What has changed in the last 20-30 years so that it now takes two incomes to maintain a household?
In: 3128
So first off the idea that a household could live off a single salary is kind of false, this was reserved for the upper-middle class, and was more of a thing between the 60s and 90s, since the 90’s the rate of single-income households has remained steady: https://wtfhappenedin1971home.files.wordpress.com/2021/12/dual-income-1.jpg
You’ll see most answers here saying that wages haven’t kept up with inflation and that the rich/corporations getting all the benefits from increased productivity since. This is incorrect, and not the explanation to your question. [Wages stopped outpacing inflation in the 60’s, but has remained steady since](https://www.pewresearch.org/short-reads/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/). Inflation hasn’t outpaced wages, so that is not the explanation for why it now takes two incomes for a household.
So all-else-equal we’d have just as many households being able to live off a single income as we did in the 60’s. What has changed since the 60’s that makes it not all-else-equal though?
1. Urbanization. Everybody wants to live in the big cities now. As such that’s where all the interesting jobs end up being located, and as such that’s where everybody needs to move to to be able to get an interesting job. It’s a vicious cycle that causes land value to spike in the bigger cities and increases the cost of living there by a lot. There are many very cheap places you can live in the US, it’s just that nobody wants to live there.
2. Increased expected living standards. Today we all walk around with a supercomputer in our pocket that we expect to replace every couple of years with a brand new one. Our TV is 4K 120hz 65″ screen with 10-bit color, as opposed to a small thick black and white one. Our cars are able to go through stringent safety testing and emission testing. Our food passes a bunch of extra safety regulations. Compared to 1960’s pretty much everything we consume today is of better quality at the same price, or same quality at a cheaper price. This is where a lot of wages-vs-inflation and increased productivity has gone into. When we measure inflation we constantly upgrade the products we measure it on, which makes it incorrectly seem that the average worker isn’t getting it better when their wages are just matching inflation. If we would be ok with the living standards of 1960 then many households would be fine on a single income.
3. Globalization. Production in Japan, Korea and later China was incredibly cheap. We were able to import goods for very little. As we did though we helped kickstart and boost an economy in these places that now have made their GDP/c and living standards increase by a lot. As such they now expect higher wages and we’re now unable to import goods as cheaply.
Latest Answers