How Do Todays Family Patterns Affect Prospects for 2050? Alicia H. - - PowerPoint PPT Presentation

Alicia H. Munnell Peter F. Drucker Professor, Boston College Carroll School of Management Director, Center for Retirement Research at Boston College US 2050: What Will America Look Like Mid-Century? Washington, DC March 22, 2019

How Do Today’s Family Patterns Affect Prospects for 2050?

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Note: Middle class is defined as family income of at least 300 percent of poverty. Source: Isabel V. Sawhill, Scott Winship, and Kerry Searle Grannis. 2012. “Pathways to the Middle Class: Balancing Personal and Public Responsibilities.” Brookings Institution, Center on Children and Families.

If the goal is to make it to the middle class, many face a headwind from the start.

Percentage Middle Class at Age 40, by Race/Ethnicity

68% 34% 52% 0% 25% 50% 75% 100% White Black Hispanic

Percentage Middle Class at Age 40, by Family Income at Birth

40% 75% 0% 25% 50% 75% 100% Bottom quintile Top quintle

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Source: U.S. Census Bureau. 2017. National Projection Tables.

These patterns are important because the U.S. is becoming more racially diverse…

Projected Race/Ethnic Composition, 2016-2065

0% 25% 50% 75% 100% 2016 2020 2025 2030 2035 2040 2045 2050 2055 2060 White, non-Hispanic Black, non-Hispanic Hispanic Other

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Sources: Author’s calculations from Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. 2018. “Distributional National Accounts: Methods and Estimates for the United States.” Quarterly Journal of Economics 133(2): 553-609; and GDP data from U.S. Department of Commerce, Bureau of Economic Analysis. 1980-2014.

…and incomes have been growing slowly for most households.

Income Growth by Income Group, 1980-2014

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1 2 3 4 5 6 1980 1985 1990 1995 2000 2005 2010 Top 0.01% Top 1% Top 10% 50-90% Bottom 50% GDP

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Source: Isabel V. Sawhill, Scott Winship, and Kerry Searle Grannis. 2012. “Pathways to the Middle Class: Balancing Personal and Public Responsibilities.” Brookings Institution, Center on Children and Families.

Making it to the middle class – income at least 300 percent of poverty – requires three things:

1) Finishing high school; 2) Working full-time; and 3) Waiting to have kids.

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Source: Author’s calculations from the U.S. Census Bureau, Current Population Survey. 1980-2018.

In terms of education, high school graduation is going up for everyone.

Percentage of Individuals Ages 25-34 with a High School Diploma, by Race/Ethnicity, 1980-2017

50% 60% 70% 80% 90% 100% 1980 1990 2000 2010

White, non-Hispanic Black, non-Hispanic Hispanic

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But today’s jobs require more, and college graduation rates lag for minorities.

Percentage of Individuals Ages 25-34 with a College Degree, by Race/Ethnicity, 1980-2017

0% 10% 20% 30% 40% 50% 1980 1990 2000 2010

White, non-Hispanic Black, non-Hispanic Hispanic

Source: Author’s calculations from the U.S. Census Bureau, Current Population Survey. 1980-2018.

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In terms of working full time, Blacks and Hispanics fare less well than Whites.

Percentage of Individuals Ages 25-34 Working Full-Time, by Race/Ethnicity, 1980-2017

50% 60% 70% 80% 90% 100% 1980 1990 2000 2010

White, non-Hispanic Black, non-Hispanic Hispanic

Source: Author’s calculations from the U.S. Census Bureau, Current Population Survey. 1980-2018.

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Source: J. A. Martin, B. E. Hamilton, M. J. Osterman, A. K. Driscoll, and P. Drake. 2018. “Births: Final Data for 2016.” U.S. Department

• f Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics.

In terms of waiting to have children, teen births have dropped sharply.

Births per 1,000 Women Ages 15-19, by Race/Ethnicity of Mother, 1980-2016

25 50 75 100 125 150 1980 1985 1990 1995 2000 2005 2010 2015 White, non-Hispanic Black, non-Hispanic Hispanic All

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But marriage rates are also down, so …

Percentage of Women Ages 25-34 Who Are Married, by Race/Ethnicity, 1980-2017

0% 25% 50% 75% 100% 1980 1990 2000 2010

White, non-Hispanic Black, non-Hispanic Hispanic

Source: Author’s calculations from the U.S. Census Bureau, Current Population Survey. 1980-2018.

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Source: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health

• Statistics. 1980-2016.

…the share of births attributable to married women is also declining.

Percentage of Births to Married Women, by Race/Ethnicity, 1980-2016

0% 25% 50% 75% 100% 1980 1985 1990 1995 2000 2005 2010 2015 Hundreds White, non-Hispanic Black, non-Hispanic Hispanic

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As an aside, those getting married are an increasingly selective group.

Percentage of People Ages 25-54 Married, by Education, 1975-2016

74% 65% 69% 50% 0% 20% 40% 60% 80% 1975 1980 1985 1990 1995 2000 2005 2010 2015 Bachelor's degree or more High school or some college College graduate High school graduate

Source: Author’s calculations from the U.S. Census Bureau, Current Population Survey. 1980-2017.

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A decline in two-parent families means more children face a tough start…

Poverty Status by Family Structure for Households with Children, 2017

Source: Author’s calculations from the U.S. Census Bureau, Current Population Survey. 1980-2018.

6.1% 7.4% 12.6% 14.0% 26.0% 19.1% 33.7% 36.8% 41.4% 0% 10% 20% 30% 40% 50% White Black Hispanic Married Single father Single mother

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Note: Advantaged is defined as children born at normal birth rate to married mothers with at least a high school education and not poor at the time of the birth. Source: Isabel V. Sawhill, Scott Winship, and Kerry Searle Grannis. 2012. “Pathways to the Middle Class: Balancing Personal and Public Responsibilities.” Brookings Institution, Center on Children and Families.

…and children who are less advantaged are much less likely to reach middle class by 40.

Percentage of Individuals Middle Class at Age 40, by Status at Birth

49% 71% 0% 25% 50% 75% 100% Less advantaged Advantaged

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Source: Author’s calculations from the U.S. Board of Governors of the Federal Reserve System, Survey of Consumer Finances. 2016.

Finally, as retirement’s my game, the risk of falling short at 65 varies by race and income.

Percentage of Households Ages 30-34 “At Risk” of Falling Short in Retirement, by Race/Ethnicity and Income, 2016

53% 73% 83% 59% 59% 64% 48% 52% 46% 0% 25% 50% 75% 100% White Black Hispanic Low income Middle income High income

What to do? Parents, not governments,

raise children, but government can help.

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• Reduce unplanned pregnancies by access to birth control.
• Support home visiting programs and high-quality pre-school.
• Improve children’s competencies during school years.
• Increase college affordability and graduation rates.
• Expand job training programs.
• Increase the Earned Income Tax Credit.