?

Log in

No account? Create an account

Economic Recovery?

« previous entry | next entry »
Aug. 19th, 2009 | 08:51 am

One of my favorite pessimistic thinkers recently had a post, No Consumer Recovery.

Part of his opinion why we're not going to escape this recession (AKA recreate the bubbles of the 2000's) is based on some of the analysis done in the book The Two-Income Trap. They key finding there, was that the family of 1970 was fiscally healthier than a comparable dad, mom, two kid family of 2004. (link to presentation.

Comparing data on where the and 1970 and 2004 families spent their money, families now are spending less on food (even with eating out), less per car (by keeping them longer), less on clothing, less on appliances, but a few hundred dollars more on electronics.

The major expenses that jumped up for the family of 2004, were mortgages, health insurance, the cost of additional cars (a 1970s family typically only had one car), and cost of child care (which was zero back when women were stuck in the home).

Additionally though household income increased during this period, the inflation adjusted wage increase for the average male wage earner stayed basically flat during that 30 year period.

The author then goes on to argue that part of the jump in housing costs was from families competing to use their new income to buy housing in areas with desirable schools.

In my opinion worker wages probably also stagnated with the increase in labor pool from women entering the workplace, and then the increasing impact of globalization and the outsourcing of jobs to lower wage countries. Yet at the same time worker productivity climbed, so the business owners were able to keep a larger fraction of the profits, which they then reinvested in real assets, for example, stocks, real estate, and commodities, like oil. However prices for all of those things were pushed up past what the average working family could afford, and since the average working family was the primary market, each of those bubbles collapsed. (Ok stocks might not count there).

One possible conclusion, from the two-income trap, would be to send women back to home. It'd likely drive up wages by reducing the number of workers, and housing prices would probably decline as no one would be able to buy anything for a while. But there are a lot of psychological costs associated with keeping a person from having more opportunities for personal fulfillment.

However this story is a good example of unintended consequences from a social reform.

Link | Leave a comment | Share

Comments {6}

no, YOUR mom

(no subject)

from: theinfamousmom
date: Aug. 19th, 2009 05:08 pm (UTC)
Link

Why send just the women home? Make it random--every tenth person in the workplace gets sent home. If men had to take that kind of consequence, just think of what would get fixed on the double.

Reply | Thread

Diane Trout

(no subject)

from: alienghic
date: Aug. 19th, 2009 05:44 pm (UTC)
Link

Personally my favorite is parents get to split the equivalent of one full time position between them. so each gets to spend 20ish hours working outside of the home and 20ish ours doing childcare.

Reply | Parent | Thread

no, YOUR mom

(no subject)

from: theinfamousmom
date: Aug. 19th, 2009 06:03 pm (UTC)
Link

That only works if the employers pay benefits to people who work that few hours in a week. It would mean a major overhaul of the usual workforce rules, for sure.

I chose to be a full time parent and never regretted that choice, but I had to read 10 to 30 books a week just to stay sane, and when the Jehovah's Witness ladies turned up on the porch it was worth the price of a few Watchtowers to have an adult to talk with during the day. :)

Reply | Parent | Thread

Diane Trout

(no subject)

from: alienghic
date: Aug. 19th, 2009 06:07 pm (UTC)
Link

Yes, a national single-payer health care system is a prerequisite for any form of job sharing.

Reply | Parent | Thread

riffraff814

(no subject)

from: riffraff814
date: Aug. 20th, 2009 04:34 pm (UTC)
Link

I concur -- no reason to send the women home. But having a parent home is good for the kid's development, too. So, it'd be nice if one person could earn a living wage for a family of four again. I mean, I do, and it's really nice, but I'm lucky. Extremely lucky. And have been pretty much every stage growing up. I'm so *totally* not the norm.

It'd be nice if minimum wage was anywhere close to livable, but I understand why it's not, I guess.

Also, having someone stay out of the paid workforce doesn't necessarily mean they're being kept from having opportunities for personal fulfillment. Both Dan and I are hoping that once the children are grown to the "self-entertaining" age and "full-day-school" age, that he'll have time to actually write. Or choose some other direction. Having the freedom to make those choices without a paycheck/mortgage depending on it could be seen as having more opportunities for personal fulfillment. (Once you get past the painful first 5 years of having no time/energy for a coherent thought, much less a life plan.)

Reply | Thread

Diane Trout

(no subject)

from: alienghic
date: Aug. 22nd, 2009 05:10 am (UTC)
Link

I can see the stay at home parent having opportunities for personal fulfillment, though it probably helps if said person is reasonably good at being self-directed. Also I think it helps if they can find a peer group that is supportive of and interested in what they're doing.

I think it helps when you have some else go, "Hey that's cool."

Reply | Parent | Thread