How to keep millennials from falling into poverty
Posted July 9
A record number of millennials who are parents, 55 percent, are having children before marriage, despite research that clearly suggests those following a more traditional sequence — get at least a high school diploma, find a job, marry and then have children — are less likely to wind up in poverty.
Just 3 percent of older millennials were impoverished in their prime young adult years — between ages 28 and 34 — if they followed that "success sequence." That's according to an analysis released recently by the American Enterprise Institute and the Institute for Family Studies. Those who did not marry or have children but who earned at least a high school diploma and work full-time were only slightly less likely to avoid poverty; 92 percent of these "on-track" young adults made it into middle- or higher-income groups, while 8 percent are poor.
The analysis studied one segment of millennials, the older members who were born between 1980 and 1984. The millennial generation is generally considered to include those born between 1981 and 1997, though definitions can differ slightly.
Millennials are the largest, most diverse and best-educated generation alive today, according to Wendy Wang, director of research at the Institute for Family Studies. She co-wrote the new analysis, "The Millennial Success Sequence," with W. Bradford Wilcox, an associate professor of sociology at the University of Virginia who is also a visiting AEI scholar.
Wang noted key differences in life sequence for these older millennials compared to baby boomers when they were the same age: 67 percent of boomers married first, compared to 40 percent of the millennials. Similarly, 20 percent of the boomers had a baby first, compared to 33 percent of the millennials. And 27 percent of those millennials are unmarried and childless, compared to just 13 percent of boomers.
They found that "even millennials from low-income families are more likely to flourish if they married before having children." They said 71 percent who were married first were at least middle class by age 28-34, while that was true for only 41 percent of millennials from low-income families who had children without being married.
"You may say, 'Maybe young adults who put marriage first are just different than others,'" Wang said during an event to launch the report in mid-June. "You're right. Some young adults are more likely to follow marriage first (sequence) than others, and some of their characteristics are linked to higher income. For example, we know that in general young adults who are white, college-educated and grew up from higher-income families are more likely to take the route of marriage first."
But even when they controlled for a range of characteristics that included work status, education and demographics, she said, the marriage and children sequence was "signficantly relevant" to how families fared financially. When they stratified groups by characteristics, those who were married and childless were most likely to be in middle- and upper-income groups (93 percent), followed by those who were married before they had children (86 percent). Lagging last were those who never married but had children (47 percent) and those who are currently divorced who had children before marriage (44 percent).
Wang touted "strong evidence" throughout the report that couples following the success sequence had a much lower chance of being in poverty and a greater chance of moving into middle or higher income brackets. Of those who completed at least high school but did not have a full-time job, 30 percent were in poverty. Of those with a high school diploma or better and full-time work, only 16 percent were poor.
Only 3 percent were poor if they had completed all three steps, including marriage before children, by the time they reached their late 20s or early 30s. Even though millennials are delaying marriage and having children, the fact that more than half of those who have children are following a sequence that makes poverty more likely could portend big burdens for programs that focus on families, from education to social safety nets.
Other factors matter
Marriage provides a number of benefits to couples, Wilcox said, from access to a second income to being able to enjoy economies of scale. Millennials who marry before parenthood have more stability and are less likely to have kids in multiple households, which can fragment resources — for example, by diverting funds for child support.
Circumstances and community norms also influence what people choose to do. For instance, young people who grow up in better neighborhoods or in households with more money are more likely to follow the success sequence. He cited Mormons as one example of a culture that's apt to promote marriage and upward mobility.
"We can't lose sight of agency in this picture, as well," Wilcox said, noting that people make choices that can transcend their circumstances, including to "embrace virtues" and "avoid vices" to better their lives.
Some are skeptical of the success sequence impact, but "it is striking that so many of the financially successful millennials appear to be following it," said Wilcox. "Most critics of the idea that the success sequence matters need to acknowledge that education, work and marriage continue to be fundamental pillars of the American dream, even for a new generation of younger adults."
Not all young people are headed toward or will thrive in college, Wilcox said, noting that the "accessibility and appeal of the success sequence" could be strengthened if vocational education and apprenticeships were improved.
Other recommendations included boosting the Earned Income Tax Credit and wage subsidies for low-income workers and creating a public awareness campaign to promote the success sequence, similar to the educational/awareness campaign credited with reducing teen pregnancy, he said.
In response to the report, Ron Haskins of The Brookings Institution cautioned that simply telling young people to get married isn't a strong intervention for the challenges people face. "Hectoring is not going to work. You need community-based organizations that deliver this message with a lot of humor and testimony from people that kids respect." But he notes that "the product being sold … is spectacular" and "makes a huge difference for kids."
Interventions proven to help overcome obstacles in the lives of low-income children should be targeted toward them at an early age, he said. Programs that haven't been effective should be dropped and funds freed up for those that do work.
Annie Lowry, a writer for The Atlantic, said millennials are often maligned but deserve praise for things they do well, including delaying marriage, young birth rates that are quite low and the fact that they attend college in high numbers. "The economic climate they are graduating into is really hard," she noted, adding they face wage stagnation, student debt and high housing costs.
The report makes it clear that those who come from higher-income families are more likely to go to college and delay having children compared to those from families with less economic resources, she said. "But it's also true that if you do follow all these steps, it's extremely unlikely you're going to be poor."
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