The 3 big drivers of inequality

by Ryan Streeter on December 1, 2011. Follow Ryan on Twitter.

Nick Schulz had a very good column in the LA Times yesterday that drew attention to three big drivers of inequality that get lost in the OWS-saturated public discussion of the issue.

The 3 drivers are: a growing super-rich class owing to the globalization of financial markets, a growing body of low-skilled workers at the bottom, and the breakdown of the family. The first two make it into the public debate somewhat, though never very accurately. The third one never does.

On that third point, here’s Nick:

The explosion of out-of-wedlock births and of children living outside of two-parent households has widened economic disparities of all kinds, including income.

The reason is straightforward. The role that human and social capital plays in helping a person generate income in an advanced economy has increased over the last half a century. And over that same time, the primary institution for inculcating human and social capital has badly weakened.

Social scientists routinely find that individuals raised in intact families are generally better equipped to thrive in the economy. Today’s 99% is teeming with tens of millions of Americans who were not raised in a stable home environment, and their earnings potential is compromised as a result.

Family formation as a topic of discussion is the greatest taboo of all in elite circles. Every social scientist who studies poverty understands single parenting’s role in perpetuating cycles of poverty, yet you hear virtually nothing about it. And every month we learn something new about how lower middle class America is increasingly afflicted by family breakdown.

And yet we aren’t allowed to talk about it. Too many people still regard family formation as a “soft issue” – the kind of thing that has to do with private moral choices that are none of the public’s business. This, of course, is insane. It has become the public’s business in a very big way and at great public expense.

  • Graham Scharf

    Well said, Ryan. The best resource I know for connecting the patterns of parenting and poverty is James Heckman, Nobel laureate in economics from the University of Chicago. has a number of short, helpful videos, as well as white papers for those more academically inclined.