Is there an economist in the house?
I’m awfully curious about something. A whole lot of stories have come out recently about the growing gap between the rich and the poor in America. The growth of the gap is generally chalked up to overseas outsourcing, and the debate moves on. Meanwhile, there are a whole lot of other stories popping up about how women have overtaken men in college admissions in the United States.
But there seems to me to be an obvious connection between the two stories.
See, when women were emancipated and whatnot, it had the theoretical potential to instantly double the size of the American workforce. Obviously that didn’t happen right away because of various social factors, but today it looks like women have caught up (in qualifications if not in wages).
My thought is, mightn’t this have created a glut of qualified, middle class workers, which - assuming their numbers grew faster than the number of available jobs - would for the moment hold middle class wages down? Market forces, you know - the more qualified people there are, the less everyone gets paid. (Adding to this hypothesis is a statistic cited in the September 2006 Atlantic which notes a particularly small growth in median income between 1966 and 2001 - just when working women were joining the workforce.)
I say “for the moment” because if this were, indeed, the cause of the current phenomena of stagnant middle class wages, it would be a temporary effect, and once the market adjusted itself to the new, bigger labor force, all ships would continue to bob upward with the rising tide. Or maybe they wouldn’t…
I’m sure someone smarter and more-qualified than me has already thought of this possibility and studied it, using data and whatnot, so I’m wondering if anyone out there in my audience of 2.5 readers who have made it this far know of any such studies. Thanks, and good night.
neill wrote:
My girlfriend studies labor economics and household decision making, so maybe she knows. I’d say that the problem with that argument is that educated women are going to have fewer children, which means that the effect on skilled labor supply ceteris paribus will be unclear.
Posted on 26-Oct-06 at 12:08 pm | Permalink
DT wrote:
This doesn’t answer your questions, but I find it interesting the impact on households of going from 1 income to 2 incomes. Say, for example, that you marry somebody with the same earnings potential as you do. Take, for example a household in which a man makes $60K/yr. If you add a second, equal income on top of this, this household is now making $120K/yr. Suddenly this household is considered a different class.
Posted on 27-Oct-06 at 2:53 pm | Permalink
Pablo wrote:
Off topic, but I thought you’d be interested. A professor of mine (Elizabeth Warren) has based her career around another interesting effect of going to two-income households. A family with two incomes doesn’t actually end up having more discretionary money because they turn around and put it all into homes in good school districts–driving up the cost of those houses. This explains why a family today needs both people to work to maintain a similar standard of living as a 1-income family did in the 50s.
Posted on 30-Oct-06 at 9:34 am | Permalink
Ladycook wrote:
And let’s not forget childcare costs. I’m told it’s not unusual for women, especially with very young children (under 2) to end up paying very little less for childcare than their salary actually brings in–or, in some cases, more.
Posted on 01-Nov-06 at 4:54 pm | Permalink