How much do Americans actually spend on food? (And how much should we?)

Last week I was trying to figure out what portion of their incomes Americans spend on food. (Why is a long story.) A lot of numbers are bandied about, but usually by people trying to make one political point or another, and it was more difficult than I expected to nail down anything reliable. But I managed to find out not only what people at various income levels do spend on food, but also what they’d have to spend in order to eat a healthy diet. The answers were, respectively, more than I thought… and considerably more than that.

The claim I most often read is that American food is ludicriously cheap. By historical and global standards, it is — but how cheap? The Gates Foundation reported last year that only 6 percent of Americans’ household expenditures went to food, compared with more than 10 percent in most of Europe and 35% in India. Their point is that the world’s poor spend a great deal more of their money on food than we do, which is true, and they intend to fund agricultural research so that the rest of the world can have cheap food like we do. Mother Jones republished the Gates Foundation’s bar chart to make a different point, that Americans spend very little — probably too little — of our incomes on food, and that this cheap food is possible only because we subsidize large-scale agriculture through taxes and externalize costs to the environment, to animal welfare, to workers, and to our health. (Since 1995 we’ve given $277 billion in subsidies to just 38 percent of U.S. farms, including more than $100 billion just to produce cheap corn and soy, most of which goes into various processed foods, most of which are far more caloric than nutritious and are by nearly every standard a major reason so many Americans are overweight.) This is, I think, also true, and we’re paying for those cheap calories through our health care expenses.

But I question this 6 percent figure. It seems impossibly low, and the Gates Foundation’s chart is drawn so vividly that it makes me suspicious. (Why is the bar for India’s food expenditures several times taller than the bar for all its expenditures? Even if the numbers are wrong, the chart is exaggerated for visual effect.) So I dug a little deeper.

According to the Bureau of Labor Statistics, the average “consumer unit” — basically, a household — had a pre-tax income of $63,685 in 2011, of which it spent $3,838 for groceries and $2,620 on eating out, or a total of $6,458 on food. That’s 10.1 percent of pre-tax income on food. Average household expenditures were $49,705, so food purchases total 13.0 percent of household expenditures.

Even that figure doesn’t give the whole picture, though, because it’s only an average. Household incomes are wildly disparate; there are a small number of people making a great deal of money, and a whole lot of people not making very much at all. The median household income — the money that went to the average household — was only $50,054. And though people who have more money spend more money on food, they spend a considerably smaller share of their incomes on food. The Bureau of Labor Statistics reported that the bottom fifth of earners spent 16.1 percent of their total expenditures on food, the middle fifth 13.3 percent, and the top fifth just 11.6 percent. So the poor are spending a sixth of their money on food, and even the wealthy are spending considerably more than the 6 percent reported by the Gates Foundation.

Where did that 6 percent number come from? I have no idea. Possibly from something simplistic like dividing food sales by total GNP. But it makes a great deal of difference, when we’re talking about food policy, whether the typical family spends 6 percent or 13 percent of its money on groceries. It matters particularly when you remember that people with low incomes are spending their food dollars on cheap calories — largely because they have to — and not for the most part on healthy food.

What does it cost to eat a healthy diet? The Department of Agriculture Center for Nutrition Policy and Promotion estimates that a “moderate” weekly grocery bill for a family of four with two children between the ages of 6 and 12 would be $236.60, which comes to an annual household expenditure of $12,300. That’s 24.6 percent of the median household income before taxes! Since a household making roughly the median household pays, on average, 27.7 percent of its income in federal, sate, and local taxes, that USDA-recommended moderate grocery bill comes to 34 percent of its after-tax income, and (assuming the average savings rate of 3.5%, which is generous at median income levels) >over 35 percent of its total expenditures. That assumes, I believe, not eating out at all. By comparison, the USDA’s “low-cost” plan for the same family would cost $189.40 a week, or 29 percent of total annual expenses, and the “thrifty” plan would cost $144.60 a week, or 22 percent of total expenses.

The bottom line, then, is that a typical family of four in the United States making the median household income would have to double its food expenditures in order to eat what USDA nutritionists consider a healthy diet.

So where does that leave us?

  1. In historical and global terms, our food is cheap. Fifty years ago Americans spent a third of their budgets on food. And the change isn’t because incomes have risen; adjusted for inflation, median incomes have remained about constant since 1970.
  2. Yet it may nevertheless be a hardship on most families to eat well. If eating a healthy diet costs more than twice what most Americans actually spend on food, it’s pretty clear that our celebrated cheap food is made up of cheap calories — which means, Gates Foundation reports to the contrary, that we don’t need to be helping other countries to emulate us.
  3. We do, therefore, need to reform our food system. A lot of activists (see that Mother Jones article) believe that Americans ought to spend more money on food than we do, that we ought to pay the real costs of our food and not externalize them to be cleaned up by future generations or an increasingly expensive health care system. I agree. But we need to be very careful about cavalierly suggesting that working-class people simply need to spend more money on food.

There is one point in the American food system that represents, at least from the perspective of an individual household budget, tremendous waste: eating out. That Bureau of Labor Statistics report said that in 2011, Americans spent 40 percent of their food dollars on eating out, which is certainly more expensive than eating at home. Junk is cheaper than healthy food, yes, but only if you pay someone else to make it for you: Mark Bittman ran the numbers a year ago and found that a home-cooked meal for four of roast chicken, potatoes, and vegetables is cheaper than four meals at McDonalds. At that price I wouldn’t be happy with how that chicken had been raised, but I’m content to take things one step at a time: if people can’t cook, they’re not going to spring for free-range chickens, even if they can afford them. Cooking from scratch would, in fact, save money even over those USDA eat-at-home guidelines, which include a budget for canned soups, frozen entrées, and prepared cereals.

That puts the onus on the consumer, but most of our public policy options for encouraging healthy eating would in some way make those cheap calories less attractive or more expensive, by ending subsidies for corn and soy, taxing junk food, banning certain kinds of advertising. Simply making food more expensive isn’t going to fly at a time when real incomes are stagnant, and in any case it isn’t enough to drive people away from the bad stuff; they have to know what to do with the good stuff. And cooking is an option available to practically everyone.

Good food is not cheap. But Juliet Corson was right: the way to eat better for less money is to learn to cook, and there’s data to prove it.