I've now seen this video at several liberal blogs, and someone has to stop it. Apparently, that someone is me, since no one else has stepped up. Mine is a high and lonely destiny.
Warren has an intriguing thesis: that women going into the workforce has resulted in few real consumption gains to families with children because all the money is going to childcare, and to bidding up the price of houses in good school districts. Meanwhile, families are more fragile, vulnerable to outside events, because Mom no longer functions as an all-purpose backstop. Meanwhile, the government is not providing the things those families need: childcare, high quality education, a more generous safety net, health insurance. The result: more bankruptcies, less financial security. The talk is provocatively titled "The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net"
As you can imagine, this thesis is extremely beloved of liberals, who like its endorsement of more government benefits, while ignoring the fact that this could equally well argue for having women stay home.
Nonetheless, I think it's an interesting thesis, and having read the book, I find it eminently plausible. The only problem is that it does not actually seem to be true.
As a general matter, my problems with Warren's work are fourfold:
1. Her arguments tend to rest entirely on particular statistics; if you look at another statistic that describes the same thing a slightly different way, her results have a tendency to collapse. Indeed, she often seems to almost deliberately pick the most useless number for measuring the effect she wants to get at.
2. She often switches nearly at random from one way of describing something to another: from percentages to absolute amounts, from individuals to households. All of these switches have the effect of concealing the holes in her work.
3. She either isn't familiar with, or ignores, fairly standard alternate explanations for the statistics she uses.
4. When she creates her own measures, they use overbroad standards for the things she wants to measure, while leaving out important variables.
Why (almost) all of her arguments are wrong in particular is so long that I'll break it up into various posts. Warren is pretty much the public face of moral panic about credit, and as such has a lot of influence. And also, a lot of the things she says are common tropes that should be addressed, so this seems like a good opportunity. More in succeeding posts.
women entering the labor force represented the last source or supply of high quality cheap labor for the capitalist system to exploit. the sharp increase in the supply of labor from women has been one of the major reason real average hourly earnings of men has stagnated. All kinds of people make this argument about immigrant labor, but the real driving force has been the massive increase in the labor supply caused by the share of married women working approximately doubling. Come on, you are an economist.
What happens when you get a massive increase in supply as represented by women entering the labor force? The price goes down. Guess what, the sharp growth in women working has been accompanied by weak real wage growth at the bottom of the scale -- exactly what economic theory calls for. You can nit pick her argument to death, but you can not counter my argument.
Spencer, doesn't your theory only work if you assume a stagnant number of jobs per capita? How do you know that the number of jobs, and therefore production, didn't increase with the addition of women into the workforce?
I'm not saying that real wages haven't stagnated, but I don't think women entering the workforce is the cause.
I agree that women's entry into the labor force has probably had some downward effect on wages, but nowhere near in the range that you postulate. Unskilled labor, where wages have declined, is one of the most gender segregated parts of the labor market. And women are actually more educated than men; they shouldn't be having a disproportionate effect on the wages of high school dropouts.
Spencer,
women are counted when the official unemployment surveys are taken. We have been in the 4 percentage point range for years, and are now right at 5%. If women 'flooded' the work force and the flood was deleterious, we'd not only see wage stagnation, we'd see higher unemployment than we do. The market can handle the extra employees, and the downward force on wages wasn't THEM, it was the 'internationalizing' of so many jobs, which by the way was necessary for production of many things to even continue. Just because we keep jobs here doesn't mean we keep the job, period... companies go out of business when they can't price their products competitively..
at any rate, I see women as being FORCED to flood the market, because since the 1940's income taxes have gone up by a factor of TEN, and one job just can't escape with enough money to care for a family anymore.
Come on, you are an economist.
No, she's not.
Spencer, your post assumes that technology is constant. This is a common Marxist affliction, actually.
It isn't constant.
Wages at the bottom end are stagnant because many bottom-end jobs have been replaced by machines or better ideas. Container freight, routed by computers, has displaced many jobs that required only a strong back (generally young, male, uneducated). This means that, even in an economy that has grown tremendously, there is little pressure from high demand for bottom-end workers.
And yes, I do believe that immigration, particularly illegal immigration, has also contributed by keeping the supply of relatively unskilled labor plentiful.
But women, in fact, have never been a significant part of the low-skill physical labor force, the "bottom end" you write about.
The laws of economics do hold; you're just ignoring many variables in the equation.
Spencer, your post assumes that technology is constant. This is a common Marxist affliction, actually.
It isn't constant.
Wages at the bottom end are stagnant because many bottom-end jobs have been replaced by machines or better ideas. Container freight, routed by computers, has displaced many jobs that required only a strong back (generally young, male, uneducated). This means that, even in an economy that has grown tremendously, there is little upward pressure on wages, from the demand for bottom-end workers.
And yes, I do believe that immigration, particularly illegal immigration, has also contributed by keeping the supply of relatively unskilled labor plentiful.
But women, in fact, have never been a significant part of the low-skill physical labor force, the "bottom end" you write about.
The laws of economics do hold; you're just ignoring many variables in the equation.
Todd Zywicki at the Volokh Conspiracy has been blogging about at least one aspect of her work for a long time, but doesn't seem to have made much of a dent: http://volokh.com/posts/chain_1187542660.shtml
Pete,
Spencer's argument works no matter what the economy is doing: an increase in the supply of labor will decrease wages over what such wages would have been. The details of just how much effect the increased labor supply produces depends upon the overall health of the economy (e.g., expansion vs. contraction), but without question increasing the labor supply will decrease wages.
The fact that, on average, women may be more educated than men may not be particularly relevant in this particular case, as the differences in education [I don't know exactly what such differences are, quantitatively] may not be substantial enough to be other than "lost in the noise".
Megan McArdle is sensible when speaking about economic matters. Is she some sort of guilt tripped white person? Why else would McArdle support Barack Obama? The Republicans may often leave soemthing to be desired. Nevertheless, Democrats Like Obama are either lying to their voters---or are convinced socialists!
Aside from the purely economic, I think it's pretty clear that the local schools have been directly affected by so many moms going into the workforce.
When I was a kid most of the mom's were at home and EVERYONE was a member of the PTA. If word got out that a certain teacher had problems or something fishy was going on at school, the principal was held accountable immediately and he knew how awesome the mom telephone tree could be.It had a great balancing effect between the community who wanted their kids to get educated and the more extreme elements of the education establishment.
Now the mom's are busy, the neighborhoods empty and the schools are left to their own devices.
Exactly. Does Warren look at the percentage of national income confiscated by government since WWII? This is the left's dirty little secret of the post New Deal era: married women have been forced into the workplace to maintain middle-class living standards, and in doing so have created much of the demand for government services the left claims is needed.
yours/
peter.
Ah, Elizabeth Warren. That brings to mind the classic takedowns of Warren's "Two Income Trap" by Todd Zywicki last year. Zywicki found many of the same problems with Warren that Megan does - switching between percentages and absolute amounts, ignoring alternate explanations, etc., etc.
In short, Warren is an extremely shoddy academic. It's no wonder some people find her so credible.
If I am not mistaken Dr. Warren was co-author of a Harvard study of bankruptcy in America that concluded 60 percent of all bankruptcy filings were precipitated by medical bills. This conclusion was achieved however by statistical sleight of hand: making the definition of "medical crisis" wide enough and loose enough to achieve the sought-after conclusion, that some form of government-sponsored universal health care was vital.
The effect on the entry of large numbers of women on the level of real wages depends on many factors which don't seem to be addressed by any of the commentators. As only a beginning, was their a relative shortage or surplus of labor in the various market segments in which women became a significant force? Where women relieved shortages, the net effect should have been increased employment at market clearing wages (as more employers could obtain the workers they sought and did not have to pay an increasing premium for them), while where they increased an already surplus labor pool, their might well be downward pressure, though given the general downward stickiness of wages and prices, this is not so likely. What it may have done, more likely is to shift hiring at entry level wages away from less qualified men in the pool to more qualified women.
And of course, that's just a static snapshot. The effect over time will depend on other factors, such as the availability of capital, general demand, and growth, based on increasing population, changing tastes, and technological innovation that changes the relative costs of factors of production.
Barry,
Women have been part of the workforce for most of history. Remember the Triangle Shirtwaist fire? And you surely don't think women weren't part of the workforce when America was an agricutural society. Women only left the workforce after the Depression and World War II, when unions and government forced them out to provide enough jobs for men to support families.
The problem is that fewer women are willing to support lower skilled stay-at-home Dads than there are men willing to support stay-at-home Moms. This can be seen in the increased number of women who choose to be single mothers rather than marry (don't have the cites handy, but remember a recent post in WaPo's Outlook). Warren's presciption for more government support for childcare, education, and healthcare, in their current form, will only exacerbate this trend. It's the same phenomenon we saw when welfare benefits were extended to single mothers in the 60s. Only when government benefits to women who marry the unemployed fathers of their children exceed the benefits to those who place their children in childcare will this trend reverse.
I think Warren is confusing the middle class with newspaper journalists, who most everyone can agree is an endangered species.
It has been a while since I studied economics but doesn't Spencer's argument also ignore the fact that increased women in the workforce also increased consumption (ie demand) for many things. Some very direct "demand" aspects I can think of include daycare, cleaning services, lawn services (as men had to do more childcare and other traditional housework), restaurant meals, office clothes, etc. Some less direct things include vacations and gadgets that higher family incomes allowed.
Now that being said, I think there was a delay between the time that women entered the workforce and the demand really kicked in -- unemployment was high in the 70's. (I'm sure women weren't the only cause but probably a contributing factor).
When we say the entry of women into the workforce hurts wages, that assumes that when these women were earning $0, they simply weren't part of the statistics.
Put another way, a woman going from a wage of $0 to $something is a clear economic improvement. Yet it's being spun as moving backwards.
This applies for the workforce in general -- are unemployed people counted as earning a wage of $0, or are they not part of median wage statistics? If it's the latter, the median wage becomes a very misleading indicator of economic progress -- people can move up latter while the average moves down.
The reason I say this is that it seems an odd complaint to say that women are now earning wages where they weren't before. Perhaps the "incumbent" men might have had to work harder to compete. Again, how is this a bad thing?
Spencer's argument is so outdatedly Marxist that I have to think that it is some parody/baiting by a capitalist seeking to embarass leftists.
The US Middle Class has never been more prosperous. Today, they can buy an iPod with 160GB of storage, which in 2001 had only 4 GB of storage. The 42-inch Plasma TV that costed $8000 in 2003 costs $1000 today. Skype has made phonecalling free, just in the last few years.
The US is SO prosperous that even $100 oil did not cause any major disruptions or hardships. Now we are at $123 oil, and still the hardships are minor, but not major.
Read how 'These are the Best of Times'.
The biggest event of the last 17 years is the stunning defeat of socialism.
come on, you claim that the income going to government has increased sharply.
Where has that income gone?
The government causes income to be transfered from one segment of the population to another. From the 1930s to the 1970s the government caused income to be transfer from the upper class or the wealthy to the middle and lower classes , but since the 1980s the government has caused income to be transfered from the middle to the upper income. Government does not produce or consume anything it just shift it around in the economy.
You are still changing the subject.
My basic argument was that women entering the labor force sharply increase the relative supply of labor and cause the returns to labor to fall.
Nobody has addressed this argument.
I'm still waiting for someone to actually address my argument.
Folks are also ignoring the absolute size of GDP. You can count it in dollars, tons, barrels, unit count or hours of services of all types etc--but the absolute amount of goods and services produced by US workers has increased dramatically since the end of WW-II. Yes women have come into the workforce in large numbers--but they were already in the workforce in large numbers.
Jobs get created, jobs get destroyed. Is there anyone alive (except perhaps in some obsolete government agency) who still works with the old IBM/NCR punch cards and computers?
In the early 1960's sitting in an economics classroom I was taught by a Dr. Ryan, who'd been a high muckety muck in the New Deal agencies in the late 30s. He told me as "gospel truth" that a 5 to 6% unemployment rate was full employment, and those unemployed were simply in the process of moving from one job to another, i.e. it was the structural unemployment rate.
We've had significantly less than 5% unemployment for several years now and we're told that women are driving wages down? Give me a break.
Of course the old joke is that when your neighbor is unemployed, it's a recession; when you're unemployed, it's a depression. But in the larger sense, the economy is fairly healthy.
I thought this whole argument was debunked in the WSJ (among other places) when it was first published, and again more recently? I forgot who by (Bainbridge?), but the crux of her failure is that she fails to account for the fact that the biggest chunk of expense that has eaten into the gains in family income during the time period described is for TAXES, at the federal, state and local level. That phenomenon will likely accelarate if her prescriptions are followed, thereby making the problem worse, not better. She ignores this purposefully, because it blows her entire theory to bits.
In the mid-80's, an OpEd writer who may or may not have been an economist (I don't remember his name, but have never forgotten the gist of his article) wrote along these same lines emphasizing the stagnation in male earnings. He hypothesized that if women returned to the home (at least in the rate that had prevailed post-WW2) to concentrate on raising their children, it would accomplish several societally desirable goals:
1-It would tighten the labor market and put upward pressure on the wages of male workers;
2-It would put mother's back into their children's lives as a more positive role-model;
3-It would bring more accountability into the Ed system as mothers would be more involved on a daily basis;
4-Since the wages earned by working mothers go, for the most part, to pay for day-care, transportation costs, and increased family taxation due to a second-earner; any reduction of net income would be made up from increased earnings due to the shortening of the labor market.
This was written from the basis of working mothers in a two-parent household, and did not apply to single-parent households. And, this was before the great increase in "un-documented immigration" that has occurred since then.
Also, it was written to deal with negatives then appearing in society that were the result (in the writer's opinion) of mothers entering the work-place on a permanent basis, and giving short-shrift to roles that had traditionally occupied them (that old division of labor thing).
"My basic argument was that women entering the labor force sharply increase the relative supply of labor and cause the returns to labor to fall."
Spencer, that is economically illiterate, that it is laughable.
You assume that there is only a fixed demand for labor in the US. You don't even consider that more workers cause more consumption and ever more demand for workers.
If you killed everyone in America, so that you were the only person in America, would your personal income be $14Trillion a year? Would China do $1 Trillion of trade a year with you?
Answer this question if you fancy yourself to be educated : In countries where most women DON'T work (Islamic nations, etc.), why are there wages so low? By your logic, they should have higher wages than the US, no?
Your questions have been answered. It is just that you don't like the answer, since it contradicts your shibboleths.
the republican, libertarian argument is that if we increase the share of the pie going to capital we are all better off. Guess what, we now have almost 30 years of actual experience that disprove this theory. there is some optimal way to divide the pie between labor and capital, and under liberal policies from the 1940s to around 1980 we increased the share going to labor and we were all better off-- including the owners of capital. Since 1980s we have increased the share going to capital and essentially every measure of the well being of both capital and labor -- except the income of the managerial class -- has experienced poorer growth.
What we have done since 1980 is shift income from both labor and capital to management. Do you know anyone who thinks that is a desirable results?
Uh, in what sense have women moved into the workforce? Someone want to argue that working in the home doesn't count, isn't real work? You wouldn't have wanted to say that to my grandmother, or even my mother. Not if you were in range of her fist.
If a woman switches from doing housekeeping, childcare and cooking at home to, say, writing for The Atlantic, the amount of work she does doesn't increase, and if she's taking a writing job (with whatever economic consequences that implies) she's also relinquishing several part-time jobs as housecleaner, daycare worker, and cook (which necessarily also has economic consequences). The overall amount of labor and the number of jobs available doesn't change all that much as far as I can see. It's just that now a lot more of them are "on the books," so to speak, gathered into national economic statistics, because now the childcare, cooking, and housekeeping jobs will be done by strangers for cash wages, instead of by mom for noncash economic support within the family.
I think any economic argument that ignores the fact that mom has always been working -- just not in the cash-based economy visible in national statistics -- is fatally flawed (spencer in particular is clueless, employing economic logic in preference to common sense to go completely off the rails). I'm sure the fact that women now work a larger variety of jobs, and that more of them are part of the cash economy, has changed society. But certainly not in as simple (and simple-minded) an assertion as that women used to not work, and now they do.
Drew,
Some of your arguments are flawed.
1-It would tighten the labor market and put upward pressure on the wages of male workers;
No, because we now live in a world of outsourcing. You are just as bad as the Marxists who believe the number of dollars in an economy are fixed.
2-It would put mother's back into their children's lives as a more positive role-model;
3-It would bring more accountability into the Ed system as mothers would be more involved on a daily basis;
4-Since the wages earned by working mothers go, for the most part, to pay for day-care,
Working mothers ARE a positive role mode.
Nothing stops parents from being active with the PTA and also working. Priorities, priorities
Also, what the hell do you think grandparents are for? They can help in all of the above things. Maybe the bigger problem is not that women work, but that grandparents are not permitted to be in the picture. Isn't that the bigger takeaway here?
The economic illiteracy being displayed here is shocking, and I am sure Megan is quite irritated reading these stupid comments.
Sorry, the 'stunning defeat of socialism' link is here.
Economic Growth is exponential and accelerating. This shuts down all the zero-sum arguments.
It appears we have found yet another example of Radical Islam and Leftist Marxism converging - they don't want women to earn money....
And for you who think my argument is Marxism., I have never seen such ignorance. Obviously, none of you have ever actually read any Marxist economics..
Carl, make that "paid" workforce. But I disagree that moving into the workforce is simply net-net zero; working moms work a lot harder than I do.
Spencer, the share of the economy that goes to labor and capital is roughly constant over time. If your theory was correct, it should have shifted dramatically starting in the 1970s; it didn't. What happened is that the distribution of wage income shifted towards more educated people, so that the median didn't rise nearly as much as the mean. The people who lost the most were unskilled men, especially those who did not graduate from high school. But women tend to be more educated than men; if the issue were competition from women, then they should be pushing down wages at the top, not the bottom. Also, unskilled women do not tend to compete with unskilled men for jobs; they tend to cluster in home replacement work such as childcare, housecleaning, and so forth. This is not an iron law--there is overlap--but your explanation, while superficially plausible, simply does not in my opinion fit with a finer grained reading of the data. As I say, I have no doubt there was some downward pressure, but it can't explain all or even most of the effect.
Pete== that is exactly my point , the number of jobs has increased. But they are jobs at low wages.
it is the pure libertarian argument. Increase the number of low wage jobs and decrease the number of high wage jobs and we are all better off.
really makes sense, doesn't it.
It is like my point that real per capita gdp in Massachusetts is 126% of the national average and in Mississippi is 63% of the national average. But if we were more like Mississippi and less like Massachusetts we would all be better off.
That is what the libertarians and the republicans keep trying to convince you.
People allocate their time in the ways that make them happier, or to avoid unhappiness.
A woman (call her Mary) can devote all of her time to her children, or possibly find some type of home-based work that she could sell to others, or hire child care and go to some business to work. The choice Mary makes is the one that seems the best choice to her, given the limits on what she can do for herself and others, and the benefits she could get from the choice.
Even if she had to pay out all of her earned income (after tax) for child care and transportation, we can't assume that this is a bad outcome, because it is the outcome that she chooses. She may not like child care duties, or is happier doing outside work, or likes having an extra car, or feels that this will keep her skills current for a better job later.
The child care worker (call her Anne) may also like Mary's choice. Child care might be Anne's calling, or the application of her best skills. Anne may not like company work, or may be bad at it. The choice for Mary to work at a company and Anne to take care of Mary's children is probably a good arrangement for them both, and for society. We can assume this, because that is what Mary and Anne have chosen.
The measure of well-being is not just how many dollars you have left over at the end of the day, but what personal improvements and good experiences that a person can arrange in their lives.
I am comfortably middle class. I have been married 31 years, have three children, one of which finished college (on mom and dads dime), another of which will graduate in 2009. (The third starts in 2010).
Over the period of my marriage, my wife worked only before we had kids and during the brief periods when I was between jobs (ten months was the longest, and that just once).
And, boys and girls, we have never earned over $100K in a year.
Despite that, we have a house and two cars. We have not stinted our children's education (or their educational opportunities), and we have lived comfortably. Even saved some.
The key of course, is budgeting and (dare I say it?) deferred gratification. The new car is 7 years old. (Still drives fine.) We don't have a wide-screen TV, RV, or expensive toys (like a boat). We vacation at home. When the last one starts college, my wife will probably go back to work -- because she wants to.
Of course, living in Texas helps, but I moved here from the Rust Belt back in the early 1980s. If people insist on living in Blue States then, yeah, their chances of remaining middle class probably diminish. But then again, the Blue States aren't reproducing, so that by the time my kids are my age, the whole "vanishing middle class" problem will be a lot smaller than it is now.
The formula is simple. Want serfdom? Vote for high taxes.
Waldo, you're extremely wrong. In th 1800s, employment outside the home was unusual for women, practically unknown for married women, and just about unthinkable for married middle-class women.
That condition changed continuously in the 1900s, and the change accelerated after WW II. Here are numbers from the Statistical History of the U.S.:
Furthermore, in 1890, over a quarter of working women were non-white, but less than an eighth of working men. 70% of working women were single. In 1950, only a third of working women were single; by 1957, less than a quarter.
It is true that during the Depression, there was a policy of excluding married women from employment to provide more jobs for family heads (including widows). But that policy went away during the war, for obvious reasons, and never came back as such.
Obviously, none of you have ever actually read any Marxist economics.
I don't read astrology, either, and for the same reason. Talk about something that's been debunked, and for a lot more than 30 years...
Of course Spencer is correct. It's so obvious it takes an intellectual to tell us not to believe it. Most of you are positing second and third order effects as counterarguments.
If one remembers the history of feminism since the '60s, it had significant corporate support. Major foundations were very active in support of the political and intellectual underpinnings of feminism.
All those "diversity" programs were clear about expanding the pool of labor. At least from the inside, it was transparent corporate self-interest.
As a result, we've extracted major human contributions to our social and family lives from stay-at-home wives and mothers and transferred that labor to the market economy. Our economy as grown at the expense of our civic lives.
Personally, I've been lucky enough in the labor market to allow my wife to devote her full efforts to our family and community but at significant economic opportunity costs.
If Warren's stats are to be believed, there are women with families who have decided to work outside the home for less pay than the work she pays others to do around the home --> she makes less than a childcare worker & maid, etc.
Of course, that makes little family econonomic sense. And, makes her thesis laughable from a common sense perspective.
Why not open a childcare service with your own kids as "freebie" clients?
All this is so silly. Each of you seem to have your Pet Theory #1 of what has caused this or caused that. This stuff reads like a fucking Douglas Adams novel or something.
It is, in fact, much more complicated because each of the factors that are identified in the various posts each played its own special little, but still inter-related, role in getting us to where we are today. Where-ever the hell *that* is. The "economy" is, in fact, a lot like the weather. Innumerable factors all play a inter-related role, no one thing is controlling, it changes every day, and damned few people can predict much of anything about it with absolute accuracy.
And... of course... if the government provided these things... you'd still have to pay for them... New provider does not equal 'free'.
Posted by spencer | May 7, 2008 7:18 PM
"the republican, libertarian argument is that if we increase the share of the pie going to capital we are all better off. Guess what, we now have almost 30 years of actual experience that disprove this theory."
Actually, you need a control group who used another strategy (say some Euro countries). Now compare our performance to theirs. Now compare and contrast the US and Europe to Asian (countries who have used a system closer to the US).
Zhombre, I thoroughly agree with your conclusions [that the "fix was in" in Warren's medical bankruptcy "study"], but I believe her purpose was not to argue for universal health care, but to paint the bankrupt in a sympathetic light to argue against the bankruptcy reform of 2005. She testified before congress.
-dk
It's more than tech toys.
I'm a "boomer". My father was an engineer and I am an engineer. We were/are solidly middle class but nothing spectacular.
When I was growing up, in their late teens middle class kids could expect to occasionally borrow one of the two family cars if they had a good reason and none of the other kids needed it. Now a middle class teen of driving age has a reasonable expectation of having a car at hir disposal. I grew up in a house of 1750 square feet or so, and my house is 2100 square feet. There are technological changes behind the productivity improvements that made these changes possible, but in housing and cars, two very old products even in the sixties, the standard of living has palpably improved.
-dk
Increase the number of low wage jobs and decrease the number of high wage jobs and we are all better off.
Whether that's true or not, it is certainly an argument AGAINST a minimum wage. Low _skill_ jobs are being automated out of existence at an extremely rapid rate - raising the minimum wage only accelerates the process.
My dishwasher, clothes-washer and dryer, Roomba, Scooba, auto-sprinkler system, and on-line bill-pay have automated at least one, if not two, jobs away - in just my household. It's much cheaper to spend, just a guess, $500 per year on all that automation than to deal with paperwork and minimum wage costs of hiring someone. The robotic lawnmower is next on my list...
Note that those doing the automation are handsomely paid for it because their wages can be spread across a wide customer-base. The house-cleaner and lawn-care-guy cannot: The cost is entirely born by one customer.
Intuitively, the idea that higher participation of women in the work force lowers people's salaries seems wrong - which is why so many people here object to it. I took me a few minutes to figure out the real weak point in this idea. Hear me out. Indeed, the nominal wages fall when more people decide to join the work force. It's old supply and demand curve, you cannot escape it. But what is forgotten is that larger supply of labor makes the production cheaper and more abundant. In the long run, while the wages may become nominally lower, the real wages will go up. The most basic point is that you have more people in the society creating wealth (higher employment), which means society must be richer given everything else equal. The loss in the nominal salary should be more than offset by the loss in the prices.
One might almost suspect she started with the conclusion and then constructed the data and measures to suit.
Two particulars I found dubious about Warren's specifics:
1. Families with non-working wives did not have just one car: they usually had two (so I remember it) since the wife may not have needed to drive to work, but she had all sorts of other activities that required a car during the day. To be sure, the second car may have been used not new, but it did usually exist, at least in middle class Michigan in the 1970s.
2. A non-working wife was not going to be very helpful at bringing in income if her husband was laid off. Often without education, and definitely without recent experience, the best she was likely to do was a mininmum wage service job with no benefits. And in a recession she might have trouble finding that. If unemployment is more damaging nowadays it isn't because there is no extra family member who can go to work part-time at Walmart, rather it's because lay-offs are no longer temporary as they often were in the past (some people, with adequete savings even trated them as vacations or sabbaticals since they knew they'd be called back to work soon enough); and unemployment compensation is far less generous than it once was, owing to inflation (these payments, in principle 2/3 of one's prior income are generally capped at around $1100/month. 30 years ago that was still a middle class income; today's it's sub-poverty).
Drew wrote: 3-It would bring more accountability into the Ed system as mothers would be more involved on a daily basis;
Trovos replied: Nothing stops parents from being active with the PTA and also working....
Um, nothing? How about needing to be in two places at the same time? Trovos, do you have kids? Are you active in a PTA? To have an impact on my son's public school, the people active in the school PTA also attend school board and city council meetings. The time-commitment is substantial.
At the preschool cooperative that my daughter attends, the volunteers (mostly women) who chair the board invariably cut back their work schedules. This is how a quality preschool becomes affordable.
I'm actually pretty contemptuous of Warren's "research," given that the "two-income trap" is totally voluntary. It totally sucks to increase your household income, but it's very easy to avoid that problem. One spouse stays home. Problem solved. (I speak from experience.)
But there's a big difference between economic arguments against two-income households and social arguments. (And, on the social arguments, I don't think the evidence is all that hot either. My wife and I have made personal decisions about our work and home life that we like, but I can't say that friends and peers that make alternate decisions are any worse off.)
Imagine the crew of Star Trek's Enterprise having this argument. The premise is laughable because their world is defined by self actualization nearly all the time, with zero scut work. This is made possible by technology, especially the leveraging of limitless energy combined with artificial intelligence. Repeating the last century's debate over allocation of severely limited resources is like watching Saturday Night Live re-enact Theodoric of York trying to divine what would be "For the good".
We will regress to the last century, and maybe worse, if we don't come up with ever better sources of cheap, clean energy. Let's hope we do, and this whole debate is rendered quaintly moot.
Warren's schtick is well known in bankruptcy law circles, where Professor Todd Zywicki's (http://www.law.gmu.edu/faculty/directory/zywicki_todd) done a yeoman's job in debunking her thesis and its underpinnings. Warren discounts almost completely the massive rise in taxes as a total percentage of income over the past few decades.
spencer,
I have a 6 T-1 pipe (10 Mbs) coming into my home. Capital. Worth $3,600 a month in 1990. My cost - about $30 a month.
I have a Cray 1 on my desktop. Cost in 1978? About $10 million. My cost? Under $1,000.
I'm getting a lot of return on that invested capital and I haven't had to put up 1¢.
Stagnant wages is not the whole story. Not by a long shot.
Unskilled labor, where wages have declined, is one of the most gender segregated parts of the labor market.
Of course, the wages of unskilled labor have been driven down by massive illegal immigration. I guess I should say "illegal" immigration, as the government (both parties) plainly condones it, whatever the law may be.
The question was "Is the middle class really doomed?".
I hope you'll be taking a stab at answering that, in addition to making fun or Warren. It certainly looks as though the answer is "Yes".
The most basic point is that you have more people in the society creating wealth (higher employment), which means society must be richer given everything else equal. The loss in the nominal salary should be more than offset by the loss in the prices.
Can you point to any prices which have actually fallen? I think you'll find yourself saying something like "prices increased, but at a less rapid rate than they otherwise would". Which is a belief, but not a scientific one.
Society beng richer does not mean that the median individual is richer. America doubling it's population would result in a doublng of its GDP, all else being equal. But, all else being equal, it would profit the median American worker not at all.
For those who say that rising taxes are the culprit, how do you explain this chart:
http://www.house.gov/jec/news/2008/Feb/pr110-35.pdf
The effective tax rate on a median income family has decreased from 18% in 1979 to 14% today.
Dick King: what you said! What's considered middle-class today is a whole lot more upscale than what was considered middle class 30, 20, 10, and thanks largely to the HGTV effect, even 5 ago. So whether one thinks that the middle class is doomed probably depends more on one's definition of "middle class" than on anything else.
About why women enter the work force: Aside from what's already been discussed, two big reasons are 1)the sense of satifaction one gets from being recognized for one's own accomplishments rather than for those of one's kids or husband and, probably more important, 2) the freedom that comes with having one's own health insurance. Non-working women of my generation often chose to stay in unsatisfactory marriages because they feared not being able to pay for basic health care for themselves and their kids. It's hard to say how these will play out as the health care picture changes and more middle-class couples choose for the woman to work while the husband/dad works in the home.
That's right, and the economic growth we've seen during the same period is quite large as a result. The problem is that you're off by about forty years. In 1935 the vast majority of Americans payed no income tax at all nor even had to file a return. The income tax progressed from being a tax on the rich only, to an onerous tax on the rich only, to a modest tax on the upper middle class and an onerous tax on the rich, to a tax on virtually the entire workforce by the end of WWII.
Now, would the majority of married women have made it into the workforce anyway? Yes. Isn't our standard of living much better today then it was at the middle of last century? Absolutely. Isn't the middle class larger today then it was back then? Certainly, if for no other reason than the fact we were still half agrarian back then. But would we be even better off today if we were taxed at 1935 levels rather than today's rates? Yes, without the slightest doubt.
yours/
peter.
Part of the reason why Warren's ideas are persuasive is that they feel right. My grandparents were first-generation Americans, and both had to work full time as teachers during the '30s-'50s. By the time my parents entered the work force in the '60s, during the "great compression", only one had to be working full time; my mother worked part-time as an art teacher but basically took care of the kids. Today my sister and brother-in-law, a psychiatrist and a physician, seem to constantly have the feeling that they're just getting by -- a feeling my parents never had.
Maybe that golden era of economic security was an anomaly that only lasted from the '50s through the '70s. But Warren's argument that people today have less economic security today than they did 30 years ago just feels right. I understand that this lacks rigor; I hope others will take up the argument at a more data-based level, but for me, I just find Warren's description persuasive. It certainly tracks with Megan's personal anecdotal experience, I think -- she will never be able to afford to live on the Upper West Side of Manhattan, and I don't think she considers her parents to have been terribly rich when she was growing up; and more importantly, the kinds of jobs that are available today, like, say, freelance journalism and blogging, have nothing like the security that a union official used to have. If Megan's father were entering the workforce today, he'd probably be a freelance consultant on labor organization issues taking short-term contracts without benefits at various not-for-profits.
By the same token, could we see any increase in population above replacement as a threat to the middle class? The Baby Boom must have truly threatened the middle class by flooding the job market with excess workers to be exploited by corporations.
LOL.
Aaron,
Women marry men and raise families together. Children do not marry their parents and raise families together. This is why there are social questions associated with the novel situation of women entering the workforce that are not associated with the expected situation of children growing up and entering the workforce.
And, yes, declining workforces do bid up wages, as you will find in Japan. Conversely, increasing workforces bid down wages. The size of the effect may be disputed, obviously, and there are other reasons why having a declining workforce is a bad thing rather than a good one.
LOL.
Re: But would we be even better off today if we were taxed at 1935 levels rather than today's rates?
No one in their right mind wants the 1935 economy back. And yes, that goes with 1935 taxation. It's a package deal-- you can't pick and choose. We are much better off with our current level of taxation, for which we have gotten some economy-growing benefits (interstate highways, for one example). Also, would anyone here want a 1930s-level military? Maybe a few hard core isolationists, but few others.
brooksfoe: "But Warren's argument that people today have less economic security today than they did 30 years ago just feels right."
I agree with you about the emotion, both personally and what I sense in the general public. But I am also suspicious that the feeling doesn't correspond to reality. For example, layoffs have decreased tremendously in the last 10 years. And risk aversion seems to have risen in all sorts of ways. So I both acknowledge your reaction and feel that the sense of danger and risk is more an emotional event than an economic one.
brooksfoe: "But Warren's argument that people today have less economic security today than they did 30 years ago just feels right."
Umm, no. When I was in grad school in the late '80s, we were inundated with articles explaining how terrible things were and how they were going to get worse. We were at the cusp of the era of declining living standards. None of us would get good jobs or be able to buy houses. Everything caused cancer. Japan waxed triumphant over U.S. industry.
So no, it doesn't "just feel right." It feels like the same idiocy, recycled.
And "30 years ago" is 1978, post-oil-shock, the high-point of stagflation, the landscape of Jimmy Carter's malaise.
Are you sure you didn't mean "40 years ago". Wait, that would be 1968. Vietnam.
How about 50 years ago? Eisenhower. Now that was the good life.
@Patrick: The effective tax rate on a median income family has decreased from 18% in 1979 to 14% today.
That's only Federal taxes (income, payroll, and excise) - it ignores the state, county, city, school, transit authority, and hospital district taxes I pay, for example. Read Todd Zywicki's articles on Warren at the Volokh Conspiracy, cited earlier.
Brooksfoe:
Part of the reason why Warren's ideas are persuasive is that they feel right.
Sure. They feel right. But feelings are a notoriously unreliable tool of cognition.
Today my sister and brother-in-law, a psychiatrist and a physician, seem to constantly have the feeling that they're just getting by -- a feeling my parents never had.
I call BS. A family of four (or five, or more) can live quite well on a physician's income alone with quite a bit left over. If they're just barely getting by, it's because they're spending more than is necessary or prudent.
I know this because there are families who feel that they are "just getting by" on a fraction of the combined incomes of two professionals.
Brooksfoe, there's also the fact that your parents don't necessarily tell you when they worry about money, so it always seems like you're struggling more than they did.
tdpzfwea saywgbpl jwmeuhnad yqpf exyuso ilojxw gtploy