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April 2022, Volume 28, Number 2

Food Spending 2020

The US Bureau of Labor Statistic's Consumer Expenditure Survey reported a total of 131 million US "consumer units" or households in 2020 with an average of 2.5 persons, 1.3 earners and 1.9 motor vehicles. Some 63 percent were homeowners, and the average age of the reference person in the household was 51. Average consumer unit income before taxes was $84,350, and average annual expenditures per consumer unit were $61,300.

Between 2019 and 2020, average household income rose and expenditures declined, indicating that households increased their savings.
Household expenditures in 2020 included an average $7,300 for food, 12 percent of total expenditures and down due to less food consumed away from home. Food spending was divided between food eaten at home, 67 percent or $4,900 of total food spending, an average or $94 a week, and $2,400 or $46 a week for food bought away from home.

The cost of food away from home largely reflects convenience, service, atmosphere and other factors. The cost of food is an average 35 percent of what is spent in cafeteria-style restaurants, 30 percent of spending in fast food restaurants, and 25 percent of spending in fine dining restaurants.

Other significant consumer-unit expenditures were $21,400 for housing, $9,800 for transportation, $5,200 for health care, $2,900 for entertainment. $2,300 on household furnishings, and $1,400 for apparel. Spending on apparel fell by 24 percent between 2019 and 2020, while spending on reading rose by 24 percent. There was a 10 percent increase in spending on household furnishings, a 10 percent decrease in transportation spending, and a 50 percent decrease in entertainment fees and admissions.

The largest food-at-home expenditures in 2020 were for meat and poultry, an average of $1,075 per household. Expenditures on cereal and bakery products, $640, exceeded the $474 spent on dairy products.

Consumer units spent an average $478 on alcoholic beverages in 2020, down because of a sharp drop in spending on alcohol away from home and a small increase in spending on alcohol at home. In 2020, consumer units spent an average $122 on beer consumed at home, $155 for wine consumed at home, and $55 on other alcoholic beverages consumed at home.

Expenditures on fresh fruits ($349) and fresh vegetables ($311) were $660 a year or $12.70 a week in 2020, and consumer units spent an additional $125 on processed fruits and $192 on processed vegetables. Data on major commodities show that consumer units spent an average $54 on fresh bananas in 2020, $50 on fresh apples, and $38 on fresh oranges. They spent an average $54 on fresh tomatoes, $53 on fresh potatoes, and $38 on fresh lettuce.

Farmers get less than 20 percent of the average retail food dollar, but slightly more for fresh fruits and vegetables. Farmers received an average 35 percent of the average retail price of fresh fruits in 2019 and 25 percent of the average retail price of fresh vegetables. This means that average consumer expenditures on these items include $200 a year for farmers (0.35 x 349 = $122 + 0.25 x 311 = $78).

Farm labor costs are about a third of farm revenue for fresh fruits and vegetables, so farm worker wages and benefits for the fresh fruits and vegetables consumed by the average consumer unit cost $66 a year (0.33 x $200 = $66). Consumer spending reflects purchases of both US-grown and imported produce. Since 60 percent of the fresh fruit available to Americans and 35 percent of the fresh vegetables are imported, the US farm labor costs included in average consumer unit spending are less than $66 a year.

About half of the workers employed on US crop farms are unauthorized. These unauthorized crop workers are aging and settling, making them less mobile and flexible just as many states raise their minimum wages and require farm employers to pay overtime wages on the same basis as nonfarm employers, that is, after eight hours of work a day or 40 hours a week. Farmers are adjusting to higher labor costs by substituting machines for workers and supplementing the current workforce with legal H-2A guest workers who cost more but are also more productive, while retailers are turning more to imports.

What would happen to consumer expenditures on fresh fruits and vegetables if farm labor costs rose? A natural experiment occurred after the Bracero program ended in 1964. Mexican Braceros were guaranteed a minimum wage of $1.40 an hour at a time when most US farm workers, who were not covered by the minimum wage, earned less than $1 an hour.

Some of the US table grape workers who were paid $1.40 an hour when they worked alongside Braceros in 1964 were offered $1.25 an hour in 1965. These workers resisted the pay cut, calling a strike led by Cesar Chavez that ended with a 40 percent wage increase in the first United Farm Workers table grape contract in 1966 that raised grape workers’ wages from $1.25 to $1.75 an hour.

What would happen to consumer expenditures on fresh fruits and vegetables if there were a similar 40 percent wage increase today? The average hourly earnings of US field and livestock workers were $15.55 in 2021; a 40 percent increase would raise them by over $6 to $21.75 an hour.

The $6 an hour increase in wages for a farm worker employed 1,000 hours a year means an additional $6,000 that would raise earnings from $15,550 to $21,750 a year. For a typical household or consumer unit, a 40 percent increase in farm labor costs translates into a four percent increase in the retail price of fresh fruits and vegetables (0.30 farm share of retail prices x 0.33 farm labor share of farm revenue = 10 percent; if farm labor costs rise 40 percent, retail spending rises 0.4 x 10 = 4 percent).

If average farm labor costs rose by 40 percent, and the increase were passed on to consumers, average spending on fresh fruits and vegetables for a typical household would rise by $25 a year (4 percent x $660 = $26.40), equivalent to the cost of two movie tickets. Farm labor costs play a small role in the retail price of fresh fruits and vegetables, but a large role in farm worker incomes.

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