Light On Dark Water

The Roots of Declining Middle-class Income

It's definitely happening, has been happening for some time, and most reasonable people think it's a bad thing. But it's not the simple phenomenon that the Occupy protesters and others make it out to be.  Bill Gates didn't become a billionaire by grinding the faces of the poor, or by grabbing up most of some natural resource and selling it at a price of his own choosing, and most of his employees are quite well paid. I'm not against the rich paying more taxes than many of them currently do (in principle–the trick is to make that happen without unwanted side effects). But we can't get out of this situation just by taking money from billionaires. This column by David Brooks, and this rather lengthy article at The Atlantic, Can the Middle Class Be Saved?, get at the most crucial part of the problem: the dwindling number of what we used to call blue-collar jobs, the jobs that were available to men with high-school educations and paid enough money to support a family. I don't agree with everything in either of these pieces, but overall I think they make important points. 

One thing that I don't believe either of them mention, though, is something I often wonder about: what role has the now nearly universal entry of women into the paid work force had on wages? If there's anything to the law of supply and demand, doesn't it follow that wages in general might be higher if that hadn't happened? Also, for a long time, that second income for many middle-class families represented a real increase in buying power: did that have anything to do with the rising cost of housing? I don't know, but I wonder.

Maclin Horton

9 responses to “The Roots of Declining Middle-class Income”

  1. Craig

    …for a long time, that second income for many middle-class families represented a real increase in buying power: did that have anything to do with the rising cost of housing? I don’t know, but I wonder.
    I’ve not seen any data on the subject, but I expect the answer is ‘yes’.
    If families were, by and large, still relying on one income the market could not sustain an increase in housing prices that outstrips inflation by a significant amount, year after year. I believe that housing prices have inflated to what the market can bear, which effectively cuts most single-income families out.
    When my parents were my age their house cost roughly 3x my father’s annual income. The house we bought a few years ago, which is a fairly small, entry-level home, cost 6x my annual salary (and roughly 3x the combined income of my wife and me). That’s anecdotal evidence, but it fits.

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  2. Mac

    Similarly, we have “less house” than many people of our general age and income, because we bought it 20 years ago when we had four children at home and my wife didn’t have an outside job. It wasn’t much more than about 2x my annual salary. Now it’s almost paid for and the payment is pretty low relative to our now-higher income. In general the bid-up phenomenon is very much in evidence here. I happen to live in a town which became not only locally fashionable but a desirable place to retire for people from the north & midwest, where incomes are generally higher, and they pushed prices beyond even the general high rate of increase.
    Another factor working against the single-income family in many parts of the U.S. is that you can find fairly inexpensive housing, but in areas where you may find the occasional stray bullet in the wall, and be afraid to go outside at night.

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  3. ex pat

    I don’t know either, but I find it impossible to believe that the vast rise in house prices in the 1980s ff was not driven by the sellers ability to build, not on, say, four times one salary, but four times two salaries. From the late 1980s on, it make very, very difficult for any but the very rich, or those ready to live in areas ridden with violent crimes, to buy a house on one salary. I believe this changed our society much more than any sort of theoretical adhesion to ideologies of women’s liberation.

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  4. Mac

    Absolutely. I’ve always thought that the feminists’ claim of responsibility for these changes was massively overstated. For every wife/mother who went out to work for “fulfillment,” there must have been ten who did it because they wanted or needed more money.

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  5. Louise on the iPod

    Nick currently earns 3 or 4 times his first salary, which is just as well b/c we would never have been able to afford to buy our own house without that increase.
    I know that one can buy a 5 acre farm with a 3br house in NC for about $165k within commuting distance of Charlotte. What’s an average kind of salary over there?
    The topic at hand really Pushes my buttons. I’m doing well not to merely react.

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  6. Mac

    Median family income somewhere around $55k/yr? I don’t really know though a little internet research would probably turn up the answer. $165k is a little on the low side for nice houses in this area, but not way low.

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  7. Louise

    Ok, that’s interesting. I’d imagine the median family income would be pretty similar here too now that I think about it, but housing prices are much higher – oddly enough.

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  8. J Dave G

    Bought 20 yrs ago, 3.5x my salary then, now worth 2.5x. At 1688 sqft, it’s way smaller than almost anyone else I know. So in general, very similar to the experiences here, and yes, I agree that the two income thing is a huge factor and overlooked.
    Forgive me for not following your links before commenting on two other aspects.
    My read of history is that, with rare exceptions, the rich and strong will press their advantage as much as they can. Sometimes economic realities like labor shortages restrain them. Without those however, then they will oppress until restrained by revolution, or violent labor strikes, or regulation. Seems to me that the “regulations” that ideologues oppose play a strong role in making a middle class and in avoiding violence that is the sure result of oppression.
    I’m a middle class engineer. My colleagues and I enjoy that status in no small part because of universal education. We have fairly rare skills that are in demand. Most would agree that universal education is a good thing, or it was a good thing for a very long time, yet universal education is a “big government program” (and would still be so even if the feds got out of the business).
    These are only hypotheses I’ve been pondering lately, and I don’t really know if they hold water.

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  9. Mac

    My situation, house-wise, is a bit anomalous in the current situation, because as I think I mentioned earlier this little town has become quite fashionable, therefore expensive. It’s really not much of a house at all–a pre-fab ca 1970. The basic house is about the size of yours, but with the addition of a first screened, now enclosed, back porch it’s a little bigger. I’m sure it would not now fetch as much as it would have before the crash, but still, because of the location, the lot alone is probably worth what we originally paid for the house. Right before the crash our neighbors were selling a much nicer house, and we were considering buying it, but it would have meant taking on a pretty big new mortgage which seems pretty crazy at our age.
    No big argument as to the natural trajectory of the rich and strong.
    I don’t know of anybody who doesn’t think universal education is desirable. But there’s a lot of variation in ideas about how to get there. Also, that doesn’t mean the same education for everybody, in the sense of assuming, for instance, that everybody needs to go to college. It is exactly the federalness that most conservatives are concerned about in govt education these days. But in general the education establishment has brought a lot of the distrust and hostility on itself. There was an article in The Atlantic, not at all a conservative publication, a few months ago, about the struggle to reform New York city schools, which featured the teachers’ union, for instance, as a major part of the problem. Let’s see if I can find it…yeah here it is.

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