Real world tradeoffs
Posted by aogWednesday, 15 September 2004 at 18:32 TrackBack Ping URL

Over at Harry’s Place we have a post about President Bush’s acceptance speech. Bush said

This changed world can be a time of great opportunity for all Americans to earn a better living, support your family, and have a rewarding career.

and Gene at Harry’s Place responds

would any “family-values” Republicans concede that many of these working moms would prefer to be stay-at-home-with-the-kids moms, but can’t afford to do so on one paycheck— especially in a time of stagnant wages?

A quick check of the reference shows that it is tracking percentiles and not actual families. Population growth and immigration can easily make the median family income go down even while no single family income decreases. Of course, that’s extremely unlike to have been the case but it does indicate why statistics like these should be considered in context.

The other thing to keep in mind is that many families are struggling because the expectation of life have grown larger. Larger cars, larger houses, air conditioning, music systems, computers, cell phones — these are all relatively recent. In fact, when parents are willing to make sacrifices for their children a stay at home parent is still quite possible. My personal, anecdotal experience is consistent with that (although I suspect it’s easier out here in the suburban / semi-rural areas than in big cities). What such a life style is, however, is more work and one where the rewards are family and not possessions. It is the beauty of capitalism that allows people to make the choice of these tradeoffs for themselves instead of some bureauocrat deciding for them.

Gene also wonders

Is it really an unmixed blessing of contemporary capitalism that fewer and fewer Americans can count on a lifetime job with health care and a pension?

No, it’s not an unmixed blessing. If you want your blessings unmixed, you’ll need to live in Utopia. Have a nice time there. However, overall it’s a good thing and if there is a workable solution it’s more likely to be Bush’s Ownership Society than the kind of intrusive state we see in the UK and Europe.

On the other hand, like individuals, a society could emphasize lifetime jobs with health and pension at the cost of an overall less materially blessed standard of living. That’s the choice Old Europe has made but they don’t seem very happy with it. It also might not be sustainable as corporations and more important the young and the talented escape. Of course, they could fix that with a wall around Europe to prevent people from escaping…

Comments — Formatting by Textile
Dave Sheridan Wednesday, 15 September 2004 at 23:12

Great post. As you say, it’s all about choices. Stagnant wages also mask the increase in total employee compensation, driven by health care costs which are a benefit just like wages.

The “middle class squeeze” is and has always been a conflict between expectations and real-world tradeoffs. New homes are something like 60% larger than the homes of 20-30 years ago. With steeply progressive taxes, there are a lot of two-income families that would be no worse off if mom stayed home with the kids, especially in family-friendly parts of the country.

If you want to think about a real squeeze — I’m working on a piece right now about the large percentage of East Germans who want their wall back. They’re caught in a no-growth economy, where unemployment is twice that in the former West Germany, in a part of the country that won’t see any new investment without pro-growth policies. Current German employment policies (ironically, designed to protect jobs) make it impossible for new investment in Eastern Germany to look attractive relative to new investment in other parts of the former Eastern Bloc. The government is cutting back on the generous jobless benefits that have postponed this day of recknoning until now.

A few of my married friends complain about the expense of raising their hoped-for families, but insist they should be able to do it in West Los Angeles. Hard to tell them that they live in a big and rich country.

superdestroyer Thursday, 16 September 2004 at 09:11

I wonder how many of those affluents Bobos who are “SAHM’s” will suffer when they get old. Saving for retirement is a function of working. Yet, the only retirement for most SAHM are SS and IRAs. How many of them are really not ” cutting back” but are just pushing problem into the future just like the government does?

Annoying Old Guy Thursday, 16 September 2004 at 11:51

Mr. Sheridan;

I’ve seen elsewhere that for many working but lower income families, a stay at home parent can improve the finances of the family. Once you add up the tax hit and job expenses (such as uniforms, daycare)a second job can be a net income loss. Even when not, the net income loss is usually minimal. The families that get hit hard financially by staying at home are the middle and upper middle class. But those are precisely the families that are not struggling (or shouldn’t be).

Harry Thursday, 16 September 2004 at 17:22

Where are these jobs for life in Europe?

If you find one could you let me know.…..

[moved from wrong post :aog]

Annoying Old Guy Thursday, 16 September 2004 at 17:43

The EU seems to think they exist. For instance, we have this report discussing worklife in Europe:

Permanent lifetime employment is giving way to fixed periods of employment.

Permanent employees, and in some cases “employees for life” still make up a large part of those employed in a company.

I guess you could call them up and ask where they found such jobs. Or this guy at the Universisty of Bristol. The UK seems to have them as well, when discussing the “post-war welfare state”.

normative expectation of a lifetime working in one main job

Another one from the EU

job guarantees in terms of lifetime employment and benefits are increasingly being eroded.

Hard to erode something that’s non-existent.

I think it’s the case that lifetime employment is decreasing in Europe, as these reports claim, but I get the impression that there’s quite a bit of protest against the reforms that are eroding it.

End of Discussion