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· FOR COUNTIES OF THE UNITED STATES

1945, 1950, AND 1954
By Margaret Jarman Hagood, Gladys K. Bowles, and Robert R. Mount

Agricultural Marketing Service

SUMMARY

Farm-operator families in the United States as a whole improved their levels of living significantly between 1950 and 1954. The 1954 farm-operator family level-ofliving index was 140, representing a 15-percent rise between 1950 and 1954. This rise is a continuation of the general improvement that has been under way since 1940.

Gains between 1950 and 1954 occurred in all States, geographic divisions, and regions. Geographical patterns evident in prior years were not much changed in 1954. The Pacific Coast States, the Corn Belt, and areas on the northeastern seaboard continued to have the highest indexes. The South and some other scattered areas still have relatively low indexes. California, New Jersey, Connecticut, and Iowa remained the highest-index States.

Indexes for State economic areas indicated a pattern of relatively high levels of living in areas near a metropolis. However, areas of large-scale, highly specialized agriculture frequently had higher indexes than those of their State's metropolitan areas. The highest State economic area indexes appeared in area 2a of Arizona and areas 6, 7, and 8 in Southern California, where these characteristics are present and where extensive use of irrigation is an added factor.

The county indexes, which form the basis of indexes for larger regions, show a wide range of farm-family level of living. County indexes in 1954 ranged from 358 in Kern County, California to 44 in Lee County, Kentucky.

Percentage increases in indexes between 1950 and 1954 were generally lowest for areas with highest 1950 indexes. Some States like California, Delaware, Florida, and Louisiana showed indexes rising more steeply than might have been expected. Spectacular index rises appeared in two Southern low-income areas, the Mississippi Delta and the Southeastern Hilly area of Mississippi and Alabama. In a number of counties in and around the South, the 1954 indexes rose by 100 percent or more over the 1950 indexes. Indexes for Colorado and New Hampshire remained almost stationary.

Adverse conditions were reflected in lowered indexes for a proportionately small number of counties. In the Great Plains and in the dry farming and ranching areas just east of the Rockies, indexes for smaller areas frequently dropped between 1950 and 1954. The effects of drought and decreased farm income were particularly evident here. The drop in county and State economic area indexes in a few other scattered places reflected local problems.

Although farm-operator families in many areas are still experiencing low levels of living, generally the 1954 indexes point to higher levels in most of the country, and to a continued narrowing of disparity between areas with low indexes and the rest of the nation.

CONTINUED RISE IN FARM FAMILY LIVING SHOWN BY 1954 INDEXES Levels of living of farm-operator families have been improving markedly in recent years, Evidences of this rise include increased consumption of various goods and services, increased savings, lowered mortality rates, particularly among infants, and higher levels of education. Important indicators of the increase in farm-family level of living are the farm-operator family level-of-living indexes contained in this report. The index for the United States as a whole was 140 in 1954 compared with 122 in 1950, representing a rise of 15 percent in this period and a rise of 40 percent from the base year, 1945.

Indexes of farm-operator family levels of living are based on iour items available by counties from Censuses of Agriculture, and have been scaled so that.the average of the county indexes for 1945 equals 100. These items are percentages of farms with electricity, telephones, and automobiles, and the average value of products sold or traded in the year preceding a census (adjusted for changes in purchasing power of the farmer's dollar). The Appendix (pp. 97 to 106) gives an explanation of how the indexes are made.

These items, of course, do not cover all the goods, services, and other satisfactions that make up the level of living of families. The number of items involved in the concept of level of living is vast, and securing information on the possession of, or expenditure for, them is a very complex matter. Indexes such as these, which are determined from a small number of items, are very useful. They can be developed with relative ease for small geographic areas such as counties and State economic areas for which detailed information on family-living expenditures is not usually available. Such indexes can be provided at frequent intervals; county and State economic area indexes are now available for 5 years of the period 1930 through 1954. State, division, and regional indexes, which are also available for these 5 years, are available on an annual basis for certain additional years.

Many studies have shown that the various items used to compute the farm-operator family level-of-living indexes are closely associated with other items related to levels of living. For example, farmhouses with electricity are more likely to have other household facilities and conveniences than those without electricity. Farms with high gross incomes are obviously likely to have more income available for family-living expenditures than farms with low gross incomes. And farm families with automobiles more probably can take advantage of various services located away from the farm, such as health facilities, libraries, and recreation, than can those who do not own automobiles,

The continuing increase in the average level of living of farm-operator families is part of a general increase for families in all sectors of the American economy. A similar measure of level of living for nonfarm families is not available, but substantial increases have been taking place. The purchasing power of per capita disposable income (income after taxes) rose about 35 percent from 1940 to 1954. However, the average per capita dollar income, or purchasing power, of farm families was still substantially less than that of the average nonfarm family in 1954 despite the increases in the level of living of farm-operator families.

It should be clearly understood that these farm level-of-living indexes only measure relative changes between different counties or sections of the country and different periods of time. They do not purport to measure differences in levels of living between farm and nonfarm families. For example, one of the important items in calculating these indexes is the proportion of farms having electricity. Almost universal use of electricity by urban families has been a fact for many years, but only a third of the farm families had electricity in 1940 and, even with the phenomenal expansion of electrification in the 1940's, a fifth of the farms in the country still did not have electricity in 1950. By 1954 the percentage of farms electrified had reached 93.

FARM LEVELS OF LIVING HAVE RISEN MARKEDLY SINCE 1939

The indexes for the period 1930 through 1954 (tables 1, 2, and 3) clearly point to an upward trend in farm-operator family levels of living in all parts of the country. In 1930 the average of the indexes for all counties in the United States was 75. Between 1930 and 1940, the decade of economic depression, the rise in the index for the United States was rather small--4 percent --but improvements in level of living occurred in a majority of the States. Only Missouri, North Dakota, South Dakota, Nebraska, and Kansas in the West North Central Division; Alabama and Mississippi in the East South Central Division; Arkansas in the West South Central Division; and Nevada in the Mountain Division had level-of-living indexes which were lower in 1940 than in 1930. The drought and dust storms experienced by many of these states in the mid-1930's were of such severity that it is surprising that the declines in indexes were not even greater.

Between 1940 and 1945, when farm incomes were high and when there was a general extension of electrical and telephone services, the level-of-living index for the United States as a whole rose from 79 to 100, or 27 percent. Indexes for all States showed an appreciable rise during this period.

During the next 5-year period, 1945-50, the rise continued in all States. The average index for the country was 122 in 1950, which represented a 22-percent rise over 1945. The highest-ranked State, Iowa, had an index of 178. Connecticut, New Jersey, and California had indexes nearly this high--175, 172, and 170, respectively.

The new indexes presented in this report for 1954 indicate a 15-percent overall rise in the level-of-living index since 1950. The average of the indexes for counties gave a United States index of 140 for 1954, compared with 122 for 1950. While indexes for all States and geographic regions have shown a general increase, farm-operator families in many areas are still experiencing low levels of living. The picture given by the 1954 national index does not reveal a certain unevenness in the general increased prosperity.

In 1954, as in previous years for which the level-of-living indexes were derived, distinct geographic patterns in farm level of living were evident. The Northeast is still the highest region, but the very high indexes of the Pacific Division place the West close behind it. In 1954 the index for the West was higher than that for the North Central Region, which had been second-highest in index years since 1940. The South as a whole is still far below the rest of the country, although it has had the highest percentage increases. The gap between Southern indexes and those for other parts of the country has been narrowing. Within the South, there is a marked cleavage in level-of-living indexes by States between the Deep South and the fringe States of Texas, Oklahoma, Florida, Maryland, and Delaware.

Only small relative increases were made in some areas, reflecting a saturation point on some of the items in the index. Such areas included the New England States, the richer midwestern areas where the farms are already relatively well-equipped and productive, and the dry areas to the east of the Rockies, where indexes were generally high but where the impact of drought and falling prices has been severe. However, some prosperous nonSouthern areas like the northeastern seaboard and southern California continued to become steadily more prosperous.

Although all States showed increases in level-of-living indexes between 1950 and 1954, not all smaller areas had this experience. For the first time since 1940, there were State economic areas that did not register increases--six whose indexes dropped, and two with stationary indexes. Also, in 1954 some counties had smaller indexes than they had in 1950. Drought and falling farm income apparently were largely responsible for this situation. Examination of some of these declines is made in following sections.

MANY FACTORS RELATED TO RISE IN LEVELS OF LIVING

During the period covered by the indexes many factors have contributed to the rise in levels of living among farm-operator families. Levels of living in most sectors of the economy have shown a general increase because of approximately full employment and rising income distributed more broadly than before. Certain other factors are easily identifiable with the higher levels of living among farm families, and with relative increases. Substantial increases occurred in all of the items used in the index. Other closely related factors are decreases in numbers of farms, increases in average size of farm, and increased mechanization,

Most obvious of the factors relating to the relative increase in level-of-living indexes was the achieved level at a certain date. Percentage increases were especially striking in the South. High negative correlations exist between the indexes at the beginning of a period and the percentage change in indexes during that period, indicating that areas with low indexes are much more likely to have substantial rises in level of living than areas with high indexes. The areas with the lowest indexes had, naturally, more room left for

improvement in the possession of telephones, electricity, and automobiles and in the value of products sold.

All Items in Index Contribute

In the periods 1930-40, 1940-45, 1945-50, and 1950-54, there were increases arising from each item used in the index, with one exception, Between 1930 and 1940, the percentage of farms with telephones dropped from 34 to 25 percent. During the same period, however, the percentage with electricity increased from 13 to 33 percent, more than offsetting the decline in telephones in effect on the index for the United States. The proportion of farms with automobiles remained at about 58 percent and the adjusted value of farm products sold also had only an insignificant increase.

From 1940 to 1945, the World War II period, every item contributed to an increase in the index. Increase in percentage of farms with electricity was still most important in raising the index, but its effect was nearly equaled by an increase in the value of products sold (after a djustment for prices farmers pay). Next in importance was an increase in percentage of farms with telephones from 25 to 32 percent. The proportion of farms with automobiles increased only from 58 to 62 percent.

From 1945 to 1950, the increase in electrification, as in the previous periods, was of greatest influence in raising the index. In 1945, 48 percent of farms reported electricity, and by 1950 the proportion had risen to 78 percent. In contrast with earlier periods, the increase in telephones ranked second in raising the index. Changes in the index due to increase in value of sales (adjusted for price changes) and in percentage of farms with automobiles were very small.

From 1950 to 1954 the increase in electrification continued to be rapid, reaching a national average of 93 percent. Percentage of farms with telephones stood at 49 percent, and represented a 29 percent increase in the proportions between 1950 and 1954. The rise in proportion of farms reporting automobiles was 13 percent. The rise in dollar value of products sold or traded was somewhat offset by a decline in purchasing power. Drops on this item restrained rises in index in certain localities, or actually lowered the index,

Since the number of items included is very limited, it is well not to generalize broadly from the indexes about the basic factors underlying improvement in the level of living of farm operators of the United States in the last 20 years. The influence of certain other related factors is examined below.

Decrease in Number of Farms May Be Related To Rise In the last two decades, marked changes in our agriculture have occurred, and some of these affected the level of living of farm families. The number of farms decreased by about 10 percent in the 1940-50 decade, and another 10 percent between 1950 and 1954. The level of living of the remaining farm operators in the counties with substantial decreases in number of farms would be expected to rise for two reasons. The remaining farmers probably would take over the land of those who left and were not replaced, leaving the agricultural resources shared by a smaller number of operators. Thus the average share of net returns from farming in the county would be higher bringing an increase in level of living. Also, if the unreplaced farm-operator families tend to have been below average in income and level of living, the net reduction in such families would tend to raise the average county level of living of farm operators, even though those remaining did not take over the agricultural resources of the others.

To explore the relationship between the change in number of farms and in farmoperators levels of living, all counties of the United States were cross-classified according to the percentage change in number of farms and in farm-operator level-ofliving indexes for two periods, 1940-50 and 1950-54. A relationship in the direction expected showed up for the 1940-50 period, but only to a limited degree. Among the 40

percent of counties with the greatest rate of decrease in number of farms, 47 percent were in the upper 40 percent scaled according to rate of increase in index. And among the 40 percent with the smallest decrease or some increase in numbers of farms, 37 percent of the counties were in the upper 40 percent according to increase in index. This suggests that only a small fraction of the geographic differences in rate of increase in level-of-living indexes between 1940 and 1950 was accounted for by differing rates of change in number of farms. Or, in other terms, the differences in rates of gain in levels of living of farm families are only slightly affected by differences in the rate of change in the number of farm-operator families in different areas of the United States.

To explore the influences of changes in number of farms upon the changes in level. of-living indexes between 1950 and 1954, the counties were cross-classified as shown in table A-1. Among the 3, 035 counties for which level-of-living indexes are available, 2,655 or 87 percent had increased indexes and decreases in numbers of farms. Counties in which level-of-living indexes and number of farms decreased comprised 4 percent. Counties where both farms and levels of living increased were 6 percent.

While the relationships are not entirely clear cut, the statement above for the 1940 50 period that "differences in rates of gain in levels of living of farm families are only slightly affected by differences in the rate of change in the number of farm-operator families" does not appear to hold for the 1950-54 period. Among counties which had decreases in number of farms and increases in level of living, the magnitudes of these two changes appear to be closely associated. Table A-2 shows that the number of counties in the quintiles of change in farms is smaller as progression is made from the lowest to highest quintile of change in level-of-living indexes, and the number of counties in the last two quintiles of change in number of farms is larger as progression is made on quintiles of change in level-of-living index. In the middle quintile the relationship is somewhat ambiguous.

Table A-1.--Number of counties by type of percentage change in number of farms and level

of-living index, 1950-54

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1

Excludes counties in Arizona and New Mexico for which farm-operator family level-ofliving indexes were not computed.

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