Eliminating Poverty and Maximizing Happiness
 
Since at least the 1960s, economists and policymakers have been asking, “What can be done to eliminate poverty in the world’s richest country?”  Ironically, after falling somewhat in the ‘60s, poverty rates have proven essentially intractable since about 1970, despite roughly $24 trillion in cumulative government spending.

Ten years ago, scholars Ron Haskins and Isabel Sawhill of the Brookings Institution observed that young men and women who adhere to three “middle-class norms” are far more likely to be at least in the middle class.  Those three norms, which they called the “success sequence,” run as follows:

- Graduate from high school;

- Maintain a full-time job or have a partner who does so; and

- Have children while married, should they choose to become parents.

More importantly, this behavior is not merely descriptive of success, it’s also predictive and prescriptive. Haskins and Sawhill argued that adults who follow these norms in sequence - that is, get an education, get a job, and get married before having children, in that order - will maximize their odds of realizing the American Dream.  In fact, using cross-sectional data, based on all adults, they observed that 98% of adults who followed the success sequence avoided poverty.

For Boomers and Xers the evidence was overwhelming.  But since each generation of Americans faces unique opportunities and challenges when they reach adulthood, the question was, “How well does the success sequence relate to the economic outcomes of Millennials, today?”

Panel data that tracks Millennials from when they were 12-to-16 years old enabled Wendy Wang and W. Bradford Wilcox to test the relevance of the success sequence among the first group of Millennials who reached adulthood.  Since a higher share of Millennials are delaying marriage and parenthood versus earlier generations, they categorized unmarried, childless young adults as “on track,” as long as they had graduated from high school and had a full-time job.

Their analysis found that following the success sequence is still strongly linked to settling into the middle class or higher.  More than 89% of Millennials who have followed all three success sequence steps are in the middle-or-top third of the income distribution by ages 28 to 34.  Similarly, 81% of Millennials who have followed the education and work steps but are not married and haven’t had children yet are in the middle-or-higher income brackets.  In contrast, only 29% of young adults who missed all three steps manage to be in the middle-or-upper income groups.

So, what does this tell us about the prospects for the Millennial generation?

According to Wang and Wilcox, half of all U.S. adults, currently aged 28-to-34, have followed all three success sequence steps or are “on track” to do so.  Specifically, 91% of Millennials have earned a high school degree and 71% are employed full-time in a job, going to college, or as a “married homemaker caring for children.” Meanwhile, 40% have married.

Notably, the share of Millennials who have followed the “success sequence steps” varies dramatically, depending on the racial, ethnic, educational, and economic situation of the family they grew up in.  For example, 57% of white young adults have followed all three steps or are “on track,” compared with about 25% of their peers who are black.

Young men and women are equally likely to have followed the three success sequence steps or to be on track. However, there is a gender difference within this combined group.  Young men are 50% more likely than young women to be “on track,” having neither married nor had children.  And, at 43%, Asian young adults are much more likely than other Millennials to be “on track.”

Furthermore, Millennials who have education beyond high school are more likely to follow the three steps of the success sequence or be on track.  A stunning 78% of Millennials who have at least a bachelor’s degree have followed all three steps or are “on track,” compared with just 38% of Millennials who have only a high school education.

The success sequence is also more commonly followed among Millennials who grew up in middle-income or-higher-income families.  65% of those from higher-income families have followed all three steps of the success sequence or are on track, compared with 31% of their peers from lower-income families.

However, the success sequence is just as clearly associated with better economic fortunes for those young adults raised in lower-income homes.  80% of Millennials raised in lower-income homes moved into the middle or upper third of the distribution as adults when they followed all three steps of the success sequence.  Meanwhile, following the sequence was also related to material success for young adults from middle-and-upper-income homes; specifically, over 90% of them settled in the middle-or-upper-third of the distribution.

Importantly, following the success sequence is also associated with greater economic achievement for young adults of all racial and ethnic backgrounds.  For example, among Millennials, 84% of African Americans, 84% of Hispanics, and 90% of whites who followed all three steps are in the middle or upper end of the income distribution.  By comparison, only 43% of African Americans, 60% of Hispanics, and 64% of whites reached this income level if they missed one or two steps.  Only a small minority of Millennials from all racial and ethnic groups who reached none of these milestones settled into the middle or upper class by the time they reach their late twenties or early thirties.

Notably, a full 94% of young adults from lower-income families managed to avoid poverty if they followed all three steps of the success sequence.  Likewise, more than 90% of black, Hispanic, Asian American, and white Millennials who followed the sequence are not poor in the prime of young adulthood.  By comparison, for all these groups - but especially African Americans and young adults from poor families - detours from the sequence are associated with a dramatic increase in the odds of being poor.

Wang and Wilcox note that, “The association between poverty and the “success sequence” is robust even after controlling for other factors related to poverty: namely, race, ethnicity, age, sex, a college education, and scores on the Armed Forces Qualification Test.  Holding family background and other factors equal, Millennials who followed the success sequence in its entirety have only one-fourteenth the odds of being in poverty at ages 28 to 34, compared to their peers who followed none of the steps of the sequence.  And Millennials who missed one or two steps are also significantly less likely to be poor, compared to their peers who followed none of the steps.

Similarly, Millennials who completed the success sequence are nine times more likely to have at least a middle income, compared to their peers who followed none of the norms.

The bottom line: Available data overwhelming indicates that following a success sequence into adulthood is clearly linked with a greater likelihood of realizing the American Dream in the prime years of young adulthood.  Therefore, policymakers, educators, civic leaders, and business leaders should take steps to make each component of the sequence more accessible, despite the structural and cultural obstacles to realizing it faced by some young adults.  Initiatives should be particularly targeted at younger adults from less advantaged backgrounds, who tend to have access to fewer of the structural and cultural resources that make the sequence readily attainable and appealing.  That means maximizing the likelihood that young people will have at least a high school education, are able to get and keep a full-time job, and avoid having children until they are married.

Given this trend, we offer the following forecasts for your consideration.

First, policymakers will increasingly treat education as the foundation for the “success sequence” rather than an “end in itself.”  Today, when it comes to education, our schools and communities tend to focus on an academic track to rewarding careers instead of approaches that emphasize learning-by-doing, occupational skills, and employability skills.  In the Millennial cohort Wang and Wilcox studied, 61% graduated from high school but did not earn a bachelor’s degree.  This group of young adults needs more attention from policymakers if they are going to get and keep full-time jobs that position them for marriage.  As other countries have demonstrated, high-level occupational skills are often best learned through a combination of work-based learning that involves real production together with vocational education and academic courses.  Apprenticeships not only widen access to quality careers and real-life mentors, but they are also cost-effective.  Companies investing in apprenticeships reap the apprentice’s contribution to output as well as to a well-matched and highly skilled workforce.  Such initiatives are especially critical for young men, many of whom favor work-based learning and earning a wage over “academic-only” classroom learning.  Experimental research suggests that male graduates from Career Academies experienced marked improvements in their income and marriageability as young adults.  Tax credits for apprenticeships like those proposed in the LEAP Act cosponsored by Senators Cory Booker (D-NJ) and Tim Scott (R-SC) are likely to be part of the mix.

Second, policies will increasingly focus on getting young people into the workforce and out of the social safety net.  Until 2018, wages among workers without college degrees had been stagnant and declining since the 1970s, making both work and marriage less appealing.  In addition to limiting the influx of foreign workers competing for jobs that do not require a college degree, policymakers will find innovative ways to subsidize lower-paying jobs to make entry-level work pay more, without burdening the employer.  In particular, a wage subsidy equal to one-half the difference between the employee’s hourly wage and the median hourly wage would be one way to do this. A direct wage subsidy would not penalize marriage and would directly reward work for a range of adults - including young men and women getting a foothold in the labor force. Work requirements for recipients of SNAP food stamps and Medicaid will help get young people into the workforce where they can acquire the vocational and social skills they need for success.  In the Golden Age of the Fifth Techno-Economic Revolution, the booming economy will offer plenty of opportunities for everyone who is prepared to seize them.  And,

Third, by 2022, there will be a concerted movement encouraging marriage and discouraging unwed parenting.  This is almost certain if the Republicans hold the White House and regain the House of Representative.  Public and private social marketing campaigns on behalf of marriage and the “success sequence” will be crucial. A campaign specifically organized around the success sequence is most likely to have a major impact on young adults were it to receive support from a range of educational, pop cultural, business, and civic institutions.  It might look a lot like the National Campaign to Reduce Teenage and Unplanned Pregnancy, which achieved success in reducing teen pregnancy; it worked with a variety of cultural stakeholders - ranging from MTV to public schools - as well as through a variety of media.  A similar strategy will guide efforts to promote marriage and the success sequence.  However, expect push-back to come from progressive special interests who argue that marriage is irrelevant.

References
1. Brooking Institution. 2009. Ron Haskins & Isabell V. Sawhill.   Creating an Opportunity Society.

https://www.amazon.com/Creating-Opportunity-Society-Ron-Haskins/dp/0815703228

2. National Affairs.  Fall 2009.  Ron Haskins.  Getting Ahead in America. 

https://nationalaffairs.com/publications/detail/getting-ahead-in-america

3. AEI Institute for Family Studies.  2019.  Wendy Wang & W. Bradford Wilcox.  The Millennial Success Sequence. 

https://www.myrelationshipcenter.org/getmedia/f983b85a-b750-4f2f-9879-ad951f711f21/IFS-MillennialSuccessSequence-Final-(1).pdf.aspx

4. Cato-Unbound. May 11, 2018.  Isabell V. Sawhill.  Why Does the Success Sequence Work. 

https://www.cato-unbound.org/2018/05/11/isabel-v-sawhill/why-does-success-sequence-work

5. Heritage Foundation. July 11, 2016.  Eric Cohling.  Reinvigorating Family Life: Critical to Restoring Opportunity. 

https://medium.com/2016-index-of-culture-and-opportunity/reinvigorating-family-life-critical-to-restoring-opportunity-574ad9bd8adf