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My Parents Managed to Raise Two Kids on One Salary. That's Impossible Today -- What Happened?
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The following is an excerpt from Jared Bernstein's new book, "Crunch: Why Do I Feel So Squeezed?" (Berrett Koehler, 2008).
My dad had a full-time job, but my mom didn't, and they managed to raise, feed, house, and educate two kids on one salary. I can't do that today. Why not? What happened?
What happened was that the real earnings of lots of people, mostly male people, so husbands in this case, started to slip. At the same time, some of the very costs mentioned -- a home and a college education -- grew a lot faster than average inflation.
That's bad.
Also, over the last 30 years, the job market has opened up much more for women, who have made impressive gains that have helped to offset their husbands' wage stagnation.
That's good.
But it also means that family members are spending a lot more time in the job market. That's bad, or at least it's stressful.
There are three problems here and one positive development.
Problem 1: Men's earnings.
Real median hourly wage, husbands and wives, 1979-2006. (Graph is based on author's analysis of U.S. Census Bureau data.)
The hourly earnings of some men -- and not a trivially small group -- have done poorly over the last few decades. As shown above in the graph, the typical married man in his prime earning years, age 25 to 54, saw his real median wage fall a couple of percent from 1979 to 2006. His female counterpart made a lot more progress; her real hourly wage rose 30 percent, and she also worked a lot more hours. And if we cut the data a little further and look at husbands with at most a high school degree -- and only a minority of husbands were college educated over these years (16 percent in the mid-1970s; 30 percent today) -- we find a real wage loss of 8 percent over these 27 years.
But before you spouses out there start humming "Hit the road, Jack," recognize that it's not their fault. These men have been caught in the crossfire of a set of trends that have ripped the bottom out of their earnings capacity. The loss of unionized factory jobs has meant the slow bleed of high-productivity jobs in a sector where these guys had some bargaining power -- clout that enabled them to channel some of that growth into the household.
The fact is, when a man goes from making stuff to providing services, especially a man without a college degree, his wage falls between 15 and 20 percent, and he loses most of his fringe benefits. What explains a loss of that magnitude? It's not just the difference in the efficiencies between the two sectors, the so-called productivity differential -- the fact that services create less value added per hour than factory work. It's also that there's a lot more wage inequality in services, and when income grows in that sector, it tends to flow to the top.
That's where you most clearly see men's loss of bargaining power playing out; and outside of the public sector, unions have been hard-pressed to get a foothold in services. Wal-Mart has shut down operations rather than entertain the possibility of their workers forming a union.
At any rate, given that most of these men were working full time, full year, families had one (legal) strategy to undertake if they wanted to offset those negative male wage trends: more work by wives.
Problem 2 and Good Development 1: Women's increased presence in the paid labor market.
The increase in women's participation in the paid labor market over the last 40 years is widely appreciated as a huge change in our economy, our culture, and our families. Back in the mid-1960s, about 40 percent of women worked; in 2006, it was about 60 percent. And, while gender wage discrimination was and is a problem, women have made important gains in education and experience, and some have successfully penetrated barriers in high-end professions like law and medicine.
See more stories tagged with: family, wages, jared bernstein, crunch, salary
Jared Bernstein is a senior economist and director of the Living Standards Program at the Economic Policy Institute in Washington D.C. He is the author of "Crunch: Why Do I Feel So Squeezed?" (Berrett Koehler, 2008).
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