The upshot: It is hard to argue that price increases are overwhelming the wage gains of male workers.
I focus on male workers because they are the focus of the populist critique of capitalism. Household income presents both a fuller and more upbeat picture of how American families are faring. According to the nonpartisan Congressional Budget Office, after accounting for inflation, federal taxes and government transfer payments, the median U.S. household enjoyed a 44% increase in income from 1990 to 2016, the most recent year for which data are available. Households in the bottom 20% saw their income increase by two-thirds over this period.
Health care and education are salient expenses in large part because their prices have gone up. If their prices had been flat for three decades, while the price of televisions and food skyrocketed, we might all be bemoaning how expensive leisure activities and proper meals have become.
An unfortunate undercurrent in this discussion is the implication that women’s participation in the labor force has been a disappointing social development, hurting families and reducing marriage rates. And there is also the claim that many women are working because it takes two incomes to finance a middle-class life. This is Cass’s conclusion.
But this likely gets the causation backward. Take education as an example. Lots of factors affect its price. One is higher incomes. As a society gets richer, its willingness to spend on these services increases. And as the demand for education services goes up, driven by higher incomes, so does its price. (Indeed, Cass’s chart shows what single- and dual-earner households choose to buy, and compares it with what one male earner makes.) And we have already seen that male workers have experienced significant wage gains.
Some public opinion surveys do show that mothers work more than their self-reported preference. But it is hard to know what to make of those results. Which is a better indicator of their underlying preferences: the women’s answers to the survey, or the choices they make? The economist in me answers the latter.
It is perfectly possible to finance a middle-class life on one income. According to an analysis by the Institute for Family Studies, 26% of married mothers with minor children whose husbands earn between $75,000 and $99,000 are out of the labor force, as are 31% of mothers with husbands who earn between $100,000 and $249,000.
This suggests that dual-earner households aren’t caught in a trap of rising prices. Instead, they are making choices that they think are best for their families.
None of this is to deny that public policy needs to do a better job addressing the costs of raising a family, including health care, college educations and child care. The financial stress and pressure many households feel is real—it certainly is in my own family.
But that stress does not mean that life was better decades ago. Instead, it speaks to our aspirations for ourselves and our children.