4 ms·

As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of (material)

by jawns 12y ago

As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of (material) richness. For instance, you might have a family with a sole breadwinner who has a low six-figure salary, but that has to cover all the family's expenses. Meanwhile, even if his neighbors, a dual-income household, both earn less than him, their household income could be considerably more. By the way, the rising percentage of dual-income households has been suggested as an exacerbating factor in the growing income inequality in the U.S. If you figure that people tend to marry others of the same educational level (more so now than in generations past), and if educational level is roughly correlated with income, then you can see how the gulf widens. Whereas 50 years ago, when single-income households were the norm, a lower-educated fellow might bring in SALARY and a higher-educated fellow might bring in SALARY * 2. But now, with dual-income households, a lower-educated couple might bring in (SALARY * 2) and a higher-educated couple might bring in (SALARY * 2) * 2. So, 50 years ago, there was one SALARY worth of difference between the lower-educated household and the higher-educated household. Nowadays, there is (SALARY * 2) worth of difference.

roc 12y ago
> "the growing number of dual-income households has been suggested as an exacerbating factor in the growing income inequality in the U.S." That's a red herring. When people talk about inequality as a serious economic problem, they're not talking about any discrepancy between households living off a salary or two. They're not even talking about the discrepancy between the ninety-nine and the one percent -- they're talking about the point-one percent and everyone else.
- Iftheshoefits 12y ago
  I don't think it's as much of a red herring as you suggest. More and more, a dual income is required for basic sustenance. That has a significant impact in many intangible ways: stress, family dynamics, freedom to pursue entrepreneurial efforts, etc.
  - roc 12y ago
    It was suggested that dual incomes were a cause of increased inequality, not a symptom. And that's wrong. The inequality that's an economic problem is not between those earning more than 100k and those earning less [1]. The problematic inequality is the difference between those earning more than 1M and those earning less. [2] I absolutely agree that dual incomes are an increasing-necessity, but they're a symptom of inequality. They're more-required because the "below 1M" earners have not been seeing their wages rise with their increased productivity. And those "lost wages" are going to the "above 1M" crowd -- not the above 100k crowd. [1] Two incomes are not making anyone cross that line, save a hypothetical family with two executives at small-to-mid-size firms. And the problem is primarily the rates-of-change of wages between those earning more than 1M and those earning less. That there's a gulf is not, by itself, much of a problem. That it's getting wider, is concerning. That tangible objective increases in worker output and efficiency are not translating into increased worker rewards is the ticking time bomb.
antihero 12y ago
Surely requiring two incomes in a household is extraordinarily problematic? Before, one partner could sustain the household and the other could stay at home and raise kids. Now, if both partners are expected to earn and have careers, who looks after the home life? Who looks after the kids? Surely this is really really damaging? And doesn't that mean that in real terms we're earning half as much?
- jiggy2011 12y ago
  You also produce more, which means you can export more, thus giving the economy a boost overall which raises standards of living because you can get more foreign goods for your $.
- specialp 12y ago
  Two incomes in a home is not required, it is just that our lifestyles have evolved to "require" that. Home prices over last 40 years adjusted for inflation have not changed very much (besides in the bubble in mid 2000's). Previously on that one income a reasonable 40 years ago family could have a home, a TV, a car, and take inexpensive road trip vacations. Now the typical family has multiple cars, homes much larger than in the past, a vacation could be flying to some destination, $100 cable bill, $150 phone bill... So if one wanted to live like in the past it is certainly attainable on a single reasonable income. That may mean "only" having a 1700 sf house with one bathroom and one car. Even since I was a child things have changed a lot. The typical new home today would be something I would have considered luxury as a child. I think that things changed a lot in the dot-com -> Real estate bubble era that gave Americans a taste for luxury that is now the normal.
  - humanrebar 12y ago
    > So if one wanted to live like in the past it is certainly attainable on a single reasonable income... That may mean "only" having a 1700 sf house with one bathroom and one car. I agree with the attitude here but cultural norms have shifted so much that there isn't nearly enough supply of those sorts of homes. The reality is that people typically "downsize" by moving far outside of town and commuting long distances, which isn't really a solution to the problem.
onion2k 12y ago
As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of richness. That depends on how the income is spent. If people spend their extra income on leisure activities, luxury goods, etc then it'll absolutely mean that a high household income will be a good measure of richness. That's obvious. However, if dual income households decide to spend their income on investing in a better house, what will happen is that it'll push house prices up - a finite supply of housing stock means there'll be competition for the best homes, so people will have to pay more for them. That demand side pressure will filter down the housing ladder and pull all the prices up. After thirty or forty years this will have had the effect on house prices that single income families just can't afford to buy. Further, it'll mean that dual income families have to retain two incomes, so parents wanting to stay at home when they have children simply won't be able to afford to. This has already happened in the UK. Lots of pundits are predicting a crash because the first-time buyers can't afford to buy, meaning no one is buying the lower price houses, and that's going to pull the whole thing down. Mind you, the pundits have been saying as much for about twenty years.
- applecore 12y ago
  Housing supply isn't fixed. When house prices go up, people build more houses.
  - nilkn 12y ago
    Zoning laws can pose a lot of restrictions on where those houses can be built, so it depends heavily on the city. Basic physical obstructions and topology also play a role. Adding more homes onto far out suburbs isn't going to do much to massage the problem of unaffordable housing near downtown office districts if it means that homeowners have to commute an untenable distance.
  - ccallebs 12y ago
    The availability of usable land is fixed. There's a limited amount of single-family homes you can build in a given area.
  - 12y ago
geebee 12y ago
I think there are a couple of factors you're overlooking. Consider the case of a dental hygienist married to a nurse. In SF, they both earn about 110k a year. So $220k is a high salary, comparable to a physician in a modestly paying speciality. Here's the thing... I think payroll deductions apply to the entire 110K of each dh and nurse's salary, but only the first $110k of the physicians salary. However, the second salary in the two-income family will be taxed at a high rate, on top of the first salary. Furthermore, physician's husband, who doesn't work, is available for full time child care. The nurse and dental hygienist have to arrange full time day care for their two young kids, which runs about $20-25,000k a year per kid in SF. And because they are a very high income family, over the "ultra-rich" 200k threshold, they don't get a tax break. Even close to 100k, that second salary may have a marginal value close to zero once kids enter the picture. That doesn't mean you shouldn't work just because the marginal value is low in the moment - eventually you get to come back up for air, and people who continued to work are often much better positioned to advance again. So there are benefits.
- ChuckMcM 12y ago
  In progressive tax situations that is called the 'marriage penalty' (second salary is all taxed at the higher marginal rate) which is mitigated somewhat by changing the tax thresholds for married people filing jointly. You can file separately of course, and it seems a number of people are living together and filing as individuals, it gets complicated as you get kids because they become dependents (and a tax credit) on one of the people's return. There is a reason all this stuff keeps a legion of tax attorneys and CPAs employed.
  - judk 12y ago
    Married filing separately doesn't change tax rates, it just splits the tax into two paper trails.

by jawns 12y ago

roc 12y ago

> "the growing number of dual-income households has been suggested as an exacerbating factor in the growing income inequality in the U.S." That's a red herring. When people talk about inequality as a serious economic problem, they're not talking about any discrepancy between households living off a salary or two. They're not even talking about the discrepancy between the ninety-nine and the one percent -- they're talking about the point-one percent and everyone else.

Iftheshoefits 12y ago
I don't think it's as much of a red herring as you suggest. More and more, a dual income is required for basic sustenance. That has a significant impact in many intangible ways: stress, family dynamics, freedom to pursue entrepreneurial efforts, etc.
- roc 12y ago
  It was suggested that dual incomes were a cause of increased inequality, not a symptom. And that's wrong. The inequality that's an economic problem is not between those earning more than 100k and those earning less [1]. The problematic inequality is the difference between those earning more than 1M and those earning less. [2] I absolutely agree that dual incomes are an increasing-necessity, but they're a symptom of inequality. They're more-required because the "below 1M" earners have not been seeing their wages rise with their increased productivity. And those "lost wages" are going to the "above 1M" crowd -- not the above 100k crowd. [1] Two incomes are not making anyone cross that line, save a hypothetical family with two executives at small-to-mid-size firms. And the problem is primarily the rates-of-change of wages between those earning more than 1M and those earning less. That there's a gulf is not, by itself, much of a problem. That it's getting wider, is concerning. That tangible objective increases in worker output and efficiency are not translating into increased worker rewards is the ticking time bomb.

antihero 12y ago

Surely requiring two incomes in a household is extraordinarily problematic? Before, one partner could sustain the household and the other could stay at home and raise kids. Now, if both partners are expected to earn and have careers, who looks after the home life? Who looks after the kids? Surely this is really really damaging? And doesn't that mean that in real terms we're earning half as much?

jiggy2011 12y ago
You also produce more, which means you can export more, thus giving the economy a boost overall which raises standards of living because you can get more foreign goods for your $.
specialp 12y ago
Two incomes in a home is not required, it is just that our lifestyles have evolved to "require" that. Home prices over last 40 years adjusted for inflation have not changed very much (besides in the bubble in mid 2000's). Previously on that one income a reasonable 40 years ago family could have a home, a TV, a car, and take inexpensive road trip vacations. Now the typical family has multiple cars, homes much larger than in the past, a vacation could be flying to some destination, $100 cable bill, $150 phone bill... So if one wanted to live like in the past it is certainly attainable on a single reasonable income. That may mean "only" having a 1700 sf house with one bathroom and one car. Even since I was a child things have changed a lot. The typical new home today would be something I would have considered luxury as a child. I think that things changed a lot in the dot-com -> Real estate bubble era that gave Americans a taste for luxury that is now the normal.
- humanrebar 12y ago
  > So if one wanted to live like in the past it is certainly attainable on a single reasonable income... That may mean "only" having a 1700 sf house with one bathroom and one car. I agree with the attitude here but cultural norms have shifted so much that there isn't nearly enough supply of those sorts of homes. The reality is that people typically "downsize" by moving far outside of town and commuting long distances, which isn't really a solution to the problem.

onion2k 12y ago

As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of richness. That depends on how the income is spent. If people spend their extra income on leisure activities, luxury goods, etc then it'll absolutely mean that a high household income will be a good measure of richness. That's obvious. However, if dual income households decide to spend their income on investing in a better house, what will happen is that it'll push house prices up - a finite supply of housing stock means there'll be competition for the best homes, so people will have to pay more for them. That demand side pressure will filter down the housing ladder and pull all the prices up. After thirty or forty years this will have had the effect on house prices that single income families just can't afford to buy. Further, it'll mean that dual income families have to retain two incomes, so parents wanting to stay at home when they have children simply won't be able to afford to. This has already happened in the UK. Lots of pundits are predicting a crash because the first-time buyers can't afford to buy, meaning no one is buying the lower price houses, and that's going to pull the whole thing down. Mind you, the pundits have been saying as much for about twenty years.

applecore 12y ago
Housing supply isn't fixed. When house prices go up, people build more houses.
- nilkn 12y ago
  Zoning laws can pose a lot of restrictions on where those houses can be built, so it depends heavily on the city. Basic physical obstructions and topology also play a role. Adding more homes onto far out suburbs isn't going to do much to massage the problem of unaffordable housing near downtown office districts if it means that homeowners have to commute an untenable distance.
- ccallebs 12y ago
  The availability of usable land is fixed. There's a limited amount of single-family homes you can build in a given area.
- 12y ago

geebee 12y ago

I think there are a couple of factors you're overlooking. Consider the case of a dental hygienist married to a nurse. In SF, they both earn about 110k a year. So $220k is a high salary, comparable to a physician in a modestly paying speciality. Here's the thing... I think payroll deductions apply to the entire 110K of each dh and nurse's salary, but only the first $110k of the physicians salary. However, the second salary in the two-income family will be taxed at a high rate, on top of the first salary. Furthermore, physician's husband, who doesn't work, is available for full time child care. The nurse and dental hygienist have to arrange full time day care for their two young kids, which runs about $20-25,000k a year per kid in SF. And because they are a very high income family, over the "ultra-rich" 200k threshold, they don't get a tax break. Even close to 100k, that second salary may have a marginal value close to zero once kids enter the picture. That doesn't mean you shouldn't work just because the marginal value is low in the moment - eventually you get to come back up for air, and people who continued to work are often much better positioned to advance again. So there are benefits.

ChuckMcM 12y ago
In progressive tax situations that is called the 'marriage penalty' (second salary is all taxed at the higher marginal rate) which is mitigated somewhat by changing the tax thresholds for married people filing jointly. You can file separately of course, and it seems a number of people are living together and filing as individuals, it gets complicated as you get kids because they become dependents (and a tax credit) on one of the people's return. There is a reason all this stuff keeps a legion of tax attorneys and CPAs employed.
- judk 12y ago
  Married filing separately doesn't change tax rates, it just splits the tax into two paper trails.