The Two Income World

A considerable amount of it, at least here in the US, is taken up by the hidden expenses of being a two-income household. That is, when you factor in all the convenience foods/eating out because neither of you has time to cook, having to maintain work clothes for two (and even if it's "business casual," women's stuff tends to be more expensive), having to maintain two commuter vehicles and parking fees (or pay transit fees for two, for places with functional public transit), and all that. Throw kids - child care, etc. - into the mix and it can actually *cost* you to have a second income. (I know folks who do it anyway, because it means their credit limit is higher. Math is hard, I guess.)

I think the lifestyle has gotten more expensive, too, as the pursuit of novelty means we're continuously buying the latest greatest *everything*. And bigger, too.

I dunno. When I quit to have our son, we cut our income in half. And, you know, we did not notice a decrease in our lifestyle, even with the expense of having a baby. A change, yes, but not for the worse. I like to cook (doing the dishes, on the other hand...) so that was no hardship, and we'd reached the point of burnout on eating out anyway.

On the other hand, we're not typical: being geeks, we make pretty good individual salaries. And we live well under our means, in a little 85-year-old two-bedroom bungalow. Compare that to my sister, who's getting ready to have a baby, and is buying a newly-built house, over twice the square footage of ours and nearly four times the cost. One car is maybe a year old, the other three or four - ours are ten and eighteen (though we're thinking of trading in one in the next year or so, or perhaps sooner if Carl's grandmother decides to sell her four-year-old car). They've bought into the dominant culture; we're opting out as much as possible.

On t'other hand, most of our friends and neighbors are what you'd charitably call "struggling." And not because they've bought into a lifestyle: they're living in aging two-bedroom bungalows and cars older than ours. Mostly, it's because they're not qualified for anything that pays more than poverty-level wages. I don't know how to solve that, over the long term and for more than a few cases. It's deeply frustrating, too.

There's this accounting identity called the Say Aggregation Principle that often provides non-rail content at Cold Spring Shops. The short form is the sum of payments to resources must equal the aggregate spending on outputs. (That does mean that some owners of resources take losses ... that's for another day.) It follows that if households have additional income, that income can have the effect of bidding up the prices of things households consume (many of which are subject to other constraints such as zoning codes and tax caps) in such a way that a one-income household has difficulty competing with a two-income household, ceteris paribus, and as the preceding poster notes, there are a lot of things that are difficult to impound in that "all else." In the States, we are probably underemployed relative to our grandparents, but when we ferry the kids ourselves rather than let them organize their own play sessions in biking distance and hire housecleaning services rather than pick up our stuff, which we have more of, it's easy to perceive ourselves as more stressed and more stretched.

Is the "Say Aggregation Principle" another word for "Zero-sum game?".

I am looking at various bits of data. For instance, spending on food and alcohol & tobacco now account for 9.4% and 3.9% of total consumer spending, compared with 17.1% and 11.3% 40 years ago, while clothes and recreation & culture are up from 3.8% and 4.3% to 6.9% and 13.3%. Different things are now reckoned as essential!

In the meantime I suggest you take a look at the government website http://www.statistics.gov.uk. On the advanced search put "distribution of income" and then click on article on "social inequalities".

The Say Aggregation Principle is an accounting identity, that in primitive form reads INCOME = WAGES + INTEREST + RENT + PROFIT. I'm not shouting ... Honestly ;) The creation of income does not have to be a zero-sum game; that's what we call economic growth, or efficiency gains. And (perhaps it is time to put up another post on this topic) those efficiency gains can mean that people are actually less stressed, rather than more stressed, compared to their ancestors. To some extent those conveniences you mention in your post have mutated into must-haves; in the States we have a curious form of school choice in which a good school district comes bundled with a more expensive house (I don't know if there's something like that at work in the UK; certainly parts of the Torbay area have a Californian look to them ... are these trophy houses?) Some people do argue that taxes have had an effect on labor force participation, as has no-fault (unilateral) divorce. I'm skeptical, however, about the generations losing ground. What some younger people are having trouble grasping is that the stuff their parents accumulated took a long time to accumulate. If they compare what they can earn now (with their entry-level skills, even if from a top university) with what their parents are able to buy (now that their kids have left the nest) they'll see it one way; if they look at what we made do with even 20 years ago they might think differently.