Inequality and Mobility: Don't Forget the Family
When it comes to inequality and mobility, there is a new smell of defeat in America. Usually, the counsel of despair highlights two market forces: the growing polarization of the labor market, with middle-class jobs falling by the wayside, and the increasing share of income going to the rich. For some, more government spending and more taxes are clearly the solution. Others see less government spending and regulation as the best way to revive the economic fortunes of the country.
But few are talking about the erosion of a fundamental building block for economic opportunity in America: the intact, married-couple family.
The most recent example is last month's speech by Federal Reserve chair Janet Yellen, who suggested that rising income inequality and stagnant wages among American families threaten fundamental American values. Her sensible prescription focused on four "significant sources of opportunity for individuals and their families" -- family financial resources, affordable higher education, business ownership, and inheritances. Yet Yellen said virtually nothing about the breakdown of the American family.
Unfortunately, this oversight is all too typical of America's public conversation about economics. In our new report, "For Richer, for Poorer," we demonstrate that the nation's half-century retreat from marriage -- marked by increases in family instability and single parenthood – is clearly linked to growing economic inequality, stagnant family incomes, and the declining economic status of men.
Take growing income inequality among American families with children. We find that about one-third of the growth in family-income inequality since 1979 is connected to the fact that fewer American parents are, and stay, married. Widening income differentials further is the fact that married parenthood is increasingly the preserve of college graduates, as working-class and poor Americans are much less likely to get and stay married.
Or take stagnant incomes. We estimate that the growth in the median income of families with children would be 44 percent higher if the United States enjoyed 1980 levels of married parenthood today.
Marriage and family structure matter a great deal for economic mobility as well. We find that young men and women work significantly more hours and make more money if they were raised in an intact family with both biological or adoptive parents (nearly all of whom are married), compared with their peers raised by single parents. Growing up with both parents also increases high-school-graduation and marriage rates and lowers rates of unwed parenthood. Regardless of the family situation in which men were raised, getting married themselves sharply increases their hours of work and their individual earnings. And middle-aged men and women enjoy markedly higher family incomes -- a gain of at least $44,000 -- if they are married. We also find that these economic benefits of marriage extend to black, Hispanic, and less-educated Americans. For instance, black men enjoy a marriage premium in their personal income of at least $12,500 compared with their single peers.
Interestingly, we found that family structure is often about as predictive of economic outcomes as other factors that attract more attention, including race, education, and gender. The connection between family structure, economic opportunity, and economic success in America is remarkably strong.
But even in the face of findings like these, many have been silent about the family-structure effect. Others seem to despair that anything can be done to revive the fortunes of marriage in 21st-century America. While Isabel Sawhill, the director of the Brookings Center on Children and Families, acknowledges that "marriage has many benefits for both adults and children" and is "one of the best antipoverty policies in existence," she thinks marriage may be beyond saving, arguing that we need to move "beyond marriage" and focus on reducing the prevalence of unplanned parenthood with more contraception, thereby ensuring at least that parents are better educated and better off when children come along.
Such a strategy is problematic, however, because no substitute exists for the intact, married family when it comes to boosting future economic opportunities for children, strengthening the commitment of men to the labor force, and ensuring the economic welfare of families. Indeed, even in Sweden, where the social-welfare state is strong, and where family-structure inequality is also growing, children from single-parent families are significantly less likely to do well in school and more likely to be poor. One study found that child poverty in Sweden was three times higher in single-parent families than in two-parent families.
So, if political, business, and thought leaders, economists, religious leaders, and educators are serious about confronting economic inequality, social immobility, and stagnating wages -- i.e., about reviving the American Dream -- they also need to focus on how to reverse the retreat from marriage in America. The alternative is a future of durable economic inequality, where college-educated Americans and their kids enjoy strong and stable marriages that boost their economic opportunities, and everyone else faces an increasingly unstable family life that puts them at a permanent disadvantage. We cannot think of anything less progressive.
W. Bradford Wilcox, a professor of sociology at the University of Virginia, directs the Home Economics Project at the American Enterprise Institute and the Institute for Family Studies. Robert I. Lerman is an institute fellow at the Urban Institute and a professor of economics at American University. They are co-authors of a new AEI-IFS report, "For Richer, for Poorer: How Family Structures Economic Success in America."