The economic decline of rural America has widespread consequences for families, children, and education. Broad changes in farming and in the rural nonfarm sector have pushed the poverty rate for rural areas in the 1980s higher than the central cities rate. Projections indicate that by the mid-1990s, one-half of all farm families in the midwest may become financially insolvent. Prompted by a decline in economic and living standards, the young and educated leave, schools and service establishments close, and social pathology increases. This study focuses on families under economic pressure in an agriculturally dependent county in Iowa. Relatively affluent before the downturn, these families had much to lose in a troubled economy. The sample includes 76 two-parent families with a seventh-grade child and at least one other sibling. Approximately half of the parents grew up on a farm, but only 12% define themselves as farmers. Four out of five of the families are in the middle class. Based on self-report and observational data, this study examined ways in which families were adapting to scarcity and the psychosocial consequences of such adaptation for couples and their children. Findings indicate: (1) that adverse income change has effects on hardship adaptations that match those of income level and far exceed the influence of unstable work; (2) that hardship adaptations mediated the negative effects of deprivation on emotional health and family relationships; and (3) that father's negativity represents a stronger link between hardship and child behavior than mother's negativity. The document includes data tables, illustrative figures, and 48 references. (ALL)