Money, Family, and Class | Socioeconomic Class and Child Development

This is the fourth in a series of posts on child development and social class. It’s my final project for my American Families class is on, so I need to know this material inside and out!

In section 4, we’re looking at the impact class can have on the life-long financial situation of a family.

IV. Money, Family, and Class

When family members transfer wealth from one generation (like parents to kids, or kids to parents) during their lifetime it’s called an “intergenerational transfer of wealth.” I actually learned the name for this at the WPC-14 in spring 2013. I’ve benefited from this my entire life, but I didn’t realize it had an economic term that could be applied to it.

In middle class and affluent families (MC&A), intergenerational transfers of wealth tend to go from the adults to the children — things like helping the kids with a down payment on a house, or co-signing a loan, or financial gifts, or business start-up funds.

This has an obvious benefit to MC&A children, since it reduces their financial burden and adult debt as they move from childhood to adult independence. Additionally, when MC&A individuals are adults supporting their own children and SO’s, they don’t have to spend their entire working lives stretching their paychecks that little bit further to support their parents. At most, they may support their parents during the retirement years. But in MC&A families, transfers of wealth usually flow from parents to children.

This is why Mitt Romney told college students to borrow money from their parents — his class status blinded him to the reality that not all intergenerational transfers of wealth go from the older generation to the younger.

In poor and working class (P&WC) families, these transfers of wealth tend to go from kids to adults. Kids start working as soon as legally possible  (sometimes earlier, with under the table or black market employment) to contribute to the family income. They help their parents out with bills and groceries, often even after they leave the family home and are supporting their own families. They help pay for car repairs, emergencies, funerals, and medical bills for their parents, siblings, and grandparents.

Now, it’s not that P&WC parents don’t want to help their kids out financially — it’s that they lack the finances to do so. Between 1975 and 1990, the wealth divide steadily grew. In the 15 year stretch between 1979 and 2004, household income grew by only $800 a year for the poorest American households, but increased by $63,100 per year for the wealthiest.

“Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.” — Mother Jones

The income of low income families hasn’t dropped because they’re lazy, or refuse to work. It’s because the traditionally blue-collar labor manufacturing jobs were increasingly exported to Mexico, China, Haiti, and Bangladesh during that same time frame.

“More and more, US multinationals are laying off workers at home and hiring overseas.” — Mother Jones

Check it: the highest job growth is in the industries of temporary employment, health & domestic services, restaurant, and retail. These positions are usually paid minimum wage (the Federal Minimum Wage is below the cost of living in most areas), lack benefits, and have demanding hours that don’t balance well with the needs of family life.

“The share of American employment in manufacturing has declined sharply since the 1950s, from almost 30% to less than 10%. At the same time, jobs in services soared, from less than 50% of employment to almost 70%.” — Economist

The wages of jobs that can’t be exported are depressed by the continued presence of undocumented immigrants in the work force. The problem here is not the undocumented immigrants as workers; the problem is that employers can use the undocumented status of an employee as a threat to prevent them from protesting violations of labor law. Plenty of people think undocumented immigrants don’t have labor rights, but that’s not quite right.

The real situation is a little more complicated. Undocumented immigrants are actually covered under the basic labor law protections — the catch is that if they complain that an employer is violating labor law, the employer can just deport them. If workers in these industries (of all races and citizenship status) begin trying to organize for a safer work environment, better hours, or better wages, their efforts can be cut short by the employer simply deporting the undocumented immigrants among them.

In other words, the presence of undocumented immigrants in a workforce is a way for an employer to keep wages down and prevent workers from organizing to demand better treatment. The solution to this problem is not to throw more money at the border in a futile attempt to prevent immigration, but to actually relax immigration laws. Once undocumented immigrants can no longer be threatened with deportation for trying to access basic labor rights, the equilibrium of the workplace will become more democratic.

This 2008 Pew Center graph shows where undocumented immigrants are employed. Undocumented immigrants tend to be employed in low-wage work, which bolsters the research of Chavez and others that the existence underpaid and exploitable labor class will keep all wages down for these positions.

Don’t blame the undocumented immigrants for coming to America. First off, when you tell the entire neighborhood that your house is the best and you’re having a kick-ass party where everyone gets prizes, don’t be surprised when the entire neighborhood shows up to the party. Second, as I noted above, the workers aren’t actually the problem — it’s the structural policies in place that prevent undocumented workers from complaining about mistreatment. They’re an exploitable working class, and the presence of an exploitable working class will depress wages in all industries where they’re present. Fun fact: the white small farm-owners in the South, the ones who couldn’t afford to own slaves? They tended to object to slavery on the basis that having an unpaid and exploited working class undercut the labor value of white working men.

When California became a state, their constitution outlawed slavery not on the basis that it’s inhumane and awful, but because the existence of an exploitable working class undercuts the value of American workers. This is also why after the railroads were built, Chinese immigrants were run out of towns up and down the West Coast, and immigration laws became increasingly restrictive. The presence of an exploitable low-wage working class always, always undercuts the value of that entire working class.

So next time you hear someone blame “illegal immigrants” for taking American jobs, remind them it’s not the worker’s fault. Unpatriotic American corporations prefer to import workers they can mistreat and underpay without fear of labor law complaints, rather than invest in the minimum standards of wage and work safety required by American workers.

This is the same reason, by the way, that American corporations ship all those jobs overseas. The usual story is that unions got greedy, but it’s (again) so much more complex than that. Corporations don’t want to pay minimum wages, yeah, but they also don’t want to invest in creating and maintaining a working environment that is up to basic safety standards. Look at the recent fires in Bangladesh factories contracted by American corporations. There are a lot of similarities to the Triangle Shirtwaist Factory fire that helped spark the American labor movement.

American corporations also don’t want their employees to enjoy a decent work-life balance. Look at the Chinese factory workers, who live in dorms on the factory premises. Sounds a lot like the “company towns” in our own pre-labor rights history, don’t they? American workers weren’t greedy, they just learned to stand up for the value of their labor, safety at work, and health after years of being exploited. The corporations who ship jobs overseas aren’t being “business savvy,” they’re being unpatriotic and inhumane.

Low income workers are often blamed for not getting better work. This relies on the assumption that jobs are plentiful, but poor people are lazy or stupid. First things first: Jobs are not plentiful, even for college graduates. High school graduates are even worse off in the job market.

In the first post, I talked about how class differences in child development styles influence the social behaviors and education of kids. Those differences come into play during the job search. Then there are the other factors, like unconscious bias on the part of the employee due to race, gender, or credit history. Those types of judgments are out of the control of the individual, but they still inhibit their ability to work for a living. You can acknowledge or deny the impact of this reality, but that doesn’t change its existence.

Maybe I could blame Americans who shop at stores like Walmart and Target, and so reinforce the demand for cheap goods produced by exploitable labor, but I don’t think that’s very useful. First, the CEO’s of these companies definitely know what they’re doing, but the shoppers may not be aware of their role in the system of worker exploitation.

Second, it’s a kind of a cycle. American workers aren’t paid enough, so they need to stretch their wages are far as possible. That means they need cheap goods, and the companies produce those cheap goods by exploiting cheap labor at home and overseas. The presence of exploitable low-wage labor continues to depress the wages of American workers, who continue to need cheap goods. It’s a vicious cycle, and the ones with the power to easily break it are the employers, not the employees.

What sucks is that during the same time frame that well-paying blue collar jobs were disappearing for low-income families and being replaced by low-wage work, the welfare system came under fire. Between 1970 and 1990, welfare payments actually decreased by 43% per family. American poverty rates were at their lowest in 1969 and 1970, at the height of President Johnsons’ “War on Poverty,” but Nixon, Reagan, and Bush all made cuts to welfare programs. Then Clinton just ruined everything by reforming the old welfare programs into the new TANF program, which has a 5-year cumulative limit. Welfare spending and poverty rates have grown since the TANF reform, so now we’re spending a lot and solving nothing.

So at the same time that full-time, unionized jobs are disappearing from the American employment landscape and real wages for working class families are plummeting, the government responded to a rising tide of political pressure and defunded the available welfare programs. In real terms, this means that a lot of working class and mid-to-lower middle class families have actually experienced downward mobility, as wages have stagnated or fallen and welfare benefits have increasingly been cut.

Additionally, American workers now work longer hours and take fewer vacations than any other industrialized first-world country, and for what? We don’t have more money, and we have even less time with our families than we did 30 years ago.

“For … many middle-class workers, job obligations are creeping into free time and family time. For low-income workers, hours have declined due to a shrinking job market, causing underemployment.” — Mother Jones

When you take all this together — lower pay, more working hours, fewer benefits, and reduced funding for welfare — what you get is a generational impact. P&WC families don’t have the resources in terms of time, education, or finances to set their kids on the path for success. The government and community are unwilling to invest in their P&WC populations, and so the same social structures that kept the parents in poverty limit the next generation as well. Remember, it’s not that P&WC parents don’t love their children, or don’t want to invest in them — it’s that they lack the resources to invest in the next generation in the same ways MC&A families can.

MC&A don’t necessarily recognize their class privileges, or some of the ways they rely on their parents for assistance. Legacy admissions to colleges, for example, don’t carry quite the same stigma that welfare benefits do. And MC&A kids whose parents help them financially may not realize how lucky they are to be able to receive money from their parents as they set up their future. This lack of recognition doesn’t make MC&A kids bad or selfish, anymore than the lack of resources available to P&WC families means they don’t care about their kids.

I would really like to stress that point — the simple fact of having access or not having access to certain privileges in life doesn’t inherently mean someone is good or bad. All it means is that they were born into a certain space and time where specific attitudes and social structures held sway, and they had to wield their personal agency in negotiating the paths available to them. Everyone makes mistakes, but those mistakes tend to be a lot more costly for P&WC families. Consider for a moment two imaginary women, Katy and Cathy.

Imagine that Cathy grew up in a poor working class family. Her father worked, and when he wasn’t working he was drinking. Her mother worked on and off. Cathy had three brothers, each of whom worked. Cathy was expected to clean the house, prepare the meals, and do all the laundry. She rarely had time for schoolwork, and often felt isolated and stressed. Her family often teased her for being a stupid girl. When she was 14, she dropped out of high school and ran away from home and dropped out of high school to marry a 17 year old classmate, who also dropped out of high school. When she was 17, she had her first child. In her early 20s, Cathy acquired a GED, and she has worked on and off in various low-wage industries over the past decade.

Now imagine Katy. Katy grew up in the same state as Cathy, during the same time frame. Katy also had two working parents and three older brothers. Katy was also expected to do household chores. But Katy was middle class, and her parents never assigned so many chores that they interfered with her homework. She had a wide circle of friends and a fulfilling social life. Her brothers were busy with schoolwork, sports, and internships, and although they teased her, they were generally supportive of her accomplishments. When she was 14, Katy started high school. She dated an older boy for a little while, but they broke up before it got serious. When she was 17, her parents helped her apply for her college choices and scout apartments in the cities she was looking at moving to. In her early 20s, Katy graduated with her Bachelor of Arts and decided to pursue a Doctorate of Psychology. She is currently working as a counselor in a local non-profit.

Same state. Same gender. Same time frame — the biggest difference is in the differing resources available not only to the girls, but to their families. No matter how much Americans like to deny it, socioeconomic class has a great deal to do with an individual’s upbringing and lifetime finances.

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