Incomes

In the 1950s, the median cost of a home was a little more than double a family’s average annual income. A car was just under half of a family’s average annual income, according to data from the US Census Bureau and the US Department of Commerce. Today, it costs an average family about four times its average income to buy a house, and almost two-thirds its annual income to buy a car. To be sure, these are improved homes and cars and other costs like food have declined. But the implications, particularly for family structures, are deep.

A majority of households in the 1950s were single-income households. By the end of that decade, the husband was the sole income generator for 70 percent of American households. Analysis performed by Pew in 2015, based on the last US census, estimated that in 2012, 60 percent of American households were dual-income households. The purchasing power of the real median income has decreased even as US households have added a second breadwinner to the home.

 

We are earning more, affording less. This has been a long time coming. Why it is getting people's attention now is uncertain. It is often linked with the ephemeral "income inequality," a concept that is new and uncertain in significance.  (If you ngram "income inequality," it appears after the second world war, occurs sporadically, then starts to rise in the end of the 1960s and accelerates in the 1970s to 2000.)

The important--and unspoken--distinction to remember in the discussion of income inequality is the great difference is not within nations, it is between nations. Those who want to homogenize the incomes between Arkansas and New York really want to homogenize the incomes between New York and Botswana, an effort that will require "management."