Twice as much money sounds pretty good.  So does, “Two can live as cheaply as one—especially if both of us are working.”

So, of course, when job markets permanently opened up to women in post-WW II America and throughout the feminist revolution, a couple living together could be forgiven for imagining that life was about to get twice as good as before—just as your dinner presumably would if you got a “2-for-the-price-of-1” pizza delivery special brought to your door.

On the other hand, theoretically speaking, things might end up being less than expected or worse than before, if—to continue the pizza analogy—the two pizzas are individually, or worse, collectively, smaller than the familiar larger single-order; and worst, if two have to split a small pizza for one.

Pizza Income Pies and the 2-for-1 Deal

Given these diametrically opposite—yes, pizza-pun on “diameter” intended—possibilities, it is crucial to know when going for a “2-for-1” pizza deal or family-income pie arrangement will result in doubling, halving or even more drastically reducing a twosome’s individual or combined payoffs.  It is also illuminating to ask whether or not and how, through some devious or inherent dynamic, 2-for-1s, i.e., 2 incomes for 1 household, can morph into their opposite, the 1-for-2.

By “1-for-2”, I mean the equivalent of 1 income pie for 2 people that is much smaller than the original 1-for-2 of the booming1950s, as the end result of a historical evolution in stages that proceed[ed] like this:

  • 1 large income pie for two people = SBW [Sole Bread Winner income, the “LITB”—“Leave It to Beaver” patriarchal income model of the 1950s]
  • 2 larger total incomes for 2 people > SBW [as double-fat incomes became more common]
  • 2 smaller total incomes for 2 people = SBW [This is the “halving” point, at which 2 earn what 1 used to, in tandem with economic slowdown.]
  • 2 even smaller total incomes for 2 people <SBW [when the 2008 recession’s full fury begins to be felt.]
  • 1 smallest income <SBW [for the harder-hit casualties of the 2008 recession]
  • No income [for the hardest-hit casualties of the post-2008 economy].

More interesting than the fact that this is exactly what has happened to many households as a socioeconomic demographic fact over two generations is that it may have been utterly predictable, whether engineered or not.

By establishing a double-income norm, America greased the slide to a lower-income 1-for-2 [or zero income] that leaves the average couple much worse off than any of the preceding twosome income forms, especially much worse off than the 1950s SBW arrangement.

Engineered? A massive deterioration in economic well-being deliberately induced? How could that be? Well, it has been claimed, e.g., by the late Aaron Russo, one-time Nevada Republican gubernatorial candidate and Hollywood mogul, that feminism was in fact “created” by shadowy elites in order to, among other things, double the population tax base and eliminate home schooling, to allow greater centralized ideological mind-control over childhood education, by getting women out of the home and into the workforce—and alleges intelligence agency funding for allegedly agency-connected Gloria Steinem’s Ms. Magazine.

Whatever the merits of marginal or marginalized reports and allegations, it is true that if there were any corporate or other organized interest in creating downward pressure on wages and salaries, doubling the workforce without at least doubling the demand for workers could have that consequence, if not that objective.  When an expanded supply of workers exceeds demand for them, the likely economic consequence is a general decline in wages and salaries and a more compliant workforce and higher enterprise profits.

On the other hand, in a booming economy experiencing labor shortages, encouraging double-income households would be a very smart win-win move for all concerned, including those relishing higher tax revenues from taxpayer jumps to higher tax brackets. The key is the strength of demand.

Unfortunately, history has not favored the unfilled-demand-for-labor boom-model, certainly not since the advent of massive outsourcing of jobs, expanded automation, collapsing savings—and attendant reduced consumption, recession-induced layoffs and widespread skills-jobs mismatches, e.g., through irrelevant degrees and inflated, misguided graduate expectations.

Prophet of Double-Doom

Compounding the decline in double-incomes are the soaring concomitant costs of maintaining a household. Even before the 2008 financial meltdown, Massachusetts senator and former Harvard Law School professor, Elizabeth Warren, in a 2007 University of California TV lecture, “The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net”,  alerted her audience to each of the following:

  • The double-income family has no labor reserves in the event a bread winner loses a job. The classic patriarchal SBW model provided such backup. If Ozzie lost his job, Harriet could pitch in and go to work outside the home. But, with the double-income household, forced by economic necessity to work as a team, the loss of one income can be a catastrophic whammy, with no way to offset it.
  • On the eve of the middle-class meltdown that she predicted in 2007, the household savings rate had, despite double incomes, dropped to zero—actually dwindled to negative savings—from a robust 11 percent chunk of take-home pay in 1970, despite substantial declines in discretionary and essential spending on consumables, such as clothing, food, appliances—clothing actually down 32%, food down 18% over 30 years, 52% less on appliances. However, although the per car costs declined significantly, the double-income family has required a second automobile. [One cautionary note: It has been claimed that Warren’s data disregarded capital gains, e.g., Warren Buffett’s $60 billion, as family assets, because, technically, those funds were not “savings”.]
  • Why the collapse in savings?—Huge spikes in essential expenditures: in home ownership, education, childcare, transportation and healthcare costs, not to mention increases in total household taxes.  Specifically, Warren identified the following as canary-in-the-coal mine warnings of big trouble closing in on double-income households—before, and as a harbinger of, the coup de grâce inflicted by the 2008 financial meltdown:

*Home mortgages: up 76 percent, even though the typical (median, i.e., 50th percentile) house size increased only marginally, up from 5.8 to 6.1 rooms.

*Health care: increased 74 percent.

*Automobiles: up 50 percent because the typical family now had two careers, which required an extra car to get to work.

*Child care: an unprecedented expense (again because both parents were working).

*Taxes: Up 25 percent due to a higher marginal income tax rate for the second earner.

*Median revolving household debt up from 1.4% in 1970 to 15% of annual income in 2005.

*Essential expenses up from 50% to 75% of family income over that generation.

*Risk of financial default doubled, given that, when either householder is laid off [without unemployment benefits], disabled, sick or otherwise unable to generate a normal income, the essential expenses cannot be met.

*In the double-income family, illness of a family member has an income impact, as one breadwinner takes time off, possibly at the risk of his or her job.

*Income went up, but, by 2007, males ended up making $800 less than their fathers.

*The growing broad expectation of pre-school and post-secondary education has, over that time, created a new, substantial expense, compounded by the rapid rise in tuition and other school-related costs—a kind of double whammy for the double-income family.

*Bankruptcy rates for married-couple households advanced to twice those of single-person households—15% vs. 7%.

Hence, any illusions about a fantastic “2-for-1” income-pie deal were already being crushed by the associated costs of maintaining a double-income household—even in the absence of a household variation on “Parkinson’s Law” effect, viz., in this instance, the possibility that household expenditures might expand—as an absolute amount, if not also a percentage of income, to consume expanded income when household income doubles.

So, what are the prospects for the double-income household already hammered with multiple whammies? Can things actually get worse? Well, there is one development that would sorely tempt a bookie economist to double down on double trouble.

…A double-dip recession.

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