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Erosion of traditional families is affecting income inequality
Economist Robert Lerman believes that our economy is failing because of failing families. Parents and children are financially worse off when they are raised outside of traditional homes. Lerman explains how we fix this. - photo by Deborah Sutton
Income inequality may be a hot topic today, but it has been on Robert Lerman's mind for decades.

Lerman was a staff economist working on welfare, Social Security and tax credit programs for the Congressional Joint Economic Committee in the 1970s when he first realized that changing family structures were impacting income equality in the United States.

At the time, everyone was writing about single moms, he recalled, but he saw another factor: the role of fathers in influencing the economic success of children. Since then, the now-71-year-old Lerman has become a pioneer in researching how fathers and the erosion of the family factor into the countrys growing income inequality story.

Two notable differences in family life in the United States have emerged in the past 60 years: average, middle-class families arent economically flourishing and there are fewer traditional family units than ever before. Lerman, now a professor of economics at American University and a senior fellow at the Urban Institute, says these two factors are linked. Changes in family structures have sabotaged the financial confidence of middle-class Americans and led to the decline of working-class men in the labor market, say Lerman and Bradford Wilcox in their 2014 paper for the American Enterprise Institute, For richer, for poorer: How family structures economic success in America.

The erosion of the intact family as defined by Lerman and Wilcox as a retreat in marriage, an increase in cohabitation and out-of-wedlock births, a prevalence of single-parent homes, and a rise in step-families has affected the economic outcomes of children and thus led to further income inequality between American families.

Young men and women from intact families enjoy an annual intact-family premium that amounts to $6,500 and $4,700, respectively, over the incomes of their peers from single-parent families, wrote Lerman and Wilcox. Men and women who are currently married and were raised in an intact family enjoy an annual 'family premium' in their household incomes that exceeds that of their unmarried peers who were not raised in intact families by at least $42,000.

Last week, Robert Lerman spoke to us on what is affecting the decline in marriage and intact families, how thats affecting the economies of families and the country, and how to address it.

Question: What is your take on why marriage is important for the economy?

Lerman: Marriage is important for the economic welfare of the country, but it is most critical for middle and lower-middle income people. Often, when you hear public figures, political people and even some researchers talk about inequality, they generally leave out this factor out or downplay it. To me, its the first order of importance. There are other things in our economy that may be affecting relationship stability, and we need to look at those as well, but the thing is that in the past 40 years, weve had economic ups and downs and we didnt have the erosion of the family as much as weve had today.

Question: What is it about marriage that affects a familys financial bottom-line, or their economy?

Lerman: First and foremost, you have two earners who are sharing the household. While you can have those two earners in a cohabitating situation and our cohabitation rates are rising but cohabitation in the United States tends to be more unstable than marriages. The second thing about marriage is that since there are lower risks of breaking up, you tend to have links with in-laws, communities and sets of friends that are helpful to financial stability. The third thing is that marriage gives each party the confidence that investing in skills and other elements will pay off in the long-term. And finally, men especially feel a greater sense of responsibility and a need to settle down when they marry. Men who are married tend to put in more time and effort at work. That alone has a dynamic effect because as they work more, they gain more work experience, which improves their long-term economic prospects.

Question: There are two different camps in explaining the decline in marriage: Either economics have affected people's willingness to get married, or people's changing values have lessened the importance of marriage, which has affected the economy. Which camp is true?

Lerman: We believe both are true. However, the economy cant be the whole explanation because weve had worse economies and still had more stable family outcomes.

Question: What are the other factors that have led to the decline?

Lerman: Well, I think its the evolution of a greater acceptability of non-marital births and acceptability of cohabitation. One of the big problems of cohabitation is that when the educational elite cohabite, they wait before having children until getting married. But when less-educated people cohabite, they dont wait until marriage to have children. This leads to a trend in single parenthood within low-income families. The weakening of the marriage situation is hurting the very people who need it most.

It has to do with values. Divorce has stabilized in recent years. But I think there has been a general tendency toward trying to be personally fulfilled relative to other obligations. If you ask me whats the single element, Id say changing in priorities is one of the key things.

Question: Are there differences in the way men and women perceive marriage and how that has changed over time?

Lerman: A lot of women from lower-middle income families who arent married are not only worried about the economic reliability of men, but other factors like infidelity. You only have to look at movies and media to see how often there are extramarital affairs. I actually think that men often are more eager than women to get married. Women arent as trusting. I mean, there are a hundred stories, so its really hard to generalize, but its not always the case that its the woman who wants marriage and the man doesnt. Were seeing a lot of cases with the opposite.

As marriages have become less stable and in some areas marriage is disappearing altogether, the learning about what makes a stable marriage that children have while growing up is unavailable to a lot of young people. And were not helping them in that respect. Right now, all of the help is on things like pregnancy prevention and not on healthy relationships. The absence of learning through their own experience is likely to have weakened their ability to have good long-term relationships and their feelings on why stable, long-term relationships are important for the future.

Question: You talk about how the decline in marriage and the decline of intact families have influenced families individual economies, but what is the larger impact of the decline of marriage on the U.S. economy as a whole?

Lerman: Well, what weve ended up doing is raising taxes to support the transfer programs and higher taxes affect middle- and middle-low income families. Its hard to exactly trace the decline of intact families to our slow economic growth, but I would suspect there is some connection. Also, fewer married men may be leading to more instability on the job and more instability in our hiring practices. Today people are moving more quickly in and out of permanent jobs, and so employers have become less likely to provide committed jobs. The other thing is that low-income men are doing the worst in our current economy, so in a distribution sense, thats not good for our society.

Question: In your report, you talk about policy recommendations that would help change our system and our ideas on marriage. Have any of those recommendations changed? Whats most important?

Lerman: Well, Im not as oriented toward family-friendly tax incentives as a solution. I do favor trying to improve the way in which we help young people, especially young men, enter into rewarding careers through the expansion of work-based learning. Young men would benefit greatly from apprenticeship-type programs where they can learn and earn at the same time and become trained for a high-skilled career.

I think we need to experiment more with educational programs in high school that teach relationship skills. We need to teach what it means to have a healthy relationship. We would have to try different things. It might not work right away. But we continue to teach first grade even if a lot of the first graders dont learn as much as wed like. I think we need to make this a part of our long-term strategy.