Why do both parents have to work nowadays?

CelticRambler · 23-03-2016 1:18pm

regi3457 wrote: »

Yes, this is because the economy works on perpetual debt...no debt = no growth.

Only because "we" have subscribed to that economic model. It's a circular concept, the same as childcare: two parents go out to work, so have to pay a child-minder, then find that mortgage and commuting costs mean they can't afford the child minder, so the government is persuaded to offer extra financial help to parents under the guise of meeting a 100% employment target, which means that now there's an incentive to have that first/extra child putting pressure on childcare places, driving up prices, which means the parents need to earn more or drive further to wherever the available places are ...

As I said above, if the parents sit down and do the sums - which some of us contributing to this thread have done - they usually find it makes better financial sense to have only one full-time worker and one parent "in reserve". On balance, they're probably contributing more to the real economy than two-income families who are funneling their wages into mortgage interest payments.

OttoPilot · 24-03-2016 3:13am

regi3457 wrote: »

Yes, this is because the economy works on perpetual debt...no debt = no growth.

I don't feel people are responsible at all. How can the average person on the street know what is reckless lending? They don't. They expect the banks and the financial regulations to be reliable.

I do agree that living below your means is always best but if people were that smart, the whole economy would collapse...as I said before. The debt is what they need and the promise to repay is what people give and this drives the economy.

That's rubbish, the economy can definitely grow without debt, otherwise we would have made no progress before banks.

Think about it, if someone finds a way to do their job in half the time it currently takes is that not growth?

Electric Sheep · 24-03-2016 3:26am

CelticRambler wrote: »

Only because "we" have subscribed to that economic model. It's a circular concept, the same as childcare: two parents go out to work, so have to pay a child-minder, then find that mortgage and commuting costs mean they can't afford the child minder, so the government is persuaded to offer extra financial help to parents under the guise of meeting a 100% employment target, which means that now there's an incentive to have that first/extra child putting pressure on childcare places, driving up prices, which means the parents need to earn more or drive further to wherever the available places are ...

As I said above, if the parents sit down and do the sums - which some of us contributing to this thread have done - they usually find it makes better financial sense to have only one full-time worker and one parent "in reserve". On balance, they're probably contributing more to the real economy than two-income families who are funneling their wages into mortgage interest payments.

That may make financial sense in the short term, but in the long term is seriously harmful to the financial security of the non-earner.

regi3457 · 24-03-2016 8:42am

OttoPilot wrote: »

That's rubbish, the economy can definitely grow without debt, otherwise we would have made no progress before banks.

Think about it, if someone finds a way to do their job in half the time it currently takes is that not growth?

No it can't. Sorry but you are mistaken. No debt = No growth = no inflation needed to pay the debt. More debt must be injected into the system else there will be a collapse. It is "perpetual debt". I am sure any economist can explain this to you... don't take my word for it if you are in doubt.

It is, but that will never happen because there will be even more debt so we must work twice as much to pay it. If you can do your job in half the time the only thing that will happen tomorrow is that you will be 2 times as productive to your boss. I am sure a car can be manufactured in half the time now than was possible 50 years ago. Does that mean that workers go home at lunch time? No, they must work more and more and more and more. And their wives and husbands will be doing the same across town in their jobs being twice as productive but late at the office working overtimes just to pay the mortgage. We work more now than before and earn less. That is the truth. Sad but true.

ezra_pound · 24-03-2016 8:50am

OttoPilot wrote: »

That's rubbish, the economy can definitely grow without debt, otherwise we would have made no progress before banks.

Think about it, if someone finds a way to do their job in half the time it currently takes is that not growth?

Of course it can grow. But at a very slow rate.

Between 1ad and 1000ad Western European GDP actually shrank.

Between 1000 ad and 1500ad it quadrupled with the onset of European banking in parts of Italy and by Jewish bankers throughout Europe.

Between 1500 and 1820 it roughly quadrupled again. By now banking was fully legal and Christians were allowed to become bankers.

I won't bother referring to economic growth since 1820 or before 1 ad.

Start up enterprise is very hard when you don't have capital and there are no banks to provide same. There is also a huge inequality between rich and poor as the poor have no option to fund enterprise and become more well off.

This means fewer jobs and much more reliance on agriculture and maintaining an agricultural feudal peasant society.

Susandublin · 24-03-2016 9:11am

Worth mentioning that not everyone dislikes their work.
I love what I do - the fact I get paid is a bonus.
Yes the wage assists but for most people it's a case of keeping up with the Jones. If everyone on your street had one car, chances are you would survive with your one car.
If everybody did just 1 holiday a year - chances are you'd survive on one holiday a year. Most people are sheep and lack the ability to be brave and live the life they want.
Human nature makes us try an improve ourselves - an easy solution is extra money which results in extra work which usually leads to the opposite.
One of life's ironic twists.

regi3457 · 24-03-2016 9:33am

Electric Sheep wrote: »

That may make financial sense in the short term, but in the long term is seriously harmful to the financial security of the non-earner.

who is considered to be the "non-earner"?

regi3457 · 24-03-2016 9:38am

CelticRambler wrote: »

Only because "we" have subscribed to that economic model.

In a truly perfect imaginary world, only those who are impartial and have sufficient knowledge of the economic system should subscribe or not subscribe to any economic model. 99% of us do not have nearly enough knowledge or understanding to be able to make any call about what model to use or not and are totally clueless. So "we" have not subscribed to it, but have accepted it believing that it is best for us.

armabelle · 24-03-2016 9:43am

Susandublin wrote: »

Worth mentioning that not everyone dislikes their work.
I love what I do - the fact I get paid is a bonus.
Yes the wage assists but for most people it's a case of keeping up with the Jones. If everyone on your street had one car, chances are you would survive with your one car.
If everybody did just 1 holiday a year - chances are you'd survive on one holiday a year. Most people are sheep and lack the ability to be brave and live the life they want.
Human nature makes us try an improve ourselves - an easy solution is extra money which results in extra work which usually leads to the opposite.
One of life's ironic twists.

It is great to love what you do. I also have this luck in my job but thinking about people in general it seems like the jones' - whoever they were - lived happier lives, earned more money and paid less for their home, had less debt and spent more time with the kids than we do.

KomradeBishop · 24-03-2016 1:11pm

Here's a good article directly relevant to the OP - which measures inequality in terms of 'lifetime spending inequality' - which factors in many things discussed in the thread, as this inequality plays a part in requiring families to rely upon two incomes (though the article doesn't touch on that):
https://newrepublic.com/article/131517/weve-measuring-inequality-wrong

OttoPilot wrote: »

That's rubbish, the economy can definitely grow without debt, otherwise we would have made no progress before banks.

Think about it, if someone finds a way to do their job in half the time it currently takes is that not growth?

Before banks there were tally sticks - a form of debt (the historical idea of a prevalent barter economy is a myth, credit/debt was used instead).

CelticRambler · 24-03-2016 1:41pm

Electric Sheep wrote: »

That may make financial sense in the short term, but in the long term is seriously harmful to the financial security of the non-earner.

Why? If you consider "both parents" to be part of the same economic unit, then neither is more or less secure than the other. Are you disputing Elizabeth Warren's findings?

Electric Sheep · 24-03-2016 4:38pm

CelticRambler wrote: »

Why? If you consider "both parents" to be part of the same economic unit, then neither is more or less secure than the other. Are you disputing Elizabeth Warren's findings?

Who do you think loses out when both parents are no longer part of the same economic unit?

maninasia · 24-03-2016 4:39pm

Eugene Norman wrote: »

It's really housing costs. That swamps everything. I bet that relative to wages, despite VAT, most things are cheaper then they were (and customs duties? We weren't in the EEC in the 60's). Childcare is also expensive but it's expensive (it's needed) because people work.

And housing and childcare are symptoms of women working rather than the cause, or rather it's a feedback loop.

It's not "entertainment systems". The cost of your mobile phone per month might be cheaper than a few calls to the UK from a landline in 1960. There were extortionate rental costs on the phones too. And my phone and Netflix (7€ a month) is my home entertainment cost.

I also think housing costs is the biggest difference. You've got massively inflated nominal amounts due to mortgages being calculated on two incomes, and much higher loan to value ratios than decades ago.

Yes your parents will tell you that taxes were high and interest rates too. Yes, they were, but VAT and other incidentals were a lot lower.
The high inflation of years passed helped mortgagees to clear the debt faster (inflate the debt away http://www.tradingeconomics.com/ireland/inflation-cpi), even though initially there would be tough times to service the high interest rates.

The main difference with today is probably the uber low interest rates (along the the very low inflation) of today allow the NOMINAL amount of mortgages (and debt) to expand as people can service the interest payments much more easily. So the low interest rates act as the pump prime, and the competing double income couples (due to increased equality for women in workplace) the demand driver.

A similar phenomenon seems to have occurred in the US but with third-level fees and exploding student debt. The easy access to student loans (the pump primer) allows universities to up their fees, after all not getting an education is not much of an option in this day and age (the driver).

Some things have gotten a lot cheaper than yesteryear, especially the cost of food and clothing. So housing costs really stick out and with the very rigid planning system in Ireland, lack of new social housing programs and expensive government levies, the whole game is stacked against young couples ..after all everybody needs a place to live.

OttoPilot · 24-03-2016 6:59pm

regi3457 wrote: »

No it can't. Sorry but you are mistaken. No debt = No growth = no inflation needed to pay the debt. More debt must be injected into the system else there will be a collapse. It is "perpetual debt". I am sure any economist can explain this to you... don't take my word for it if you are in doubt.

It is, but that will never happen because there will be even more debt so we must work twice as much to pay it. If you can do your job in half the time the only thing that will happen tomorrow is that you will be 2 times as productive to your boss. I am sure a car can be manufactured in half the time now than was possible 50 years ago. Does that mean that workers go home at lunch time? No, they must work more and more and more and more. And their wives and husbands will be doing the same across town in their jobs being twice as productive but late at the office working overtimes just to pay the mortgage. We work more now than before and earn less. That is the truth. Sad but true.

I've studied economics, I've never met a professor who believes that debt must increase perpetually to create growth. I agree that debt increases growth, but in the absence of debt the economy will still grow, just not as quickly.

I don't know how you can believe in something that you can't explain yourself.

You should always break a concept down to its simplest form, a 2 person economy.

If I grow apples and you grow oranges and I discover my way of increasing productivity but I need to spend all my time on it. Then I need to borrow some oranges from you to consume to survive. Then when I have my increased production I can pay you back with interest and the debt is gone.

If you honestly think we earn less than people in the sixties, you're a fool. I'm currently typing this on a device the size of my hand from my own home which will be transported electronically to you and every other person in the world who wants to see it. We work harder because we have way more stuff, things people 50 years ago couldn't even imagine, that includes housing.

Suryavarman · 24-03-2016 7:01pm

regi3457 wrote: »

No it can't. Sorry but you are mistaken. No debt = No growth = no inflation needed to pay the debt. More debt must be injected into the system else there will be a collapse. It is "perpetual debt". I am sure any economist can explain this to you... don't take my word for it if you are in doubt.

It is, but that will never happen because there will be even more debt so we must work twice as much to pay it. If you can do your job in half the time the only thing that will happen tomorrow is that you will be 2 times as productive to your boss. I am sure a car can be manufactured in half the time now than was possible 50 years ago. Does that mean that workers go home at lunch time? No, they must work more and more and more and more. And their wives and husbands will be doing the same across town in their jobs being twice as productive but late at the office working overtimes just to pay the mortgage. We work more now than before and earn less. That is the truth. Sad but true.

Cars can now be manufactured in less time so less people work in car factories. Those people are now employed in other industries.

Workers are now working less and earning more than they have in the past. That is a fact. The so-called truth you speak of is a figment of your imagination.

KomradeBishop · 24-03-2016 7:13pm

OttoPilot wrote: »

I've studied economics, I've never met a professor who believes that debt must increase perpetually to create growth. I agree that debt increases growth, but in the absence of debt the economy will still grow, just not as quickly.

I don't know how you can believe in something that you can't explain yourself.

You should always break a concept down to its simplest form, a 2 person economy.

If I grow apples and you grow oranges and I discover my way of increasing productivity but I need to spend all my time on it. Then I need to borrow some oranges from you to consume to survive. Then when I have my increased production I can pay you back with interest and the debt is gone.

If you honestly think we earn less than people in the sixties, you're a fool. I'm currently typing this on a device the size of my hand from my own home which will be transported electronically to you and every other person in the world who wants to see it. We work harder because we have way more stuff, things people 50 years ago couldn't even imagine, that includes housing.

Yea but the real economy isn't a two-person system. The real economy depends on debt, because it has banks and a monetary system built upon debt.
The way this system is run, creates a real and significant burden on household incomes, due to how it depends upon the growth of debt.

Your 'lets assume a two-person economy' is a 'lets assume a tin-opener' statement.

It's silly the way so many people who have studied economics, mistake oversimplified models as representative of reality.

KomradeBishop · 24-03-2016 7:18pm

Suryavarman wrote: »

Cars can now be manufactured in less time so less people work in car factories. Those people are now employed in other industries.

Workers are now working less and earning more than they have in the past. That is a fact. The so-called truth you speak of is a figment of your imagination.

Workers are actually receiving far less of a share of productivity improvements than they have in the past - combined with other changes like the rise of reliance on Private Debt, this has led to the squeezing of worker wages, that has made both parents working more of a requirement than before:

Suryavarman · 24-03-2016 7:22pm

KomradeBishop wrote: »

Workers are actually receiving far less of a share of productivity improvements than they have in the past - combined with other changes like the rise of reliance on Private Debt, this has led to the squeezing of worker wages, that has made both parents working more of a requirement than before:

That has nothing to do with what I said.

Regardless, According to the OECD average annual hours worked are declining steadily in pretty much every country. Likewise average hourly compensation is increasing steadily in pretty much every country

KomradeBishop · 24-03-2016 7:26pm

As a proportion of overall productivity gains, workers are earning a lot less, the gains are not being shared out like they used to be - that's a fact - and that relates directly to what you were replying to, backing it up.

Suryavarman · 24-03-2016 7:28pm

KomradeBishop wrote: »

As a proportion of overall productivity gains, workers are earning a lot less, the gains are not being shared out like they used to be - that's a fact - and that relates directly to what you were replying to, backing it up.

It doesn't have anything to do with what I said. I said that workers are earning more and working less which I edited my post to show. Engaging in statistical gymnastics and bringing up workers share of productivity gains is a red herring that doesn't address what I said.

jobbridge4life · 24-03-2016 7:31pm

Why do both parents have to work now?

Possible answer: Standards
In the past peoples standards were lower. Its a similar reason I suppose as to why it is harder to afford a home today. What people expect and desire is of a much higher standard than previously.

KomradeBishop · 24-03-2016 8:31pm

Suryavarman wrote: »

It doesn't have anything to do with what I said. I said that workers are earning more and working less which I edited my post to show. Engaging in statistical gymnastics and bringing up workers share of productivity gains is a red herring that doesn't address what I said.

It's not a red herring - it directly relates to what you replied to:

regi3457 wrote: »

No it can't. Sorry but you are mistaken. No debt = No growth = no inflation needed to pay the debt. More debt must be injected into the system else there will be a collapse. It is "perpetual debt". I am sure any economist can explain this to you... don't take my word for it if you are in doubt.

It is, but that will never happen because there will be even more debt so we must work twice as much to pay it. If you can do your job in half the time the only thing that will happen tomorrow is that you will be 2 times as productive to your boss. I am sure a car can be manufactured in half the time now than was possible 50 years ago. Does that mean that workers go home at lunch time? No, they must work more and more and more and more. And their wives and husbands will be doing the same across town in their jobs being twice as productive but late at the office working overtimes just to pay the mortgage. We work more now than before and earn less. That is the truth. Sad but true.

The poster you replied to, was clearly talking in terms of productivity.

andrew · 24-03-2016 8:49pm

Suryavarman wrote: »

That has nothing to do with what I said.

Regardless, According to the OECD average annual hours worked are declining steadily in pretty much every country. Likewise average hourly compensation is increasing steadily in pretty much every country

Fairly sure that graph is specifically in relation to the United States
In any case, it vastly overstates the extent to which income and productivity have decoupled - see this article, for example.

To throw my 2c in: it's hard to disentangle the extent to which both parents are working because now both can, or now both need to. Anyway, to the extent that now both parents need to, I'd put it down to housing costs, if I had to guess. I don't think the cost of any other good, for which there are few substitutes, has risen so dramatically.

Suryavarman · 24-03-2016 8:51pm

KomradeBishop wrote: »

It's not a red herring - it directly relates to what you replied to:

The poster you replied to, was clearly talking in terms of productivity.

The main gist of the post was that workers were working more and more and earning less.

andrew · 24-03-2016 9:22pm

OttoPilot wrote: »

Who do you think owns the banks and receives their profits on interest? People!

And the economy is just a grouping of trillions of two person transactions.

Nobody who supports this perpetual debt system can explain their position. You just say the economy depends on debt because banks depend on debt. We could function perfectly fine without banks creating debt but that would slow down innovation due to lack of capital.

If someone can explain why the real economy cannot grow without debt (even though it has done in the past and continues to do so today) I will accept I'm wrong.

This seems like a fairly good post with which to begin a new thread - this post has been moved to a new thread in this forum

OttoPilot · 24-03-2016 9:45pm

andrew wrote: »

This seems like a fairly good post with which to begin a new thread - this post has been moved to a new thread in this forum

True, we were getting off topic.

In relation to housing, I wonder how much of the value of the house is the physical building and how much is the land it sits on?

As we know the population is going to increase over time, so you could buy a house much cheaper in the past because demand was lower (and supply is staying constant over time) than it is currently.

KomradeBishop · 24-03-2016 11:12pm

andrew wrote: »

Fairly sure that graph is specifically in relation to the United States

In any case, it vastly overstates the extent to which income and productivity have decoupled - see this article, for example.

To throw my 2c in: it's hard to disentangle the extent to which both parents are working because now both can, or now both need to. Anyway, to the extent that now both parents need to, I'd put it down to housing costs, if I had to guess. I don't think the cost of any other good, for which there are few substitutes, has risen so dramatically.

It is in relation to the US, yes - but it represents a trend which is fairly prevalent across much of the western world.

I tried to gather comparable stats to generate a graph for Ireland a while back, but it's hard to gather the data - just getting accurate wage data going back that long isn't easy.

The second article doesn't seem to deal with productivity though? The graph I used, would mostly be in reference to corporations breaking the trend of sharing productivity improvements with workers - so it wouldn't just be about wealth/income deciles.

I agree with you though, that housing costs would play the biggest part.

Suryavarman · 25-03-2016 1:19pm

andrew wrote: »

Fairly sure that graph is specifically in relation to the United States

In any case, it vastly overstates the extent to which income and productivity have decoupled - see this article, for example.

To throw my 2c in: it's hard to disentangle the extent to which both parents are working because now both can, or now both need to. Anyway, to the extent that now both parents need to, I'd put it down to housing costs, if I had to guess. I don't think the cost of any other good, for which there are few substitutes, has risen so dramatically.

The original graph is in relation to the US. The graphs I linked to can be changed around to show the US data as far back as 1950 for hours worked and as far back as 1970 for average compensation.

If you look at the US data you'll find that labour compensation has grown steadily in line with the other G7 nations although Japan's has fallen over the last 20 years.

Hours worked is a different story. The US enjoyed a secular decline for the 32 years until 1980. Then workers began to work more hours every year until 1989. By 1989 US workers were working more hours on average than they had since 1974. This might seem that workers are being exploited by their bosses but that isn't actually the case. As shown in Why do Americans work so much more than Europeans? from the Minneapolis Fed Americans work more because they face lower marginal tax rates. This would seem to be borne out in the OECD graphs. In 1982 a year after the first batch of Reagan tax cuts and after the end of a recession hours worked began to increase before plateauing and then increasing again after another wave of tax cuts in 1986. Then they once again started to fall steadily from 1995.

With all due respect although Where has all the income gone? is a very insightful article it still doesn't address KomradeBishop's question which would be "where has all the productivity gone?". You are correct to say that the original graph probably overstates things but the linked article probably doesn't explain the entire decoupling of productivity and wage gains.

KomradeBishop wrote: »

It is in relation to the US, yes - but it represents a trend which is fairly prevalent across much of the western world.

I tried to gather comparable stats to generate a graph for Ireland a while back, but it's hard to gather the data - just getting accurate wage data going back that long isn't easy.

The second article doesn't seem to deal with productivity though? The graph I used, would mostly be in reference to corporations breaking the trend of sharing productivity improvements with workers - so it wouldn't just be about wealth/income deciles.

I agree with you though, that housing costs would play the biggest part.

Where has the productivity gone then?

This graph from the St. Louis Fed* shows that corporate profits as a share of GDP have increased from 1.5% of GDP in 1974 to 4.6% of GDP in 2013 and the share has increased steadily during the period. Over the same timeframe wage income as a % of GDP has declined from 50.1% to 42.2%. One could therefore argue that all the productivity has gone to corporate profits. But that would only explain about two-fifths of the change at best. This kind of change is to be expected though as larger shares of the population are made up of retirees. Retirees no longer earn wages but they do get dividends from corporate bonds and profits. How much of an effect that would have on the overall picture I don't know. This is just a hypothesis on my part.

*The graph can be edited to show the picture a bit better. Select one of the edit data series options under the graph and change y-axis position to right.

regi3457 · 26-03-2016 9:12am

Suryavarman wrote: »

Cars can now be manufactured in less time so less people work in car factories. Those people are now employed in other industries.

Workers are now working less and earning more than they have in the past. That is a fact. The so-called truth you speak of is a figment of your imagination.

yes, so both parents are working to support a household and both parents are working longer hours and this has become the norm and to you this is working less and earning more? Just look at the title of this thread. This is the society in which we live. It is now abnormal to even leave work on time:

http://www.boards.ie/b/thread/2057537527/2

regi3457 · 26-03-2016 9:17am

KomradeBishop wrote: »

It's silly the way so many people who have studied economics, mistake oversimplified models as representative of reality.

I have also found this. I think it is odd that some people who have actually studied economics don't know these things. The video posted above however does explain that monetary theory (which is essential to understanding the debt system) is actually left out on purpose.

Why do both parents have to work nowadays?

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