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Economic Wellbeing

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Garfinkel, Irwin, and Natasha Pilkauskas. 2016. “Economic Well-Being.” In Children of
the Great Recession, edited by Irwin Garfinkel, Sara McLanahan, and Christopher Wimer.
New York: The Russell Sage Foundation.

© The Russell Sage Foundation

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https://www.russellsage.org/children-great-recession
 Chapter 2

Economic Well-Being
Irwin Garfinkel and Natasha Pilkauskas

R ecessions are primarily an economic phenomenon. If we are to under-

stand the effects of recessions on families and children, the first order
of business is to document how recessions affect families’ pocketbooks.
This chapter describes the economic well-being of families with children
born at the turn of the twenty-first century and how the Great Recession
affected this well-being. The economic circumstances of families are
described in terms of employment, household income, and two measures
of economic distress—poverty and economic insecurity or hardship. As
described in chapter 1, we also consider the possibility that recessions may
affect families differently depending on their initial background and level
of vulnerability. Thus we examine each of these indicators separately for
families with different social class backgrounds, measured by mother’s
education—whether less than high school, a high school diploma only,
more than high school but no college degree, or a college degree. We also
examine economic well-being separately for two other family character-
istics linked with advantage and disadvantage: parents’ race-ethnicity and
whether parents were married, cohabiting, or living apart at the time of
the child’s birth.
We examine a number of different measures of economic well-being,
including numerous alternative measures of employment and earnings
and several other measures of economic well-being. All of them yield
the same overall story as the four outcomes we report. Here we describe
briefly the rationale for focusing on employment, income, poverty, and
economic insecurity and how each indicator was measured.
The most immediate effect of recessions on families is a loss of employ-
ment. Thus the first outcome we examine is the biological mother’s and
father’s employment. We study biological fathers rather than all fathers
living with the child because the biological father may contribute child
support even if he does not live in the same household, and the data on
social fathers are incomplete. We use employment in the week prior to the
survey because it is most current and therefore most likely to be the most
accurately reported labor market outcome; it is also how the Bureau of
Labor Statistics measures employment. We use employment rather than
unemployment because a change in employment picks up discouraged
32 children of the great recession

workers who have dropped out of the labor force after long-term unem-
ployment as well as unemployed workers who looked for work in the
previous week. We also use employment because at the highest levels of
education very few mothers or fathers were unemployed and therefore
our sample is not large enough to estimate the effects of recessions for
those groups.
Our first measure of economic well-being is household income. One of
the most commonly used measures of economic well-being, it normally
includes earnings, cash government transfers, and cash transfers from fam-
ily and friends, but not the Supplemental Nutrition Assistance Program
(SNAP, commonly known as Food Stamps), a near cash benefit, or the
Earned Income Tax Credit (EITC). Because both of these transfers are
widespread and substantially increase the total incomes of families who
receive them, we follow increasingly common practice among leading
researchers and include both in our household income measure. We mea-
sure total household income using the mother’s report of total income or
of the components of household income during the prior twelve months,
whichever is higher. For example, if a mother reports $40,000 in annual
household income, but summing annual earnings, SNAP, cash assistance,
and other income components yields $45,000, we treat the latter as her
true income.
Our second measure of economic well-being is poverty. Poverty is the
most common measure of whether households are in poor financial shape.
Poverty is measured using the Census Bureau’s official poverty thresh-
olds. Unlike the official measure, our measure of household income also
includes the EITC and SNAP (as noted). The official poverty threshold
for a family of three in 2014 is a bit less than $20,000.
Our third measure of economic well-being is what is typically called
material hardship, but may be better described as economic insecurity.
The material hardship measure is newer and less commonly studied than
either household income or poverty. In the Fragile Families and Child
Wellbeing Study (FFS), families are asked whether in the past twelve
months they faced any of the following circumstances because they did
not have enough money: did not pay rent or mortgage, did not pay utili-
ties (gas, oil, or electric), had telephone service disconnected, had gas or
electricity turned off, received free food or meals, were hungry because
they did not have enough food, moved in with other people for financial
reasons, stayed in a shelter, were evicted from their homes, or had a medi-
cal need that went unmet. A large minority of poor families respond no
to all of these questions; a large minority of nonpoor families respond yes
to at least one. Families who respond yes to any question are clearly worse
off economically than those with the same income who respond no to all
of them. These questions thus tap a dimension of economic well-being
other than poverty. Positive responses to some questions, such as hunger
 economic well-being 33

or homelessness are well-described as material hardships, whereas others,

such as failing to pay a bill, may or may not translate into hardship.
Families with incomes above the poverty line find themselves in such
situations sometimes because they simply do not know how to manage
money, but more often because they are near poor or experience a drop in
income at some point in the year, or because they are close to or are living
beyond their means. Indeed 20 percent of families with incomes above
three times the poverty line experience a material hardship. Clearly, these
families are worse off than families with equivalent incomes. But, material
hardship may not be the best description of what they are experiencing.
Economic insecurity appears more apt in this case. Arguably it is even a
superior description for the experience of most of the poor who report
some form of material hardship. In this context, the U.S. Department of
Agriculture (USDA) eighteen-item scale is labeled food insecurity rather
than food hardship. For these reasons, we use these material hardship
questions to measure economic insecurity. More detailed descriptions of
each of the measures studied here are available in the appendix. By look-
ing at poverty and economic insecurity as well as family income, we can
get a more complete picture of family economic well-being during good
times and bad.
We first look at the economic well-being of families over the previous
twelve months when children were approximately one, three, five, and
nine years old. This corresponds roughly to the first decade of the twenty-
first century, ending with the Great Recession. Our purpose here is to
document families’ levels of economic well-being over the decade, as well
as how family well-being varied by social class. We then describe the effects
of the Great Recession on families’ economic well-being over the previous
twelve months, harnessing the copious data we have on families over two
recessionary periods. The core questions we seek to answer are how the
Great Recession affected the economic well-being of vulnerable families,
and how the experiences of these families compare with those of their
more-advantaged counterparts?
Our analyses indicate that employment and household incomes
increase steadily as education increases, but that the largest gap is between
those with a college degree and everyone else. We find nearly as large a dif-
ference in income when comparing white families with black and Hispanic
families and married-parent families with cohabiting and single-mother
families. The Great Recession exacerbated these differences in income by
imposing the largest percentage losses in income on the most vulnerable
groups—families formed by poorly educated, minority, and unmarried
parents. At the same time, we find that the Great Recession also narrowed
the gaps in poverty and especially insecurity rates between the more privi-
leged and more vulnerable groups by spreading economic distress to
better-off families, in particular those with some postsecondary education.
34 children of the great recession

PRIOR RESEARCH ON RECESSIONS

AND ECONOMIC WELL-BEING
As macroeconomic conditions worsen, families’ economic circumstances
suffer. It is well established that recessions lead to more weeks of unem-
ployment, lower average weekly earnings, lower family income, and more
poverty.1 The Great Recession is notable for the depth and severity of the
labor market crisis relative to past recessions and is the largest recession in
the United States since the Great Depression. Recent research suggests
that the relationship between unemployment and poverty during the
Great Recession was similar to that observed in earlier recessions.2 Thus,
because unemployment was higher, the effects of the Great Recession
were probably even more severe than in prior recessions.
The Great Recession had a significant impact on the economic well-
being of American workers and their families. Mean household income
fell from 2007 to 2009 by about 2.9 percent, and median household
income fell by 3.7 percent.3 Long-term unemployment and poverty also
increased substantially, particularly among families with young children.4
Nearly 40 percent of U.S. households reported unemployment, negative
equity in housing values, or falling behind in their house payments during
the period.5
As expected, an increase in unemployment and an accompanying
decrease in income leads to increases in poverty and decreases in families’
ability to put food on the table, keep the lights on, keep current with
housing payments, and afford necessary medical care. Research on the
Great Depression shows that individual unemployment increased material
hardship; hardship likewise increased during the Great Recession.6 We
also know that food insecurity increased in response to increasing unem-
ployment during the Great Recession, as did homelessness and house-
hold crowding and the closely related measures of consumption poverty.7
Despite a general (and expected) understanding that hardship-insecurity
increases when economic conditions decline, we know less about whether
vulnerable families, such as those who have little education and young
children, are hit harder by recessions than other groups.
However, some evidence indicates that individuals and families
with lower income and lower levels of education were hit hardest dur-
ing the Great Recession—at least in terms of labor market outcomes.
Unemployment affected less-educated, low-wage workers more strongly
than other workers, especially among men.8 Estimates from the Current
Population Survey suggest that among families in the lowest 10th percentile
of the income distribution, unemployment rates were as high as 31 percent
between October and December of 2009.9 Unemployment for college-
educated individuals rose by only 3 percentage points from 2006 to
2010, whereas for those with a high school diploma or less, it rose by
 economic well-being 35

nearly 7 and 9 percentage points respectively.10 This finding suggests that

increases in poverty and insecurity, and decreases in household income,
may be particularly pronounced in families whose parents have only limited
educational credentials.
We go beyond previous research by using longitudinal data that follow
the same families over the first nine years of the child’s life, which happens
to coincide with the first decade of the twenty-first century. We focus
exclusively on families with children, highlight the diversity of family
experiences, and pay special attention to families who were vulnerable
before the onset of the Great Recession.

ECONOMIC WELL-BEING OF FAMILIES

FROM BIRTH THROUGH AGE NINE
We begin by describing mother’s and father’s employment and then
describe trends over time, or trajectories, for household income, poverty,
and material hardship or economic insecurity.
Figures 2.1 and 2.2 plot mother’s and father’s employment by the
child’s age over time for the four groups of families based on mother’s edu-
cational attainment. We expect employment rates of mothers to increase
over time as their children age and need less child care. In general, we see
increasing employment for all groups of mothers as their children age. The
biggest increases are for the more poorly educated mothers. But both at

Figure 2.1 Maternal Employment

100
90
Percent of Mothers Employed

College +
80
70
60 Some college
50
40 High school
30
20 Less than
high school
10
0
1 3 5 9
(1999–2001) (2001–2003) (2003–2006) (2007–2010)
Child’s Age-Year

Source: Authors’ calculations.

Note: Sample is restricted to mothers interviewed in all survey waves (n = 2,986). Figures
are weighted.
 36 children of the great recession

Figure 2.2 Paternal Employment

Percent of Fathers Employed 100
90 College +
80
70
Some college
60
50
High school
40
30
20 Less than
high school
10
0
1 3 5 9
(1999–2001) (2001–2003) (2003–2006) (2007–2010)
Child’s Age-Year

Source: Authors’ calculations.

Note: Sample is restricted to mothers interviewed in all survey waves (n = 2,986). Figures
are weighted.

age one and age nine, mothers with some education after high school and
with college degrees have the highest levels of employment. Employment
rates for the two most poorly educated mothers decline between age five
and nine, probably reflecting the effect of the Great Recession.
As expected, fathers’ employment rates are substantially higher than
those of mothers, ranging from 75 percent to 99 percent, versus the
41 percent to 73 percent of mothers (depending on the year and education
level). Fathers’ patterns by education are similar to those for mothers—
lower employment rates for the more poorly educated, though the differ-
ences across education groups are less pronounced. Employment rates for
fathers are flat over time, but the rate for the most poorly educated fathers
drops somewhat at age nine, perhaps reflecting a Great Recession effect.
Figure 2.3 shows the mean household income trends as the child ages.
Two patterns stand out. First, household income increases steadily with
education, the gap between families with college-educated mothers and
other families being especially large. Income for families with a mother
without a high school diploma ranges from about $36,000 to $44,000.
Income for families with a high school–educated mother, a mother with
some college, and a mother with a college degree or higher are respectively
about $47,000, $65,000, and $158,000. Second, household incomes
increase over time as the parents and their children grow older. Although
income for the college educated appears to peak at age three, the differ-
ence between three and five is not significant. The absence of an income
drop between the year five and year nine interviews may appear surprising
 economic well-being 37

Figure 2.3 Household Income ($2010)

250,000
Dollars of Household Income

College +
200,000

150,000 Some college

100,000 High school

50,000 Less than

high school
0
1 3 5 9
(1999–2001) (2001–2003) (2003–2006) (2007–2010)

Child’s Age-Year

Source: Authors’ calculations.

Note: Sample is restricted to mothers interviewed in all survey waves (n = 2,986). Figures
are weighted.

at first blush. The parents in these families, though, are getting older and
therefore can be expected to earn more. Furthermore, a portion of the age
nine sample is interviewed before the Great Recession began and an even
larger portion is interviewed in the early days of the Great Recession, so
they may not have yet experienced the full effect of the recession on their
household incomes. Finally, even in the relatively good times of the first
decade of the twentieth century, big family income declines and fluctua-
tions in household income are quite common.
That large income drops are relatively common can be seen in figure 2.4.
We examine income loss by displaying the proportion of our sample that
experienced large, moderate, and small incomes losses and gains between
interview years. Large gains or losses are those greater than 40 percent,
moderate ones are between 10 percent and 40 percent, and small ones are
less than 10 percent (labeled as no change). Twenty-seven percent of the
sample saw a 40 percent gain in income, and close to another 25 percent
saw 10 percent to 40 percent gains between years one and three. Still, more
than one in ten lost 40 percent or more of their total income. By contrast,
between years three and five, 17 percent lost 40 percent of their income
and nearly another quarter lost between 10 percent and 40 percent. Large
losses between year five and year nine interviews are actually a bit less com-
mon than losses between years three and five, though overall losses were
generally equal between three and five and five and nine. When we limit
our sample to families who completed the year nine interview later in time
(the fall of 2009 or early 2010), we see that a much larger percentage of
 38 children of the great recession

Figure 2.4 Big Gains and Losses

Percent of Households Experiencing 100
90 22
27
31 35
80
Each Income Change

70 18
+ 40 percent
60 23 17 14
22 + 10–40 percent
50
16 13
40 23 No change
30 23 18
22 − 10–40 percent
20 15
10 20 − 40 percent
13 17 13
0
1 (1999–2001) to 3 (2001–2003) to 5 (2003–2006) to 5 (2003–2006) to
3 (2001–2003) 5 (2003–2006) 9 (2007–2010) 9 (Only Fall
2009/2010)

Child’s Age-Years

Source: Authors’ calculations.

Note: Sample is restricted to mothers interviewed in all survey waves (n = 2,986). Figures
are weighted.

families, 20 percent to 13 percent, saw their incomes decrease 40 percent

or more. These findings suggest that the income drop associated with the
Great Recession will be larger than that of the 2001 recession. We observe
income drops similar in magnitude to those from 2001, but our data do
not include the postrecession years (up to two years) when we would likely
have seen the largest income drops.
In short, big drops as well as big increases in income are quite common
for urban families with young children. The Great Recession, as we have
seen, made big income losses even more common, but was not uniquely
responsible for the poor economic conditions of these families.
Figures 2.5 and 2.6 display poverty and economic insecurity trajecto-
ries by mother’s education. Both indicators are highest for the least edu-
cated and decline steadily as education increases, the largest gap, as with
income, occurring between families with a college-educated mother and
other families. More than one-third of families in which the mother has
less than a high school diploma are poor in some year. Only 1 percent to
2 percent of families in which the mother has a college degree are poor.
Economic insecurity is more common than poverty among all groups
of families. Even for families in which the mother has some college,
insecurity-hardship rates are over 40 percent. Whereas poverty rates over
time are generally steady or declining, insecurity rates increase for all groups
 economic well-being 39

Figure 2.5 Poverty Rates

40
Percent of Households in Poverty

35 College +
30
25 Some college
20
High school
15
10 Less than
5 high school
0
1 3 5 9
(1999–2001) (2001–2003) (2003–2006) (2007–2010)
Child’s Age-Year

Source: Authors’ calculations.

Note: Sample is restricted to mothers interviewed in all survey waves (n = 2,986). Figures
are weighted.

Figure 2.6 Hardship (Insecurity) Rates

60

50 College +
Experiencing Insecurity
Percent of Households

40 Some college
30
High school
20
Less than
10 high school
0
1 3 5 9
(1999–2001)(2001–2003)(2003–2006) (2007–2010)
Child’s Age-Year

Source: Authors’ calculations.

Note: Sample is restricted to mothers interviewed in all survey waves (n = 2,986). Figures
are weighted.
 40 children of the great recession

Figure 2.7 Household Income ($2010) by Race-Ethnicity

Dollars of Household Income 140,000
White
120,000
Married
100,000
Hispanic
80,000 Cohabiting
60,000 Black
Single
40,000
20,000
0
1 3 5 9
(1999–2001) (2001–2003) (2003–2006) (2007–2010)
Child’s Age-Year

Source: Authors’ calculations.

Note: Sample is restricted to mothers interviewed in all survey waves (n = 2,986). Figures
are weighted.

between years five and nine. It may appear puzzling that insecurity rates
would increase when average income is not decreasing, but if people antic-
ipate future increases in earnings and overextend their expenses or debts,
hardship rates might increase.
Finally, to illustrate how other characteristics linked with disadvantage
are related to the economic circumstances and experiences of families,
figure 2.7 displays trajectories of household income by race-ethnicity and by
parents’ relationship status at the time the child was born. We focus on three
racial-ethnic groups (black, Hispanic, and white) and on three relationship
statuses (married, cohabiting, single). At the top of figure 2.7, with the high-
est incomes, are white families whose incomes range from about $110,000
to $130,000. The incomes of black and Hispanic families are relatively simi-
lar, about $48,000 and $56,000, respectively—less than 50 percent of white
household income. In terms of relationship status, families in which the par-
ents were married at birth have the highest incomes, more than twice that
of cohabiting or single-mother families, about $63,000 to $75,000 higher
than the incomes of cohabiting-parent or single-mother families.
Although not shown, trajectories for poverty and insecurity by race-
ethnicity and family structure were similar to the patterns shown in figures
2.5 and 2.6. The college-educated group is the best off, followed by white
and then married-parent families. Black and Hispanic families are near the
bottom, and single-mother families always fare the worst.
In short, poorly educated, minority, and single-mother families have
the lowest incomes, the highest poverty rates, and the highest rates of
economic insecurity. How do recessions affect these families? Would they
 economic well-being 41

be disproportionately hard hit by a big recession, making the gaps we find

at age nine even larger than they might otherwise have been? We turn to
these questions next.

EFFECTS OF THE GREAT RECESSION

ON ECONOMIC WELL-BEING
To estimate the effects of a deep recession, such as the Great Recession, on
families’ economic conditions, we take advantage of the vast differences in
local unemployment rates among our respondents during the first decade
of the twenty-first century. As we have seen, these families lived through
the dot-com recession, a tepid recovery, and then the Great Recession.
The relatively good as well as the bad economic times are captured in these
data. As explained in chapter 1, we begin by estimating the relationship
between local unemployment rates and mothers’ and fathers’ employment
and our three indicators of economic well-being, net of a host of demo-
graphic characteristics, including mother’s age, race-ethnicity, relationship
status at birth, immigrant status, whether she grew up with both parents,
survey year, and family’s city of residence (see table 2.A1 for a detailed
example of our analyses with and without individual fixed effects). The
local unemployment rate during the month of the interview is used when
employment last week is the outcome variable. The average of the local
unemployment during the last year is used when the outcome is family
income, poverty, and economic insecurity during the past year. We then
use our estimates to predict what the economic well-being of our families
would be given an increase in the unemployment rate from 5 percent to
10 percent, which is approximately the size of the increase brought about
by the Great Recession. More detail on our methodological approach and
the regression coefficients are available in the appendix. We also examine
a number of different specifications that are reported and discussed in
the appendix (see tables 2.A2 and 2.A3). We find little evidence that the
associations between the unemployment rate and the outcomes of interest
were significantly or substantively different during the Great Recession.
Figure 2.8 displays the simulated effects of the Great Recession on moth-
er’s and father’s level of employment. For fathers, the predicted decline in
employment is 11 percentage points, a 15 percent loss. The largest losses are
for fathers with the least education, a high school diploma or less, which is
consistent with other research. The estimated differences between groups,
however, are not statistically significant. For mothers as a whole, a big reces-
sion is predicted to decrease employment by about 9 percentage points,
or 14 percent. The smaller employment loss for mothers is also consistent
with prior research. Although differences across groups are not statistically
significant—because of small sample size, we think—two differences are
worth noting. First, consistent with prior research, college-educated moth-
ers’ employment stands apart from the other groups in that they see no loss or
 42 children of the great recession

Figure 2.8 Employment by Education

Predicting Percent of Employment
100 UR 5 percent UR 10 percent –12%
90
+3% –11% –9%
80 –15% –10%
–11% –14%
70 –9%
60 –5%
50
40
30
20
10
0
All* Less than High Some College + All* Less than High Some College +*
high school* college* high school* college*
school school

Mother’s Employment Father’s Employment

Source: Authors’ calculations.

Note: UR = unemployment rate. Predictions based on fixed-effects regressions controlling
for time. Chow tests find no statistically significant differences between groups.
*p < .05 between UR and employment

gain in employment. Second, those with some education after high school
see the largest losses in employment. This pattern appears in other outcomes.
The effects of the Great Recession on mean family income by mother’s
education are shown in figure 2.9. The families with less-educated moth-
ers have the highest percentage losses; families in which the mother had
less than a college degree lose 14 percent to 20 percent of their income.
Families in which the mother had a college education or more lose a much
smaller proportion of their income—5 percent. These differences are both
large and consistent with findings in other studies based on repeated cross
section data, but again are not statistically significant across groups.11
Figure 2.10 displays the effects of the Great Recession on income loss
by mothers’ race-ethnicity and relationship status at birth. Black and
Hispanic families are hit only slightly harder than their white counterparts.
Families in which the parents are cohabiting or living apart at birth have
greater losses than families with married parents. Those who are single or
cohabiting at birth have a predicted loss of about 21 percent, more than
twice that of families in which the mother is married when the child was
born. This pattern is the same as for mothers’ education: those who are
already disadvantaged see the greatest percentage losses in income.
Figure 2.11 depicts the impacts of the Great Recession on poverty. As
with income, families in which the mother has a college education or more
see little to no change in poverty. Indeed, the effect is negative, though
not statistically different from zero. Among those with less than a college
education, poverty rates increase as mother’s education increases, though
 economic well-being 43

Figure 2.9 Income by Education

160,000 –5%
Predicted Dollars of Household Income

140,000
120,000
100,000
–15% UR 5 percent
80,000 –13%
–20% UR 10 percent
60,000 –14%
40,000
20,000
0
All* Less than High Some College +
high school* school* college*

Source: Authors’ calculations.

Note: UR = unemployment rate. Predictions based on fixed-effects regressions controlling
for time. Chow tests find no statistically significant differences between groups.
*p < .05 between UR and income

absolute poverty rates are highest among the least educated. As a conse-
quence of the Great Recession, families in which the mother has more than
high school diploma but less than a college education see an astonishing
75 percent increase in poverty (from 8 percent to 14 percent). Thus, although
families with more-educated mothers continue to have lower poverty rates
than families with less-educated mothers, the Great Recession has the net

Figure 2.10 Income by Race-Ethnicity and Relationship Status

100,000 –9%
90,000 –17%
Predicted Dollars of
Household Income

80,000
70,000
60,000 –19% –20% UR 5 percent
50,000 –20% –20%
40,000 UR 10 percent
30,000
20,000
10,000
0
Black* Hispanic* White Married Cohab* Single*
Race or Ethnicity Relationship Status

Source: Authors’ calculations.

Note: UR = unemployment rate. Predictions based on fixed-effects regressions controlling
for time. Chow tests show that the coefficient for unemployment for married mothers is
statistically different (p < .05) from cohabiting and single mothers.
*p < .05 between UR and income
 44 children of the great recession

Figure 2.11 Poverty Rate by Education

40 +42%
Households in Poverty 35
Predicted Percent of

30 +63%
+56%
25
20 UR 5 percent
+75%
15
UR 10 percent
10
–33%
5
0
All* Less than High Some College +
high school* school* college*

Source: Authors’ calculations.

Note: UR = unemployment rate. Predictions based on fixed-effects regressions controlling
for time. Chow tests show not statistically significant differences across groups.
*p < .05 between UR and poverty

effect of reducing educational differentials in the proportion of families

experiencing poverty—except for college-educated mothers.
Figure 2.12 depicts the effects of a big recession on economic insecurity
rates. As is true of poverty, we again see that the group hardest hit by the
Great Recession is families with mothers with some education after high
school. The increase in economic insecurity for mothers with some educa-
tion after high school was 24 percentage points, or 56 percent. The effect

Figure 2.12 Hardship by Education

70 +16% +24% +56%

Predicted Percent of Households

+26%
60
Experiencing Insecurity

50
40 UR 5 percent
30 +47%
UR 10 percent
20
10
0
All* Less than High Some College +
high school school* college*

Source: Authors’ calculations.

Note: UR = unemployment rate. Predictions based on fixed-effects regressions controlling
for time. Chow tests show that differences between some college and mothers with less
than a high school degree are significantly different.
*p < .05 between UR and hardship
 economic well-being 45

of the Great Recession was to equalize economic insecurity rates among

the three lowest education groups. College-educated mothers also see a
large increase in hardship, 47 percent, but from a much lower base. The
increase is not statistically significant, but as before, this is likely a result of
a small sample. Even if we take the increase at face value, the rate for the
college educated is less than half that for the other three groups.
We also examine the differential effects of recessions by race-ethnicity
and family relationship status at birth (regression results are available in
table 2.A4). As a consequence of the Great Recession, mothers who were
cohabiting or single at birth and blacks and Hispanics lose about 20 per-
cent of income—a loss comparable to that of those with a high school
diploma or less. Married mothers and white mothers have losses on aver-
age similar to those of college-educated mothers, indistinguishable from
zero. Poverty rates go up for all groups, though the increases for married
mothers and Hispanic mothers are small and not statistically significant.
We suspect the Hispanic estimate is biased by attrition, because we know
that Hispanic families are more likely to attrite, and perhaps those who
lose their jobs are more likely to return to their native countries (if they
are immigrants). What is striking is how large the increase in poverty is
for single mothers, about 1.25 times larger than for the poorly educated
mother groups, suggesting a special vulnerability to increased poverty
from recessions for single-mother families.
Our results show that the most disadvantaged families see somewhat
smaller losses in income and much smaller increases in poverty and eco-
nomic insecurity than the two middle groups. The smaller losses for the
most poorly educated groups are likely a result of the lower employment
rates among this group. Those who are already out of work cannot lose
earnings from a recession. Similarly, for these disadvantaged families, we
find smaller increases in poverty and economic insecurity because so many
of these families live in poverty and experience economic insecurity even
in the best of times. The poor may get poorer (lose income), but they were
poor before and during (and likely after) the recession.
In sum, families not protected by a college education (or marriage,
or white skin color) are the hardest hit in recessionary times. We find, in
particular, that mothers with more than a high school education but less
than a college degree are particularly vulnerable: the largest decrease in
employment, a poverty rate increase of 75 percent, and an insecurity rate
increase of nearly 60 percent.
Does the Great Recession exacerbate already large economic differ-
ences between vulnerable and comfortable families with children? When
comparing families with a college-educated mother with families with
less-educated mothers, the answer is yes. When comparisons are limited
to the three less-educated mother groups, the Great Recession narrowed
the gap between the vulnerable and somewhat more privileged groups by
spreading distress to the latter groups.
46 children of the great recession

APPENDIX
Measures
Employment. Mother’s employment and biological father’s employ-
ment is a measure indicating whether mothers or fathers were employed
at the time of the interview. Following the Bureau of Labor Statistics,
the parents are asked, “Last week, did you do any regular work for
pay?” If they report working or being on vacation, they are considered
employed.
Household income. Household income is a measure of mother’s house-
hold income in 2010 dollars. Mother’s total household income is cal-
culated using the sum of the component parts of income: her earnings,
partner’s earnings, various government transfers, and child support. We
use TAXSIM to estimate the amount of the Earned Income Tax Credit
mothers would have received and add that to income (more details on
the EITC estimation are available in chapter 3).12 We also include the
near cash benefit—the Supplemental Nutrition Assistance Program in
our measure of income. Finally, we include a measure of private financial
transfers—money received from friends or family. Mothers also report
on their total household income in a single item measure. We use the
higher value of the single report or the sum of the components to create
a measure of income after transfer (analyses run on the single household
income measure and the measure without transfers were substantively
the same). We also study income before transfers, when all transfers are
subtracted from the income measure. We log the income variables in our
analyses.
Poverty. The household’s income-to-needs ratio is constructed using
the Census Bureau’s official poverty thresholds, which are adjusted by
family composition and year. Households are considered poor if they have
an income-to-needs ratio of 1 or less. We construct measures of poverty
using both pretransfer and post-transfer income.
Material hardship–economic insecurity. Material hardship measures
whether families go without basic needs in five domains: bills, utilities,
food, medical care, and housing. Specifically, families are asked whether
in the past twelve months they faced any of the following circumstances
because they did not have enough money: did not pay rent or mortgage,
did not pay utilities (gas, oil, or electric), had telephone service discon-
nected, had gas or electricity turned off, received free food or meals, were
hungry because they did not have enough food, moved in with other
people for financial reasons, stayed in a shelter, were evicted from their
homes, or had a medical need that went unmet. If families reported expe-
riencing any of the ten hardship measures, they received a 1 on the hard-
ship variable.
 economic well-being 47

Supplemental Analyses
A number of additional analyses tested the association between the unem-
ployment rate and economic well-being. First, analyses including an inter-
action term with the unemployment rate and the year nine wave of data
collection test whether the association between the unemployment rate
and outcomes differed during the recession. In none of those analyses is
the year nine interaction term statistically significant, suggesting that the
link between unemployment and economic well-being was not distinct in
the Great Recession (see table 2.A2).
Second, to test whether the rate of change in the unemployment rate
is more closely related with economic well-being, spline models distin-
guished between an annual declining rate of change in the unemployment
rate and an annual increasing rate of change in the unemployment rate
and economic outcomes. Few associations are significant using the rate
of change models, and the main coefficient on unemployment does not
change from the model without rate of change indicators (see table 2.A3).
Third, instead of studying the link between the unemployment rate and
economic outcomes, we use the consumer confidence index and the fore-
closure rate as indicators of the Great Recession. No associations between
the consumer sentiment index and economic outcomes are significant.
The foreclosure rate is significantly associated with economic well-being,
and the findings are very similar to those of the unemployment rate.
Fourth, additional analyses focus on years five and nine. After construct-
ing a measure of an income drop between years five and nine, we regress
year nine economic outcomes on a measure of a 1 to 40 percent drop in
income and a 40 percent plus drop in income. These findings, as anticipated,
show that families whose incomes declined also saw a drop in economic
well-being (more hardships for example), and that the larger drop is linked
with even higher odds of hardship than the smaller drop. We also construct
income drops between waves for the other survey years and find that large
drops between survey waves are linked with higher odds of hardship.
Fifth, we consider a change in the unemployment rate between years five
and nine on year nine outcomes, distinguishing increases and decreases in
unemployment. These analyses, as expected, generally show that a decline
in unemployment is linked with better economic outcomes and an increase
is linked with poorer ones.
Sixth, we run models lagging the unemployment rate. In the first, the
average unemployment rate over the prior year is lagged two and three
years. In the second, we include the unemployment rate at the interview,
a twelve-month lag, a twenty-four-month lag, and a thirty-six-month lag.
The models show no evidence of a lag in the association between the
unemployment rate and the economic outcomes.
48 children of the great recession

Table 2.A1 Full Regression Results, Material Hardship

With Individual Without Individual
Fixed Effects Fixed Effects
Unemployment rate 1.17** (5.02) 1.13** (4.10)
Education
   Less than high school 2.85** (6.94)
  High school 2.33** (5.92)
  Some college 2.72** (6.97)
Relationship status
  Married 0.58** (-6.34)
  Cohabiting 1.11* (1.98)
Mother’s age 1.00 (-0.34)
Race-ethnicity
  Black 1.22* (2.32)
  Hispanic 0.96 (-0.43)
  Other 1.20 (1.43)
Immigrant 0.77† (-1.87)
Number of children in household 1.08** (3.02)
Lived with both parents at age fifteen 0.77** (-4.82)
Interview year
  2000 0.59** (-2.69) 0.70** (-4.49)
  2001 0.83 (-1.28) 0.87** (-3.16)
  2002 0.66* (-2.38) 0.72** (-3.87)
  2003 0.83 (-1.07) 0.84* (-1.99)
  2004 0.59** (-2.95) 0.70** (-3.41)
  2005 0.73† (-1.90) 0.77** (-3.25)
  2006 1.71 (1.00) 0.89 (-0.35)
  2007 0.93 (-0.32) 0.92 (-1.34)
  2008 0.98 (-0.14) 1.02 (0.16)
  2009 0.77 (-1.26) 0.82 (-1.26)
  2010 0.63 (-1.37) 0.77 (-0.97)
 economic well-being 49

Table 2.A1 Continued

With Individual Without Individual
Fixed Effects Fixed Effects
City
  Austin 1.47** (10.58)
  Baltimore 1.07 (0.91)
  Detroit 1.14* (2.37)
  Newark 0.89** (-3.12)
  Philadelphia 1.05 (0.73)
  Richmond 1.27** (2.62)
  Corpus Christi 0.89† (-1.80)
  Indianapolis 1.38** (4.48)
  Milwaukee 1.25** (4.26)
  New York 0.83** (-4.88)
  San Jose 0.74** (-4.70)
  Boston 1.34** (6.42)
  Nashville 1.06 (0.90)
  Chicago 0.82** (-3.80)
  Jacksonville 0.74** (-4.72)
  Toledo 1.02 (0.32)
  San Antonio 1.33** (4.32)
  Pittsburgh 1.16* (2.13)
  Norfolk 1.00 (0.03)
Constant 0.23** (-7.94)
Observations 8,392 15,860
Number of individuals 2,280
Source: Authors’ calculations.
Note: Figures reported are odds ratios. Z-stats in parentheses. Covariates are measured at the baseline
survey (except year) and are clustered at the city and individual level. Model includes level unemploy-
ment rate. The model without individual fixed effects is clustered at city and individual level.
**p < .01; *p < .05; †p < .1
Table 2.A2 Coefficients and Standard Errors, Rate of Change, Economic Outcomes
With Individual Fixed Effects Without Individual Fixed Effects
Less than Less than
High High Some High High Some
All School School College College + All School School College College +
Mother’s employment odds ratios (z-stat)
  Unemployment rate 0.89** 0.93 0.87* 0.80** 1.04 0.93** 0.96 0.93* 0.84** 1.04
(model 1) (-3.82) (-1.48) (-2.45) (-3.42) (0.31) (-2.64) (-1.05) (-1.98) (-5.00) (0.43)
  Unemployment rate 0.89** 0.94 0.87* 0.80** 1.04 0.93** 0.96 0.93† 0.84** 1.04
(model 2) (-3.73) (-1.39) (-2.32) (-3.49) (0.29) (-2.66) (-0.99) (-1.92) (-5.23) (0.43)
  Increasing 1.00 1.00 1.00 1.00 1.01 1.00 1.00 1.00 1.00 1.00
unemployment rate (0.52) (0.40) (0.86) (-0.92) (1.16) (0.51) (0.00) (0.31) (-0.25) (1.10)
  Decreasing 1.00 1.00 0.98 1.00 0.98 1.00 1.01 0.99 1.00 0.99
unemployment rate (-0.50) (0.39) (-1.25) (0.16) (-0.94) (0.11) (1.51) (-1.16) (0.70) (-0.69)
  Observations 8,446 3,587 2,281 1,856 722 15,851 6,126 4,061 3,927 1,733
  Number of 2,301 991 617 502 191
individuals
Father’s employment odds ratios (z-stat)
  Unemployment rate 0.85** 0.84** 0.88 0.86 0.62* 0.89** 0.94 0.89† 0.84** 0.68**
(model 1) (-3.77) (-2.63) (-1.45) (-1.56) (-2.21) (-3.50) (-1.56) (-1.83) (-3.46) (-3.44)
  Unemployment rate 0.84** 0.82** 0.90 0.84† 0.65† 0.88** 0.93† 0.90 0.81** 0.68**
(model 2) (-3.81) (-2.83) (-1.26) (-1.77) (-1.90) (-3.57) (-1.67) (-1.59) (-3.21) (-3.06)
  Increasing 1.00 1.00 1.01 0.99† 1.02 1.00* 1.00 1.00 0.99** 1.00
unemployment rate (-0.52) (-1.22) (1.39) (-1.67) (1.43) (-2.39) (-1.48) (1.49) (-3.94) (0.31)
  Decreasing 1.00 0.99 0.99 1.00 1.00 1.00 1.00 1.00 1.00 1.01
unemployment rate (-0.33) (-0.40) (-0.55) (-0.04) (-0.03) (0.16) (-0.25) (0.25) (0.20) (0.17)
  Observations 3,924 1,724 1,091 891 218 11,588 4,236 2,864 2,934 1,499
  Number of 1,181 522 333 264 62
individuals
Log of household income
  Unemployment rate -0.04** -0.05** -0.05** -0.03* 0.01 -0.04** -0.05** -0.05** -0.03* 0.01
(model 1) (0.01) (0.01) (0.01) (0.01) (0.06) (0.01) (0.02) (0.01) (0.01) (0.06)
  Unemployment rate -0.03** -0.04** -0.05** -0.02† 0.03 -0.03** -0.05** -0.05** -0.03* 0.02
(model 2) (0.01) (0.01) (0.01) (0.01) (0.07) (0.01) (0.02) (0.01) (0.01) (0.07)
  Increasing rate of 0.00** 0.00* 0.00† 0.00* 0.00 0.00 0.00 -0.00 0.00* 0.00
unemployment (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
  Decreasing rate of 0.00 0.00 -0.00 0.00 0.00 -0.00 0.00 -0.00 0.00 -0.00
unemployment (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.01) (0.00) (0.00)
  Observations 15,688 6,062 4,027 3,879 1,720 15,688 6,062 4,027 3,879 1,720
  Number of 4,600 1,821 1,162 1,122 495
individuals
Poverty (odds ratios)
  Unemployment rate 1.16** 1.16** 1.20* 1.17 0.93 1.11** 1.09* 1.12* 1.20** 0.81
(model 1) (4.01) (2.91) (2.51) (1.60) (-0.18) (3.63) (2.36) (2.20) (2.99) (-0.67)
  Unemployment rate 1.14** 1.13* 1.20* 1.16 0.92 1.10** 1.08* 1.13* 1.19** 0.82
(model 2) (3.52) (2.39) (2.43) (1.43) (-0.19) (3.44) (2.07) (2.18) (3.03) (-0.69)
  Increasing 0.99** 0.99** 1.00 0.99 0.97 1.00** 1.00** 1.00 0.99 0.99
unemployment rate (-3.32) (-3.30) (-0.46) (-1.05) (-1.11) (-2.68) (-3.07) (0.17) (-1.48) (-0.39)
  Decreasing 0.99 0.99 1.01 0.98 0.81 1.00 0.99 1.01 0.99 1.09
unemployment rate (-0.83) (-1.01) (0.89) (-1.07) (-1.15) (-0.34) (-0.85) (1.01) (-0.76) (0.93)
  Observations 5,833 3,277 1,571 920 65 15,656 6,045 4,004 3,876 1,018
  Number of 1,618 916 433 251 18
individuals
(Table continues on p. 52.)
Table 2.A2 Continued
With Individual Fixed Effects Without Individual Fixed Effects
Less than Less than
High High Some High High Some
All School School College College + All School School College College +
Material hardship
  Unemployment rate 1.17** 1.09† 1.18** 1.30** 1.16 1.13** 1.08* 1.11** 1.23** 1.08
(model 1) (5.02) (1.72) (2.68) (4.13) (1.01) (4.10) (2.11) (3.26) (6.09) (0.77)
  Unemployment rate 1.19** 1.10* 1.19** 1.33** 1.16 1.13** 1.09* 1.11** 1.24** 1.07
(model 2) (5.36) (2.00) (2.77) (4.41) (0.99) (4.20) (2.25) (3.17) (6.76) (0.57)
  Increasing 1.00** 1.00† 1.00 1.01† 1.01 1.00 1.00 1.00 1.00 1.00
unemployment (2.75) (1.90) (0.84) (1.74) (1.26) (1.23) (1.08) (0.77) (1.05) (0.08)
  Decreasing 1.00 1.01 1.01 1.01 0.95† 1.00 1.01 0.99 1.01 0.96*
unemployment (0.54) (0.54) (0.48) (1.11) (-1.75) (0.05) (1.18) (-1.00) (0.98) (-1.99)
  Observations 8,392 3,523 2,341 2,025 503 15,860 6,131 4,064 3,925 1,740
  Number of 2,280 971 631 545 133
individuals
Source: Authors’ calculations.
Note: Standard errors and z-stats in parentheses. Model 1 includes the unemployment rate as a level. Model 2 includes unemployment rate as a level as well as rate of change in
unemployment rate. SEs for the OLS with fixed effects are clustered at city, for OLS and logistic models without fixed effects are clustered at city and individual.
**p < .01; *p < .05; †p < .1
 economic well-being 53

Table 2.A3 Sensitivity of Coefficients, Economic Outcomes

With Individual Without Individual
Fixed Effects Fixed Effects
Mother’s employment odds ratios (z-stat)
   Unemployment rate (model 3) — — — —
  Individual unemployment — — — —
   Unemployment rate (model 4) 0.89** (-2.84) 0.92* (-2.19)
  Unemployment rate ∗ year nine 1.00 (-0.00) 1.02 (0.50)
Father’s employment odds ratios (z-stat)
   Unemployment rate (model 3) — — — —
  Individual unemployment — — — —
   Unemployment rate (model 4) 0.80** (-3.63) 0.87** (-3.69)
  Unemployment rate ∗ year nine 1.09 (1.27) 1.04 (1.19)
Log of household income
   Unemployment rate (model 3) -0.03** (0.01) -0.03** (0.01)
  Individual unemployment 0.24** (0.02) 0.43** (0.02)
   Unemployment rate (model 4) -0.04** (0.01) -0.05** (0.01)
  Unemployment rate ∗ year nine 0.01 (0.01) 0.02 (0.01)
Poverty odds ratio (z-stat)
   Unemployment rate (model 3) 1.14** (3.39) 1.08** (3.02)
  Individual unemployment 0.40** (-13.16) 0.25** (-19.18)
   Unemployment rate (model 4) 1.18** (3.28) 1.12** (4.16)
  Unemployment rate ∗ year nine 0.97 (-0.45) 0.99 (-0.20)
Material hardship odds ratio (z-stat)
   Unemployment rate (model 3) 1.17** (4.95) 1.12** (4.03)
  Individual unemployment 0.92 (-1.42) 0.81** (-4.71)
   Unemployment rate (model 4) 1.15** (3.40) 1.09† (1.94)
  Unemployment rate ∗ year nine 1.03 (0.57) 1.05 (0.98)
Source: Authors’ calculations.
Note: Standard errors and z-stats in parentheses. Model 3 includes unemployment rate and a measure
of individual unemployment. Model 4 includes unemployment rate and an interaction between unem-
ployment rate and year nine, when the Great Recession hit. SEs for OLS with fixed effects are clustered
at city, for OLS and logistic models without fixed effects are clustered at city and individual.
**p < .01; *p < .05; †p < .1
Table 2.A4 Coefficients and Standard Errors, Economic Outcomes
Black Hispanic White Married Cohabiting Single
Mother’s employment odds ratio (z-stat)
Unemployment rate 0.86** 0.91† 0.99 0.96 0.96 0.79**
(-3.07) (-1.65) (-0.18) (-0.55) (-0.84) (-4.69)
Father’s employment odds ratio (z-stat)
Unemployment rate 0.88† 0.84* 0.76* 0.73** 0.83** 0.91
(-1.93) (-2.15) (-2.39) (-2.64) (-2.80) (-1.36)
Log of household income
Unemployment rate -0.05** -0.04** -0.01 0.00 -0.05** -0.05**
(0.01) (0.01) (0.04) (0.02) (0.01) (0.01)
Poverty odds ratio (z-stat)
Unemployment rate 1.24** 1.03 1.26* 1.09 1.10 1.25**
(3.71) (0.54) (2.11) (0.68) (1.57) (4.19)
Material hardship odds ratio (z-stat)
Unemployment rate 1.20** 1.20** 1.08 1.19* 1.20** 1.13*
(3.67) (3.31) (1.01) (2.33) (3.66) (2.55)
Source: Authors’ calculations.
Note: Standard errors and z-stats in parentheses. Model includes level unemployment rate, results include individual fixed effects and time. SEs for OLS
with fixed effects are clustered at city.
**p < .01; *p < .05; † p < .1
 economic well-being 55

NOTES
1. Blank and Blinder 1986; Blank 1989, 1993; Cutler and Katz 1991; Blank
et al. 1993; Tobin 1994; Haveman and Schwabish 2000; Freeman 2001;
Hoynes 2002; Gundersen and Ziliak 2004.
2. Bitler and Hoynes 2013.
3. Thompson and Smeeding 2013.
4. Smeeding et al. 2011.
5. Hurd and Rohwedder 2010.
6. On the Great Depression, Conger and Elder 1994; on the Great Recession,
Pilkauskas, Currie, and Garfinkel 2012
7. On food insecurity, Nord, Andrews, and Carlson 2009; on homelessness and
household crowding, Sard 2009; DeCrappeo et al. 2010; Painter 2010; Sell
et al. 2010; on consumption poverty, Meyer and Sullivan 2013.
8. Hout, Levanon, and Cumberworth 2011.
9. Sum and Khatiwada 2010.
10. Thompson and Smeeding 2013.
11. Bitler, Hoynes, and Kuka 2014.
12. TAXSIM is the National Bureau of Economic Research’s online program
for calculating liabilities under U.S. Federal and State income tax laws from
individual data, available at http://users.nber.org/~taxsim/ (accessed April
15, 2016).

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