Marriage and the Economy
by Henry Potrykus, Patrick Fagan, Robert Schwarzwalder
Issue 216– November 28, 2012
Government revenues come from the taxation of the economy. But U.S. economic growth is and will continue to be a fraction of that of the pre-1960′s era (cf. Chart 1) because of the breakdown in marriage. As a result of that breakdown, more and more citizens are pushed into dependency on the government.
Chart 1: Slowdown in Real GDP Growth
Bureau of Economic Analysis NIPA
This slowdown in economic growth coupled with the increased numbers of dependent citizens makes closing the deficit impossible for President Obama or anyone else who uses the present welfare state as the economic model to be sustained. It cannot be. This reality arises from two facts: 1) We have proportionately fewer children, as shown in Chart 2. 2) Up to 20 percent of these children are unequipped to compete in the modern economy because of a lack of essential skills formed within the intact married family
Chart 2: Number of Children per Household
Derived from U.S. Census Current Population Surveys
Families are in decline. 55 percent of U.S. children entering adulthood in 2008 had experienced the breakup of their family of origin. Also we have fewer men who experience the “marriage premium.” This deprives the economy of the remarkably large effect of marriage, a 0.9 percent income increase per year for married men, which, to put it in context, is nearly as large as the income increase for years experience on-the-job [1.2 percent per year, a human capital effect].
Chart 3: Decomposition of American Households
Derived from U.S. Census Current Population Surveys
The decline in the growth rate in the economy is thus explained by these facts about the family.
Chart 4 illustrates the degree to which married families are the essential contributors to wealth generation. Their income and savings immediately translate into revenue for government and capital for the economy. Thus we can now see that the transition of our country since the 1960′s from a nation of intact families to a nation with a majority of broken families produces a much-weakened economy.
The families of this new economy cannot financially support our needs the way they once could. Hence, government has had to go overseas more to find purchasers for its debts, debts that arise from continued high expectations by both citizens and government. Our $1.5 trillion deficit–$1.5 trillion is 10 percent of our economy-was only one-third financed by American households; another third was financed by foreign lenders such as Saudi Arabia, China, UK and Japan; and the final third was covered by the Federal Reserve Board purchase of bonds, it simultaneously “adjusting its balance sheet.” Many are concerned with the increased market and inflation risk associated with this new reality..
Chart 4: Median Income and Net Worth by Family Type
Derived from Fed. Reserve Board Survey of Consumer Finance 2007
Increased inflation (risk) combined with low interest rates punish savers (mainly intact families).This does not build a strong society nor a strong economy. Because we need a society of savers and investors, we need a society of stable, married families (Chart 4). Furthermore, married families who worship together further lower the risks of economic instabilities both for their own families and for the nation at large, especially during serious downturns.
The key investors in both physical and human capital throughout America’s history have been stable, married families. As shown in Chart 1, from 1980 to 2010, there was a decrease in annual GDP growth. During these decades that average growth was roughly three percent. From 1980 to 2010, population growth contributed more than one percent to this three percent growth (cf. Chart 2). However, due to the post-1960s/1970s massive rise in contraception and abortion, the number of children in the average American household fell by 50 percent (cf. Chart 2). This now-embedded population trend will give us barely one-half of one percent of GDP growth contrasted to the prior one percent.
In other words, children from the relatively larger families of the 1960s became the workers of the 1980s and on and contributed to growth at the one percent level. However, their children [of the smaller 1990s families] will yield the smaller growth of one half of one percent from the 2010s on.
For human capital the story is similar. Human capital contributed 0.5 percent to 1.5 percent to GDP growth each year in previous decades, up to roughly 2008. With the retirement of the baby boom and their replacement with neglected and undercapitalized [human capital] generations most of this growth component shall be wiped out.
With $2 million as the median lifetime earnings of the U.S. household, the long run effects of the sexual revolution of the 1960s and 1970s [~$100 trillion: $2 million x 50 million heads-of-households lost] dwarf any other factor in the macro-economy.
Government actions in the last five decades have worked to construct a different society, one aspect of which is this new economy. Government’s actions that have encouraged the formation of non-married and less child-centered families:
1. Family planning policies have undermined fertility rates and simultaneously discouraged marriage and encouraged out-of-wedlock births. Among its main target group, the poor, marriage has virtually disappeared, and been replaced with serial cohabitation.
2. Through the introduction of no-fault divorce, marriage law changed from protecting the unity and stability of marriage to empowering the partner that wanted to break it while simultaneously disempowering the partner who wanted to keep the marriage intact.
3. The Supreme Court in Eisenstadt v. Baird (1972) massively undermined married family as the American norm [see Chart 3] by inventing a political right to sexual intercourse outside of marriage for single adults. This contributed massively to the ensuing demographic and human capital disaster, especially when coupled with its Roe v. Wade (1973) decision. By misshaping the American family through a fundamental undermining of family law, the Supreme Court constructed the legal, social, and moral framework that has produced our new economy.
4. Sex education in public schools changed from forming youth to confine the act of sexual intercourse to the institution of marriage to propounding a very different sexual regime, one in accord with the Supreme Court’s Eisenstadt v. Baird decision: teaching teenagers how to have sexual intercourse while minimizing the act’s probability of pregnancy.
Because larger families are a greater contribution to the economy than smaller families, U.S. family planning policies have undermined the U.S. economy. The sensible economic policy is to grow intact, stable married families instead of favoring sexual unions that are not child-centered.
1. A sane government would work to reverse all laws, policies and programs that undermine fertile marriage such as no fault-divorce, abortion, education formation of high-school students in extra-marital sexual intercourse, and family planning services that have resulted in a massive increase in single-parent families, and the loss of well over 50 million workers.
2. Tax policies should support rather than penalize marriage and family formation.
The long-range solution to our economic difficulties is to grow intact married families rather than growing government.
Henry Potrykus, Ph. D., Senior Fellow, Patrick Fagan, Ph. D., Director. Robert Schwarzwalder, Senior Vice President, Policy, at the Family Research Council.