an important indicator of their well-being.
In 2009, 16.9 percent of the U.S. population
had no form of health insurance. For members of farm operator
households, the comparable figure was 10.2 percent. The
likelihood of having health insurance coverage increases
with both age and income. Virtually all U.S. citizens
age 65 or older are eligible for Medicare. Farm operator
households are more than three times as likely as other
U.S. households to be headed by an individual over 65.
Farm operator households also have higher incomes, on
average, than the general U.S. population.
d
Most Americans receive health insurance through their
employers. Although farm operators are largely self-employed,
the majority of farm households have an operator or spouse
employed off the farm. As with the general population,
the most common source of health insurance for members
of farm households is employment-based. In fact, farmers
are almost as likely as the general U.S. population to
receive their health insurance through an outside employer.
Farmers are more likely than the general population to
directly purchase their health insurance from an insurance
company, and less likely to receive health insurance from
a government-sponsored program, such as Medicare or Medicaid.
In 2009, about half of farm household members had health
insurance coverage from an employment-based plan. One
major reason that a farmer or rancher would work solely
on the farm and not have access to employer-sponsored
insurance through an off-farm job is the intensive time
commitment for some commodity specializations. An example
of this is in dairy production. Farming is the major occupation
for 97 percent of those who specialize in dairy production—significantly
more than the 43 percent across specialties. Compared
to the 55 percent of all farm persons who receive insurance
from employer-sponsored plans, only 35 percent of persons
in dairy households do. The lack of off-farm employment
and the recent difficult financial conditions for dairy
producers likely contributed to the difference in health
care coverage between persons in dairy farm households
and those in the overall farm household population. In
2009, 30.5 percent of persons in dairy households were
uninsured, compared to 10.2 percent for all farm persons.
In 2008, the contrast in coverage was even more stark,
43.6 percent compared to 10.6 percent.
d
Having health insurance and the source of health insurance
are major determinants of household expenses for health
care. The most expensive type of health insurance is direct
purchase. Farm households with direct purchase insurance
had the highest health expenses of all farm households,
more than $8,000 per household, accounting for one-fifth
of total household cash expenses in 2009 (see table).
d
Household Living Expenses
Farm household income varies more over time than do living
expenses. Farm households are likely to save from current
income to maintain a certain level of household expenditures
and/or to alter their spending when they expect income
changes to be permanent. Thus, living expenses can provide
a less erratic indicator of the well-being of households
over time, compared to income. Expenses also tend to be
more equally distributed across farm households than are
income and wealth.
Farm earnings are not closely tied to household expenditures
for a variety of reasons. First and foremost, most farm
households receive most of their income from off-farm
sources. In addition, expenditures are driven in part
by the household's expectation of usual income,
rather than the current year's farm income, which
is more variable. Unlike farm earnings, household expenditures
are not closely associated with farm size because many
small farms have considerable off-farm income and net
worth.
Household expenditures of farm operator households generally
increase as household income (from both farm and off-farm
sources) increases. This is true for all U.S. households
as well. At lower income levels, farm households have
higher average expenditures than the general population.
As income levels increase, the general U.S. population
has proportionately higher expenditure levels than the
farm operator household population. At the highest income
category of $70,000 and above, for example, average expenditures
of the general U.S. population are more than 1.6 times
greater than farm households. Perhaps, this is evidence
that farm households tend to save in high-income years
in anticipation of potential low-income years.
The average farm operator household has historically had household expenditures less than the average for all U.S. households, although the gap has been narrowing over time. Part of the reason for the lower expenditures of farm households is that most farm households live on the farms they operate and their farm business provides them with a farm dwelling. As such, the cost of housing is not included in household living expenditures. The average U.S. household devotes about one-quarter of its expenditures on housing.
d
Farm Injuries on the Farm
The farming environment has some unique features that
place workers and their households at greater risk for
injuries and illnesses than many other work environments.
Home and worksite are the same location for most farm
operations, exposing farm family members to hazards associated
with animals, machinery, tools, and chemicals. Farming
activities are dictated by weather, season, and climate.
During planting and harvesting periods, farmers, their
family members, and hired workers tend to work long hours
while operating equipment and handling livestock. Farmers
and farmworkers often work alone and far from medical
assistance. Measures of fatalities and injuries relative
to other occupations indicate the relative safety of the
farming occupation.
Farming has one of the highest fatality rates of all
occupations, according to the U.S. Department of Labor.
While the overall fatality rate in the United States in
2009 was 3.3 per 100,000 workers, the rate for those with
farming or ranching as a major occupation was more than
ten times that figure—38.5 per 100,000. Nearly three-quarters
of the fatalities in farm operator households occur in
households where farming is the operator's major
occupation.
d
The Department of Labor reports that fatal injuries,
as a rate per 100,000 workers, generally increased for
farmers and ranchers, while the fatality rate for all
U.S. workers has steadily declined between 1992 and 2009.
The fatality rate for crop production has averaged twice
that for animal production.
d
Farm Operators' Perceptions
About Satisfaction With Their Place of Residence
A subjective indicator of the well-being of farm households
is self-reported satisfaction with quality of life. In
a 2005 national survey of farm operators, respondents
were asked to identify their views about their place of
residence. In particular, they were asked to report whether
10 characteristics of their place of residence were a
major problem for them and their households. These characteristics
covered employment, health, education, geographic access
to, and social environment.
More farmers (nearly one-third) identified access to
airports as a major problem with their place of residence
than any other characteristic. A close second (30 percent)
was crime and vandalism. In contrast, only 6 percent indicated
that access to schools was a major concern.
d
|
