Yesterday’s ABS divorce statistics for 2006 provide more evidence for our discussion of familist politics.
On the one hand, there is again no evidence that industrial relations changes are anti-family. The absolute number of divorces fell for the fifth year in a row. The ABS’s ‘crude divorce rate’, the number of divorces per 1,000 persons, as it mathematically must with a rising population, also fell. This is not a very good indicator of the stability of marriage as an institution, since it could reflect fewer people getting married as much as fewer people getting divorced. But comparing the absolute number of divorces with the absolute number of married persons recorded in the census shows the same trend. 1.45% of marriages were dissolved in 2001, compared to 1.3% in 2006 (though there had been an upward spike in 2001; the rate was 1.4% in 1996).
On the other hand, could perhaps a declining divorce rate mean that the massive family handouts of the Howard government are having a positive effect? Though the proportion of divorces involving children has been stable since 2002 on 50%, it is down from 54% in 1996, and the overall drop in divorces means fewer kids are having their lives turned upside down by divorce. There were 5,000 fewer kids whose parents divorced in 2006 compared to 2001. It is of course very hard to isolate the effects of family payments, but there is no new evidence against family spending in these numbers.
Or perhaps, as is suggested in the SMH, these improving numbers are just a ‘blip’. The average duration of marriage before divorce is rising, but that may not affect the proportion of marriages which eventually break up. Closer examination of the divorce statistics shows that divorce rates are dropping for those aged 44 and below, while rising for those aged 44 and above. But at least this means fewer couples with children still in the home are ending their marriages.
Andrew Norton 
When you say “there is again no evidence that industrial relations changes are anti-family” – might it be too early to say that, given that the changes have only been in felt in the context of a booming economy.
Traditional wisdom says that divorce rises in hard times (the extra stress I suppose) and we’ve yet to see what extra hardship the changes might contribute when the boom is over.
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Russell – In the historical statistics, there is a temporary upward spike in divorces coinciding with the early 1980s recession, but it is less clear for the early 1990s. The number did go up, but it was trending up before the recession and kept going up for years afterwards. There is also a strange upward surge for 2001.
On the booming economy point, this is one (of many, admittedly) area where I disagree profoundly with opponents of IR reform. In my view, it would be better if some of the economic shock of a recession was absorbed in wages and conditions rather than through loss of employment, which has far more serious consequences for those involved.
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The other thing that you probably need to worry about is that the overall proportion of people getting married is declining (there was a release a week or so about this). Thus the divorce statistics are not going to be such a good measure of family life, especially if the married/de-facto groups are getting more qualitatively different than before.
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“Closer examination of the divorce statistics shows that divorce rates are dropping for those aged 44 and below, while rising for those aged 44 and above”
Theories? More traditional wisdom had the divorce rate rising when it became economically possible for women to leave. Those over 44 are surely wealthier than those under, and at about that age are starting to inherit – whereas those under 44 are facing debts and the ‘housing affordability crisis’, perhaps divorce is becoming less affordable for them?
Your point that “it would be better if some of the economic shock of a recession was absorbed in wages and conditions rather than through loss of employment” sounds good, ideally, but some of us wouldn’t trust the market to do that fairly.
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Conrad – One of the media reports did make the point that these statistics measure legal divorces, not separations.
The crude marriage rate has been stable the last few years, but I have not checked the more relevant statistic of marriages of the relevant unamarried population group. But we could possibly assume that a lower divorce rate might be partly due to couples more prone to splitting not marrying in the first place.
Russell – I think that’s a possible theory. On the recession point, in the 1980s Labor used the Accord to reduce real wages to boost employment. But that was easier to do in a high-inflation environment, when no cuts to nominal wages were needed to reduce real wages. It’s also likely to be a less effective strategy, as it blunts the price signals encouraging workers to move between employers.
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And looking back working class people would say that that wasn’t fair either – since at the time the gap between the wealthy and the ordinary was growing. But it was do-able because, as you say, there weren’t visible cuts to wages.
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Russell, you said:
‘Your point that “it would be better if some of the economic shock of a recession was absorbed in wages and conditions rather than through loss of employment” sounds good, ideally, but some of us wouldn’t trust the market to do that fairly.’
What do you mean – do what fairly? Is there a ‘fair’ way to cut wages? If the choice is between wages and jobs, what do you think should be sacrificed?
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Russell – Your problem here is the price of labour needs to adjust to the point that people are prepared to pay for it. Otherwise people become unemployed. Wage control may cause some temporary shift from profits to wages, but ultimately people will not invest in firms that cannot make reasonable profits and employers will find other ways of reducing labour costs, such as not replacing staff who leave. Less overall employment is the result in either case.
Ultimately, ‘fairness’ is not a concept that yields workable operational policies in these cases.
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“people will not invest in firms that cannot make reasonable profits
Isn’t ‘reasonable profits’ a sort of flexible concept? Are there not firms which are out to make just as much profit as they legally can? Wouldn’t some commenters here claim it is management’s duty to return as much profit to shareholders as possible?
I don’t think ‘fairness’ is a disposable concept – we just need to try harder to work out, overall, how it will be achieved
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Russell – What I meant was that investments that do not provide a return on capital at least consistent with alternative investment opportunities given comparative risks etc will attract little interest from investors.
Given the complexity of the market economy, few consumers or investors have much idea of who their actions will effect or how, so it is hard to see how ‘fairness’ could as a matter of practice be implemented, even if it was a good idea in principle. And this is ignoring the dynamic effects of not investing in potentially profitable (and job creating) firms by propping up other firms in the name of ‘fairness’.
To go back to the topic of the original post, I think your idea is divorced from practical reality.
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Russell says:
“When you say “there is again no evidence that industrial relations changes are anti-family” – might it be too early to say that, given that the changes have only been in felt in the context of a booming economy.”
Russeel monthly payroll stats also confirm sold growth in wages. Are you able to point to me where we can get a glimpse of people having a hard time due tot he current “recession”?
I presume you must be thinking there is a recession going on.
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The only divorces that we really should be worried about are those that are negatively affecting children. Plenty of evidence suggests that humans are naturally serial monogamists at best, and the constant worrying about how many marriages end in divorce is mostly just social inertia in letting go of the need to consider marriage ‘sacred’. Messy separations that leave children in unstable and unhappy households are obviously another thing entirely, and it’s not clear the evidence shows either way whether these are increasing or decreasing. But the sooner we learn to accept that marriage is, at its heart, no more than a social contract to remain together as long as necessary in the best interests of raising children, the sooner we’ll see the end to unrealistic expectations constantly ending in tears.
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JC – no, I said that we’re booming now. The recession will come later.
“it is hard to see how ‘fairness’ could as a matter of practice be implemented, even if it was a good idea in principle”
even if ?? there’s the difference between left and right.
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Russell, high profits in an industry will attract competitors. Competition will put downward pressure on prices and profits and upward pressure on wages as firms compete for labour. It is called capitalism and has nothing to do with the success or failure of marriage. The state should have as little to do with marriage as possible. If consenting adults want to contract themselves to each other, that is their business. Government policy should neither be family friendly or hostile, but rather neutral. How you arrange your domestic affairs is your business. Counting the failure rate of marriage is an interesting thing for sociologists to study, but has little economic meaning.
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Brendan — counting the failure rate of marriage has a lot of economic meaning, even if the government had nothing to do with marriage. This is because it affects lots of things, not least of which are things like people’s productivity (short term), how the children get looked after (longer term) etc.
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Maybe the simple matter is that it’s too expensive to be single at the moment.
Given the low amount of pay most people are getting, a dual income is needed to pay the mortgage, credit card bills, car loan and child care.
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Rusell, conceptually, what do you mean by “fairness”? I suspect that this word would have very different meanings to different people.
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Sacha – I’m sure it does, and perhaps is changing over time too. I guess if you asked most people (but not on this blog) if it’s fair for the USA to export its hugely subsidised agricultural products to countries that can’t compete in the subsidy business, they would say, no, that’s not fair. It’s not fair to use economic power to gain that kind of price advantage in the market.
In order to prevent employers exploiting a position of power we had the Industrial Relations Commission as a kind of umpire: an employer should be able to make a profit and his workers should be paid enough to have decent lives. In a competitive, globalising world it seems it’s becoming harder to run our own little internal fairness system. I didn’t say I knew how to do it (who knows, even economists might be useful here), but it might involve fiddling with capital gains taxes, wealth taxes ….. and also by providing excellent education opportunities, excellent medical care, affordable housing etc, to cre create lots of chances for ‘social mobility’.
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Russell, I mention that not to make some point, but just to say that it can be a squishy concept e.g. different things seem fair to people in different situations.
Regardless of its specific meaning, it would be difficult to implement “fairness” as Andrew N. points out.
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Sacha – I read that back and it didn’t answer your question – whch is a hard question so I looked in the OED, and the meaning we’re talking about is “affording an equal chance of successs”. Fairness is creating conditions where people have equal chances of succcess. Most people would think that that is a good thing.
I would go further though – if I see very rich people living in a community with very poor people, I think it’s just not fair. I don’t know that I really care so much for whether they had equal chances and I don’t know that I could weigh up how much was chance and how much wasn’t. It doesn’t matter how somebody became so poor that they can’t afford necessary dental treatment – to me it’s not fair that they can’t have the treatment they need, when the rest of us have so much. It’s unfair because everyone is entitled to not fall so far behind the rest.
There has to be some sense in a community that we’re all in it together – if there’s a recession I would rather everyone felt the effects of it. I don’t think it would be fair if an employer asked workers to reduce their incomes, if his wasn’t reduced as well.
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Sacha – implementing fairness is a lot of what the government does everyday – from a national health scheme to the first homebuyers grant. Which is why I said at the beginning ” we just need to try harder to work out, overall, how it will be achieved”. Meaning that if we’re losing our ability to do it by central wage fixing, we will have to try to have an effect in other spheres – such as in education and housing.
Which is not to say that fairness doesn’t come into IR – didn’t the PM say that he was making Workchoices fairer when he made the recent changes? Presumably he used that word in response to polling that showed most people thought Workchoices was unfair.
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