Farm Household Economics and Well-Being:
Demographics and Labor Allocations

Farm Household Economics and Well-Being Briefing Room Income Forecast (2/12/2008) and Income in Perspective Assets, Debt, and Wealth Additional Measures Demographics and Labor Allocations Federal Taxes and Households

The financial well-being of farm households is affected by the choices household members make. Their choices are determined by many factors, including demographic characteristics. One of the major choices that affects financial well-being is how farm operators and their spouses allocate their labor to farm and off-farm work. Among this chapter's highlights:

• The householder (or principal farm operator) of farm households is generally older, is more likely to be a White male, and more likely to live in the South and Midwest than the average U.S. householder.
  
• Farming is not the single career choice for most farm households. Off-farm employment is increasingly common for both farm operators and their spouses.
  
• Job choices link household well-being to the broader economy; farm operators and spouses work in a variety of business types.

Demographics of Farm Operators

More than one-quarter of farm operators are age 65 or older (see table). The average age of operators has been greater than 50 since at least the 1974 Census of Agriculture. The age structure of householders (i.e., heads of households) for U.S. households is much younger. One reason for the advanced age structure of farmers is the farm's status as the family home. More than 20 percent of farm operators report they are retired. Senior farmers adjust to farming in a variety of ways, such as operating their farms at a smaller scale or participating in the Conservation Reserve Program.

The education level of farm operators is very similar to the educational profile for U.S. householders. The highest education level for the majority of farmers and U.S. householders is to graduate from high school and perhaps even have a few years of college (see table). Only about one-quarter of farmers and U.S. householders graduate from college with a 4-year degree or more. This high degree of correspondence between the educational attainment of farm operators and all U.S. householders is a relatively new situation. In 1964, for example, only 4 percent of farmers had a college degree, and two-thirds had not even completed high school, which lagged behind the educational attainment of all U.S. householders. Some would argue that formal education is less important for a farmer than for other occupations because much of the human capital demanded of a farmer comes from farming experience. However, formal educational attainment contributes to a farmer's ability to adapt to the changing agricultural marketplace and to adopt new farming techniques. Higher education is also financially rewarding for the majority of farmers who are employed in the nonfarm economy.

Most farm operators are men. About 10 percent of principal farm operators are women. However, that represents a significant increase from as recently as 25 years ago, when less than 5 percent were women (see table). Women generally operate farms that are smaller than average. Once primarily focused on beef cattle production, female principal operators have diversified their farm operations over the past two decades to include horses, aquaculture, and fur-bearing animals. Many farms, more than 40 percent, report more than one operator and in most of these cases the additional operators are women. When all operators are considered—not just the single principal operator of a farm—more than one-quarter of U.S. farm operators are women.

About three-quarters of the general U.S. population is classified as being solely White (i.e., white alone and of all ethnic origins). Farm operators are much more likely than the general population to report being White. In 2006, 95.5 percent of operators reported being White and 2.9 percent reported being of Spanish or Latino origin. There is overlap in these characteristics; 93.0 percent reported being White, not of Latino origin. Current information is not readily available on more detailed racial categories because of the small population of nonwhite farmers available in USDA's annual survey. However, every 5 years, the Census of Agriculture seeks to contact all farmers, and so more detailed racial breakdowns are provided by that data source. The latest Census in 2002, reported that 97 percent of principal farm operators were solely White. Blacks or African Americans were 1.4 percent of all principal operators. American Indians or Alaska Natives (0.7 percent), Asians (0.4 percent), Native Hawaiian or other Pacific Islanders (0.1 percent), and those reporting more than one race (0.4 percent) made up the remainder. Most Hispanic operators (93 percent) reported their race as White, but White operators were less likely to report being of Hispanic origin than were other races.

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Most U.S. farms are located in the South and Midwest census regions (see table). The fewest farm households are in the Northeastern States, consistent with the greater population density of this region and the open-space requirements of most farming operations. Compared to all U.S. households, a greater share of farm households is in the Midwest and South and a smaller share is in the Northeast and West.

Labor Allocations of Operators and Spouses

Farming is not the single, nor even primary, career choice for most farm households. Farm operators and their spouses often allocate their time to off-farm work activities, either working for wages/salaries or operating a nonfarm business. Sometimes this activity is where they spend most of their work time, and sometimes it is secondary to their farm work.

It is common for both the operator and spouse to work off the farm, as occurs in approximately one-third of farm operator households (see table). (This rate is even higher when we consider only those households where a spouse is present.) It is also a common situation for neither the operator nor the spouse to allocate time to off-farm work. When a spouse is present, farm spouses are just as likely to allocate time to off-farm work as are operators.

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A straightforward indicator of how farm operators and spouses allocate their time is what they consider to be their major occupation, or the work activity in which they allocate the majority of their work time. Operators were just as likely to identify nonfarm work as their major occupation as they were farming or ranching (see table). Some operators indicated that they were not in the workforce, most of whom also indicated that they considered themselves to be retired. In contrast, spouses were most likely to identify nonfarm work as their major occupation, although about one-third indicated that they did not work outside the home.

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When they work off the farm, farm operators and their spouses work in a variety of business types. The most common for operators is manufacturing, but other common choices include construction, retail, agriculture and other extractive industries (such as forestry, fishing, hunting, and mining), and health/education services. The off-farm businesses in which spouses are employed are also diverse, although more than 40 percent work in the education and health services area.

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