A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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Getting Poverty Wrong
On the presidential campaign trail, its almost as if the 1960s never happened.
21 March 2008
Barack Obamas much-discussed speech in Philadelphia earlier this week was not only about race. It was also about economics and, specifically, about poverty. Measures of group wealth, or the lack of it, are often used to support claims that our society is racist. Obamas speech revealed that though he may be, to many people, a refreshingly new kind of post-racial politician and a healer, when it comes to notions of poverty and economic advancement, his ideas are right out of the 1960s and 1970s.
At one point in his speech, for instance, Obama suggested that some black poverty today can be attributed to the legalized discrimination that existed in America prior to the civil rights laws of the 1960s, which, in his telling, prevented black families from accumulating wealth to bequeath to future generations. Obama seemed to suggest that families in America escape poverty by patiently accumulating wealth and passing it on to future generationswhen in fact millions of Americans of all races leap out of poverty within a single lifetime through their own initiative, not their inheritances. We are long past the time when the legacy of Jim Crow laws and other forms of official discrimination can explain black poverty rates.
Reading Obamas speech prompted me to look at his larger economic policy proposals, especially those aimed at combating poverty. Clearly, he believes that our economy is failing many Americans, and to help the impoverished, he proposes everything from tax credits for the working poor to a higher minimum wage. In fairness, on these issues, hes not much different than his Democratic opponent, Hillary Clinton.
Yet both candidates are largely missing the point. While they insist that strengthening labor unions or protecting homeowners from foreclosures will alleviate the hardships of the poor, the latest data from the U.S. Bureau of the Census remind us that the breakdown of the traditional two-parent, married family is a far greater contributor to poverty in America than many of the supposed shortcomings of our economy. Its hard to imagine that America will make much more headway on reducing persistent poverty until it halts this long-term trend.
The Census Bureaus study on the living arrangements of American children appeared in mid-February. The data show that the number of children now living in two-parent families has dipped just below the 70 percent mark for the first time since the Census began collecting data on family formation nearly 130 years ago. After peaking in the 1950swhen about 87 percent of all children lived with two parentsthe traditional family went through a rapid decline beginning in the 1970s and has continued to shrink over the last three decades, though the rate of decline has slowed somewhat. As part of this sweeping change, the percentage of children living with married parents has fallen more rapidly, down more than two full percentage points, to 66.6 percent of all kids, in the last 10 years alone. Consistent with these decreases has been a sharp rise in the number of children living with single parents and with unmarried parents.
The economic impact of this breakdown has been profound. Researchers estimate that the entire rise in poverty in America since the late 1970s can be attributed to changes in family formation, a euphemism for the decline of families headed by two married parents. The latest Census data illustrate the problem. Only one out of ten American kids living in two-married-parent families is in povertyand about one-third of these families are recent immigrants whose poverty is temporary. By contrast, 37 percent of children living with single mothers are impoverished.
Marriage seems to be the defining characteristic of economically successful families. With out-of-wedlock birth rates in America soaring, so that many traditional families arent so much breaking up as never getting started, the percentage of children living with cohabiting parents is growing. Yet these kids are three times more likely to be in poverty than the children of married parents. The data actually demonstrate that poverty rates for families headed by two unmarried parents more closely resemble the poverty rates of single-parent families than those of two-married-parent ones.
Part of this shocking difference owes to what City Journal contributing editor Kay S. Hymowitz has called the marriage gap in America (Marriage and Caste, Winter 2006). Hymowitz describes how better-educated, higher-income men and women are now more likely to delay having children until theyre married, while lower-income, less-educated men and women are more likely to cohabit and have children out of wedlock.
But even these demographic facts dont completely explain the widely varying poverty rate between married and cohabiting parents. Studies that adjust for parents educational levels still find that a family headed by two unmarried parents is twice as likely to wind up in poverty as one that married parents head. Something about the marriage certificatea sense of long-term commitment, family stability, perhapsmakes an economic difference. Research shows that married workers exhibit more job stability and make greater wage gains than cohabiting parents, a sort of marriage wage premium, as some economists dub it.
Such factors also help to illuminate economic disparities along racial lines in America. As the latest Census statistics illustrate, family formation differs widely by race. Nearly nine in ten Asian children, for instance, live with two parents, as do 78 percent of white kids. By contrast, 68 percent of Hispanic children and only 38 percent of black children in America reside in two-parent families. A black child living with a single mother is nearly three times more likely to live in poverty than a black child living with two parents, the Census data show, yet 50 percent more black children are living with single mothers than in two-parent married families.
Given that a significant body of research now shows that children raised in two-parent, married families do better in school, are less likely to wind up in jail, and are less likely to end up on welfare, the startling racial divide in marriage tells us that a new generation of children, especially blacks, are growing up destined to struggle academically, in the job market, and in forming their own families. And policy prescriptions like a higher minimum wage or tax credits are unlikely to help many of these kids. What they mostly need is another parentusually a father.
While government cant give them that, candidates can at least give us some straight talk on poverty. But its easier, it seems, to blame the woes of the poor on the excessive profits of greedy corporations, or on so-called underhanded mortgage brokers taking advantage of low-income borrowers. Obama did briefly mention absent black fathers in his Philadelphia speech, but he blamed the breakup of the black family in part on the shame and frustration that black men felt when they were unable to provide for their families. Yet back in the 1930s, when Jim Crow laws were in full force and opportunity was truly absent for black men, the two-parent black family was stronger than it is today; in fact, the continuing rise of black out-of-wedlock rates since the 1960s has occurred even as black economic advancement has proceeded.
Ignoring the obvious stress that family breakdown has inflicted on children, Obama seems like hes stepped out of a time warp, offering new proposals to increase spending on a range of dubious social programs. To combat poverty, for instance, he would fully fund the persistently troubled, fraud-plagued Community Development Block Grant program, which dates back to the Nixon presidency and has expended more than $100 billion in federal money since its inception, to little apparent effect. Neither Obama nor other advocates of such programs have explained why extra spending would accomplish what hundreds of billions of dollars so far have not.
Still, Obama isnt alone in ignoring the cultural issues that underpin poverty. Hillary Clintons agenda for combating poverty includes hiking the minimum wage to $9.50 an hour, although fewer than 20 percent of families in poverty are headed by someone working full timemeaning at least 80 percent of families would derive no significant benefit from the policy. And workers in the remaining 20 percent of impoverished families might be worse off, considering that eight in 10 economists believe that raising the minimum wage increases unemployment among the unskilled.
Even Republican presidential nominee John McCainwhose economic agenda focuses on pro-growth policies, like corporate tax cutshas little to say about the family, though the children of many fractured poor families will be in no position to take advantage of such tax cuts.
Comparing the rhetoric of the presidential candidates with the latest stark data on families is a reminder that, until we can at least begin to discuss in the political sphere one of the major causes of economic woes in America today, we cant begin to take the necessary steps to reduce long-term poverty.
Steven Malanga is senior editor of City Journal and a senior fellow at the Manhattan Institute. He is a coauthor of The Immigration Solution.