This is like arguing that the invention of the assembly line caused inflation because you could produce too much.
You contradict yourself by saying 'double supply' and 'inflationary effects'... increasing supply of a commodity (in this case labor) should DECREASE inflation, not increase it.
> it's a simple supply and demand curve. Increasing the number of workers decreases their value.
You are leaving out a crucial factor - the wages that the 'new' workers earn are going to be spent in the economy, growing the economy as a whole. This is increasing the 'demand' side of that supply and demand curve.
This is the same flaw that anti-immigrant people use when saying that immigrants 'take our jobs'. They take a job, but they also create jobs by spending the money they earn. That is what an economy is. Every worker creates more value than they take (otherwise no one would hire the worker in the first place!)
Of course, home prices are not completely isolated from the rest of the US economy, but I think that's a far cry from the idea that each household just now has twice as much money to spend on goods, entertainment, food, etc.
This was the topic of conversation this weekend between my wife and I and 4 other couples that we are friends with, each of us with young children. We live in SoCal. We have young kids. We basically can afford to live here, despite having high-paying, dual-income households. That's it, we can afford living. We can't afford to go to Disney very often. We can't afford to go to the San Diego Zoo very often. We're keeping pace with house and car payments (this was a big one for my wife and I, we no longer have car payments and are doing everything we can to make our situation work with the automobiles that we have), with childcare, and trying to put away money for our kids at the expense of the local economy.
I somehow don't feel any more financially secure or independent; I don't feel like I have more discretionary income than when I first moved to California and was making $10/hour. My own conclusion is that it's a feature of our economy, it's by design.
I have a mortgage, insurance, and taxes.
> multiple cars
I'm really tearing up the road in my 2004 Scion (that I got used in 2010) and my 2014 Honda.
I also have exorbitant childcare costs that are leading my wife and I to question the value of my wife or I continuing to work and live in this place.
I'm not rich. I don't live in Ladera Ranch. I don't own a Tesla and a Range Rover. But fuck me for thinking it'd be fun to take my kids to Disneyland or a Zoo.
Plenty of people would love to live in CA, and make enough to stay there. I'm also going to bet you are fully funding your retirement, it's a lower percentage of your income to max out your 401k.
I understand you don't feel rich, but be grateful for what you have and enjoy life. If your not having sleep for dinner or worrying about the electricity being turned off; you have it good.
If you can follow a plot line, you'd intuit that I came to this state poor. I'm very well aware of what the lesser fortunate and folks in poverty are dealing with; I've been there myself. Thankfully without children, but I can certainly imagine what it's like to be homeless with children, having been homeless for a brief period myself and now having children of my own.
And that was the entire point of my comment. If I'm sitting here today, given my current economic status, without the ability to direct my discretionary income in a way that would benefit the local economy (Disney and the SD Zoo are just two relatable examples, they're being cherry-picked to support that persons rant) then what hope do those in the lower-middle class or below have?
I've watched my economic output get sucked into a vortex by landlords and banks and government and now I can add on the insane costs of childcare. This was true when I was poor and it's still true today when I am not.
Where in anything that the other commentor has said are they making a point about what I am saying?
The main point is that these are presumably upper-middle class families. You would expect that with their higher-than-average incomes they would have greater amounts of discretionary income that they would be spending and that their expenses would be spread out across more of the economy, supporting many other businesses and services. Instead the high salaries are being captured by housing costs. Sure they're not hurting, but it is surprising that dual-income, high-earning families are basically breaking even.
I’m making a great deal of assumptions but not being able to go to Disney land at the drop of a hat seems awfully trite.
Dual income families are — and for decades have been — spending their extra second income on housing rather than the rest of the economy. The comment you’re referring to is therefore very relevant because it shows that trend in action. Housing — and other opportunities in life it enables, like access to schools, (real life) social networks, safety, etc. — supersedes everything else in importance for many families, so second incomes are just spent on what is ultimately a bidding war over housing.
If the highest-earners of the middle-class have their discretionary income locked up in housing costs, how much more difficult is it for those who don't have the same level of income. Housing then eats into non-discretionary expenses.
And as a non-American, from an ex-Communist state, where salaries are still a fraction of those in the US, that standard of living sounds anything but affluent. Here, families with two upper-middle-class incomes and 1-3 children are more likely to own multiple houses, than barely be keeping up with their mortgage. It's just another story for the growing pile of reasons to never move to the US. Being in the top 5-10% of earners and in debt just from housing is not normal.
Boggles my mind...
I would even expect this to be true, though on a smaller scale, in areas where housing supply isn't constrained, since, in general, each individual house is unique to some extent; two dual-income families fighting over the same house will have more resources to throw at their bids.
It's very clear that an increase in labor supply puts downward pressure on wages and there's plenty of evidence that the economy is not growing fast enough to offset that pressure.
And, making that worse: Once you have two careers to plan for, it's much harder to move to a smaller cheaper city to escape. Perhaps both of you can find good jobs in the big city, and in 5 smaller places... but not the same 5! So you have to pick the big center.
If you increase workforce but not increase capital (or increase workforce more than capital), then it is true that economy as a whole (GDP) will grow, but GDP per worker will go down, there would be downward pressure to wages and upward pressure for capital yield.
That assumes that the number of available jobs is perfectly-sized and fixed, and that there's no other work that could be done (or no under-employed, existing work that could be done better) if we had more workers. That would seem not to be true.
No it assumes the exact opposite of a fixed number of jobs-- it assumes the other work wasn't being done because wages were too high to make it profitable, but as the workforce grew the price of labor dropped until employers wanted to hire into those jobs. That's the whole idea behind supply and demand.
How would you explain the stagnant wages of the last 4+ decades compared to the massive economic growth? I don't think there's much evidence that the relationship between labor supply and economic growth is anywhere near one-to-one (e.g. one more person working means their wage is added to the volume of labor demand).
The childcare discussion cuts to the heart of this, because the language of economic optimization cloaks its real world results - the addition of ever-more third-party intermediaries to raise your own kids, such you can keep on performing the most system-legible labor possible.
What should have really happened is that "full time employment" should have been redefined to 30 hours per week, a few decades ago. By now we should be at 20-25 hours per week. We're in the age of the greatest technological progress in history, yet rather than success, the treadmill is turning faster than ever! All to produce more layers of bureaucracy, overpackaged fast food, or junk that ends up in a river. And then we do our penance lamenting about "sustainability", when the simple answer is to stop overproducing in the first place.
So it's a double-edged sword: you flood the supply side with new laborers while keeping the demand side static, and you increase the general cost of living because you now have to pay for childcare that you used to get for free.
There is historical precedent for it, see 14th-century Italy after the Black Death halved the population.
https://dailyhistory.org/How_did_the_Bubonic_Plague_make_the...
More people going to university -> Demand outgrows supply, universities can charge more and spend more money on appealing things. More student debt.
More workers -> More supply than demand, companies can pay less.
Each worker needs a vehicle. More expenses.
Both parents working, need to pay someone else to take care of kids. More expenses.
More debt/expenses, less pay.
Of course correlation =/= causation, but perhaps it was one of the contributing factors to the 10+% inflation rates of the late 70s early 80s.
https://www.amazon.com/Two-Income-Trap-Middle-Class-Parents-...
Henry Ford realized that the automobile was not going to change the world unless auto workers were so productive that they could easily afford the cars they made.
That kind of productivity increase is not possible w/ Childcare. I remember a Z Magazine cartoon more than 20 years ago where two women were pondering the mystery of why a child care worker can't afford child care and the unspoken punch line was that it was the perversity of capitalism but, no, it's not that economically efficient to pay somebody else to watch your kid for you. It makes money for the day care center, it makes money for your employer if you go to work, you pay taxes on the money you earn -- it makes money for a whole lot of people who aren't you.
You, not so much.
Universal child care is currently reeling from the discovery that recipients of universal child care in Montreal have turned into DQN adolescents. Maybe "the kids will be alright" in the end, but it is not looking like a program that pays for itself like Head Start.
If there wasn't any overhead, the childcare worker with one infant would pay 1/4 of their wages on childcare, which doesn't leave a lot for housing, food, transportation, student loans, etc. They are only infants so long however...
Actually there is overhead, the child care center has to pay for a building, administrators, marketing, and possibly taxes.
Contrast that to the auto worker, who probably gets a new car relatively often, let's say it works out like a $300 a month, or $3600 a year.
I think auto workers are relatively well paid, so the cost of that car is 5% of their wages as opposed to 20% or more.
Heartbreaking: https://daily.jstor.org/lifesaving-horrifying-history-wet-nu...
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