You need to read this magnificent article in The New York Times that breaks down the economic phenomenon we went over several years ago when we looked at the work of Harvard Professor Charles Murray, who demonstrated that a significant driver of income inequality in the United States was caused by a radical shift in the family structure of the lower and middle classes.
The wedding ring, along with a college degree, has become the primary social and economic class status indicator. Namely, the upper classes are more likely than ever to get married, stay married, and invest an enormous amount of resources including time, energy, and money, into their children. The economies of scale of having multiple paychecks, yet the same fixed expenses, results in a leveraging effect that makes life exponentially easier in the same way economies of scale give Wal-Mart or McDonald’s financial advantages; there comes a point at which you’ve covered your base operating costs and every additional dollar flowing in results in more falling to the bottom line. This creates a self-reinforcing cycle where economic security and prosperity is easier to achieve, leading to more economic security and prosperity as the family accumulates capital that throws off dividends, interest, and rents, increases human capital permitting higher paying jobs, and can more flexibly manage commitments so the opportunity cost of sickness or temporarily unemployment is significantly reduced.
A couple of generations ago, 95 out of every 100 children in the middle class enjoyed such a two-parent household. Today, a majority are born out of wedlock, with a large percentage to a mother who chooses to have multiple children with multiple fathers.
This matters to economists because, despite all of the heroic efforts of single mothers, as a group, children who don’t grow up with two parents in the household fall behind in every measurable life progress score imaginable. They are more likely to drop out of high school, less likely to go to college, more likely to go to prison, less likely to have a high paying career, less likely to have a stable family of their own, more likely to abuse alcohol or drugs, more likely to be physically assaulted or sexually abused, more likely to be obese, ad infinitum. Horribly, these social ills actually cost society more money to produce as the broken households use more per capita taxpayer funded benefits just to survive.
The Economic Problem Can’t Be Solved Because It Is Politically Unpopular to Discuss
One of the reasons it hasn’t been solved is because it creates a political problem. For a child born today, the single greatest, sure-fire indicator that you came from a lower class family is a mother who is unmarried and has children with multiple men so the siblings are half-related. Yet, no one wants to go back to the days when women were shamed into marrying a man because they got pregnant, nor do they want to stigmatize the (now large percentage) of children born into such situations as the kids are innocent. Equally as delicate is the notion of egalitarianism that is instilled in every American, who generally eschew social and economic class categorizations entirely (our poor insist they are middle class and our rich insist they are middle class).
This leads to a sort of Gordian Knot, bound by social niceties, where the desire to avoid individual injustice is leading to a system-wide failure that ultimately harms women and children in tangible ways that will follow them throughout their lifetime. Thus, in order to be polite and potentially not hurt anyone’s feelings, the situation goes unchecked, with some damning consequences.
What makes it worse is that there are those who refuse to address this economic disparity because it doesn’t fit with their existing worldview. Consider this comment, which is one of the highest rated responses to the New York Times article:
We need different values alright – among the powers that be, who think $10 p hr is a living wage. These changes don’t happen in a vacuum and do blame them on “eroding values” is preposterous. Americans have become more conservative, churchgoing, but also unfortunately more ignorant about economic realities. Transferring a nation’s wealth, up to 90% of it, to the 1% at the top, which politicians have strategically done with the help of their oligarch bosses, has unfortunate consequences for the remaining 99%. The economic and social realities people like Ms. Scheirer finds herself in are the result of conservative political goals – media concentration (the better to spew out untruths and disinformation), defunding public education (the more ignorant the public, the less able they are of critical thinking), and the systematic elimination of unions (the best to kill off the middle class and turn the 99% into obliging oligarchy serfs). So she didn’t finish college, and made stupid choices (having 3 kids with a deadbeat father – btw, men rich guys are also great deadbeat material) – she still deserves to earn a living wage!
This is the sort of fatuity that drives me to exasperation, yet it’s this commentator who is precisely the type of person we should be trying to help; those too ignorant to realize how ignorant they are, while spouting off about the importance of “critical thinking” (the irony of which is painful). For example, school funding cuts are not responsible for the sub par results of the American education system as per capita education expenditures are the highest in the world. As a matter of fact, we used the Kansas City School District as an example the other day. The amount of money spent on education is far less useful in determining how well a student does than whether or not the student is in a two parent household. Nicer textbooks and a better paid teacher cannot make up for, in even a small way, what a child lacks at home. That’s the reality. That’s what the numbers show. Throwing more money at a problem is a particular American pathology that has to stop. Money can’t solve everything and worshiping it as some sort of panacea when it is just one tool in our arsenal is pointless. Some problems are cultural. Want academic success? A good marriage trumps money every time.
In addition, despite this commentator’s belief, church attendance has not increased in the United States, it has shown a decline over the past decade with those saying they “seldom or never” attend increasing from 25% of the population to 29%, while those who attend weekly went from 39% to 37%.
The numerical reality of the single mother’s life in the Times article is mostly not part of some evil conservative machination (leaving aside the House Republican’s refusal to support President Obama’s proposed 50% payroll tax cut a couple of years ago, which would have been one of the largest tax cuts in American history aimed squarely at the poor and working class), it’s a function of basic math: When you add a second income on top of costs that don’t change, it’s all profit. It’s disproportionately beneficial. It’s all left over for swimming lessons and baseball equipment, vacations and college savings.
To put it bluntly, for all of their monumental, almost mind-numbing failures, it is not the fault of the United States Congress, or the Republicans, or the Democrats, or the President, or Wall Street, that a single mother can’t afford to pay her bills. There has never been a time in U.S. history when she’s been able to live well. It’s basic home economics. None of us is somehow magically exempt from arithmetic.
What You Can Do To Give Your Own Family an Advantage
What are the takeaways on an individual level? While the societal problem is a hard one to fix, you, personally, can use this to your advantage. The single greatest inheritance you can give your child is not a trust fund, but a stable, intact, loving, two-parent home where you are married to your spouse. Even if you are in the bottom half of household income, the significant advantages of this arrangement mean your children have a much greater statistical chance of enjoying better lives.
Nothing else you do as a parent will have the predictive power of improving your son or daughter’s chances. It shows up in countless data sets touching on nearly every major sociological, economic, academic, and health indicator. Marriage is the greatest anti-poverty program that has ever been created. It was the original corporation. It was the original partnership. It is the fundamental building block of the civilization.
Wait to meet the right person, get married, and have children in that order. Do that, and it’s like using an economic cheat code in the video game of life. No matter how unpopular it is to discuss, or even acknowledge, you should still strive to take advantage of it, harnessing this model just like you do compound interest.
And for those of you who get that analogy, you might want to consider the following status symbols of your own: