Macro-level Stressors: Economic Stress HDFS 325

Group Discussion: Dynamics of Poverty: What disadvantages are children in poverty more likely to experience?

Introduction: Macro-level Stressors Characteristics: Factors that impact large # of families  Nearly all families subject to factors Macro-level stressors tend to have a broad impact on family functioning Types: 2 macro-level factors:  Economic/poverty influence  Ethnicity

II.Low Income/Poverty Status A. General Pattern There is a broad set of indicators of relationships between poverty & negative outcomes in children. 90% of people in long term poverty were born into poverty. Many researchers suggest that poverty status may be one of the most influential factors impacting child & family well-being.

Economic Security: Defined 1. Stable predictable income 2. Savings & assets that help families Human & Social capital  Human capital refers to the stock of productive skills and technical knowledge.  Social capital refers to connections within and between social networks ---e.g. being friends with the banker, the librarian, the next door neighbor, the Sunday school teacher. All of these could contributes to a child’s success.

B. Changing Demographics of Low-Income Families 1. Federal Poverty Level  Poverty Guidelines: fed-reg.shtml fed-reg.shtml   How we measure poverty:

2. Exposure to Poverty A. Poverty: 14 million children live in poverty  15 million more near poverty. B. Low income families: 29 million children live in low-income families - 40%  Minimum amount required for families to meet their material needs. 

C. General Pattern Decrease in child poverty every year from ; increase in Categories of Children likely to be in Poverty:  A. Lower educated parents 83% of parents who dropped out of high school live in poverty. 53% of parents who have a high school diploma live in poverty. 20% of parents who are college educated live in poverty.

B. Younger Parents:  78% of children whose parents are under age 24 are low income.  27% of children whose parents are over 40 are low income. C. Single mothers:  71% of children of single mothers live in low income families.  46% of children of single fathers live in low income families.  27% of children with 2 parents live in low income families.

D. Racial Differences: African American and Latino children are twice as likely to live in poverty as white children. Resources: National Center for Children in Poverty: 

Children, Poverty & Race

III. Sources of Economic Stress: 1. Inability to meet family obligations 2. Uncertainty of income sources 3. Employment instability 4. Inadequate earnings to meet material needs. 5. General economic conditions at local, state, regional, or national levels.

B. Nature of Economic Stress Normative (milestones, such as marriage or births) or Situational (unexpected events: divorce, forced retirement, catastrophic illness). Short-term/temporary, long-term, life-long Among families who use credit cards, 45% carry balances, averaging $ 1,900. Average American household has 9 credit cards (includes bank, gas, retail, and phone cards) Personal bankruptcies were at an all-time high in 2004 (1.5% of all households in 2004). Now even higher…

Bankruptcy chapters 6 types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code : Bankruptcy Code United States Code Chapter 7 Chapter 7 : basic liquidation for individuals and businesses; Chapter 9: municipal bankruptcy; Chapter 11 Chapter 11 : rehabilitation or reorganization, used primarily by business debtors, but sometimes by individuals with substantial debts and assets; Chapter 12 Chapter 12 : rehabilitation for family farmers and fishermen; Chapter 13 Chapter 13 : rehabilitation with a payment plan for individuals with a regular source of income; Chapter 15 Chapter 15 : ancillary and other international cases. The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. In Chapter 7, a debtor surrenders his or her non-exempt property to a bankruptcy trustee who then liquidates the property and distributes the proceeds to the debtor's unsecured creditors.

C. Impact of poverty and economic stress on individuals & families 1. Overall negative effect on mental health & well- being 2. Economic stress and poverty are related to:  A. Increased anger, hostility, depression, anxiety  B. Decreased physical health, relationship quality, social activities, self-esteem.

Relationship of economic stress to marital relationships 1. Marriage:  A. Money/finances one of the most common areas of marital conflict.  B. Conflict over finances reduces rates of communication  C. Conflict over finances reduces marital quality.  D. Financial declines increase marital tension.  E. General Pattern: next slide:

General Pattern

Economic stress affects family relationships Patterns:  1. Decrease family satisfaction  2. Decrease family cohesion  3. Decrease parental quality Stress - Parent well-being - parenting behavior Child Outcomes:  1. Associated with: A. Reduced economic resources B. Reduced economic opportunities- helplessness C. Reduced Human Capital

Life Cycle Economic Stressors Family Economic Lifecycle:  Phase 1. Debt Accumulation (30% of population but…) 60% of family debt among families w/young children. Includes:  Credit debt  Mortgage  Student loans  Car loans

Monthly Expenses ---Did you include the following? Mortgage (rent), utilities, home repair Clothing, Food/Groceries/housekeeping supplies, Car payments, gasoline, car care/repair, Telephone Health insurance, life insurance, medical costs Educational costs ??? Anything else??? cable tv, entertainment, family activities, toys, computer

Monthly Expenses Exercise Estimate monthly expenses for a family of 4 with a 3 bedroom house. 5 year old & 11 year old

Economic Policy Institute

Phase 2 Middle adulthood (ages 35-65) Repaying debt & saving for retirement 1. Middle adulthood should be a time of wealth accumulation  Income exceeds consumption needs. 2. Quality of this period tied to need for debt repayment 3. Includes assumption of additional debt tied to education.  25% of families use retirement assets to pay college expenses. 4. Families generally under fund their retirement. Retirement Planning example:

Phase 2: ( continued) College….  Only 28% of American households w/children under 18 years of age have saved anything for education goals. What will college run you?  cost/collegecost.html cost/collegecost.html

Phase 3: Retirement Planning & Preparing for Intergenerational Transfers 1. Adjustment to retirement is a difficult process.  41% report difficulties w/ adjusting to retirement financially, especially among lower SES, less educated, less savings, and poorer health. 2. However, during retirement, stress levels are lower than in earlier phases. 3. Lack of preparation for widowhood  60% of widowed women had not discussed the management of their finances with their husbands, leaving them unaware of their financial position.

Helping Low-Income Families Key Interventions  Earning supplements Often in the form of tax credits.  ex_22.html ex_22.html  Job placement programs  Affordable health care  Child care subsidies

Financial Assistance Outcomes Parent Outcomes  Higher income levels  Reduced stress  Improved access to health care and child care Child Outcomes  Better academic performance  Better behavior  Higher educational/occupational expectations  Academic outcome higher for girls.