On Domestic Poverty and the Family

Earlier this month I was invited to speak at a retreat led by the Archbishop of San Francisco for the board of Catholic Charities.  They asked me to talk on the relationship between poverty and the breakdown of the traditional family structure.  I was happy to do it, partly because this was new but interesting territory. Global poverty is in the center of my research wheelhouse; domestic poverty, not so much.

One would think there should considerable overlap between the two.  And there is, to the extent that economists can use some of the same investigative and econometric tools to try to understand both domestic and international poverty. But the time I spent in preparation for the talk only reinforced what I had previously thought to be true: the causes, consequences, and effective interventions related to domestic poverty differ substantially from global poverty. Moreover, there seems to be a stronger correlation between poverty and the functionality of families in our country than there is in overseas poverty. It has been an eye-opening journey, and one that I thought was worth a blog post.

I wanted to just summarize three main points from the talk that I thought might be of general interest.

First, demographers argue that what we are witnessing now in changes to the basic family structure in the West is a result of something called the Second Demographic Transition.  The First Demographic Transition (beginning in the late 18th century) was characterized by lower death rates, due mainly to improvements in public health infrastructure, lower childhood mortality, and better disease control. But the Second Demographic Transition (which began roughly in the early 20th century) was characterized by lower birth rates, fueled by reductions in infant mortality, increasing female literacy, and the increasing availability of contraception.

In this Second Demographic Transition, better-educated women, smaller families, and the increase in labor-saving technology in the home all increased female labor participation in the workforce.  To make a very long story short, this has greatly altered the nature of the family and shaped many of the changes we see today in Western culture. That in decades past women needed men to be breadwinners, and men needed women to care for children, created a functional motivation for the traditional family.  Marriage has historically formed the arena for this exchange between gender-prescribed labor.  But today each gender participates more in the activities previously prescribed to the opposite gender. This has made parents more self-reliant, and dampened the purely functional motivation for the traditional family, whereas even a couple of generations ago there were substantially bigger gains from the exchange of different types of labor between spouses.

This new self-reliance has contributed to the radical individualism now pervasive in Western thought and culture, in which individualism and self-fulfillment have become reigning cultural values.  Commitment to traditional institutions of all kinds is out, superseded by the primacy of individual self-fulfillment.  Whereas previously, marriage and family had obvious functional purposes in meeting basic needs like safety and economic security, now these relationships are called upon to meet higher-order needs.  We expect our spouses not just to bring home the bacon (or cook it), but to fulfill our needs for meaning and self-actualization.

Because it is easy to let each other down in these areas, and because grown adults have become increasingly efficient and autonomous economic units, and because emotional self-fulfillment has become so primary in our hierarchy of needs, many now choose cohabitation over marriage.  That way, when a partner begins to insufficiently fulfill these higher-order needs, it is easier to switch to a new partner who we think will do a better job.  This has resulted in nearly 7 million cohabiting couples in our country today, up from about 0.5 million in the mid-1960s.  That married couples today report greater levels of happiness than cohabiting couples, lower levels of domestic violence, and that married couples who cohabited before marriage are more likely to divorce, has done nothing to mitigate this trend.  But to summarize the first point, fundamental changes in demography and long-term economic changes have substantially affected the composition and nature of the nuclear family in our country.

The second point argues that the reverse is also true: The composition and the nature of the family today substantially affects economic outcomes of the next generation of family members.  In other words, there are vicious and virtuous cycles at play here.  Long-term economic trends affect the nature of the family, but the nature of the family also affects economic outcomes.

The statistic that stood out the most for me in preparing this talk was a very simple but stunning correlation from a 2014 study by Lerman (an economist) and Wilcox (a labor/education guy).  They call it the “family premium.”  Those adults today in the labor force who are (a) married today and (b) who were raised in a two-parent family, earn an income that is $42,000 higher than their unmarried peers who were raised in single-parent families.  Clearly the statistic deserves a lot of unpacking because it is obviously not a causal effect as such, but rather the result of a tangled web of correlations, some of which are likely to be causal, but all of which are interesting and important.  However, the sheer magnitude of the statistic (a difference of more than 2/3 of U.S. per capita income) causes one to take notice.

The first correlation behind this $42,000 difference is that kids from single-parent families face grave disadvantages. Relative to children from two-parent families they have higher rates of school expulsion, high school dropout, delinquency, cigarette smoking, alcohol use, weapon-related violence, sexual intercourse, and suicide.  These correlations are undisputed in the literature, (e.g. here, here, and here) and are almost certainly causal, although the effects of single-family parenting are undoubtedly diminished after controlling for factors causing both single parenting and these unfortunate outcomes. The authors estimate a $5,600 “two-parent” wage premium to those who grew up in two-parent families.  (Given the strong relationship between two-parent families and educational outcomes and between education and earnings, I am actually surprised that this figure isn’t higher.)

The second correlation is simply that married men earn more than unmarried men; they estimate this “marriage premium” for men to be about $15,900 more.  (For married and single women, salaries are about the same.)  It may be that married men are more serious about their careers or more aggressive in asking for raises, perhaps because they have more mouths to feed and bodies to clothe; it is hard to say.  However, these two effects appear to reinforce each other, such that when one falls into both of these categories the premium for men and women combined rises to the $42,000.

Although it is just a correlation, what is disturbing about the magnitude of this statistic is that it indicates a that family breakdown is likely a big channel for inter-generational poverty persistence in this country. And the ominous sign today is that the breakdown of the traditional family among the middle-class, working class, and the poor is almost certainly contributing to the alarming increase in inequality in our country. While marriage rates were nearly identical among the poor and the rich just a generation ago, marriage has now become correlated with affluence.  Marriage today in the United States is sadly becoming a symbol of social status.  While it is just as common as ever among educated and well-off Americans (although occurring at a later age), marriage is becoming increasingly rare among the poor and working-class, where itinerant relationships and cohabitation are now the growing norm.  Children raised in the relative instability of these environments face grave disadvantages compared to their upper-middle-class peers raised in traditional family structures that today are heaped on to their economic disadvantages.

The declining rates of marriage below the American upper-middle class may be because of the pressure that technology and globalization are putting on middle-class jobs, and especially jobs that tend to be held by men.  Many of the jobs wiped out in the Great Recession, such as jobs in heavy industry, were held by men.  In contrast, jobs more disproportionally held by women, in education, health, and administration were hit less hard.  This may have made blue-collar men less attractive as marriage partners.  And as male working-class incomes have been lost or threatened, stable fathers may be less likely to be found in the homes of children.

This may be exaggerated in places like the San Francisco Bay Area, where real incomes have fallen for working-class families as home prices have been bid up by the inflow of highly educated workers in the technology industry.  It is the curse of economic dynamism that we bear in this part of the country.  What is good for tech has been hard for non-tech families.

The third main point of the talk centered around what faith-based NGOs like Catholic Charities can do for families in the context of these massive macroeconomic forces.  In general, Christians take a dimmer view of cohabitation, divorce, out-of-wedlock births, and single-parenting than secular people. There is a tendency for both Catholics and evangelical Protestants to want to react to these trends in three ways: 1) condemn the trends in the pulpit and try to keep people in the church from being part of the statistics; 2) openly vent against unappealing cultural trends on social media; and 3) make laws to stop people outside of the church from being part of the statistics either.

Although I personally believe that secular thinking (especially in blue places like the San Francisco Bay Area) dramatically and naively underestimates the importance of the family, my conclusion to the group is to try to approach these issues from a different angle. For example, Justin Wolfers and Betsy Stephenson’s work on the economics of the family has indicated that the apparent correlation between divorce and a number of other factors such as unhappiness and outcomes of children are likely to be due to a selection into divorce of unhappy couples.  Unhappy parents create unhappy families, which in turn cause poor outcomes among children whether the parents divorce or not.  Thus instead of making it impossible for people to get divorced, a more effective approach might be church-based interventions among at-risk families that help them to move from dysfunctional to functional.  Unlike focusing on politics, his would not only lower the divorce rate, but also would be more likely to promote better outcomes for children.

Of course this is probably harder work than venting on social media or lobbying the government to change laws, but Christians need to increasingly be in the difficult but loving business of promoting peace and reconciliation within families instead of being so quick to condemn or pull the political card.  Wouldn’t it be refreshing if local churches could offer classes to people in the community about how families could love and care for each other during difficult economic times?  If local dioceses and churches were to offer attractive and effective programs to strengthen family relationships, it could have a significant impact on strengthening the role of family in our culture. Christians believe the family to be a sacred institution, but we must demonstrate to the rest of the world, through care-giving, articulation, and example, the importance of the family to human flourishing.  We have to earn it.

Follow Bruce Wydick on Twitter @AcrossTwoWorlds.net.

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