Once upon a time, before the popular show The Sopranos, the “family business” referred to family-owned farms that functioned as small, self-sustaining businesses producing enough food, clothing, shelter and sweat equity to prosper. Each family member, from children to parents to grandparents and other adults, had a productive role that contributed to the economic success of the family unit.

As the Industrial Age came into its own, farms switched to producing cash crops and family duties – particularly those traditionally performed by women and children, like clothing production – moved off-site to factories. Without the need for a large, extended family to work the land, families became smaller, and the average woman had fewer children spaced more closely together. Ultimately, the very nature of a family changed, from that of a public institution with economic purpose to that of a private institution with the purpose of raising children. Now, that role is being redefined again. Where almost 48% of U.S. households had children under 18 living in the home in 1956, only 33% did by 2004.

Family flip flop – extended families are a thing of the past
My how things have changed! In 1850, almost 70% of the population age 65+ lived with their adult children, while fewer than 15% lived alone or with their spouse. By 1990, that trend had reversed, with 70+% of seniors living on their own or with a partner and less than 16% residing with their children. Drivers behind this trend are many, including a healthier senior population capable of independent living, a more mobile society where adult children often live thousands of miles from parents, and the dissolution of economically-based living situations such as the family farm.

The American family is changing in other ways too, perhaps the most important being its importance to the population overall. Looking across a 100-year span beginning in 1950, the total household count in the U.S. will grow by a factor of 3.5. However, the number of households with children will grow at a mere 60% of this pace. As fertility rates drop below replacement levels, the U.S. will be home to both fewer households with children, and smaller ones.

Flying solo
For probably the first time in U.S. history, in 2007, the majority of American women were found to be living without a spouse. The confluence of effects – such as delaying marriage, living longer as widows and postponing remarriage after divorce longer than men – pushed this lifestyle choice from minority to mainstream.

Presently, 54% of men live with a spouse while 49% of women do, with marked differences exhibited along ethnic lines. Almost 60% of Asian women live with a spouse: 55% of whites, 49% of Hispanics and 30% of African-American women share a household with their husband.

Slipping the knot
Marriage is down across all income groups, but not uniformly so. Marriage rates are especially down for working class and lower income people. Likewise, divorce rates are also falling, and are falling fastest for upper incomes, and particularly for college-educated husbands and wives [see sidebar, Divorce Rate Decreases].

The net effect of these changes is an increasing income disparity between married-couple families and other family structures. Married couple families are twice as likely to be in the top 20% of earners and enjoyed a 59% increase in income over the past decade. Many researchers who study marriage see these trends as potentially the beginning of a return to an older view of marriage, a time in which the elite married and the poor did not.

While the divorce and marriage rates are decreasing, the ages at which people get married have been increasing since the late 1970s. During the 1950s and 1960s, the average age to tie the knot for men was 23 and for woman was 20. Today half of men marry for the first time after age 27 and half of women after age 25. Couples are more closely matched in age now than ever before, and also more closely matched in education and pre-marriage incomes.

Composition components
It is no surprise that the strong population growth rate in the U.S. is fueled primarily by Hispanics and Asians. Perhaps obscured by all the talk, however, is the fact that not all parts of the population are becoming more ethnic at the same rate. For example, the increase in Hispanics among older Americans is practically nil. Most immigrants tend to be younger, and many come to new countries in order to raise families. The effect is that much of the growth among Hispanics and Asians has been in younger ages and in families with children.

For those whose business lies in predicting consumer tastes and trends, here are some startling statistics. Looking ahead, U.S. households with children will become the majority minority shortly after 2035. (That is, less than half will be non-Hispanic whites; more than half will be Hispanic, Black, and Asian.) Population under age 24 will become the majority minority after 2030 and population under six will become the majority minority after 2025.

Squeeze play
The Ozzie and Harriet two-parent/one-earner family paradigm has become as outmoded as black-and-white television. In 1965, the two-parent/one-earner model described 60% of American households. By 2000, that model represented a mere 25% of families, with two-parent/dual-earner households dominating at 41%. Today, there are more single-parent families (30%) than two-parent/one-earner households.

Despite media coverage bemoaning the transformation from ‘50s homemaker to frenzied, sleepless, working Mom, in truth, married parents are spending more time per week attending to child-care duties today (20 hours) versus back in 1965 (13 hours). According to The American Time Use Survey, from the U.S. Department of Labor Statistics, Mom and Dad are putting in three and four more hours of child care per week, respectively.

Time bandits
On a percentage basis between 1975 and 2000, married fathers stepped up to the plate, spending almost 60% more time with their kids, and married mothers added 11% to their already full load.

Where’d they find the extra time? Something had to give, and it proved to be housework, which experienced a 25% drop in cleaning hours per week from 1965 to 2000. Additional areas that suffered included civic activities and time spent alone with spouse. Another time-carving technique was learning to multi-task, accomplishing more in a finite unit of time.

Independent viewing
In the 1950s and 1960s, the whole family used to gather around the TV to watch their favorite programs. Today, television sets outnumber people in the average household (2.79 TVs vs. 2.54 bodies). As the American family continues to shrink in size, and television viewing becomes more and more individualized, family or multi-person viewing is in decline even though average viewing hours per person continues to rise (to an estimated 1,555 hours per person this year according to Nielsen Media Research).

Yet another factor fostering individual viewing is the proliferation of stations and channels. In 1950, 3.8 television stations were on the air in the average household. By 2006, the typical viewer could choose from 17.5 stations and 104.2 channel alternatives. This overwhelming menu of program selections also helps to explain the shrinking viewer per household figures for top shows as the audience pie gets sliced among more choices. In 1975, the top show, All in the Family, attracted 2.14 viewers per household. Thirty some years later, the number one show, American Idol (Wednesday), drew just 1.54 viewers per household.

Charting the course
Marketing products to households with children will become more and more difficult given the demographic changes already in place as well as those that will come within the next decade or two. The simple fact that households with children will continue to decline as a share of total households – from nearly one in two at the heights of the Baby Boom to less than one in three today, to close to one in four over the next several decades – means that brands heavily skewed to this once dominant family type will grow more slowly because their market is growing more slowly. These brands will experience a demographic drag and may be hard pressed to perform to corporate benchmarks. In about 25 years, brands heavily skewed to households with children will no longer be mass-market brands, but will become specialty niche players with minimal appeal to the nearly 75% of U.S. households who won’t have children.

The smart money will acknowledge both the declining share of households that have children as well as new sub-segments that comprise the fabric of the modern American family life. From young adults living at home longer and postponing marriage to young families that are the true melting pot of America today to educated affluent couples spending more time with fewer children to an unmarried working class struggling to support children outside marriage, it’s a uniquely American pastiche that affords limitless opportunities to savvy marketers willing to plumb the subtleties of segmentation.