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The Rise of the Two-Income Family

February 28, 2010
(The following experimental thoughts were inspired by some fascinating remarks by Oliver O’Donovan in recent class.)

Christian conservatives have an odd tendency to divorce social and moral problems from economic problems.  A classic example is the issue of women in the workplace.  I grew up in a small subculture that strongly opposed the idea of women having careers and that traced many of the ills of our society to the feminist movement, and the loss of a proper understanding of the family and the gender roles it presents to us.  Interestingly, feminism seems to have largely missed some of the economic roots of the problem as well.  According to the conservatives, the problem was that a proper understanding of the family collapsed, feminism went around persuading women to be uppity, and, thinking they had to prove themselves, women marched out into the workplace.  According to the feminists, the workplace was full of sexists who wanted to keep their power over women by refusing to let them work, and it took a sustained and aggressive campaign by women to get equal employment rights.  

While there is truth in both of these narratives, both ignore another tremendously significant factor--namely, that the world of business had a very good reason for wanting to haul women in, rather than keep them out: wages.  


Until the middle of the last century, there was a widespread cultural consensus (strongly propounded by Catholic social encyclicals, among other things) that a business ought to pay its workers a wage sufficient to support a family in reasonable comfort, the assumption being that in each family, only the father was working out of the home, and the father had to earn enough to provide.  Normal wages then, by the 1950s, having to meet this societal expectation, were quite high.  Businesses, then, had a strong incentive to increase the supply of wage-earners, thus bidding down wages, and indeed, to overturn the whole cultural consensus that there would only be one wage-earner in a family.  Although it is true that many sexist businessmen let prejudice get in the way of good economic sense, it is nevertheless true that the liberation of women and breakdown of the traditional family was largely motivated by economic interest on the part of businesses.  The radically different understanding of gender roles and of the family that we now have to deal with was not so much a triumph of liberal social ideals, then, but of capitalism; indeed, we could say that this was perhaps capitalism’s greatest triumph of social revolution.  

The consequent bidding down of wages and changes in the structure of the marketplace have had wide-ranging economic effects as well, helping turn us into more of a consumerist culture.   In the old family organization, it was the husband’s duty to bring home the wage, and it was the wife’s duty to help make that wage go as far as possible.  The wife practiced “home economics,” making the home an efficient, thrifty economic unit so that some of the wages could go into savings.  Now, with the wife out in the workplace, no one has the time and expertise to practice thrift and home economics.  It is now normal for families to eat out almost as much as they eat in, and to buy overpriced and unhealthy pre-cooked meals when they do eat in.  Instead of caring for their children, they pay others to do so, and pay for all sorts of toys and activities to entertain the children.   In short, families no longer create or maintain any of the things they need for life, but simply purchase them and replace them as soon as they are worn out.  The family is no longer a carefully-run economic unit, but a federation of two income-earning and several income-spending units.  It is surely true that many factors besides women in the workplace have helped cause this transition to consumerism, but this shift is certainly one that deserves more attention than it is generally given.

12 comments:

Although the causal chains are complex, the effect is as you describe it. The economic value of the home had declined due to more prepared foods and household conveniences (vacuum cleaners, washing machines, refrigerators etc.) which increased the leisure time (read: uselessness) of women. At the same time, the wage was under pressure, which made women's supplementary incomes more valuable. This brought more women into the workplace, which put more pressure on the wage. Women in the workplace wanted parity, adding weight to "women's rights" talk.

The median white male wage has not changed (in real terms) since 1973. This wage stagnation made two incomes "necessary." But in the last eleven years, the family wage has stagnated, even before the recession began. This led to increased reliance on credit to keep up living standards.

Now, there is no way out of this mess on this side of collapse.

March 1, 2010 at 4:28 AM  

Mr. Littlejohn,

"Although it is true that many sexist businessmen let prejudice get in the way of good economic sense, it is nevertheless true that the liberation of women and breakdown of the traditional family was largely motivated by economic interest on the part of businesses."

In countering the typical narratives you argue that it is business economic interest that caused the rise of the two income home. You base this argument (I believe) on the premise that businesses had incentive to lower wages because the workforce was growing and as the supply of workers increased the demand for high pay decreased. For sake of argument I will put aside all assumptions that you seem to be making about parity of skill, education, experience and desired work environment between the single wage earner (already part of the market) and the dual wage earner (which at the time was entering the market). It seems that there are myriad other considerations and factors to consider in looking at the actions and reactions of a whole economy during this period that your analysis doesn't seem to address.

It seems that under the same logic, couldn't one argue that a car salesman is at fault and liable for a couple's bad financial situation when he sells them a car for full price and the following day he sells the same car for $1,000 less? Here, the couple made a conscious decision to pay full price for the car (or in your example take a lower wage for the second spouse) for their own independent reasons. The reasons are myriad and will vary from one couple to the next all the way across the car driving populace. Here, however, the fault is not with the car salesman or the business. The fault is with the couple for choosing to pay full price. This is, of course, provided that the car salesman was completely honest, forthright and did not coerce them.

Ultimately what one sees in the rise of the two-income family that you hit on here is the market reaction in response to new market conditions. That market reaction (i.e. effect) is much different than your assertion that businesses decreased wages and therefore spurred the decline of the single earner family as "largely motivated by economic interest on the part of businesses." The cause seems to have been mixed up with the effect.

The rise of the dual earner home is an intriguing question. I find the fault first in the abdication of husbands followed by countless other causes.

Cheers,

JRM

March 1, 2010 at 6:12 AM  

Hey Jess,
(Why do you keep calling me "Mr. Littlejohn"?)

Again, I think you have oversimplified my thesis (inasmuch as I have a thesis...more an interesting line of thought worth pursuing). I am not saying that there's a simple line of causality in the rise of the two-income family that lays responsibility squarely at the feet of businesses. Of course not, and I think Mr. Medaille has helpful fleshed out some of the complexities. I am simply arguing that it is foolish to discuss this social shift without taking into account the way that the incentives built into capitalist economics helped drive this shift.

That said, I do want to quibble with a couple of the things you said further on, even though they seem to veer us off the question at hand....
I'm not altogether comfortable with the car salesman changing his price like that from day to day (unless it's due to important concrete factors--e.g., he got a big shipment of that model of car in the interval and has to sell down his stock, so he's lowering the price). If he's simply adjusting his price because he thinks he can squeeze more out of one buyer than another, that sounds an awful lot like what the Bible has in mind when it condemns having unequal weights and measures.

You say, "The fault is with the couple for choosing to pay full price. This is, of course, provided that the car salesman was completely honest, forthright and did not coerce them." But what do you mean by "honest, forthright, and did not coerce." The price of a good is supposed to honestly communicate its value. If the value of the car is actually $1,000 less (as evidenced by the fact that the salesman sells it for $1,000 less the next day), then is the salesman being honest and forthright to quote them a price $1,000 more and act like that's the value?
Moreover, there are many forms of influence short of outright coercion. Some are legitimate, some are not. At some point, one crosses the line from legitimate persuasion to wrongful manipulation. A salesman can be wrong for such manipulation (which includes implying distorting the real value of the good) even if he hasn't "coerced" anyone. In this case, the couple has not exactly made a free choice.

Indeed, I might as well point out what seems to be the larger issue lurking in the background (and the reason why you brought up this only tangentially-related example): capitalism operates on this odd individualist philosophy that insists on viewing individuals as entirely separate, free moral agents. Which is absurd, of course, because individuals are never just individuals, they are embedded in social structures. Which means they're never perfectly "free"--at least, in the capitalist sense. Capitalism wants to say that as long as physical force is not brought to bear on a situation, the actors remain free moral agents, fully responsible for their own decisions. But the world doesn't work that way--individuals are always pulled this way and that, constrained and impelled by various social forces and structures around them. Individuals then always bear a certain responsibility for their decisions, but so do those social structures. This issue came up in the issue of labor justice--a worker who has been put in a situation of choosing starvation or $3 a day has not made a "free choice" to work for $3 a day, for which he alone can be held responsible. Neither can we say that families who decided to become two-income families made some morally culpable choice in a vacuum, for which they alone can be held responsible. I sense a foundational disagreement on this point lying behind some of our interactions.

March 1, 2010 at 10:31 AM  

Mr. Littlejohn,

I think you are correct in pointing out the underlying foundational disagreement that is present here. I think, however, that I disagree with your statement about "weights and measures" because doesn't the whole example come down to a question of valuation. What is the true value of a particular car? Say for example that my wife hates automatic seat belts and would only purchase a car with automatic seat belts if it was $100, but you love them and would pay 1,000 for the same car. What is the value of the car? What if the car happened to be a Toyota with a suspect accelerator? What if it was a car designed by your father and you wanted to purchase it for sentimental reasons and would pay 10,000 for it. What is the value of the car?

I argue that as long as the parties are bargaining at arms length, and that there is no outright deceit occurring, then the value of a particular car (or thing) is what the parties bargain for in the exchange. This goes beyond "physical coercion" to include deceit or knowing misinformation. What is fair value? I would argue that it is the price a willing buyer and a willing seller agree upon when there is no coercion.

By "honest, forthright, and did not coerce" I mean that the salesman is not aware of any particular defect or other misinformation about the asset being sold. And that he isn't otherwise physically or mentally coercing the buyer to act.

Cheers,

JRM

March 1, 2010 at 10:29 PM  

Jess,
While you are of course right that a large part of determining value is subjective, and depends on what the contracting parties are looking for in the item being sold, my concern is that we not reduce value entirely to exchange value. This, I think, has been one of the mistakes of capitalism. The medieval Church was adamant about the notion of a "just price"--that there was in principle, though it might be difficult to determine in particular circumstances, a just price at which something should be sold, and should be sold consistently. While the average price that people are willing to pay may play a legitimate role in helping the salesman set his price, I don't think that he should raise or lower the price from buyer to buyer, depending on how badly they want this or that safety feature. I'm open to being persuaded otherwise on that particular point, but I think it's very important to resist the idea that value is determined solely by supply and demand. It is this idea that justifies people ratcheting up prices dramatically to those who have just suffered a natural disaster, because they are so desperate they are willing to pay anything.

March 2, 2010 at 9:54 AM  

"Value" has two meanings in economics: Use value and exchange value. In order for a trade to take place, there must be a gap between the two, for both buyer and seller. The seller of bread has more need for the money he gets than for the bread, and the housewife has more use for the bread than for any other use of the money.

The maximum amount of wealth is created by the greatest gap between the two, and this is created by driving price to costs; that is, eliminating economic rents. The "natural price" is the least amount that will compensate the factors of production; the maximum price is just short of the use value.

Use values are subject to subjective factors, but if the seller absorbs these values, less wealth is created. The Scholastics, from Aquinas to Molina, found such pricing to be theft, since use-values exist in the buyer, not the seller, and in selling use values, the seller is selling what he does not own.

March 2, 2010 at 9:22 PM  

This is funny how off-topic we are by now, but this is definitely worth pursuing. Could you explain your final paragraph a bit more, Mr. Medaille, perhaps with some examples, for a poor bewildered non-scholastic like me?

March 3, 2010 at 7:31 AM  

Use being subjective exists in the seller; for the buyer to price the "use" is to price what he does not own. Take a case where I have a million dollars worth of wheat and you have a bakery with $1m and no wheat. Suppose that if you had the wheat, you could make $1.25M, net of other expenses. The wheat therefore has a use-value to you of $1.25m. But supposing that I say, "Brad, I know what this wheat is worth to you, and hence I am charging you $1.2M, leaving you only $50k to live on."

Clearly, the seller is "selling" the buyer's use-value and is appropriating his labor.

March 3, 2010 at 1:17 PM  

Ah, thank you. That is very helpful, and fascinating. But then the question arises, since the demand does not determine the price, how do we determine that the wheat the seller has is worth $1 million? How is that value quantified?

March 3, 2010 at 2:52 PM  

There are two theories on that--the labor theory and the marginal utility theory--but in a free market they work out to the same thing, in theory at least: prices are driven to the cost of production. The "cost of production" is the least amount that will compensate the labor that is consumed, including the labor represented by the entrepreneur and that which is embodied in the capital used.

Anything beyond this is an "economic rent," which serves as a drag on production, a kind of private tax. The confusion factor is land, which has no cost because it is not consumed in production; after the production is complete, the land remains, while the capital and labor are expended. Land is allocated, but not consumed, and its income is a pure rent that limits the returns to capital and labor. Also, markets are never perfectly free, so in practice there is vast amounts of economic rent. For these practical problems, the scholastics tended to favor "legal prices" set by "common estimation," something which involved both market and non-market forces.

March 3, 2010 at 3:07 PM  

Thanks, that's very helpful. Of course, one might reply that if producers can only charge the cost of production, they won't have enough motivation to the produce and sell their products. But I guess the scholastics would reply that if that's the case, they need to reexamine their motives.

March 6, 2010 at 1:47 PM  

The cost of production includes the support of entrepreneur. This actually creates more wealth. The argument that producers need high profits, and even the monopoly protection of patent laws, does not seem to be borne out in practice.

March 6, 2010 at 3:55 PM  

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