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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.
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.)
Based on the official poverty threshold, 17.2 percent
of persons in farm operator households were in poverty
in 2007, compared to 12.5 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
2004 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 2004,
less than 5 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 96 percent
of farm households with high wealth are split into two
groups, with 35 percent having income higher than the
U.S. median and 44 percent having income lower than 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.
Health Insurance Coverage
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 2007, 15.8 percent of the U.S. population had no form
of health insurance. For members of farm operator households,
the comparable figure was 12.6 percent (see table).
The likelihood of having health insurance coverage increases
with both age and income. Virtually all U.S. citizens
age 65 or older have some coverage through 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.
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 2007, more than half (52.7 percent) of farm household
members had health insurance coverage from an employment-based
plan. For households where both the principal operator
and spouse worked off-farm, three-quarters of household
members were covered by employment-based plans (see table).
In households where neither the principal operator nor
the spouse worked at an off-farm job or business, only
20.6 percent of household members were covered by employment-based
plans. Members in these households had significantly more
coverage under private-direct purchase plans and government-provided
plans, such as Medicare. The reliance on government plans
for those who do not work off the farm is consistent with
the higher level of these operators who reported being
retired.
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 50 percent
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 spends nearly one-third of its expenditures
on housing.
d
Farm Fatalities and Injuries
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 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
2007 was 3.7 per 100,000 workers, the rate for those with
farming or ranching as a major occupation was more than
nine times that rate—38.4 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 declined further between 1992 and 2007. The
fatality rate for crop production has averaged more than
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
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