As parents (one of us with a newborn and the other with three children), we have both experienced the wonder and joys of raising children. As economic analysts who focus on racial inequality, we both also see the increasing economic challenges facing families who are rearing the future of our country. Economic insecurity is rapidly becoming the norm for many American households. A trifecta of rapidly increasing costs, near stagnant wages and the contemporary call to weaken government investments in our nation's families pose a serious challenge to our nation's future as well as threaten to exacerbate the inequalities that divide our nation.
Harvard Law School Professor, Elizabeth Warren, in her vanishing middle class analysis, highlights how transportation, mortgages, child care and health insurance have all increased at a much faster rate than workers earnings over the last few decades. American families have been dealing with these increased costs in three primary ways: moving from a single-income to a dual-income household, increasing the use of debt, and declining savings. Rising levels of debt and declining savings make for an increasingly unstable American middle class and Dr. Warren notes that even the transition from a single-income to a dual-income household still leaves the average family with less money to save and invest than they had 30 years ago. As a result, a heavy debt anchor and bankruptcy have become far too common for low to moderate income families.
The loss of wealth for most families raising children is increasingly creating a larger and larger wealth divide. Before the "Great Recession," the 2007 survey of Consumer finance shows a doubling of wealth inequality between couples with children and couples without children. In 1998 the median wealth of couples without children was about $24,000 higher than couples with children. By 2007 this wealth disparity had increased to $50,000, so that couples with children had a third less wealth than their childless counterparts. For women and most minorities the low wealth tied to child rearing is even more extreme. Single white women raising children have 14% of the median wealth (about $8,000) of that compared to single white men raising children. Single Black and Latino women have a median wealth of $0 and Black and Latino households as whole have about 5% of the wealth of white household
As the nation rapidly becomes a majority minority the interplay between racialized wealth inequality and the growing divide between families who are having children (who are also more likely to be minorities) is steering the future of the country in an increasingly unstable economic path. In 2009, 14.7 million children, 20 percent, lived in poverty with the percentage of children of color in poverty alarmingly higher. Research suggests that young child poverty, specifically children who are poor before age six, are more likely to experience educational deficits and health problems, with effects that span one's life course. Serious consideration must be given to the implications of child poverty and what will happen if parents cannot and the country does not invest in our children. There is much talk during the political season about family values; but the disparity between political rhetoric and policies that value families is increasingly vast.
While families must recommit themselves to stricter economic discipline in these challenging economic times and prioritize saving over spending on "wants," families cannot do it alone. Investing in children should be a national priority to ensure the nation's future work-force and well-being.
Policy changes that are truly in line with family values include:
• Strengthening the social safety nets that support families who have fallen on hard times, such as the Supplemental Nutrition Assistance Program (SNAP), the Women, Infants, and Children Program (WIC), and Temporary Assistance for Needy Families (TANF) to reduce the number of children who go to bed hungry or whose parents cannot afford to put a roof over their heads.
• Making the child tax credit and the child and dependent care tax credit refundable. Many low and moderate income households currently can't benefit from the deduction that higher-income households receive. Making these credits refundable will provide low and moderate-income households with the same benefit as high-income households.
• Strengthening legislation that supports equal pay between women and men, such as the Paycheck Fairness Act (that failed in the senate in 2010) would put much-needed income in the hands of families.
• Increasing state and federal support for child care, such as the Child Care and Development Block Grant which provides child care subsidies for low-income families and supports improvements in the quality of child care.
Dedrick Muhammad is the senior director of the NAACP Economic Department and Mariko Chang is author of Shortchanged: Why Women Have Less Wealth and What Can Be Done About It.