Thursday, January 09, 2014

Rubio's Message To The Poor: Get Married!

The Republican politician Marco Rubio has figured out how to lift "families and children" out of poverty:

Republican Senator Marco Rubio has discovered “the greatest tool to lift children and families from poverty,” which he shared in a speech on Wednesday: “It’s called marriage.”
So much for the GOP’s much-hyped pivot to poverty backed by bold new policy specifics. Speaking at the Capitol, Rubio took the fiftieth anniversary of the War on Poverty as an opportunity to assail the tyranny of the federal government, and to call for a dismantling of the safety net in exchange for a fuller embrace of “the American free enterprise system.”
Matthew Yglesias partly agrees and (sorta) gives us examples of the benefits of resource pooling and the economies of scale*  from marriage.  Or from having a roommate.  Or from cohabitation, actually:

If you look up the Federal Poverty Guidelines you'll see that the way it works is that one person is poor if he or she earns less than $11,490. But due to household economies of scale, the FPG says that for two people to be non-poor they need to make $15,510 not $22,980. Indeed, the poverty line for a family of three is only $19,530—less than double the poverty line for one. Basically poverty is $11,490 for the first person plus $4,020 for each additional person.
So imagine a single mom earning the federal minimum wage of $7.25 an hour and working 40 hours a week, 50 weeks a year. She's got $14,500 a year in income which leaves herself and her daughter below the poverty line. Now she meets another single mom who's in the exact same financial situation. The two of them fall in love, and since they live in an enlightened state they are able to get married. Now instead of  two separate 2-person households each earning $14,500 and being poor we have a single 4-person household earning $29,000 which is well above the poverty line for four. They could even adopt a fifth child and still not be poor. Which is to say that marriage "lifts" families out of poverty not by increasing their incomes but by reducing what the federal government assumes their expenses to be.
Did you notice that the reasons why marrying or cohabiting or having roommates could lift people from poverty isn't about stuff like conservative family values or the conservative desire to have the traditional male breadwinner model of families?

It's about the savings one gets by being able to share apartments, heating and lighting costs, Internet costs and so on.  Food costs might rise less rapidly than the number of people one feeds because of the savings from bulk buying and the like.  Or they might not if the "new member" of the household is an expensive eater.

Even a purely economic calculus about marriage and poverty is complicated, by the way.  For example, suppose a man and a woman, both earning the minimum wage while working full time decide to get married.  The immediate effect of this decision is to lift them out of poverty, as Yglesias points out.

But what if they then decide to have a child?  Is there affordable daycare for that child, and if not, will the couple now become a single-earner family?  In that case they would be in worse poverty than initially.  Or what happens if this couple has a child, both continue working their minimum wage jobs but then get divorced?   Add to all this the impact of greater threat of unemployment** on low-pay workers and the findings of a recent study:

Williams writes, "A nationally representative study of more than 7,000 women found that approximately 64 percent of the single mothers who married were divorced by the time they reached age 35-44. More importantly, single mothers who marry and later divorce are worse off economically than single mothers who never marry."
In the report, Williams says a reason for this has a lot to do with environment, writing, "The pool of potential marriage partners for single mothers in impoverished communities does not include many men with good prospects for becoming stable and helpful partners."

The way social welfare support is determined may also affect the likelihood that couples marry or not.  But even the most basic economic calculations about marriage as the miraculous elevator which lifts families out of poverty hints that the causality is more likely to run from poverty to the prevalence of marriage rather than the other way round.   

*What these mean is that the cost per person drops as the number of people living together rises, up to a certain limit.  This is because even a person living alone must pay basic rent, heating, lighting and so on.  If that person gets married and the new spouse moves in some of those basic costs (rent ) will not rise but now there are two people sharing them, so the per person cost goes down.

Other costs might rise (say, electricity use) but they could still show economies of scale.  Suppose that two individuals, living apart, each spend $35 a month on electricity.  Once they move together, their electricity bill is $50, which means $25 per person.

Economies of scale exist as long as the average costs of keep going down as we increase the scale of some activity (here the number of individuals who move together).  That's not going to go on forever, of course.  At some point the rental apartment will be too small, say, and the couple/roommates/cohabitors/family need to pay more for more housing.

**As an aside, Bruenig misinterprets some marriage data from other countries in that article. Those data are not strictly comparable to the US situation, because cohabitation without marriage has risen as culturally acceptable form of family formation in some countries.  Thus, it's not quite correct to assume that marriage statistics for, say, the Scandinavian countries completely reflect long-term partnerships.  Put in simpler terms, fewer Scandinavian families are single-parent families than the marriage data would suggest.