Generational Changes
Patrick at Cash Money Life had an interesting post this week about how generations past have been able to afford raising children on one middle-class income, but today’s generations can barely afford to raise a family on two incomes. Now, this isn’t the case in every situation, so I’m really just speaking in generalities, as was Patrick, but if you look it, previous generations has more kids and seemed to survive on less. This begs the question, why can’t we?
Naturally, I had to put my two cents worth in on this discussion; however, I wanted to discuss it in more detail then a comment would really allow. So, I’d like to expound on my theories a little if I may, but keep in mind that they are just that, theories and nothing more.
So, in my comment at Cash Money Life, I basically stated there were three reasons that I could see why there is such a difference in the previous generations to today. Patrick gave the example of his grandparents migrating to the U.S. after WWII and raising 7 kids in California with one income. That’s a pretty impressive feat. His grandfather was not college educated and he worked primarily blue-collar jobs, so they embodied the typical middle-class American family.
Seven kids, two adults, and one salary. Is that doable today? With the advent of social welfare programs, sure. But, is it doable at a middle-class level? Probably not. Someone will probably prove me wrong on this statement, and that’s ok. But, I highly doubt there are many families with that many kids working blue-collar jobs and living as middle-class Americans in today’s society, and here’s why.
1. The cost of living was lower back then.
2. Today’s lack of middle-class/blue collar jobs.
3. America’s expectation of a higher lifestyle.
Let’s take a look at each of these individually.
The Cost of Living Was Lower Back Then
If you look at the cost of living from even two decades ago, you’ll see a vast difference in those rates from today’s. Between inflation and capitalism, our cost of living today is double and triple what it was 20 years ago. On top of that, if you look at the average middle-class wage, while it has increased over the years, it’s certainly not keeping pace with inflation. So, what could once be afforded with one income two generations ago is something that can barely be afforded with two incomes in today’s terms.
I didn’t go into detail with this on CML, but if you look at real estate prices over the years, you can really see this in effect. My grandparents bought their home for $30,000 in the early 60s. It was a nice home; 4-bedrooms, 2 bathrooms, a den, and a game room. Granted, they live in Iowa, which is typically a lower end market for housing anyway; however, their home today is worth almost $200,000. So, if that home was worth $30,000 20 years ago and is worth almost $200,000 now, imagine what they’d get if they tried to pay $30,000 for a house today. Not much, I’d wager. Thus, the cost of living has affected almost every area of the economy and takes more of our paycheck, but we’re not seeing it reflected in our raises.
Today’s Lack of Middle-Class/Blue Collar Jobs
We have outsourcing and illegal immigrants to thank for this. I mean no disrespect, but companies can find cheap labor from illegal immigrants and they’re paid under the table, saving the company thousands in taxes. It makes a difference in the number of jobs available to the middle-class. But, one of the biggest culprits in this area is outsourcing. Sending jobs like manufacturing overseas saves the company a lot of money. The fact is, it takes jobs away from Americans, and the pool of available jobs that don’t require a college education is much smaller then it was two decades ago.
Then there’s the expectation corporate America has that everyone have a college education. It’s viewed as something everyone has access to, so there’s no reason not to have one. Whereas even 20 years ago, a college education was based on social class. If you had the money to go, or the smarts to get a scholarship, then you got in. If not, well there were plenty of blue collar jobs you could work. But, this social mindset began changing soon after and now it’s simply an expectation that you go to college and get a degree. There are too many programs available to those who need financial assistance to not take advantage. Not everyone would agree with that statement; however, employers want to higher those who are willing to get the education they desire.
America‘s Expectation of a Higher Lifestyle
Compared with generations past, our expectations of lifestyle have changed. During our grandparent’s time, they were content to spend time with one another, play outdoors, enjoy nature, that sort of thing. Today, our happiness and contentment are based on whether we have the latest gadgets and trinkets, and even then, our contentment only lasts until the next gadget comes out and then we have to have that one. Our money then becomes extrinsically tied up in things of no value. What was considered a luxury in previous generations has become so commonplace to us today that we forget it really is a luxury.
We expect that we’ll have a house and two cars. We expect we’ll have a cell phone, computer, TV and DVD player in at least one room of the house. We expect to have running water and electricity. These weren’t necessities in previous generations and they didn’t waste their time with them. As Patrick commented to this point, this is something people can control. So, I think that’s a great answer to the initial question. How come today’s generation struggles to support a family on one income when previous generations did so with more kids and less money? While I think all three reasons combined are the overall answer, a large part of it is that we’ve lost the discipline and self-control of previous generations. We’ve become a slave to our wants and desires, thus fueling the debt cycle. We’ve allowed ourselves to be ruled by advertising and marketing schemes. We need to get back to the simplistic wisdom of our grandparents’ generation.
What do you guys think? Given your financial knowledge, would it be possible to raise a family on one income in your household?
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I don’t have kids so this is from an outsiders point of view, but some time around the time of Dr. Spock (not the one from Star Trek – the other one) people started treating their children differently. In the past you let kids run out and play outdoors “until the streetlights came on,” you let them play stickball and build tree houses. At an early age you had them do physical chores and there wasn’t as much concern about kids getting hurt. Now days if you let your child play unsupervised you are considered a horrible parent. I’m not saying there aren’t good reasons for this, what with pedophiles and child snatchings, but what that means is that parents needed to find ways to protect their children more. This meant enrolling them in supervised sports, buying more expensive games and toys, arranging daycare, taking them on long family vacations – and all that adds up. Children are far, far more expensive now than they once were. Plus there are dental and health costs. (No more paying the country doctor with a basket of eggs or tying a bad tooth to a string tied to a doorknob and slamming the door.) Add in braces and dermatologists and if you are a good parent, saving for junior’s first car and college. On top of all that, kids are at home a lot long and working a lot later. Most kids are home until they are at least 18 and many (though this boggles my mind) don’t get jobs – even in college. Even in my day, and certainly before, kids turned 16 and they went and got a job – if not before. That seems to be going away too.
Heck, as expensive as it is, it is a wonder people have families at all! :)
It depends on the number of kids :) There’s a tipping point where day care becomes more expensive than the income it’s replacing.
I make what I would consider to be a very good salary. I can’t imagine supporting our family on just my salary, and we really don’t have an extravagent lifestyle – as an example, the car I drive to work is 11 years old. I guess if we really scrimped and didn’t save for retirement and college … but I want to have a decent nest egg at retirement.
In my opinion, the dual income trend has been a driver of the increases in cost of living. People have dual incomes, spend the money (turning the luxury of one generation into the necessity of the next). That puts a greater demand on products, and drivse up the cost (basic supply vs. demand).
Easy credit has also driven up costs in a similar manner – creating demand by putting buying power into the hands of more people.
It really depends on your income of the individual and the choices you make such as the place you live, school your kids go to etc. According to wikipedia average individual income in U.S is $32000/year. I would have to be extremely frugal and do some radical restructuring of my life to be able to raise my family on 32K per year. At the same time…with a second child on the way, day care will become the biggest expense for me in a few months.I might be able to squeeze by with my current income, but then there would be almost no savings, no 401(k) or a vacation anytime soon.
One the reasons for home prices going up I believe is because of lack of good school districts to live in. If the quality of all the school districts adjacent to one another have been comparable, then we would not have to pay as much for our homes. I paid at least 70K more on my house compared to a similar house 3 miles away but in a school district with bad reputation.
I think if our country ise able to fix our failing school districts along with bring the cost of healthcare down, we might be able to live on one income in future.
I am a SAHM of two kids, so I’d like to think that I can give some insight. Before I got pregnant, we decided that it would be best for our family if they were able to have a parent home with them during their early years to be the primary caregiver and teacher. This is not a dig on people who choose to work, or can’t afford to make that choice, it is just stating a fact of our lives. And yes, we do make more than the 32k “average” family.
To live on one income we chose to make a few sacrifices. We practiced while I was still working and used my salary to pay off the cars (our only debt). We limit our eating out and our vacations are rare as well as significantly cheaper than they used to be. We are usually the last to buy whatever new gadget hits the marketplace. I clip coupons and shop sales – many a store manager knows my name. I keep a very close eye on exactly where our money goes, and we try to make sure that our spending is in line with what we really value. We eventually realized that we were living in such a high COLA that we would never be able to afford a house, and the condos that we could afford were in areas with horrible schools, so we moved. DH was able to get a transfer to a small town with fabulous schools and affordable housing.
Dawn also has a point about kids and their expenses. My kids are in K and pre-K and they are just entering the organized sports phase of life. We have made the decision to limit them to one activity each. It saves them from being exhausted and saves us money by not having to pay for tons of equipment, classes and gas for the car (one downside of living in a little town is that it is a 20-40 minute drive to get anywhere!) My kids have a backyard to play in, and we have a lot of neighbors on our street with similar values and our kids are often in the front yard playing until the sun goes down. I know some people are horrified at the idea of living in a homogenous neighborhood (I don’t mean racially – we are surprisingly diverse in that arena), but we all moved here with the same idea that we needed to take care of our family first, and there are a lot of single income families trying to make it.
Living one one income can still be done, but it does require sacrifice and planning. In some ways, I work more now than I ever did before, because I need to be diligent 24/7. That’s my 2 cents anyways!
I think you wrote an excellent article here. In addition to your points, I will echo a few things pointed out by others – cheap credit and a devaluation of the dollar have caused the cost of living to increase and wages haven’t kept pace. There is a greater supply of money than there was several decades ago, which means it takes more of those dollars to purchase homes and other necessities.
My wife and I will be able to be a SAHM, but our situation is a little different. We waited until we were established professionals until we had children, we paid off all non-mortgage debt several years ago, we built a substantial nest egg, and we have been living on one salary for over a year. We wanted to have these things in place before we had children. I realize that isn’t possible for everyone, but it was something we were able to work toward, and we feel blessed to have this opportunity.
Excellent article and great comments! :)
Great article. You are definitely right about America’s Expectation of a Higher Lifestyle. We are now expected to live with a cell phone, cable tv, internet, etc… If I canceled just those services I would have an extra $400-$500 dollars. Plus our costs of living is higher regarding housing. Well, at least in Southern California it is. If I could afford to stay home I would save another $400 in childcare costs. Plus, we have the monthly car payments. I commute 2 hours each day so for me it seems essential to have a decent car. Anyhow… you talked about some great points.
Plus, back then you weren’t overloaded with stores/shopping and internet shopping. You had Gimmel’s, Woolworths, or Sears. And your food selections were not overloaded with convenience food. Women cooked back then to make mostly everything you needed from scratch. There is a great article about the past, here.
Well, I am in a transition currently seeking to downsize my family to a one income household. I would like to have the opportunity to downsize so that I may become an entreprenuer and/or my husband can retire. I am rather happy about this challenge. So, this post was a good one for the interests I am now pursuing. ;)
Great comments everyone! And lots of diverse thought here!
@ Dawn – You know, that’s a very good point. I didn’t really give it much thought per se, because in my neighborhood growing up, we played in everyone else’s backyard. My next door neighbor was a good buddy and we even had the tin can telephones…amazingly that worked!
@ Kosmo – Easy credit is another factor. It certainly has driven the way we choose to spend our money.
@ BM – Looking at the issue from the perspective of the school districts is a good point. I don’t have kids, so I don’t really give much thought to that. At this point, I can afford to go where’s it’s cheaper.
@ Angie – Thank you for sharing! I know it can be done with one income these days, but I guess I’m really wondering what’s the threshold where it stops being possible. If the average family makes $32k, can they comfortably go with that one income? What about $27k? Is that too low? In your experience, do you think such a threshold exists?
@ Patrick – I think if I ever decide to have kids, I’ll go the route you and your wife chose. I think it makes sense to cover your bases. Not everyone is lucky enough to do that; however, I think it’s important to at least try. And thank you for your kind words about the article. It was derived from your article, so I must give the credit to you! ;)
@ Christine – I’m also trying to downsize my life, so I understand the challenge you face! Best of luck to you and I’m glad you found this article helpful.
Don’t forget that college education also costs a lot more than it used to.
And the cost of health insurance/ day care, etc.
Nice article!
We tried being a one-income family when we had our first kid, but it didn’t take(due to boredom and money issues). Now we’re trying it again (this time with two kids) after I’ve been laid off and am going back to school.
After a year, it’s not so bad. But I think we’re making due knowing it will be temporary.
So I guess I think it can be done. But it takes a lot of work.
Here’s how I could (in theory, I don’t actually have kids) raise a kid on one income:
Have a partner to stay at home to do child care, cook, clean, garden, etc
Yard sale, hand-me-down toys and clothes
No eating out
No new car
No fancy electronics and no cable TV
Vacations would mean car camping, no flying or hotels
Can only afford one kid, two would be stretching it
Kid could only participate in cheap sports
Aside from the one kid thing, this is how I was raised. And I would only be able to (barely) afford this because I make good money. Average money would not cut it.
People today think multiple TVs, high speed internet, cable TV, SUVs, destination vacations, cell phones (even for kids!), and fancy electronic toys and games are part of a basic standard of living. They’re not! I think having a computer is important because in today’s world kids need to grow up knowing how to use them, but they don’t have to be the latest model. Mine is six years old and works great. Mostly the need for two incomes is related to increased lifestyle expectations.
That said, housing costs are a huge issue where I live. The parents of a friend live a couple blocks from me and paid $18,000 for their house in the 60s. At the time it was twice her dad’s annual salary. In the late 70s my parents bought their house in the same city for four times my dad’s annual salary. Two years ago I bought my house (which is a lot smaller than my parent’s house and somewhat smaller that my friend’s childhood home) for almost six times my annual salary. My friend’s dad, my dad and I are all in the same salary bracket for our times so it is a good comparison. I could have one kid, my parents had three and my friend was one of nine.
My husband works a blue collar job and we raise our family on one income. Granted, two kids… not seven. I have a friend who is a stay at home mom to 4 kids and her husband is a long distance trucker and he was a tow truck driver for years before that. They do it.
In my experience it’s very doable. I suppose we do make sacrifices in order for me to stay home, but I certainly don’t feel that we go without. Do we have everything want? No. But we have everything we need and then some.
I think one of the most interesting points you made came near the end of your post regarding what we view as necessity vs. luxury in today’s culture. While I think it might be overstepping it a little to say that running water and electricity aren’t essential in this day and age, we all could benefit by simplifying our lives and embracing a “power of small” approach. We don’t need blackberries and ipods, we WANT them. Identifying the difference between the to will help us not only recover from years of excess spending, but refocus our society on the things that really matter.
I think part of the equation is that so many people start out there life with a bunch of debt from college. You go to college to be able to get a better paying job and then end up paying for it for a decade.
Certainly the comments about higher cost of living and higher expectations for standard of living play are very accurate.
I’m 40 – I remember when my parents got a television – I was 7 and they paid cash for it like they paid cash for everything except the house. Today people buy a tv on credit which will cost them more in fees and interest, they get cable or dish which costs them more every month – it’s no longer the idea of “Having X will cost me Y” but “getting X will obligate me to spend Y each month.”
It’s not difficult to live on 30k a year if you live in the same manner that you did when you were growing up. Go to the library, learn to sew, have friends over for dinner and cards. Don’t even think of going out to eat, ordering in or getting prepared food from the deli – you didn’t eat all that stuff when you were growing up did you?
I’m buying my grandmother’s house — going through the process right now. It was appraised at $110,000 and my down payment is $20,000. Back in 1954 when my grandparent’s built the house they put $1,000 down — the whole house cost $5,000!
While that seems cheap to me it’s really not when you think about how much stuff cost back then and what people made for a living. Were the good old days really so good? My grandmother got $2.00 a week for caring for a child in her home. She has about 14 of them! And that was per family! Even if they had three kids she still charged $2.00.
How times have changed!