Lastly, there is the delay of marriage as well as its avoidance altogether. Pew Research estimates that a quarter of today’s 20-year-olds in the U.S. will still be unmarried by the age of 45-54, past the years of reproductive possibilities. And with the average age of those first-marriages that are happening, approaching 30 for men and 28 for women, fewer available years of reproduction means fewer children will be born.
In the short term the consequences of the low birth rate will be limited. There will be fewer strollers sold, fewer daycares built and fewer school children. In the longer term, assuming the trends of low birthrates don’t reverse, economic growth tends to coincide with families and babies being born. Although it is difficult to say whether having children leads to economic growth or economic growth leads to kids being born, there is definitely a correlation between economic cycles and baby-making. Looking at the graph above we see that those periods of sharply declining birth rates were periods of low economic growth in the U.S., namely the 1930s and the 1970s. The periods of greatest economic activity in the last century – generally, the 1920s and 1950s, and the 1980s to a lesser extent, were periods when families were having many children.
It seems that family growth is both a push to and a pull from the economy. The pull is when a good economy gives a family more confidence that they will have the financial means to support another child to clothe, feed and shelter. But the push is also important. When a couple does have that child, there is then a strong incentive to produce for society and earn the necessary income to pay for that child. I believe that the very high economic demand from children and marriage is perhaps the most important factor that forces economic productivity. A man or woman who provides only for himself or herself may be able to finance a lifestyle on $25,000 a year. With a spouse additional resources are required, and with a child still more.
Taken in isolation, today’s era of fewer marriages and fewer children being born results in less economic output, at the macro level because fewer schools and houses are needed, but also at the micro level, when unmarried men and women choose to lead a less “growth-oriented” career and life a lifestyle with more financial freedom than could exist with marriage and children.
Research shows that this is indeed the case - household incomes are higher for married couples than non-married couples and they are generally higher for those who have children in the household compared to those who don’t.
Data from the Census Bureau’s Current Population Survey of 2013, found that the median income of U.S. households with a married couple with a child under the age of 18 living there was $85,087. A married couple with no children at home had a median income of $70,995. Unmarried couple households without children earned an average of $62,126. Interestingly, unmarried couples with children earned an average of $50,031, or more than $12,000 less than those without children.
Although this may deserve a broader discussion on another day, we have to recognize that the Census Bureau’s stated incomes here are cash incomes, and do not reflect non-cash subsidies, tax rebates, and non-cash benefits that lower income individuals with children often receive. We know that a large percentage of unmarried “single” taxpayers (cohabitating or not) with children are able to subsist on a low cash income, relying in large part on heavily subsidized housing, day care and healthcare benefits, food stamps, the earned income credit, etc. The share of families with low-cash income, high non-cash income, greatly skews the average income downward for this section of the population.
Continuing on the data from the survey, the average single male, not married or cohabitating and without children, earned a median income of $36,600 and a female in the same circumstances earned an average cash income of $26,355.
If we add together the average incomes of single male householders and single female householders, the average income is about $63,000, or more than $20,000 less than a married couple with children. And the high incomes of married families are in spite of the fact that a sizeable portion of spouses do not work outside the home do not work outside the home. According to the Bureau of Labor Statistic, in 2013 less than 60% (59.1%) of the married couples with children under the age of 18 had both husband and wife earning an income.
If we compare the average $85,087 income for such families with the fact that in at least four out of ten marriages with children where one spouse is completely out of the workforce, we see that the working husband or wife is likely earning a substantially higher income, than a single man or woman. While I could not find specific data on this this, based on the share of single-earning families, I estimate that the average income of a sole-earner married man or woman with children would be at least $70,000, maybe closer to $75,000 or $80,000. Such an income is roughly twice what a single man earns and about three times what a single woman earns. Additionally, Census Bureau surveys find that when couples marry, the family income trajectory increases at a faster rate when compared to non-marrieds. Getting married (as well as having children), increases the speed at which an individual’s earnings increase as well as his or her peak earnings.
After I wrote the last article I was reminded of how in the past the bosses would push their single male workers, especially salesmen, to get married and if already married, to have more children. While this inquiry into family circumstances may be less acceptable today, the reasons for such pressure were two-fold. First, a married man is more likely to be a stable employee for a company. But secondly, managers know that a married man, and especially a married man with children, will have larger financial demands. Bosses know that more financial demands will usually lead workers to work harder to earn more to satisfy those demands.
So what does all this mean? Well, there is still much more to say about the topic of the topic which I believe will have an extremely powerful impact on the country’s economy. The decline of marriage has already had a strong impact on society, with greater impact to come, and in coming years the decline of marriage and parenthood will have a strong impact on the economy as a whole. I’ll continue with this topic next time.