The Poverty of Reaganomics

The Poverty of Reaganomics

By Staff

Vol. 9, No. 4, 1987, pp. 1-2

In its twilight years the Reagan Administration is returning to its extravagant rhetoric about having created the “opportunity society.” According to Administration officials–proud of low inflation and a proposed treaty with the Russians–President Reagan will leave office with the world safer and the American people richer than ever before.

Braggadocio, of course, is nothing new among politicians of both parties nowadays, but these claims go beyond self-congratulations. They are reckless and alarming misstatements that invite the American people to ignore dangerous trends within this country. They call cruel realities “opportunities” and enlarged poverty “riches.”

A recent report from the Children’s Defense Fund in Washington amply illustrates the unreality of these claims. Its report on the declining status of young men tells vividly that no societal group in this country is assured of a future that is safe or enriched. The key findings are summarized below:

Young Men’s Earnings

Between 1973 and 1984, the average real annual earnings among males ages twenty through twenty-four fell by nearly thirty percent (from $11,572 to $8,072 in 1984 dollars). This sharp drop affected virtually all groups of young adult males, athough [sic] young black men suffered the most severe losses (nearly fifty percent).

Nearly sixty percent of all males ages twenty to twenty-four were able to earn enough to lift a family of three out of poverty in 1973. During the 1980s, however, the ability of young men to support a family plummeted, leaving only forty-two percent with earnings above the three-person federal poverty line by 1984.

Earnings, Education and Basic Skills

Young men between the ages of twenty and twenty-four who had not completed high school suffered the largest percentage drop in their real annual earnings during the 1973-1984 period–forty-two percent.

The percentage of all male dropouts ages twenty

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through twenty-four with earnings above the three-person poverty line dropped by nearly half, from fifty-nine percent in 1973 to thirty-two percent in 1984. Only four in ten white male dropouts, fewer than three in ten Hispanic dropouts, and a shockingly low one in nine black dropouts earned enough in 1984 to support a family of three.

The level of basic academic skills makes a difference even among young adults with the same amount of schooling. High school dropouts with strong basic skills have average earnings more than twice as great as dropouts with weak basic skills. Similarly, high school graduates with basic skills ranking in the top fifth among their peers have earnings nearly double those of graduates falling in the lowest fifth.

In 1973 young male college graduates earned twenty-five percent more than dropouts; by 1984 their average earnings were nearly twice those of dropouts.

Because they are disproportionately poor and frequently reside in communities with inferior schools, minority teenagers are particularly likely to leave school without the basic academic skills they need. Despite substantial gains that have narrowed the black/white achievement gap over the past decade, the average black seventeen-year-old now reads at the same level as the average white thirteen-year-old.

Youths who by age eighteen have the weakest reading and math skills (in the bottom fifth when compared to those with above-average basic skills) are nine times more likely to drop out of school before graduation; and five times more likely to be both out of work and out of school.

Young black male dropouts experienced a stunning sixty-one percent drop in real annual earnings between 1973 and 1984. Young black high school graduates fared only slightly better, suffering a fifty-two percent loss in real earnings. In contrast, young black college graduates actually increased their earnings.

The percentage of young black men working year-round has fallen by one-third, from forty-eight percent in 1973 to thirty-two percent in 1984. Only twelve percent of black male high school dropouts ages twenty through twenty-four had no earnings in 1973. By 1985 nearly half–forty-three percent–of all black male dropouts ages twenty through twenty-four failed to obtain any employment whatsoever.

Among young black men who had dropped out of school, the proportion with earnings above the three-person poverty line fell from forty-four percent in 1973 to twelve percent in 1984. The percentage of young black male high school graduates with such earnings also plunged from sixty-eight percent to thirty percent during this period.

Earnings and Marriage Rates

As recently as 1974, roughly two in five young men ages twenty through twenty-four were married. Over the next decade, however, the rate for such young men fell by half.

Regardless of their race or level of educational attainment, young men ages twenty through twenty-four with earnings above the poverty threshold for a family of three remain three to four times more likely to marry than young adult males with below-poverty earnings.

The decline in real earnings and resulting drop in marriage rates have been most severe among high school dropouts and graduates not going on to college–those young people who have tended in the past to marry and bear children earliest.

As a result of declining marriage rates, a larger percentage of children now are born out-of-wedlock. In 1984, fifty-six percent of all births to teens and twenty-five percent of all births to women ages twenty through twenty-four were to unmarried women–a dramatic increase from 1970’s thirty percent and nine percent respectively.

Youths ages eighteen through twenty-three who have the weakest reading and math skills (in the bottom fifth when compared to those with above-average basic skills) are eight times more likely to have children out-of-wedlock.

Poverty Rates

The poverty rate for families headed by a person younger than twenty-five has nearly doubled since 1973, reaching thirty percent by 1985. Poverty rates among young white families more than doubled, from twelve percent in 1973 to twenty-five percent in 1985. Poverty rates among young black families were higher to begin with but still increased by nearly half, from forty-three percent in 1973 to sixty-two percent in 1985.

Nearly one-half (forty-eight percent) of all children living in young families in 1985 were poor–nearly double the twenty-six percent rate in 1973.