What has changed in the last 20-30 years so that it now takes two incomes to maintain a household?
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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.
I was about to link [https://wtfhappenedin1971.com/](https://wtfhappenedin1971.com/) but someone already did.
One interesting thing to add: Back when they introduced the first tractor, they advertised it with one machine being so productive that the farmer only needs to work 2 hours a day to get the same stuff done that he and his team did in a whole day.
Today, farmers still work 8 hours a day, the economy simply adapted to the fact that the farmer *could* work 8 hours a day, so now he does.
Didn’t expect to get 1.5k upvotes on here. I may need to add that this “adapting” thing could be applied to many factors such as
* women entering the workforce
* communication and travel being much more accessible
* trade going down much faster than it used to be much
* many more things
This isn’t necessarily “better” or “worse”, it’s just that economy and productivity works different than it did 70 years ago (“20-30” is a bit too tight on the time frame there) and because many factors added up it’s very hard to pin it down to a single factor. It also leads to people “disproving” individual factors that may in fact still could’ve had some effect, either in the long run or for a short burst that eventually had effects on the future many years later still.
Every time this comes up I share this video.
Wealth Inequality in America visualized
byu/zaham_ijjan ininterestingasfuck
Wage growth has stagnated but costs have gone up. The top 1% has an increasing share of the total wealth leaving the bottom sharing less and less money.
People are trying to live on the same money while costs are taking a bigger chunk of their income.
Doubling the workforce by sending women to work, usury on a global scale, stock market and housing market being manipulated HEAVILY, wages aren’t increasing to meet inflation, are probably some of the larger factors.
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Honestly, families having 2 incomes is a big part of what changed. The following is not a lifestyle endorsement or political commentary, just something that a lot of younger people wouldn’t have seen first hand. When most families had a single income, they had far lower expenses. No childcare, because one parent was staying home with the children. Lower food costs, because one person had more time for grocery shopping and food prep. Depending on the neighborhood, you might only need one car, if only one person worked outside of the house. And this isn’t even factoring in expenses that didn’t even exist 20-30 years ago: mobile phone, internet, streaming services.
The more important factor though, is that we had a functional economy based on single income households, then, rather quickly, we shifted to an economy where two incomes were common. When you have a sudden shift in buying power like that, it will inevitably lead to inflation in areas like housing, because people are willing and able to spend more to live where they want to live.
If you want to get even deeper, improving technology and growth of disposable income, along with decrease/elimination of employer funded retirement (pensions,etc), lead more individuals into the stock market and helped create the modern retail segment of the stock market. On an individual level, this allowed new groups of people to accumulate wealth in a way that wasn’t possible previously. Inadvertently, we created a system where CEOs get rewarded for the performance of their stock price, and the incentives for how you run a public traded company completely changed. Slow down wage growth to protect the bottom line. We don’t need to pay the individual enough to support a family, because families have two incomes now.
There are so many factors that have gotten us here, it’s hard to simplify it in an accurate way
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