The Causes of Wealth Inequality (11): Family Structure

In the U.S., and probably in other countries as well, there’s been an increase in the number of single parent families. Most of the time, that means a single mother, divorced or unmarried, or with a husband in prison, and raising one or several children on her own. As a result:

The percentage of children living with one parent has doubled since 1970, from 12 percent to more than 26 percent in 2004. (source)

There are about 13.7 million single parents in the United States today, and those parents are responsible for raising 21.8 million children. 84% of those single parents are mothers.

Single mothers often earn relatively lows wages, partly because they can’t afford to work long hours. Combine that with the fact that they have higher per person expenses (heating a house costs just as much for a two parent family as for a single parent family) and the fact that women in general have lower wages, and you have a recipe for inequality.

However, the growth in the number of single parent families in the U.S. flattened when income inequality continued to increase. So, family structure may be a good although partial explanation of poverty levels, but not necessarily of inequality. There must be other causes, some of which are discussed here.

The Causes of Poverty (39): The Bee Sting Theory of Poverty

Why are people poor? A cursory investigation almost always blames the poor for their own poverty. Poor people seems to make stupid choices all of the time. They are disproportionately likely to have children while in their teens, to be an unmarried mother, to drop out of school, to abuse drugs, to commit crimes etc. Non-poor people also engage in this kind of irrational behavior but the costs to them are much smaller. So rationality would tell poor people to stay away from such behavior. The fact that they don’t leads many to conclude that poor people are especially irrational, perhaps even dumb.

Many conservatives often adopt this causal theory of poverty, although not always in those terms. Perhaps it’s a reaction to liberals who tend to situate the cause of poverty far away from the poor themselves, e.g. racism, capitalism etc. Both camps, however, remove responsibility from the discussion. If you’re too dumb to escape poverty, you’re not likely to magically develop the responsibility to take your life in your hands. And if outside forces as powerful as racism and capitalism make you poor, no matter how strong your sense of responsibility, you’re not likely to win.

A multicausal understanding of poverty seems closer to reality: dumb choices, lack of effort and responsibility and outside forces all contribute to create and maintain poverty, in different measures for different people. It’s likely that poor people aren’t different from anyone else in this respect: everyone makes dumb choices, lacks responsibility in key moments and suffer the brunt of outside forces, the poor just pay a heavier price. They have smaller margins of error, so they suffer disproportionately from the errors they make. And their reserves and defenses are weaker, so the impact of outside forces is stronger. And we shouldn’t forget poverty traps as a cause of poverty: the more you’re down, the more difficult it is to get up again. Partly because of material reasons (for example, the trap of the ghetto or the vicious circle of poverty and ill health), but also because of psychological reasons:

A person with one bee sting is highly motivated to get it treated. But a person with multiple bee stings does not have much incentive to get one sting treated, because the others will still throb. The more of a painful or undesirable thing one has (i.e. the poorer one is) the less likely one is to do anything about any one problem. Poverty is less a matter of having few goods than having lots of problems. …

If, for example, our car has several dents on it, and then we get one more, we’re far less likely to get that one fixed than if the car was pristine before. If we have a sink full of dishes, the prospect of washing a few of them is much more daunting than if there are only a few in the sink to begin with. …

[B]eing poor is defined by having to deal with a multitude of problems: One doesn’t have enough money to pay rent or car insurance or credit card bills or day care or sometimes even food. Even if one works hard enough to pay off half of those costs, some fairly imposing ones still remain, which creates a large disincentive to bestir oneself to work at all. (source)

This is a classic example of a poverty trap: being poor makes you poorer. People just get overwhelmed by problems and their ability to cope suffers. It’s not just that they are dumb or irresponsible; they’re simply overwhelmed. All of us would be, even the smartest and most responsible among us.

It also means that, as Charles Karelis has argued, there’s something wrong with the disincentive argument about help to the poor (giving them help reduces their incentives to do something about their situation, like giving unemployment benefits reduces the incentive to find a job). Things may actually be the other way around:

Reducing the number of economic hardships that the poor have to deal with actually make them more, not less, likely to work, just as repairing most of the dents on a car makes the owner more likely to fix the last couple on his own. (source)

The Causes of Wealth Inequality (3): Marital Homogamy and Declining Manufacturing & Unionization

Part of the increase [in inequality during the last decades, particularly in the U.S. and the U.K.] stems from declining manufacturing employment, part from shrinking unionization and fragmenting collective bargaining, part from heightened immigration and other aspects of globalization, and part from technological change. … [A]nother source of the rise in inequality: changes in household size and composition. Due to later marriage and more prevalent divorce, more and more households have just one adult, and hence only one potential earner. At the same time, coupling between people with similar education and thus similar earnings potential (“marital homogamy”) has increased, and the share of highly educated women who are employed continues to rise. The result of these developments is that many countries have more two-adult households with high earnings and more one- or two-adult households with low earnings than used to be the case. Lane Kenworthy (source)

The Causes of Poverty (28): Family Structure

Almost 30 percent of children [in the U.S.] now live in single-parent families, up from 12 percent in 1968. Since poverty rates in single-parent households are roughly five times as high as in two-parent households, this shift has helped keep the poverty rate up; it climbed to 13.2 percent last year. If we had the same fraction of single-parent families today as we had in 1970, the child poverty rate would probably be about 30 percent lower than it is today. Isabel V. Sawhill and Ron Haskins (source, source)

These numbers seem to correspond to intuition. It’s harder for one person to raise children than it is for two. And the risks of ending up in poverty are therefore higher. However, some caution is needed when linking poverty to family structure. Also, perhaps family structure isn’t so much the cause of poverty as its effect. And then there’s the fact that some countries, such as the Nordic European ones, have low marriage rates and high out-of-wedlock birthrates, yet they are much more egalitarian and have lower poverty rates than the U.S. (source). Part of the reason for this is the more generous welfare systems (and higher taxes ) in Nordic countries. Another part is the fact that

in the Nordic countries it’s quite common for committed couples raising children to just not be married. In the US a child whose mother isn’t married is typically growing up without his or her father being present, which isn’t the case in Sweden or Norway. (source)

“Born out of wedlock” doesn’t necessarily imply “single parent”. It’s family structure, and the presence of two parents – not necessarily “biological parents” or parents of a different sex – that helps families and children avoid or escape poverty, not formal or legal marriage status.

Unmarried biological parents in northern Europe are more likely to stay together to raise the kid than married parents in the US. (source)

This quote isn’t intended to imply that unmarried couples are better than married ones. Again, what matters isn’t marriage as such but family structure. And the focus on family structure isn’t intended to imply that all single parents are bad. Even if there’s only one parent, descent into poverty isn’t destiny. It also depends on the parent. Poverty isn’t a mechanical result of a certain family structure, but family structure does count in many cases (a poor single mother, even with the best intentions and efforts, will perhaps do worse than a celebrity divorcee). Having two parents is extremely helpful.

Yet we shouldn’t forget that poverty has many causes and family structure is just one of them, and most likely not the most important one. Hence it’s very well possible that a society with extremely high rates of single parents and births out of wedlock experiences less poverty (including child poverty) than another society where the large majority of children are raised by two biological parents and the large majority of marriages doesn’t break down.

Here‘s a graph indicating that living with only one parent certainly doesn’t condemn children to poverty.

Lies, Damned Lies, and Statistics (19): Fun With Percentages

A certain company discovered that 40% of all sick days were taken on a Friday or a Monday. They immediately clamped down on sick leave before they realized their mistake. Forty percent represents two days out of a five day working week and is therefore a normal spread. Nothing to do with lazy employees wishing to extend their weekends. They are just as sick on any other day.

A more serious example, now, more relevant also to human rights:

The stunning statistic that 70% of black babies are born out of wedlock is driven, to be sure, by the fact that many poor black women have a lot of children. But it turns out it is also driven by the fact that married black women have fewer children than married white women. (source)

The fact that married black women have fewer children than married white women obviously inflates the percentage of black babies born out of wedlock. If married black women had just as many children as married white women, the proportion or percentage of black babies out of wedlock would drop mechanically. But why do they have fewer children? It seems it’s a matter of being able to afford children.

It’s well known that the black middle class has a lot less in the way of assets than whites of similar income levels – hardly surprising, given the legacy of generations of discrimination and poverty. But that also means that things that a lot of white middle class people take for granted – like help with a down-payment on a house when you have your first kid – are less available. Middle class black parents have less in the way of a parental safety net than their white equivalents, so they’re less likely to have a second kid. (source)

The 70%, when compared to the national average which is about 40%, may seem high, but it’s artificially inflated by the relatively low number of black babies in wedlock. So before you go out yelling (see here for example) that all the poverty and educational problems of African-Americans are caused by the fact that too many of their children are born and raised out of wedlock, and presumably by single parents (although the latter doesn’t follow from the former), and that it’s better to promote “traditional marriage” instead of affirmative action, welfare etc., you may want to dig a bit deeper first. If you do, you’ll paint a more nuanced picture than the one about dysfunctional black families and irresponsible black fathers.

Nevertheless, while the percentages may not be as high as they seem at first glance, it remains true that black babies still make up a disproportionate share of kids born out of wedlock. And if “born out of wedlock” means “single parents” (usually mothers) then this can be a problem. Although many single parents do a great job raising their children (and often a better job than many “normal” families), it can be tough and the risks of ending up in poverty are much higher. And yet, even this is not enough to justify sermons about irresponsible black fathers. Maybe the misguided war on drugs, racial profiling and incarceration statistics have something to do with it.