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Where Have All The Families Gone?


Economics

WHERE HAVE ALL THE FAMILIES GONE?

The rise in single-parent households will keep rocking the nation

Whatever the merits of Vice-President Dan Quayle's arguments on morality and the family, it is certainly true that the American family has been radically transformed over the past three decades.

Simply put, the traditional, two-parent family is under siege. It is being displaced by the single-parent household. The percentage of white children living with one parent has almost tripled, to 19.2% during the past three decades, and it has more than doubled among blacks, to 54.8%. About half of all marriages now end in divorce, and out-of-wedlock births have rocketed. Consider this: A majority of children born today will spend at least some of their youth in a single-parent household.

Why has family structure changed so dramatically? Many reasons, including laws making it simpler to divorce and a debilitating urban drug culture that tears apart many families. To Christopher Jencks, sociologist at Northwestern University, the stable, two-parent family lost ground to broad cultural changes, such as more permissive attitudes toward sex and marriage.

But for economists, the most potent reasons for the change are economic. They say that the surge of women into the labor force and the stunning drop in the wages of less educated men account for much of the decline in the traditional family. Millions of men became poorer breadwinners, and millions of women became more financially independent. "It's a pincer action at work," says Robert D. Plotnick, economist at the University of Washington. And if the pincer continues to create more and more single-parent families, economic growth will suffer.

LESS INCENTIVE. From the early 1970s, global competition woke up many a stodgy U.S. manufacturer. To stay competitive, they streamlined their domestic production and opened new operations abroad. As American businesses went global, the competition from low-cost, foreign labor drove down the wages of less-skilled workers at home. For example, the wages of men with a high school education fell by 20.7% from 1973 to 1991 (after adjusting for inflation). Those with less than a high school education saw their paychecks cut by an amazing 26.4%, and the wage decline for young urban black workers came to a mind-numbing 50%.

A good part of the sharp decline in marriage rates among blacks can be traced to a sharp drop in the employment opportunities of young black men, argues William J. Wilson of the University of Chicago. These men are less able to support a family. Economists agree with Wilson that this economic factor played a role, although the size of its effect is hotly debated.

The huge influx of women into the job market was itself a result of economic forces. The growing service sector offered women plentiful job opportunities. And the economy's stagnant productivity performance since 1973 forced women into the job market to shore up their family's eroding standard of living. Female participation in the labor force, the proportion of women working or looking for work relative to women in the population as a whole, soared from 38% in 1960 to almost 58% in 1991. (Since 1990, female labor force participation has declined a fraction as more women had babies and the recession cut jobs.)

And as women moved into jobs, they steadily moved up the earnings ladder. Women's earnings as a percent of men's wages for full-time work in all occupations reached an all-time high of 71% in 1990, up from 60% a decade ago. So from an economic perspective, women have less of an incentive to get or to stay married. "The propensity to split rises when women are doing better," says Gary S. Becker, economist at the University of Chicago, BUSINESS WEEK columnist, and a pioneer in the economics of the family.

WELFARE MYTH. Surprisingly, although many people believe the welfare system is behind the rise in single-parent families, most economists now agree that the impact of welfare has been limited. True, welfare payments do reduce a mother's reliance on a husband's earnings. And yes, single motherhood did increase as welfare payments rose between 1960 and 1970. But single parenthood continued to spiral higher even after benefits, adjusted for inflation, declined after the mid-1970s, points out David T. Ellwood, professor of public policy at Harvard University. Adds Isabel V. Sawhill, senior fellow at the Urban Institute: "The evidence suggests that welfare can explain only a small piece of the increase."

Clearly, more women working and globalization have reaped huge rewards for the U.S. economy. But some economists worry that the rise in single-parent households also carries an economic price. For one thing, poverty in the U.S. could become more intractable. Single-parent families are overwhelmingly poor. The poverty rate of married-couple families with children was 7.8%, compared with 44.5% among female-headed households.

More troublesome still, children of single-parent households often don't get enough in the way of good education and adequate health care, a drag on their economic potential as adults. Recent research shows that children of single parents are less likely to complete high school and more likely to have low earnings and low employment stability as adults than children raised in two-parent families. That's why many economists believe that both the government and the private sector will need to invest more in "human capital" in the 1990s.

The rise of single-parent households will crimp spending on such big-ticket items as houses. And a few economists even fret that a weakening of family ties among the better-off could put a further drag on the already anemic U.S. savings rate. Divorce and out-of-wedlock births are fraying the bonds between generations. The elderly have every incentive to consume their wealth and leave less to their heirs, reducing the pool of accumulated savings, says Laurence J. Kotlikoff, economist at Boston University.

The word "economics" comes from the Greek oikonomia, or household management. Economists this century have tended to ignore the family, concentrating on inflation, recession, and recovery. That could change as the transformation of the American family begins to affect living standards as much as the swings of the business cycle.Christopher Farrell in New York


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