The real reason it's harder for families to "thrive". Matthew Yglesias

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The real reason it's harder for families to "thrive"

Matthew Yglesias

12 - 15 minutes

In her autobiography, Agatha Christie writes about living in London in 1919 with her husband while expecting their first child. The couple already had a live-in maid but were looking to hire a nanny when the baby was born.

“Looking back, it seems to me extraordinary that we should have contemplated having both a nurse and a servant,” she writes. “But they were considered essentials of life in those days, and were the last things we would have thought of dispensing with. To have committed the extravagance of a car, for instance, would never have entered our minds. Only the rich had cars.”

I thought of this anecdote when I read Scott Winship from the conventionally free market-ish American Enterprise Institute debating a claim made by Oren Cass from the right-populist group American Compass. Cass argues that something he calls the Cost of Thriving has risen over time, and if you review the debate, I think Winship is clearly correct. He at times undermines his position by incorporating some ideas that miss Cass’ point and make the dispute seem more even than it is. But I wrote about a version of this claim back in 2020, and on the key points, Winship is right and Cass is wrong — he counts health insurance incorrectly, for example. The fact that Cass has persisted in some of these errors suggests that the exercise is not on the level.

It is, after all, quite easy to see that inflation-adjusted wages and inflation-adjusted household income have gone up over the past several generations. It’s also obvious that many things exist now that you couldn’t have bought at any price in 1950 or 1980. The only reason to generate an alternative price index is that you already know the answer you want, so you just keep tweaking the items until you get the desired result. This is a shame, because I think the basic conclusion that Cass wants is roughly correct and reachable without invoking any exotic price indexes. The issue is exactly what Christie points to in her biography — relative price shifts — and how those changes intersect with the vision of a good life that centers childrearing.

Why is it that 100 years ago, a middle-class family could afford two servants but zero cars? Because, as the great economist William Baumol observed in the 1960s, wages rise with economy-wide productivity but productivity does not increase evenly across the economy.

Precisely because we got so much better at making things like cars — turning them from niche luxury items into mass market commodities — wages rose, and hiring someone to do something labor intensive like be a live-in maid got more expensive. Baumol used the example of a live string quartet, which by definition requires four players. But even though hiring live musicians has gotten more expensive, we have good technological substitutes like Spotify. Hiring a full-time maid would cost a bundle these days, but washing clothing and dishes is a lot easier than it was 100 years ago thanks to appliances.

But kids are tough.

There’s been little, if any, technological advancement in the field of “pay someone to watch your kids.” And that’s an activity we should construe broadly as encompassing not just child care, but also regular school and afterschool activities and summer camps. It includes things like getting someone to coach the Little League or soccer team. Even if you pay $0 for a volunteer coach, the opportunity cost of being a volunteer has gone up because wages are higher.

And then there’s the opportunity cost of mom. Women’s wages have soared, boosting household incomes a lot. Most married mothers with kids under six don’t work full-time, in part because of childcare costs and in part because people like spending time with their kids. But averting the cost of daycare, aftercare, beforecare, whatevercare by having mom do it herself doesn’t actually change the economics — the opportunity cost of taking time away from the workplace is dramatically higher than it was in the 1950s.

I assume there was someone sitting around in 1969 looking back at Agatha Christie’s time with nostalgia. “It’s nice that middle-class people have cars these days,” she might think, “but all this loading and unloading the dishwasher is very undignified, and we’re not truly thriving the way we were when we had servants.” But most people think that’s dumb. By 2019, a typical two-parent family had two cars (with GPS) and were carrying around supercomputers in their pockets. But the number of children per household has fallen. You might look at that and say “well, trading away traditional family life for streaming video isn’t really thriving; the nostalgics are right this time.”

And maybe they are. But it’s worth saying that if you want a genuine 1950s lifestyle today, you can probably afford it.

Some things really are harder to afford than they were in the past because we are richer today. But by the same token, middle-class people from the past were poor by our standards. In 1950, the average new single-family home was 983 square feet.

If you’re willing to live someplace unfashionable like Cleveland, I can find you a 1,346-square-foot, three-bedroom house for $189,900. That’s an estimated monthly payment of $1,382 per month or $16,584 per year. Let’s say you’re living by the rule of thumb that says housing should be 30% of your annual income. Well, that pencils out to $55,280 per year. Is that out of reach for the modern Ohioan? The BLS says the mean wage for all occupations in the Cleveland metro area is $59,530.

There’s no all-occupations median, unfortunately. But for postal service clerks, the median is $56,200. Suppose you know a skilled trade and you can apply for this mechanic job at the airport that pays $32/hour. That’s north of $60k per year.

So what about child care? Summer camp? All that Baumol stuff? Well, it doesn’t matter, because you’re thriving 1950s-style and your wife takes care of all that. People think it’s weird that you guys only have one car, but that’s the ‘50s for you.

It’s a 27-minute commute to your job at the airport by metro. You’re four blocks from the elementary school and two blocks from the playground, so mom and the kids are fine to be carless if you need it for the day, and it’s only a 25-minute walk to the shopping center at Kamm’s Corners. Of course with three kids and a modest income, you’re not taking vacations by airplane or dining out much, but ‘50s people didn’t do that either.

How about groceries? Intern Maya found this website with food prices from 1950s ads.

    You could get two pounds of bananas for 27 cents in 1957, which is $2.98 adjusted for inflation. The Target near my house is selling them for $1.99 and it can’t be cheaper here than in Cleveland.

    Sugar cost 43 cents for five pounds in 1952, that’s $4.93 in today’s money. Today at Target, I see 10 pounds of sugar for $7.29.

    Chickens were 43 cents per pound in 1950, or $5.56 in today’s money. Today we have such chicken abundance that they’ll give you special boneless skinless chicken breast tenderloins for $4.99 per pound. If you’re a foodie who’s against chicken breast, you can get bone-in chicken thighs for $1.69 per pound. 

How does all this thriving work? Basically, you avoid Baumol Effect problems by having a stay-at-home mom, which makes your household income low for a middle-aged married couple, but it’s fine because you are accepting the much lower material living standards of the 1950s. You can even splurge on some occasional out-of-season fruit that would blow the mind of anyone living in the 1950s. The AARP says a new car in 1960 cost $2,600 or about $27,000 in today’s money, just about what a new Camry costs today. We can debate how much value there is in the quality improvements — today’s cars are safer, more comfortable, and more fuel-efficient — but the basic affordability doesn’t hinge on those claims. For $80 you can get a television with a bigger screen and better resolution than what RCA was selling for $400 in 1965.

The problem — and here’s where Cass’ framing about “thriving” is clever — is that my Cleveland family is not really thriving in 2023. They are, in fact, exceeding the material living standards of the typical American family of the 1950-1965 era. But they’re being very eccentric. We think of a thriving family in 2023 as having a large house by the standards of 2023, not by the standards of 1953. Having only one car because that’s cheaper than two cars is not exactly a sign of thriving in the contemporary United States, unless you’re like me and live someplace with expensive houses and a boutique walkable urbanism lifestyle.

At the same time, it’s not like these kids are suffering from serious deprivation.

Plenty of American kids are much worse off, but they are generally growing up in single-parent households. And it’s not as if contemporary American women can’t afford to get married (what would that even mean?), it’s more like the opposite — women are more economically empowered than ever before, which includes the power to tell men to fuck off. The fact is, any way you slice it, we have become richer. This greater prosperity just means that certain kinds of lifestyles have become relatively less desirable.

You could address this by trying to bring back massive labor market discrimination against women, but that would be neither moral nor workable. Alternatively, the welfare state could be your friend here. There could be very cheap optional afterschool programming, summer camps, and school vacation camps in every city. There could be a generous child allowance and preschool for three- and four-year-olds. We could have a big Child Tax Credit. We could have universal health care. We could eliminate the marriage penalties in the welfare state by making every program more generous. The basic economic problem with children is that they consume stuff but don’t have gainful employment. So in general, the more you expand the welfare state and provide services to people, the better off you make households with a large ratio of non-workers to workers. Public libraries, public schools, a good city bus system — it’s all good for families. And of course targeted direct financial support à la the CTC is especially good.

Outfits like American Compass that are trying to chart a course for the post-neoliberal American right aren’t going to go there, of course. I had a lot of quibbles with the precise design details of the now-dead Build Back Better family care agenda, but in broad strokes, it was much closer to what I’m talking about than anything Cass would embrace. And of course a giant expansion of the welfare state would be expensive and require higher taxes — broadly higher taxes, not just on billionaires.

I’d be inclined to leave it there, except that American Compass’ handbook for conservative policymakers features the following striking proposal in its trade policy discussion:

    Establish a uniform Global Tariff on all imports, set initially at 10% and adjusted automatically each year based on the trade deficit. After any year when the trade deficit has persisted, the tariff would increase by five percentage points for the following year. After any year when trade is in balance or surplus, the tariff would decline by five points the following year.

If you think about the mechanics of this, it’s essentially an across-the-board increase in the prices Americans pay for the stuff they buy. If you’re willing to do that, then why not consider a VAT rather than a huge tariff? If I were a politician, I wouldn’t want to propose a VAT because I’d be wary of proposing a big increase in the prices Americans pay for the stuff they buy. But that’s exactly what American Compass is proposing.

The VAT would influence the trade deficit (by curtailing American consumption), but instead of creating a windfall for the owners of incumbent American manufacturing companies, it would create a revenue windfall for the federal government that could be used on pro-family programs. That, it seems to me, would do more to promote a family-centric vision of “thriving” than an effort to narrowly prop up the manufacturing sector. It also seems extremely far-fetched politically. But it would directly address the issue at hand, which is that the price of family-related stuff has gone up, not relative to the absolute ability to pay but relative to the price of other stuff, and we’d need a mix of taxes and subsidies to even it back out.