What has changed in the last 20-30 years so that it now takes two incomes to maintain a household?
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Generally speaking 20-30 years ago it took 2 incomes to maintain a household. Things were transitioning to a 2 income household in the 70s. 50-70 years ago, things were different. Back in the 50s and 60s, cost structures were different. Clothes were much more expensive, adjusted for inflation. Food was more expensive too. But housing was a smaller part of the budget… Because people couldn’t afford to pay as much. There were also fewer spending pressures on people back then as compared to now. Also, look at what the homes that were being built back then we’re compared to today. Today, new development is concentrated at the high end of the market. Back then it was not.
On housing:
There is a lot less new housing from year to year now than there used to be, so if you’re moving, you are competing against 2 income households for scarce housing. In the past, this was somewhat flipped with more housing.
There are also a lot more companies involved and a lot more pricing efficiencies happening. These days, renters know very well what they can charge to rent a place for. In the past there was less knowledge of this information as the algorithms and software didn’t exist.
On inflation:
Inflation is normal. Historically we are at a pretty high point, but we just had a period of about 30 years with unprecedentedly low inflation. Believe it or not, wages on the low end have outpaced those on the high end recently… This is due to:
Labor:
In the past, we always had enough labor. Now we don’t. This is driving up wages on the low end for unskilled work, and it is also making it harder to come by skilled employees. There is a generational shift right now – boomers have been leaving the labor force as they age and gen X is a much smaller cohort, so we are trying to replace 80 boomers with 60 gen X people. This has reprocussions through the entire economy.
Pandemic:
Supply chain disruptions are still happening today. A lot of positions are going unfilled due to retirements. While the primary effects of the pandemic have gone, the secondary effects remain.
Development:
The US has willingly developed itself in a way that is incredibly difficult for most people to get by without a car. Cars are a pretty big expense. In a lot of areas, to have 2 incomes, you need two cars, too. People are pushed further and further from where their good jobs are because they can’t afford to be closer.
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