DEBATES OVER POVERTY AND INEQUALITY—high and low incomes; the gap between rich, poor, and everyone else—have long raged, but they have become frequent again in the past half decade with Occupy Wall Street protests, a best-selling book by a French economist and others, as well as responses to the same. The debates are often framed in economic-only terms: More interventionist leaning academics, politicians, and others assert that inequality poses a danger to societal stability and is economically problematic. More market-friendly analysts have found and argue that poverty and inequality are often mischaracterized, with the data misinterpreted and misunderstood. Some would argue that inequality in particular (though not poverty) is inevitable and serves a useful purpose, by providing an incentive to prosper.
Wherever one falls on the inequality and poverty debates, however, a review of the relevant discussion shows a different sort of gap: family formation and family “fracturing” are little discussed in Canada. This appears in distinct contrast to the United States.
This gap is problematic. The inequality debates, and related debates such as those on poverty, insofar as they approach the subject of family, do so only via economic analysis, thus implicitly assuming that a material end (more or less inequality) stems from a material cause (economic dynamics).
Typical approaches thus leave out a wide swath of human behaviour and non-material, noneconomic causes, despite what is revealed in the statistics. For example, a drug addict will not necessarily be cured via economic policy—a material remedy—because the cause of the addiction may not be material in nature; a rich person can still be an alcoholic. Thus the core problem may be psychological or social in nature.
This reality has implications for policy research and policy recommendations, but with the focus in the public debates often only on economic data—a growing or shrinking economy, or higher or lower tax rates, or more or less government redistribution—the debates on inequality and poverty are unnecessarily limited.
The aim of this paper is to look outside the economic data. Once one looks at family formation and fracturing over the past ninety years and in the past half-century in particular, these non-economic causes become obvious.
After-Tax Median Incomes
In 1976, two-parent families with children demonstrated the highest after-tax median income ($62,300) followed by married couples with no children ($56,500). That was followed by loneparent male families at $46,700, and then female lone-parent families ($24,400) and unattached individuals ($22,000).
In 2011, the pattern was much the same with two-parent families with children showing the highest median after-tax income ($83,600) followed by married couples with no children ($66,500). That was followed by lone-parent male families at $50,700, and then female lone-parent families ($39,900)— the one cohort that showed a decreasing gap vis-à-vis others—and unattached individuals ($25,800) (all figures adjusted to 2011 dollars to account for inflation).
Family Fracturing Can Affect Poverty and Inequality Data
Those after-tax incomes by economic family type matter to the inequality debate, and also to poverty, because insofar as the higher-income family cohorts fracture, the potential exists for more poverty (and possibly more inequality) even if overall economic opportunities have not changed.
This in fact is demonstrated by a look at family statistics over the decades. With available data sets, it turns out that over ninety-five years the most dramatic change in marital status was the increase in divorced or separated. That cohort rose from just 0.1 percent in 1921 to 9.0 percent of the population by 2016. That can matter to poverty statistics (Executive Summary Figure A) given that it is often more expensive to maintain two households than one.
Sources: Statistics Canada 2017b; 2017c. *“Separated” is included in “married” statistics 1921–1971. The “split” in the lines is because the data underlying this measure come from two separate sources, the main difference being that more categories are available in the 1971–2016 sources. In an effort to ensure readers are aware of the different data sources, the lines are separate in this and other charts where appropriate.
Family Formation and Children: Trends 1976–20141
A further analysis of a different data set, dating from 1976 onward, also has ramifications for inequality and poverty. Between 1976 and 2014, the composition of the Canadian family changed dramatically.
Whereas in 1976, 71.6 percent of (non-elderly) families were twoparent families with children; that percentage dropped to 49.0 percent as of 2014. There was a dramatic rise in the proportion of lone-parent families. That matters to poverty and inequality statistics given that two-parent families with children displayed the highest after-tax median income in both 1976 and in 2014 (Executive Summary Figure B).
The Importance of Family Dynamics: An Issue in the United States Since the 1960s
Narrow, focused work on poverty or inequality from an economic perspective is useful in its own right. Nonetheless, it might be helpfully supplemented by attention to more of the above data, which displays a trend to family fracturing and different types of families over the decades.2 Here, it appears American academics and public intellectuals have long pondered how family fracturing might lead to later social and economic problems. This focus appears less often in Canada, especially in any memorable high-profile analyses and books.
In the United States, such work in the past half century includes that of Daniel Patrick Moynihan in 1965. Later a Democratic senator from New York, Moynihan, a sociologist by trade and a then assistant secretary at the US Department of Labor, authored a report on black Americans, considering the context of family structure. More recent work that addresses the topic of non-material causes for individual, family, and community woes in recent decades (including inequality where it is assumed to be a problem, and poverty) include the importance of social capital as pointed to by Francis Fukuyama (1995; 1999) and Robert Putnam (2005); James Q. Wilson (2002) on how culture has influenced families and weakened them as a force for stability; Jeremy Greenwood and Nezih Gunner (2009) on how technology has affected family formation in the United States since the Second World War; Deirdre McCloskey’s work on why economics cannot explain the modern world (McCloskey 2010) but why ideas can (McCloskey 2016); and Charles Murray’s 2012 book that identifies four factors as influential to a “good life” including economic success: marriage, industriousness, honesty, and religiosity (Murray 2012).
In contrast to the United States, where such reports and books have been a staple of public policy debate from Moynihan onward, major Canadian work seems focused only on the economics of such debates. As an example, just after the Labor Department published Moynihan’s 1965 work, which delved into the danger of a continued fracturing of the black family unit, three years later, Canada’s statistical agency published a 356-page analysis on the incomes of Canadians. Unlike the Moynihan report, family composition is touched on only relative to identifying who was poorest (widows and single-parent families headed by females). No mention is made of family dynamics as a possible cause for poverty or warnings about the future based on current statistical trends (Poduluk 1968, 191).
This appears to be a chronic gap in Canada, which opens up the possibility for an additional avenue for research and for more correctly-identified causes. Moreover, this holds promise for better understanding some potentially overlooked causes for poverty and inequality in Canada.
OVER THE PAST DECADE, a variety of economists, other social scientists, journalists, and politicians have discussed inequality and poverty with a sense of urgency. They have often done so in only material terms—that is, with reference to economic data and without considering social, cultural, and faith factors that may influence what leads to such data.3
For example, French economist Thomas Piketty gained fame in 2013 with his book Le capital au XXI siècle, translated in 2014 as Capital in the Twenty-First Century, by alleging that any sign of growing inequality around the world was ipso facto negative. In response, others have argued either that, depending on the country, cohort, or reason for changes in inequality, inequality is not necessarily a significant problem, or that Piketty misinterpreted the data.
On the latter point, for example, in Canada, a number of analysts have noted that most people will, over their lifetime, move into a higher income cohort because of the normal career progression for most people and thus, in the most extreme cases, away from poverty. A twenty-year-old will (unless already a wealthy entrepreneur) necessarily be in the bottom fifth of income earners. Someone in their peak earning years (in their forties and fifties) may be in a higher cohort. This difference only makes sense if few people at fifty are at the same point in their careers and incomes as they were at age twenty. Thus, the argument goes, the progress of individuals over their lives must be taken into account and not just “cohorts” as if the people in those were always the same individuals.
In addition, the same economists, market-friendly ones in many cases, have also noted that inequality is inevitable. This is a commonsense proposition to which no serious scholar could object unless they were committed to utter equality of outcomes in incomes, that is, that every person or family should earn only the same income and no more. The same economists also note the possibility that inequality can act as a spur to self-improvement, productivity, and economic growth. That is, individuals who realize they are falling behind their friends in possible financial options in life (home, vacations, lifestyle) may choose to increase their education or other skills or work extra hours.
The Focus of This Study: Overlooked Factors in Inequality and Poverty
This author is sympathetic with the latter arguments: lifetime measurements matter; inequality is inevitable outside of a command-and-control society, and even there it is merely masked; inequality can act as a “prompt.” All such analyses give a more fulsome understanding of inequality. Nonetheless, the ongoing poverty and inequality debates often discuss the economic data in isolation. Less attention appears to be given to possible causes of increased poverty, or increased inequality and to why those causes might be independent of economic forces or why the actual causes might be resistant to economic and policy “fiddling.”
That lack of attention to non-material causes is problematic: As an example, consider a household with $50,000 in income from one earner that then splits into two homes immediately skews the lower-income data. A two-household family each living on $25,000 makes it appear as if lower-income households have increased as a result of economic forces even though the economic opportunities have not changed—except one should expect poverty statistics to increase when one income now supports two households rather than one.
Thus, to grasp whether much of the recent literature details such social causes of inequality and poverty, this study reviews:
- the inequality and poverty debates—the former being more “high profile” in recent years and in public policy discussions;
- statistics in Canada on family formations and changes;
- trends on family formation;
- the rise of single-family households;
- literature in Canada and the United States for evidence of the discussion of social reasons for poverty and inequality; and
- thoughts on what, if anything, can be done about the social factors that may lead to inequality and poverty.