The College Wage Premium vs the Marriage Wage Premium

She Did. He Did. They Are.

This is adapted from my article published by the Oklahoma Council of Public Affairs in their July Issue of the Perspective Magazine.

There is a lot of discussion in the mainstream media about the “college wage premium”—the benefit gained by earning a college diploma in terms of one’s long-term earning potential. Going to college provides many benefits to an employer, such as increased skills and a signal of work effort. In economic terms, college reshapes a person’s life by increasing his or her productivity, which higher productivity leads to higher earnings.

However, obtaining a college diploma is not the only life-altering event that can reshape a person’s life. Another major event is starting a family, which begins with marriage. After marriage, behavior often changes for the better, especially for men, as a person takes on the added responsibility of caring for a household. While harder to quantify, married people are more productive, as shown by higher earnings.

Unfortunately, the “marriage wage premium”—the earnings boost stemming from marriage—is not as widely discussed, or lauded, as the college wage premium.

We recently examined data from the U. S. Bureau of Labor Statistics (BLS) Current Population Survey as published in the October 2012 report, “Highlights of Women’s Earnings in 2012.” (PDF) The data in the two nearby tables show a significant boost in earnings from marriage. Indeed, for the majority of workers the boost exceeds that of going to college.

Table 1 shows the median weekly earnings of all workers in America in 2012. A person with a high school diploma earns $652 per week while a person with at least a bachelor’s degree earns $1,165 per week—a difference of 79 percent. The college premium is also higher for men than it is for women.

Table 1 also shows the median weekly earnings of people who have never been married at $609 per week while a married person earns $880 per week—a difference of 44 percent. The marriage premium is also higher for men than it is for women.

Table 1 Median Weekly Earnings by Characteristic

However, the majority of America’s employed work on an hourly basis (59 percent). These workers tend to be blue collar and thus middle class. For these workers, the situation is very different, as shown in Table 2.

A person with a high school degree earns $13.58 per hour while a person with at least a bachelor’s degree earns $18.18 per hour—a difference of 39 percent. The college premium is also higher for women than it is for men.

Table 2 also shows the median hourly earnings of people who have never been married at $10.16 per hour while a married person earns $14.99 per hour—a difference of 48 percent. The marriage premium is also higher for men than it is for women.

Table 2 Median Hourly Earnings by Characteristic

It is very interesting how the marriage premium, on a percentage basis, is actually higher for the majority of working Americans—yet marriage gets so little attention in the media. There is significant social and human capital formation that occurs within a marriage—interpersonal skills, dependability, reliability, integrity, flexibility, and motivation, to name just a few—that has tremendous economic value in the workplace (see the Energy Industry Competency Model).

To further illustrate the economic value of marriage, the data also show the impact on earnings from divorce. For both median weekly earnings and median hourly earnings, a person that has been through a divorce suffers a decline in economic productivity (-12 percent for weekly earnings and -5 percent for hourly earnings). In both cases, the negative impact is highest for men.

An important extension of this work would be to further disaggregate the data to better ensure an apples-to-apples comparison. The workers represented actually fall into each of these classifications in different proportions, thus biasing the results. (For instance, “never married” individuals likely represent a greater proportion of “high school graduates,” which makes it less clear which factor is driving the lower earnings.) Even so, these data from the BLS study are enlightening.

Many people lament the fading of the “American Dream” of living a solid middle-class lifestyle, but fail to connect the decline of the American Dream with dramatic increases in divorce and cohabitation. Both cases result in lower household earnings and erode the middle class. Society simply cannot discard the marriage earnings premium without expecting to pay a steep economic cost.

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The War on Children

Picture of Crowd of Children in Keene New Hampshire

The last few decades in America have not been good ones for children. As a nation we have declared a “war on children” where the needs, wants, and desires of adults take precedence over those of children. Let’s take a brief tour of the battlefield.

First, in 1969, California became the first state to enact”no-fault” divorce into legislation and no-fault quickly spread to other states (pdf). Whether the old system of divorce was optimal or not, its dissolution had the effect of elevating the wants of adults over the needs of children. Even to this day, children generally have no legal voice in divorce proceedings–except as pawns to be fought over by the “adults.”

The story on the negative impact of divorce on children is being told in a new documentary called “Split.” This preview opens with some stunning statistics–over half of all children under the age of 16 will experience a divorce of their parents at a rate of 1 million children per year.

Second, the introduction of oral contraceptives, or “the pill,” in the 1960’s had two impacts on children–one direct and one indirect. The direct impact was that now children were no longer safe in the womb since the pill is an arbortificant–meaning that it doesn’t prevent the fertilization of an egg, it only prevents it from attaching to the mother. As such, the pill is really a chemical abortion.

The indirect impact of the pill was that casual sex was now possible on an unprecedented scale. Along with casual sex comes adultery and, consequently, divorce. The pill and divorce have proven to be a toxic pairing to American families.

Third, the war on children got even deadlier with the infamous Roe v Wade Supreme Court decision that legalized abortion throughout America. Now if chemical abortion wasn’t good enough, now you could legally hire a doctor to go in with the heavy artillery. This is the ultimate expression of putting the needs of adults over that of the children with the outright killing of the child. And, you thought government was suppose to help protect the innocent?!

Now we have moved into the nuclear age on the war on children with the arrival of same-sex marriage where children will be purposely created to serve the whims of adults. By definition, children can’t be born into a same-sex pairing, they have to “acquired” through adoption or a surrogate (be it a male sperm donor or female baby incubator).

The end result is the exploding of the legal system once designed to protect a child’s right to know their biological mother and father. Already, we are seeing bizarre cases such as three parents families. In essence, we have moved into the post-divorce world where a child can be born right into a step-parent situation. Historically, children involved in a step-parent situation received special care and attention.  Now, with same sex marriage, we have decided to impose it on them simply to cater to the perverse desires of adults.

Adding insult to injury, the war on children was greatly accelerated by an activist federal judge who recently ruled that the Constitutional Amendment defining marriage as between one man and one woman in Utah is unconstitutional at the federal level. This act of Judicial Tyranny will have far-reaching consequences and as Jennifer Roback-Morse succinctly put it in her “77 Non-Religious Reasons to Support Man/Woman Marriage” (pdf): “Same-sex marriage amounts to a hostile takeover of civil society by the state.”

Now, decades since the war on children began, the socioeconomic consequences are coming home to roost in the form of Demographic Winter. More specifically, lets look at some demographic data in Maine. Why Maine? Maine is a very interesting case study since it is demographically-neutral over time.  In other words, since it is overwhelmingly white and has been since the founding of the state then changes in variables are more easily identifiable without the worry of a shifting base.

As shown in the chart below, Maine saw robust natural population growth in the 1950’s adding approximately 12,000 Mainers every year as births easily outnumbered deaths. But starting in 1960, something ominous began to take hold. As noted above, the introduction of the pill appears to have played a major role in the decline of births which cut the yearly natural population growth in half.

Roe v Wade and no-fault divorce arrived in Maine together in 1973 although the immediate impact was muted by the largest in-migration into Maine in recent history with net migration of 68,922 people that decade. Many of these people “from away” in the 1970s were young, back-to-the-earth types who eventually went on to have families in the 1980s helping create the echo-boom generation.

Chart Showing Maine Births vs Deaths 1950 to 2012

Maine Births vs Deaths 1950 to 2012

Despite continued in-migration, Roe v Wade and no-fault divorce eventually caught up creating another prolonged slump in the birth rate that continues today. In fact, the drop in the birth rate has fallen so low that in 2012 Maine became the second state to record more deaths than births (West Virginia being the first). This dubious distinction puts Maine firmly in the grip of Demographic Winter.

Yet, it doesn’t have to be this way. In Maine, according to the Guttmacher Institute, approximately 2,800 babies are aborted each and every year. If those babies were born instead, Demographic Winter would not yet exist as this would generate a net natural population growth of about 2,600. This would not put Maine back to the 1950s, but it would certainly buy some much needed time to put the other genies back in their respective bottles–the pill, no-fault divorce and same-sex marriage.

Unfortunately, the war on children rages on in Maine and in states throughout America. Until very recently, it appeared that the war might be reaching a turning point with 30 states having Constitutional protections on traditional man and woman marriage (not including the potential overturning of the Utah Amendment). The recent federal ruling in Utah now casts doubt on that.

America has been barreling down one of the largest social experiments in history on the most innocent of victims–children. If you are among the lucky to survive the trip down the birth canal and have an intact traditional family, you are now the exception. What are the consequences of this monumental frontal assault? No one knows, but we are all about to find out, ready or not . . .

Miley Cyrus and Divorce

Miley Cyrus [Feat. RockMafia]

I’ve long admired country music star Billy Ray Cyrus’s family as they seemed to be the exception in Hollywood. They publicly professed their faith in God and their love and support  for one another. Their famous daughter Miley, who at age 11, was catapulted to fame by the children’s television show Hannah Montana seemed lucky to have such principled parents looking out for her.

Her dad was always there right by her side singing with her on stage or co-starring in movies with her and her mom Tish managed her career. So, when I read that her parents were divorcing, I wondered how this might affect Miley. A young adult now, she no longer needs her parents to sign off on her career choices.

Her rebellion slowly began to emerge a couple of years ago with her revealing clothing choices, PDA and cohabitation with boyfriends, pictures of her reported drug use and her recent sexually explicit performance at the Video Music Awards. In recent pictures, her tongue is stuck out and her clothing looks like it was put through a shredder leading to the obvious conclusion that she is in great emotional pain.

Much of that emotional pain might be wrapped up in the family turmoil leading to her Mom filing for divorce. In June, she posted Twitter messages asking her Dad to tell the truth or she would tell the public. And when there was no response by Billy Ray, she posted a picture of her dad with a woman who is not her mother. To make it even worse, a couple years back, there were rumors floating through the media that her mom had an affair with a musician which prompted talk of divorce for the couple.

Thankfully, in August, the Cyrus couple publicly said they were halting divorce proceedings to try and work on their marriage. However, whatever has gone wrong with their marriage has presumably taken an emotional toll on Miley and her siblings and the public is seeing it play out.

We can observe the pain of a girl like Miley who is in the public eye but, with the divorce rate (3.6 per 1,000 people) now up to over half of the marriage rate (6.8 per 1,000 people), how are the children of these unions responding to the great upheaval that divorce inflicts on a family? How are they performing academically and emotionally? Will they be more likely to cohabitate and not marry?

The real costs associated with divorce include costs in terms of government growth as parents with children outsource expenses to the government in the form of Medicaid, TANF, SCHIP, Child Welfare, etc. These are expenses that could obviously be paid for and reduced if there were a watchful mother and father in the home. A study by Ben Scafidi, The Taxpayer Costs ofDivorce and Unwed Childbearing (pdf), estimates the taxpayer cost of divorce and unwed childbirth by state concluded that divorce costs, for example, Oklahoman taxpayers $430 million.

Further, in an NBER paper released this month, Cohabitation and the Uneven Retreat from Marriage in the U.S., 1950-2010 (pdf), economists Shelly Lundberg and Robert A. Pollak find:

The poor and less educated are much more likely to rear children in cohabitating relationships. The college educated typically cohabit before marriage, but they marry before conceiving children and their marriages are relatively stable.

Further, they find:

Marriage is the commitment mechanism that supports high levels of investment in children and is hence more valuable for parents adopting a high-investment strategy for their children.

The 1996 Welfare Reform Act which turned AFDC (Aid for Families with Dependent Children) into TANF (Temporary Assistance for Needy Families) spelled out four goals, the fourth which was to “Encourage the formation and maintenance of two-parent households.” Of the $31 billion in grants given by DC to the states for TANF in 2012, only 1 percent of this money was spent on programs to support two-parent families. Unfortunately, most government entities seem disinterested in reducing reliance on welfare.

Everyone should want parents to have a “high investment strategy” for their children. After all, having children that are emotionally well-adjusted, smart, compassionate and ambitious are some of the most important traits we want to see in our future entrepreneurs, workers and leaders. When children come from a two-parent home, the probability that these types of children will emerge significantly increases.

They also will emerge wealthier. Pat Fagan of the Family Research Council, who testified this month at an interim study conducted by Oklahoma House Speaker T.W. Shannon, reports that of those households with children, it is in married, intact households where the median income of $82,270 outstrips that of the next highest household income by 25 percent, or $16,454.

The development of no-fault divorce ultimately changes people’s time horizons. When people aren’t forced to prove why a divorce is in the best interest of the man, woman and child, they no longer think of marriage as a lifetime commitment. As a result, the data show that people are choosing to not even bother marrying despite the overwhelming economic evidence that over their lifetimes, they will be much poorer for not doing so.

If we as a culture embrace cohabitation and divorce instead of lifetime marriage, we are upsetting the singular institution (outside of the rule of law) responsible for our moral and durable culture.

A shorter version of this blog appeared in the Edmund Sun: “A High-Investment Strategy for Oklahoma Children”