What is the relationship if any between dual-income families and the cost of living, and how far back in the 20th century do you have to go to see jump in prices ? I know there is a relationship but I can’t find any data to support it.
I look forward to your feedback.
This question has a straightforward, factual answer. It is better suited to General Questions than to Great Debates.
So moved.
There has been a secular rise in dual-income families at least since WW2 and probably for all of the 20 & 21st centuries at least. There has been inflation virtually every year durign this period as well. So any statistical test is going to show a relation. But if you mean a causal relation, I don’t know. The single-earner income of the middle class has been falling for a while so more families have become dual income due to necessity. More women now have opportunities for and interest in careers also. Are you thinking this was caused by inflation? Id think that would only be true to the extent that prices in general have outpaced wage income.
Or are you thinking that inflation has been caused by dual income families? I wouldn’t think so.
Please explain what you mean by the cost of living. Are you considering the standard of living in that?
I am pretty sure that families having two incomes had a direct influence on the cost of houses. When people are buying their first home, the main thing they are interested in is how much they can afford on the mortgage payments. Two income households were able to bid the prices up.
Thanks OldGuy. I do see references from time to time on how incomes are also determining prices across the board. Food is a good example. I’m especially thinking of the price inelasticity of milk. The price of a gallon of milk in the US had been going up steadily. It is not only because of inflation or even energy costs. Oil prices have been very low for some time. Producers and grocery chains exploit that fact. What I’m trying to find out is whether or not there was or is a causal connection with double incomes. Following WWII, was there a significant spike in prices across the board in the US, and were incomes have a role to play in that?
Yes bob++. I come across that connection quite often online. I think, but can’t prove that food prices and prices across the board are influenced by incomes. How else do you explain the varying costs of living around the world. I bet a gallon of milk doesn’t cost $8 in a developing countries. Incomes are much lower in those countries. I do appreciate the fact that there are many other factors that affect price, supply and demand and seeking ever-higher returns on investment. Food is a commodity after all.
Are you implying it costs you $8 for a gallon of milk? Maybe if you buy it by the pint, but I generally get milk for between $2 and $3 a gallon buying a gallon at a time (actually 2 or 3).
The U.S. government began tracking food prices in 1913. This article shows some startling increases in basic commodities over 100 years.
**HOWEVER! **
Go down to the section “Standard of Living vs. Food Prices” and you’ll see that, when adjusted for single-income vs. two-income households, income has increased much more than even the most inflated basic food commodity prices.
It’s more difficult to judge with other costs, because cars, houses and even clothes are much different from those of 100 years ago. But milk, potatoes and flour are pretty standard, and relatively less expensive than in the past.
You’d expect, as societies switch from predominantly one-worker households to predominantly two-worker households, two things to happen:
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Households have a lot more money to spend.
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Households are a lot more productive.
So, more money chasing goods and services, but more goods and services to be chased.
Overall, this might more or less net out, but you would see significant changes at the micro level. One-income households become relatively disadvantaged, obviously; they can’t afford the mortgages that two-income households can, or the cars or other big-ticket items. The additional money being spent on housing will make housing more expensive, but also of better quality - more spacious, better fitted-out, more “stuff” in it in the way of appliances and luxury items. There’ll be much greater demand for services like childcare, and for products and services that enhance the utility of household leisure time, which is now scarcer and more valuable - more money spend on tourism and travel, for instance.
I don’t have any real data to back this up, but these all seem related to me.
As more and more women joined the work force, the supply of labor is increased, which is going to depress wages. As people are hired and negotiate salary, all parties involved have the understanding that this is not going to have to fund an entire household.
This makes it increasing difficult for the one income households to stay afloat, so more of them convert into dual income households to keep up. This completes the cycle.
I live in the Washington DC metro area and this is very obvious. Almost all households have more than one wage earner. Looking at a list of the top median household income by county, metropolitan DC areas make up 5 of the top 6 highest. I have a good job, but it difficult to be solid middle class with that if you have multiple kids. Housing prices are high.
What would it cost to live like a middle class family in the 1950s? One car (that’s a deathtrap), one small TV, virtually no electronics, rarely eating out, few vacations–and never flying as a family, few extracurricular activities that cost money, dramatically fewer clothes and toys, no cable or video game system or media purchases, kids sharing a bedroom, college savings minimal, and 1950s medical care would be pretty cheap, though less effective. I bet a lot of people currently in dual-income houses could support that lifestyle on either partner’s income.
You can’t talk about changes in the cost of living without talking about changes in the quality of life.
Even things like “milk” aren’t really the same product–what you buy today is better pasturized, so it’s safer and lasts longer.
Thank you all. What I am trying to ascertain is whether there was a sudden price restructuring across the board in the US following a large uptick in income (as more women joined the workforce after WWII) or was if it was gradual. I am inclined to think that there was a general upswing in prices across the board over a decade or so but how much of it was directly related to dual income households I don’t know. It would be nice to get a percentage value
If companies/industries are targeting a certain demographic they have a good idea of their incomes. They know how much certain households can afford. That certainly plays a role in pricing, too. Prices are not only dependent on wages and energy costs. Businesses are in the business of making profits. How much of that $2-3 a gallon milk is pure profit I wonder?
This has some graphs you might find interesting: The fallacy of cheap home prices and the two income trap – dual income households underscore massive housing inflation. Nationwide home prices overvalued by 25 percent. » Dr. Housing Bubble Blog
Thanks spamforbrains. Another thought occurred to me as to why prices rose so rapidly after WWII. Consumers had easier access to loans. Most of us have, at one time or another, bought something we couldn’t immediately afford. Consumer lending potential must surely have played some role in price structuring, and probably still does.
Pure profit for whom? The dairy farmer who buys, houses and feeds the cow expects to get more for milk than his input costs. The processor who separates raw milk into products, pasturizes it, cures the cheese and makes the yogurt expects to make a profit, and the supermarket that sells it expects to make a profit. There are costs for marketing, transportation and packaging, and the companies that provide those expect to make a profit.
So it “takes 2 incomes today to provide what one income provided 30 years ago” (Warren and Tyagi).
2003 figures presumably. So the dual-income status may not be a factor
“The single-income family of 1970 had more discretionary income than the dual-income family of the early 2000s. To keep pace, the recent trend has been for households to take on more and more debt to make up for this real short-fall”
“Now with many households becoming one income households yet again because of this recession, we see the tide rolling out and how bad things really are. Combine this with a tightening of credit access and the reality is revealed. Home values are still extremely expensive and have been covered up by dual income households and massive amounts of debt. Remove both of those and you get a very ugly economic picture.”
Thanks spamforbrains. That clears up some of my questions on the dual income/price structuring question. I still leave the question of how price structures and lending potential are linked. I see a clear relationship in terms of housing prices. Banks/the housing market expects dual-income families to afford higher prices. When it comes to electronics and food, we tend to purchase more on credit these days. It would be nice to see some data supporting higher prices based on credit availability.
https://www.ifad.org/documents/10180/90baccae-ca5e-4a65-b77a-19999dff877c
“Growing population and income in emerging and developing countries will add significantly to the demand for food in the coming decades. By 2050 the world‟s population is expected to have reached about 9 billion people and the demand for food to have increased by between 70% and 100%. This alone is sufficient to exert pressure on commodity prices. According to the latest OECD/FAO medium term outlook projections, prices of crops and most livestock products will be higher in both real and nominal terms during the decade to 2019 than they were in the decade before the 2007/08 price spikes. If the rate of growth of agricultural production does not keep pace with demand, upward pressure on prices will result. A demand or supply shock in a situation where the supply-demand balance is already tight, can, for the reasons explained in the previous paragraph, result in increased volatility around the upward trend.”