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.
Once people started having the money of two incomes, stuff started costing the money of two incomes.
In capitalism, everyone is competing to get ahead. If someone can do the same job for less money, they will outcompete the people who need more money to do that job. Similarly, if someone can afford to pay more for a product, the seller of that product will raise the price of that product to collect as much profit as possible.
In the mid-20th century, women began entering the workforce more and more. Initially, those 2-income households were able to enjoy a higher standard of living. But because capitalist markets are competitive over limited resources, as more and more households started collecting 2 incomes in the late 1960s and early 1970s, the prices of everything started to rise to capture that additional spending power. Then, instead of 2-income households enjoying a higher living standard, the living standards of 1-income households started to drop as their household incomes fell behind the inflation rate.
So, what was once an advantage became the “new normal,” and everything adjusted around it, to make it necessary even just for survival.
You need two incomes because your neighbors have two incomes and you are competing with them to purchase the same house, groceries, school, etc. The people selling these things can sell them to a two income house for more then a single income house, so they do. Eventually the single income house is priced out of the market, and the only way to keep up is to become a two income house. This spreads across society one kitchen table conversation at a time until every house is a two income house.
The question is upside down and shows a clear bias. What we might ask is: how did women entering in the workforce impact our levels of wealth in society? Home sizes massively exploded, for one: https://www.statista.com/statistics/529371/floor-area-size-new-single-family-homes-usa/
Before the 1950s, whole families worked (including kids). It was just this magical era where the US supplied rebuilding materials and equipment while financing the rest of the world. Then the rest of the world caught up and people needed the extra income again.
Then debt was seen as a basic necessity and working for interest became the vicious problem.
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Well, it actually started a long time before that, 20-30 years ago it was unlikely that the majority of people were actually in single earner households and living comfortable lives. People long for the day of a single earner having enough money to run a household, but they never look at the downsides.
Men generally worked full time, but what did the women do? Order a delivery from a supermarket while binge watching Netflix? No, since none of that existed, so they went out, not in a car, multiple times a week to get fresh produce, because they didn’t have the storage facilities. They washed clothes by hand. They looked after bigger families. Ran a household without the benefit of a dishwasher and window vac.
As work got “easier”, and by that I mean largely more automated, much of the manual work evolved, no longer is a gang of men digging a trench, but one or two guys with diggers… But this happened in the household too, anyone can load a washing machine in 2 minutes, anyone can order food online, put it in the freezer and slap it in the oven at dinner time. There was no longer a need for women to stay home.
So women suddenly no longer had to spend several hours a day running a household, so they went out and started to get jobs while still running the house, more jobs means more money. More money means more luxuries, bigger houses. Eventually it became the norm.
The transition was gradual, not a cliff, those people living in single earner households likely found they were not keeping up with their double income neighbours. So 20-30 years ago it may have been *more* possible than today, but you would need to give up today’s standards to get it.
We now have more disposable income per person than ever, but shit got expensive too as it became more advanced. Your grandparents didn’t have mobile phones, or computers, multiple TV’s, gadgets coming out the wazoo. So if you want to give up those things, and live like your grandparents did, then it’s entirely possible on a single wage, but generally we dont.
Women entering the workforce doubled the pool of workers.
Inflation without real wage increases with $ accruing to the top instead of the middle class.
More white collar jobs probably made both parents working a bit easier.
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