Cato Online Forum

Shoring up the Middle Class

By Don Peck
November 2014

I’ll admit upfront that I’m going to cheat on this assignment. I’m not writing about what I believe to be the surest or simplest ways to speed long-term growth. (If I were doing that, I might start by aggressively encouraging much larger numbers of highly skilled and entrepreneurial immigrants to settle here.) Nor am I recommending a single policy change, but rather a change in focus for many of the country’s economic and social policies.

What I’d like to address is the cultural, economic, and familial dysfunction that is steadily climbing from the lowest socio-economic classes into the broad American middle class. If this climb is not reversed, I find it hard to imagine any high-growth future.

In the 1970s, the family lives of Americans with a high-school diploma but not a college degree closely resembled those of college graduates. Marriage and nuclear families were the norm. But today, as the sociologist W. Brad Wilcox writes, “the family lives of today’s moderately educated Americans increasingly resemble those of high-school dropouts, too often burdened by financial stress, partner conflict, single parenting, and troubled children.” Between 2006 and 2008, among moderately educated women, 44 percent of all births occurred outside marriage, not far off from the rate (54 percent) among high-school dropouts; among college-educated women, that proportion was just 6 percent. The same pattern — families of high-school graduates coming to look like those of high-school dropouts, rather than those of college graduates — emerges with norm after norm: the percentage of 14-year-old girls living with both their mother and father; the percentage of adolescents wanting to attend college “very much”; the percentage of adolescents who say they’d be embarrassed if they got (or got someone) pregnant; the percentage of never-married young adults using birth control all the time.

Wilcox is hardly alone in noticing this trend. It has been documented, exhaustively, by scholars across the ideological spectrum, from Charles Murray to Kathryn Edin. It is deeply worrying, because the college graduates who seem immune to familial dysfunction make up a minority of our society: the broad center is what’s changing.

Intertwined with many of the cultural and familial changes are changes in the work lives and financial prospects of people without a college degree. The economic prospects of this large group have fallen over the past several decades, especially among men. In 1967, nearly every prime-age American man with only a high-school diploma was working; today, about one in five is idle. According to Michael Greenstone, an economist at MIT, real median wages of men have fallen 28 percent since 1969, once you account for the men who have washed out of the workforce altogether.

Fading prospects and economic insecurity are not the sole cause of the changes in the cultural habits and family lives of the lower middle class, but they are an important cause. In a recent Pew poll, for instance, 78 percent of never-married women said a steady job was “very important” to them in choosing a spouse or partner, more than for any other factor. Marriage, famously, has become a “capstone” rather than a “cornerstone” of life in working-class communities: it is viewed as a sign you’ve arrived, rather than as an institution that can help you get where you’re going. A raft of sociological research suggests that women typically will not marry men with poor economic prospects, though they do end up having children with them.

Children, ultimately, are the reason I’ve been going on about family matters in an essay that’s supposed to be about economic growth. An enormous body of research indicates that one of the worst things for children is an unsettled family. By the time the average out-of-wedlock child is five, his or her mother will have had two or three significant relationships with men other than the father, and the child will typically have at least one half-sibling. This kind of churning is disastrous — heightening the risks of mental-health problems, trouble at school, teenage delinquency, and more. The problems can begin to build almost from the moment of conception: emerging evidence suggests that maternal stress during pregnancy — the sort that unsettled circumstances and financial insecurity bring — can carry lifelong consequences for a fetus, including a higher incidence of developmental disorders and mental illness. In the two-parent households of college-educated America, children are born into highly predictable lives, and they are lavished with attention and resources. In the rest of the country, while they are loved just as well, the circumstances of their upbringing are very different — and increasingly so.

How do these developments affect economic growth? Human capital is of course the foundation of any modern economy. When large and increasing numbers of children grow up in circumstances that impede their development, the economy’s potential is slowly leached away.  And, of course, as these same children struggle as adults, and adopt the mores and habits of their parents, cultural separation, in tandem with income divergence, could become self-reinforcing across generations. That would create a toxic political environment, characterized by instability, an unhealthy preoccupation with pie-slicing, and myopic policy choices across the board.

As a society, we have spent a lot of energy and a lot of money trying to bolster the prospects of young children from low-income families (through programs like Head Start), and to improve educational opportunities for children across the board (through public-school improvement and wide access to college). These are, in the main, worthy efforts, but I would submit that they begin too late. Academically and behaviorally troubled children are often the products of troubled families; if we can reduce the incidence of the latter problem, the former will ease.

The defining period in many lives begins in late adolescence and stretches through early adulthood: it is during this period when many people will make choices about work and sex and relationships that will set them — and, eventually, their children — on very different life trajectories. Yet our public policy is remarkably inattentive to this period. Sure, we promote college access through loans and grants, but four-year colleges are simply not an answer for a large part of the population: the proportion of young people who graduate from college has risen excruciatingly slowly for more than three decades, despite massive efforts to send more kids to college. That proportion is only about a third today.

Ron Haskins and Isabel Sawhill have shown that young people who graduate from high school, find full-time jobs, and wait to have children until they are over 21 and married are very likely to lead middle-class lives — and these same circumstances create an environment in which children can flourish. The real imperative, I believe, is to focus harder, as to our public policy, on launching young adults more reliably into good full-time jobs and stable family relationships (the two go together).

Young, working-class men should be a particular focus, because far too many are now simply adrift, and because many of the cultural problems I’ve described in this essay can, in one way or another, be traced back to them. In my own reporting, I’ve seen countless young men, in Reading, Pennsylvania or among the exurbs of Tampa, with no real plan for their lives. They’d found school ill-fitting, and once disgorged into the workforce after high school or an indifferent semester in community college, had little idea what to do. The job opportunities immediately available were typically poor, with low wages and low prospects for advancement. Faced with these prospects, many drifted in and out of work, and in and out of relationships. They became fathers, and wanted to be good ones, but wanting is not always a sufficient strategy.

What might a new focus on steering young adults into stable careers and stable relationships entail? First, a new emphasis on increasing the odds that non-college men and women can find their way into steady work and, ideally, a good trade or career. That means radically expanding the nation’s vocational programs, apprenticeship opportunities, and other job training programs focused on the young. Adjusting for inflation, government support for employment and job training programs has fallen about 75% since the 1970s. We now spend more than $20 on college grants, loans, and tax-breaks for every $1 on these programs: that proportion is far out of whack. It also means more aggressive wage support for low-end jobs, primarily to encourage young people who have few other good opportunities to seek and keep those jobs, rather than drifting in and out of them. The Earned Income Tax Credit is still primarily focused on people already raising children (often on their own): we need support for young adults who don’t yet have them, in order to encourage work habits and to raise incomes enough so that they will marry before becoming parents. (I am agnostic, for now, on whether we accomplish this through an expanded EITC, direct wage subsidies to employers, or perhaps an expanded minimum wage. Each of these approaches has pluses and minuses.)

Second, it entails the broad encouragement of marriage and of dedicated, long-term relationships generally. I believe that improving early career prospects is in fact the best way to do that, but there are others as well. The tax code, for instance, could be tweaked to make marriage more economically beneficial, especially to low- and moderately-low-income people.

Finally, it entails the prevention of accidental pregnancy, before young people want and are ready for children, through the aggressive promotion of IUDs, which are vastly more reliable than condoms or the pill. Likewise, while abortion should not be actively encouraged by our society, it should be readily available, without preconditions that subtly pressure pregnant women to avoid it.

From an economic standpoint, all of this is a very long game. The measures I’ve outlined are primarily geared toward people who are unlikely to become highly productive workers, in the classic sense: the direct impact on growth is likely to be modest, given the outlays involved. But in the long run, these measures — if we undertake them wholeheartedly — should provide better, more stable childhoods for countless children, and a much thicker base of human capital in the decades to come.

The opinions expressed here are solely those of the author and do not necessarily reflect the views of the Cato Institute. This essay was prepared as part of a special Cato online forum on reviving economic growth.

Don Peck is the deputy editor of The Atlantic and the author of Pinched: How the Great Recession Has Narrowed Our Futures and What to Do about It (2011).