Savings, Credit and Economic Security

There have been important changes, over the decades, in the extent to which workers set aside part of their incomes as savings to meet future needs, or use consumer credit to buy things they might not have purchased out of current income.

The social security programs and the vast expansion of insurance, especially group insurance, provide in themselves a form of workers' saving that has been described as "automatic." Furthermore, the greatly increased buying of homes and substantial types of durable goods requires a highly significant kind of saving. In earlier generations, most workers had to do without homes of their own and found it necessary to put off the buying of durable goods for long periods while they were trying to accumulate the necessary savings. Present-day workers, by means of amortization and gradual payment, are able to "save" while actually living in the homes and using the automobiles for which they are paying.

Ability to obtain goods and services in addition to the basic necessities is probably the most widely accepted criterion of consumer well-being. A corollary proposition, however, has been a more convenient analytical tool: As buying power (real income) rises, the proportion of income devoted to necessities declines. Conversely, of course, consumers are able to increase the share of income spent for other goods and services (variously designated as secondary necessities, conveniences, and luxuries) as their command of purchasing power increases.

Income after taxes, as well as expenditures and apparent savings, naturally averaged higher for all urban families than for the families of wage earners and clerical workers. The patterns of spending of all urban families were not markedly different from those of workers' families -- evidence that urban worker families' consumption habits resemble those of other urban family groups.

Single workers typically were younger or older than the family man, and their income was slightly less than half of family income. And, because many of the single workers maintained their own households, they spent nearly two-thirds as many dollars for housing, fuel, and light. The single workers also apparently often ate in restaurants, as food and beverages represented about the same share of their budget as of families' expenditures. Since only minor differences were noted in other expenditure categories, it may be assumed that the single workers had either more or somewhat better clothing, medical care, recreation, personal care, etc., since they were spending about half as many dollars for these purposes, yet their expenditures covered purchases for 1 person, compared with an average of 3.4 in families.

The relationships of average incomes and expenditures among the broad occupational groups of wage and clerical workers -clerical and sales workers and, among wage earners, the skilled, the semiskilled, and the unskilled -- appear consistent with conclusions derived from other sources. So also the expenditure patterns seem to reveal no surprises. The most apparent differences were that the white-collar workers had smaller families but uniformly spent more of their income on housing and clothing than skilled workers, although the incomes of the two groups were not far apart. Skilled workers, on the other hand, spent relatively more than clerical workers on food, transportation, and tobacco. And both groups were better off than the semiskilled and unskilled workers.