The Wealth of Relations

May 3, 2019

Speaker Nancy Pelosi (D-CA) said it would lead to “Armageddon.” President Obama’s National Economic Council Director Larry Summers said it would cause 10,000 deaths a year. But 18 months after the Tax Cut and Job Act became law, the economy is booming.

Last week the Commerce Department reported that the gross domestic product of the United States grew by 3.2% in the first quarter of 2019. And today the Labor Department reported that 263,000 jobs were created in April, sending unemployment to just 3.6%, a 49-year low.

These are great numbers that every American should celebrate. But the American Dream is about more than just numbers. As Tim Carney writes in his important new book, Alienated America:

“[T]he things we think accompany the American Dream are the things that really are the American Dream. What if the T-ball game, the standing-room-only high school Christmas concert, the parish potluck, and decorating the community hall for a wedding—what if those activities are not the dressings around the American Dream, but what if they are the American Dream?”

Unfortunately, as the Joint Economic Committee detailed in their 2017 report, What We Do Together: The State of Associational Life in America, these activities that used to define the American Dream are slowly withering. Fewer Americans are forming two-parent families, more Americans are born into single-parent homes, fewer Americans are participating in volunteer organizations, and more Americans, especially men, are not working.

For two years the JEC’s Social Capital Project has documented and described these alarming trends. And now they are beginning to develop a policy agenda to address these problems. Specifically, the Social Capital Project will be releasing five reports, each one focusing on one of the five policy goals outlined below:

1) Making It More Affordable to Raise a Family - The most important source of social capital for most people is the family in which they are raised. When families are unhealthy or diminishing in number, the social capital effects ripple across our other relationships and civil society, reducing happiness, hurting opportunity, and exacerbating inequalities. Unfortunately, both marriage and fertility have declined dramatically since the mid-20th century.

Has it become less affordable to raise a family, or is it just too expensive for too many people, regardless of the change over time? Who faces affordability problems? And above all, what should be done to help Americans who cannot afford the family that they desire? The Social Capital Project will pursue these questions over the coming months.

2) Increasing How Many Children Are Raised by Happily Married Parents – In 1960 just 5% of births were to unmarried woman. In 2017, that number rose to 40%. And half of children today will experience at least some time living without both parents. Hundreds of studies find that on just about every outcome, children who grow up with single parents do worse than children who grow up with married parents.

Reversing this trend could entail a variety of strategies: fostering the conditions that lead to more happy marriages; improving men’s economic prospects to make them more “marriageable;” or removing penalties in the tax code and in safety net programs that discourage marriage among those who would otherwise wed. We will explore these and other policy approaches during the rest of this Congress.

3) Connecting More People to Work – The share of working age men, ages 25 to 54, who are employed or looking for work, has fallen from 97 percent in 1953 to just 89 percent today. Compared with employed men, men out of the labor force are more socially isolated and less happy. They were less likely to be married, to live with adults, or to live with children, and they were more likely to be divorced.

Our proposals will seek to reverse the deadening social disconnection that is subsidized by work-discouraging federal benefits, inflicted by government regulations that price many people out of employment, and exacerbated by economic policy that limits job creation and wage growth.

4) Improving the Effectiveness of Investments in Youth and Young Adults – If opportunity were perfectly distributed in our country, then one in five children raised in the poorest fifth would make it to the top fifth in adulthood, and one in five children raised in the top fifth would stay there. In reality, as few as one in 33 poor children rises to the top fifth, and almost half of poor children (46%) end up in the poorest fifth of adults.

Our project will examine ways parents, voluntary institutions, and government can increase the value of social capital available to young people. Given the low rate of success that social programs have demonstrated, however, government must evolve to emphasize more evidence-based policymaking—requiring evaluation of publicly-funded programs and strict accountability. There are any number of ways to increase the value of social capital accessible to youth and young adults through parental and institutional investment in them, and policymakers should be open to all of them.

5) Rebuilding Civil Society –Rebuilding civil society will require a fundamental change in how we perceive policymaking. It will require policies that respect the strengths of localism while accounting for its weaknesses.

The Social Capital Project intends to think creatively about how policy—including federal policy—can rebuild civil society. Federal policy can strengthen local institutions. It can leverage existing institutions and refrain from impeding their efforts. In particular, it can reduce barriers to church-based service provision using federal funds. It can also devolve more authority to local institutions in administering federal programs, and it can reduce its involvement in policies that could be better pursued locally.

This agenda will necessarily be incomplete, but it should offer a policy menu of sufficient variety to appeal to policymakers with a range of priorities. It will, hopefully, inspire others to think more creatively about investment in social capital and how public policy might make us wealthier not just financially, but in terms of our relationships with each other.