August 30, 2011
Many uneducated, lower-income men and women have yet another strike against them -- being single. A recent study from the Pew Research Center documents a growing and disturbing trend: while the overall marriage rate is declining, that decline has been much steeper for Americans without a four-year college degree. Less marriage for the less educated means a further widening of the gap between rich and poor.
"The trend for higher-income people to be more likely to marry contributes to [the wealth gap]," says Mariko Chang, an independent consultant for The Insight Center For Community Economic Development, a think tank based in Oakland, Calif., who sees this as a serious problem. Marriage has long been associated with greater wealth -- a 2005 study at Ohio State University found that someone who married and stayed married for 10 years had nearly four times more wealth than their single counterpart. And that gap is even wider when it comes to the median net worth (the difference between what the household owns and what it owes). According to Census data, the average median net worth of married households is seven times the wealth of unmarried households.
In 1970, about 88 percent of college-educated men were married, compared with 86 percent of those without a college degree, a 2 percent difference, according to Richard Fry, a senior economist with the Pew Research Center. By 2007 that gap had grown to 13 percent: 69 percent of college-educated men were married, while only 56 percent of those without a college degree married. Perhaps a better way to illustrate the shift is the growing number of single moms: In 2009 a whopping 41 percent of babies were born to single moms according to the National Vital Statistics Report. "Part of what's going on is that increasingly, the married couples are college-educated men and women who are better off financially," Fry said.
“Low-income youth aspire to marriage, but only when a certain economic bar is met.”
The growing marriage gap is particularly worrisome because the wealth gap between the college educated and those with only a high school degree or less has already been widening in the past 30 years. In the late 1970s, a young worker with a college degree earned 10 percent more than a young worker with a high school degree. By 2010, college-educated workers were earning about 50 percent more than those with just a high school education.
Karina Colin, age 30, and her boyfriend, David Garcia, age 33, exemplify the financial struggles some unmarried couples face. They've been living together for five years and have a three-year-old child. Colin, who didn't attend college, is an orthodontist assistant but gets no health care insurance, nor does her boyfriend, a part-time dental lab assistant. She says they haven’t tied the knot because she still needs to save up enough money to get a divorce from her first husband. She and Garcia take turns providing child care for their children while the other works. Colin earns $1,300 a month while Garcia makes $800, barely enough to cover their $1,100 in rent and other expenses. Colin says she is frugal, rarely uses credit cards and only buys clothes when the children really need them. She's trying to get another part-time job on the weekends to supplement the family's income. "It's hard," Colin says. "Every month I get paid, by the next day, my paycheck is gone."
Contrast that with Mike Sprouse, a 36-year-old chief marketing officer for a large internet marketing company in Chicago. He said finances were a greater struggle when he lived with an ex-girlfriend for two-and-half years. In September, 2010, he wed a teacher and children's book author. They were able to pool their resources to finance major home improvements, combine their 401Ks, which have both earned solid returns, and invest in technology stocks which have fared well. "We got married because we love each other, but the financial benefits of being married have been exceptional for us," he said.
One of the reasons lower-income individuals are nixing marriage is that women today have greater possibilities to earn their own income, says Stephanie Coontz, director of research and public education for the Council on Contemporary Families and author of Marriage, A History. A woman may be uninterested in sharing her income with a high school graduate who doesn't have high earning potential and is likely to be laid off or have periods of job insecurity. And there's also the fear of divorce, often associated with economic stress, which further depletes financial resources. The divorce rate for a high school graduate is 28.5 percent, compared with 17.6 percent for someone with a bachelor's degree and 10.3 percent for someone with a professional degree, according to the U.S. Census Bureau. In addition, there’s less stigma attached to having children out of wedlock, so many lower-income people choose to live with a partner without marrying them, says Chang.
"A marriage license is the best insurance policy you can get."
Another reason, according to Fry at Pew Research Center, is that less-educated young couples tend to wait until they’re financially “ready” to be married. “Low-income youth aspire to marriage, but only when a certain economic bar is met, including a large wedding that signifies the couple has ‘made it,’” he says. “The economic reality of their employment make it very difficult for them to surpass the economic bar, hence marriage remains elusive.” The growing cost of children also contributes to this. Many couples wait to wed until they want to have children, but never feel financially secure enough to do so.
That puts them at a financial disadvantage, though. "A marriage license is the best insurance policy you can get," says Richard W. Johnson with the Urban Institute. If one partner loses their job or becomes ill, they can fall back on a spouse's income. A study by the Urban Institute found that those married and experiencing a work- or health-related disability reduced household wealth by 16 percent, while that number was 42 percent for those who are single. Living together isn't as financially beneficial, since partners can't take advantage of each other's health insurance or retirement benefits or pool those resources. They also may not invest in long-range assets together because they're less confident the union will last, Coontz says.
While falling short of pushing his clients to tie the knot, Robert Henderson, a financial planner in Mystic, Connecticut, says he "clearly outlines some of the benefits to marriage," for those who are reluctant. In particular he'll discuss the economies of scale that two incomes provide, as well as the ability to take advantage of dual health and retirement benefits. But "telling poor people to get married won't solve the problem, because marriage is riskier for them," Coontz says.
Addressing marriage inequality is essential, says Robert Lerman, professor of Economics at American University. He says that children raised in lower-income, single-parent households face greater financial and emotional challenges, making them more likely to struggle as adults, thus reinforcing the cycle. He supports a federal program, the Healthy Marriage Initiative, that’s intended to increase the percentage of children who are raised by two parents in a healthy marriage. It provides grants for classes that teach skills about how to develop quality lasting relationships. Learning how to have a healthy marriage "is one of the most important things in life, yet we're very reluctant as a society to address it," he said.