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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Ending Demographic Winter: Go Back to Church?

Chart Showing Correlation Between Church Attendance and the Birth Rate

As I’ve pointed out previously, Demographic Winter appears to be here to stay in America. The most recent “components of population change” for 2013 from the U.S. Census Bureau shows that the natural change in population (births minus deaths) continues its decline:

2011 — 1,481,360

2012 — 1,425,019

2013 — 1,412,009

The decline in natural change is due to both a decrease in births and an increase in deaths. As the boomers age, there is not much we can do about the ever increasing rise in the death rate–barring some major technological breakthrough that extends our life-spans.

Theoretically, the easiest and best way to tackle a declining natural change is to boost the birth rate. Yet, the persistent decline in the birth rate suggests this may be easier said than done.

One interesting correlation that has been much discussed is the connection between religion and the birth rate. So, I put together the chart above which reinforces this notion by looking at the relationship for the 50 states (minus Alaska and Hawaii). More specifically, it looks at the relationship between weekly church attendance and the birth rate.

As you can see in the chart, Utah, not surprisingly, anchors one end with both the highest birth rate and weekly church attendance. On the other hand, the three Northern New England states (Vermont, New Hampshire, and Maine) have the lowest birth rate and weekly church attendance.

On a personal level, I see this in my small town in New Hampshire. Inside my Catholic church are several families with four or more children (including my own of course). Yet, when I go into the local Walmart, I rarely see families with more than 2 children.

From an economic perspective, this relationship does make sense. Religion essentially extends one’s time-horizon to include multiple generations–children, grandchildren, etc. However, from a secular viewpoint, children are a burden that detracts from “living life to the fullest”–after all, your short time on Earth is all you have. Therefore, children are more likely to be valued in a religious household and less valued in a secular household.

Assuming this correlation is real and not a proxy for something else, what has to happen to get Americans back into a pew? My guess is that it would take a major Christian revival that have often occurred from time-to-time in America’s past. Some thought the 9/11 terrorist attacks would spark the next revival, but it did not.

I don’t claim to know what will start the next Christian revival. All I can do is raise my own children in the Catholic Christian faith and hope that maybe one of them will help find the answer. They will need to since we apparently live at ground zero for Demographic Winter.

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 . . .