Over the past 20-30 years, what changes have occurred that now make it necessary for many households to have two incomes to stay afloat?
In: Economics
The pool of available labor increased dramatically due to a few big societal changes.
For one, women entered the workforce en masse creating what Elizabeth Warren called The Two Income Trap. Wages and cost of living adjusted accordingly to this big increase in available labor.
Also explicit racial/sexual discrimination was either banned or decreased substantially. When people think of a single income supporting a family, they’re thinking of straight white men generally. Now we have women, ethnic minorities, and openly gay people competing for jobs that were often exclusively given to straight white men for decades.
Also, the cost of housing has gone up partly due to most wealthy countries failing to build enough of it for decades. The Biden admin report on housing affordability in the US notes that we haven’t built housing fast enough to match population growth in 50 years. That’s also when housing costs began to decouple from wages. More people are now competing for fewer housing units. You see similar in most wealthy countries.
Jobs have also concentrated in the most expensive major cities with the highest housing costs. After 2008, almost all of the job growth/recovery in the US happened in just a handful of the largest cities. The so-called knowledge economy highly favors a handful of already-expensive cities because employers want to have large pools of educated labor to hire from. Factory jobs have either been automated or moved overseas which also pushes working class people to strive for traditionally middle class office jobs further increasing competition.
Labor unions also decreased in power and number and they effectively act as cartels controlling the pool of labor for the benefit of worker wages even if there’s tons of people who could compete for a job. So their decline hurts wages.
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