Why Do We Need Two Breadwinners in Today's Economy?
While cost of consumer goods has decreased, the rising expenses of essentials like healthcare, education, and housing have far outpaced inflation. Combined with generational differences and the unequal distribution of economic benefits, has further exacerbated the need for dual-income households.
In the not-so-distant past, it was common for a single breadwinner to support an entire household. However, in recent years, economic changes have made it increasingly challenging for a single person to shoulder this responsibility. Despite the decreased prices of consumer goods like electronics, the cost of essential items such as healthcare, education, and housing has skyrocketed.
Consumer Goods and Inflation
Over the past few decades, the cost of consumer goods, such as big screen TVs and personal computing devices, has significantly decreased. Thanks to technological advancements, we can now purchase these products for a fraction of their previous cost. As a result, inflation has been kept under control, leading to relatively stagnant wages. However, this reduction in the price of non-essential items does not directly address the rising costs of essentials.
Rising Costs of Essentials
While consumer goods have become more affordable, the costs of essential items, such as healthcare, education, and housing, have considerably outpaced inflation. Take housing prices as an example: in previous decades, they were around 3-4 times the average annual wage. Today, they have shot up to 5-10 times or more. These essentials have what we call an inelastic demand, meaning people cannot live a healthy and fulfilling life without them. As a result, the costs of basic necessities have increased, placing a heavier burden on individuals and families.
Generational Differences:
One interesting aspect to consider is the generational divide. Older, more established individuals often do not experience the full impact of these rising costs. For instance, they may enjoy retirement benefits like Medicare, which provides healthcare coverage. Furthermore, voting patterns among the older generation may contribute to policies that restrict the supply of housing (NIMBY voting), driving up property values.
Additionally, many older Americans received college degrees when education was more affordably funded by public spending in the 1960s and 70s. In contrast, younger individuals today face the challenge of paying off student loans that can reach six figures, making education less accessible.
The changes in our economy have made it increasingly necessary for households to rely on the income of two full-time breadwinners rather than just one. While the cost of consumer goods has decreased, the rising expenses of essentials like healthcare, education, and housing have far outpaced inflation. This, combined with generational differences and the unequal distribution of economic benefits, has further exacerbated the need for dual-income households.
