What has changed in the last 20-30 years so that it now takes two incomes to maintain a household?
In: 3128
As the workforce globalizes, people need to compete with lower income workers worldwide. Factories have been moving to cheaper countries. Office jobs are being sent overseas.
To counteract this, the government has been stimulating growth by dropping interest rates for the last 40 years. But it hasn’t been enough to cause wages to keep up with costs, so the living standard a single person can provide has been dropping steadily.
The situation is intensifying rapidly in the last few years. Because recessions are defined by GDP, and government spending is included in that calculation, the government simply spends what it needs to, to prevent a technical recession from happening. This has been happening since after the great recession in ’08 and ’09.
Because we would have had a massive depression starting in 2020 due to covid economic disruption, this is causing government debt levels to skyrocket to extreme levels (currently in excess of 120% of GDP).
The extreme spending is causing very high inflation and accelerating impoverishment, especially in housing costs. The 3 and 4 income household will soon become the norm, as cost increases continue to outpace income growth.
Corporate profits across the board being at the highest levels in 50 to 100 years. No corresponding wage increases.
There are many factors, but one element is the fact that many households embraced having two incomes. This is gonna sound like circular reasoning.
In Australian mining towns, people are being paid huge amounts of money because mining is lucrative and they have to move into the middle of nowhere to work in the mines. The result of all these people earning big incomes is that crappy houses that were once worth $250k are now worth $600k. Because that’s the market. Money is abundant, housing is somewhat limited, price goes up.
Imagine a world where every household has a single income. What would house prices be like?
Now, have 30% of those households bring in a second income. What does that do to house prices? Those with money will willingly pay more for the premium or sought after property. Others embrace the dual income life so that they can also move up in the world.
As this site is relatively most American the glory days of Americans being able to live off a single income were created post World War 2 when Europe and a lot of the world was bombed to shit.
This left America as the only large developed country with working infrastructure and manufacturing. This is why jobs paid so well for Americans and created a huge economic boom.
Other countries didn’t see this effect other than the baby boom which meant lots of taxes when they became adults and so lots of infrastructure and social policies are paid for and lots of new cheap houses being built to rebuild the cities.
Then there’s all the other globalising effects others have mentioned. Once Europe had rebuilt it started pulling money back from America. As China and India develops that takes money and business away from other countries too.
America was rich because other countries were poorer.
Unless there’s another world defining event that just won’t happen again.
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