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The other interesting connection to wage growth and 1970's was 'women in the workforce'. The concept, apart from the genuine support that existed for it, was c

by _red 8y ago

The other interesting connection to wage growth and 1970's was 'women in the workforce'. The concept, apart from the genuine support that existed for it, was certainly pushed by the feds, not out of political support but because they knew what the implications were. They could drive down purchasing power and families could make up for it by having both parents work.

dissident1234 8y ago
yeah check out this list of feminists by religion https://en.wikipedia.org/wiki/Category:Feminists_by_religion https://en.wikipedia.org/wiki/Category:Feminists_by_religion Notice anything interesting?
Cacti 8y ago
Yes, great point. Certainly some very insidious second order effects there.
gumby 8y ago
I agree that this factor has a big impact on the economy but I don't see how it drives down purchasing power in any way. By having more people available to do more things you have an opportunity for more economic activity. It's true that when an economy is in deep, possibly structural recession, you can increase wages by reducing the number of workers (this was used in Germany in the 1930s -- when they cut the number of people allowed to work in half the employment rate magically and mathematically doubled). But if you think that there is inherently a finite amount of work to be done (the so-called "lump of labor fallacy") you could also "fix" this problem by adding a day (or two!) to the week end. France tried this by lowering the number of non-overtime hours per week from 40, but it had no real effect. Instead I think there is general consensus that having more people available to do things promotes economic growth and human freedom. It has had a pernicious effect: household income has increased because the number of people working per household now averages more than 1. Relying on that measurement has masked the overall flattening of wage growth, which has been quite a bad thing. I don't know what you mean by this policy being "pushed by the feds"; could you give any examples?
- woolvalley 8y ago
  I think they mean supported maybe? I can definitely see a typical economist giving arguments why women going into the workforce and away from the family 'workforce' is a good thing, this being encouraged by the fed which leads to policy changes by congress people. I think what people argue is multifold: - Households tend to pay for things in terms of budget percentages vs something more rational. Ex: People tend to semiconciously target 30% of their income towards housing, and will upgrade and downgrade their housing accordingly as incomes go up and down. A dual income household will therefore pay approx double the normal price if single family households are the norm. - The cost of things in some markets, especially NIMBY housing markets, are demand sensitive at the margins since the supply isn't responding properly due to rent seeking structures. So if a new more competitive creature called the dual income household lands on the scene, the price norm will adjust to assume a dual income household vs a single income household as the market price - Employers consider cost of living in pay to make a competitive offer to employees. If the typical household is dual income, the pressure to pay more to cover this norm is reduced. People quickly figure out that you need to be dual income to pay your rent and have a 'family sized' lifestyle. - Iterate this kind of model several times over a lot of stuff and you need to be a dual income household in many cases to tread water. So what you are saying and what others say can both be true at the same time. Dual income norms increase total economic output, but also make it very hard to compete as a single income household on the market, which have other knock on effects such as decreased fertility since all of the 'free' household labor has now disappeared. Go watch "F is for Family" for a 1970s time capsule of how family life was back then. You have a suburban white single family household living in a house on a single lower-middle class income, with 2 cars, the conflicts that arises as the wife starts working and her previous 'free' household labor disappears and more.
  - gumby 8y ago
    Thanks, good analysis.

by _red 8y ago

dissident1234 8y ago

yeah check out this list of feminists by religion https://en.wikipedia.org/wiki/Category:Feminists_by_religion https://en.wikipedia.org/wiki/Category:Feminists_by_religion Notice anything interesting?

Cacti 8y ago

Yes, great point. Certainly some very insidious second order effects there.

gumby 8y ago

I agree that this factor has a big impact on the economy but I don't see how it drives down purchasing power in any way. By having more people available to do more things you have an opportunity for more economic activity. It's true that when an economy is in deep, possibly structural recession, you can increase wages by reducing the number of workers (this was used in Germany in the 1930s -- when they cut the number of people allowed to work in half the employment rate magically and mathematically doubled). But if you think that there is inherently a finite amount of work to be done (the so-called "lump of labor fallacy") you could also "fix" this problem by adding a day (or two!) to the week end. France tried this by lowering the number of non-overtime hours per week from 40, but it had no real effect. Instead I think there is general consensus that having more people available to do things promotes economic growth and human freedom. It has had a pernicious effect: household income has increased because the number of people working per household now averages more than 1. Relying on that measurement has masked the overall flattening of wage growth, which has been quite a bad thing. I don't know what you mean by this policy being "pushed by the feds"; could you give any examples?

woolvalley 8y ago
I think they mean supported maybe? I can definitely see a typical economist giving arguments why women going into the workforce and away from the family 'workforce' is a good thing, this being encouraged by the fed which leads to policy changes by congress people. I think what people argue is multifold: - Households tend to pay for things in terms of budget percentages vs something more rational. Ex: People tend to semiconciously target 30% of their income towards housing, and will upgrade and downgrade their housing accordingly as incomes go up and down. A dual income household will therefore pay approx double the normal price if single family households are the norm. - The cost of things in some markets, especially NIMBY housing markets, are demand sensitive at the margins since the supply isn't responding properly due to rent seeking structures. So if a new more competitive creature called the dual income household lands on the scene, the price norm will adjust to assume a dual income household vs a single income household as the market price - Employers consider cost of living in pay to make a competitive offer to employees. If the typical household is dual income, the pressure to pay more to cover this norm is reduced. People quickly figure out that you need to be dual income to pay your rent and have a 'family sized' lifestyle. - Iterate this kind of model several times over a lot of stuff and you need to be a dual income household in many cases to tread water. So what you are saying and what others say can both be true at the same time. Dual income norms increase total economic output, but also make it very hard to compete as a single income household on the market, which have other knock on effects such as decreased fertility since all of the 'free' household labor has now disappeared. Go watch "F is for Family" for a 1970s time capsule of how family life was back then. You have a suburban white single family household living in a house on a single lower-middle class income, with 2 cars, the conflicts that arises as the wife starts working and her previous 'free' household labor disappears and more.
- gumby 8y ago
  Thanks, good analysis.