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September, 2000, Vol. 123, No. 9

David S. Johnson and Mark Lino

As most parents with teenagers know, their children between the ages of 14 and 17 receive a major portion of family income. The latest U.S. Department of Agriculture estimates of family expenditures on children indicate that middle-income families spend between $9,390 and $9,530 per year on the typical teenager.¹Although teenagers are a major expense, they can offset some of their expense and even contribute toward their family’s economic well-being by attaining employment in the labor market and contributing to the family budget. According to a recent report by the Department of Labor, 2.9 million youths aged 15 to 17 worked during the school months, and 4.0 million youths worked during the summer months, over the 1996–98 period.²

Previous research on teen employment has primarily focused on the incidence and patterns of work, and the effects on the teenager’s educational attainment, future employment prospects, and other developmental outcomes.³Some of this research suggests that teenage employment can have detrimental effects, such as lower educational attainment. J.G. Bachman suggests that employment provides youths with "premature affluence."⁴One marketing study suggests that in 1999 teens spent $105 billion of their own money and influenced $48 billion in family spending.⁵

Although previous research has examined the association of husbands’ and wives’ labor force participation with family expenditures, little research has been undertaken on the connection between the employment status of teenagers and family expenditures.⁶ This article does just that. It examines the role that employed and nonemployed teenagers play in family expenditures. It specifically looks at the percentage of teenagers who are employed and not employed, and the characteristics of each. This is done by income level because children from low-income families may be more likely to contribute to family economic well-being than children from nonlow-income households. Low-income households are defined as families with before-tax income below 200 percent of the poverty threshold; this income includes that earned by all family members, including employed teens.⁷In addition, the association of teen employment with major family expenses is analyzed by testing whether teen employment is associated with more or less money spent on certain types of expenses, while controlling for other factors.

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Footnotes
1 Mark Lino, Expenditures on Children by Families, 1999 Annual Report, Miscellaneous Publication No. 1528–1999 (U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, June 2000).
2 Report on the Youth Labor Force (U.S. Department of Labor, June 2000).
3 For a review of this research, see National Research Council, Protecting Youth at Work (Washington, DC, National Academy Press, 1998); and Department of Labor, Report on the Youth Labor Force.
4 J. G. Bachman, "Premature affluence: Do high school students earn too much?" Economic Outlook USA, vol. 10(3), 1983, including updated tables.
5 "Report of Teen Research Unlimited Study," Discount Store News, Jan. 3, 2000.
6 This research includes M. J. Alhabeeb, "Characteristics of employed teens and their consumption," Paper presented at the annual conference of the Eastern Family Economics and Resource Management Association (Champaign-Urbana, IL, 2000); A. W. Bailey, "Teenagers employment, earnings, and spending," Journal of Home Economics, Summer, 1992, pp. 20–24; V. S. Doss, J. Marlowe, and D. G. Godwin, "Middle-school children’s sources and uses of money," Journal of Consumer Affairs, vol. 29(1), 1995, pp. 219–41; M. A. Guadagno, "Impact of children’s employment on the economic status of two-parent families," Family Economics Review, vol. 5(4), 1992, pp. 11–16; and C. B. Meeks, "Factors influencing adolescents’ income and expenditures," Journal of Family and Economic Issues, vol. 19(2), 1998, pp. 131–50.
7 Low-income households being defined as families with before-tax income below 200 percent of the poverty threshold is in concordance with prior definitions of low-income families. See America’s Children: Key National Indicators of Well-Being, 1999 (Washington, U.S. Government Printing Office, Federal Interagency Forum on Child and Family Statistics, 1999).

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