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Comment by donmcronald | Hacker News Reader

> The numbers are significant in that wages increasingly have been recognized as a driving force in inflation.

The wealthy are buying up all the tangible assets and price gouging everyone with high rent and subscriptions for everything imaginable, but it’s the workers asking for enough money to keep up that’s driving inflation. Ok.

The western world has gone from single income homeowners in the 80s to dual income homeowners today. That’s 80 hours of work per household per week instead of 40. IMO we’re trending towards multigenerational home ownership where it may require 4-6 income earners to own a house.

We’ll all be living paycheck-to-paycheck with 3 families to a house and the economists will still be blaming inflation on the working class having too much money. Maybe it’s time to start asking if a lack of competition is allowing the ownership class to manipulate supply so they can set unfair prices.

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> The western world has gone from single income homeowners in the 80s to dual income homeowners today

This is largely the result of 3 things, a giant shortfall of building where population growth has outpaced new home starts for 40 years, women joining the workforce in greater numbers since the 60s, and houses on average are much larger and feature more amenities.

> women joining the workforce in greater numbers since the 60s

In the most literal sense yes, of course the increase in dual income homeowners is because of a greater number of women joining the workforce. But that masks the true reality, which is that those families require two incomes to a lifestyle that used to be achievable with one.

It’s a result of the lack of affordability, not a cause.

I think you have it backwards.

Houses could only be priced such that a single income could buy them when most women did not work. Or nobody could buy them.

Once you have couples competing to buy that same housing stock, it becomes increasingly hard for a single income to compete and the price rises to match what the market can support.

This is exactly the point I'm making. Home ownership rates are still at about 66% of households in the US but median household income has risen dramatically and interest rates have been very low so there has been a lot of room for home prices to increase. Supply has also lagged and labor costs have also risen.

> Houses could only be priced

> the price rises

ah, the swirling anonymity of "market forces"! These are all active decisions made by people, not forces of nature. The money from these increased prices doesn’t just disappear into the ether.

You're not wrong, of course, but it's worth looking at it from another angle. A house for a dual income family does not cost more to build than a house for a single income family. In a world where housing is considered more of a human right than an investment vehicle prices could have stayed low, more could be built, faster. Instead we live in a world where everyone must work more in order for their quality of life to stand still. I think it's permissible to be angry about that.

Oh, I completely agree that it's reasonable to be angry we have to pay more for the same or less. And our family is single income so it's been really hard for us.

It doesn't take houses to be considered investment vehicles by anyone though for this to happen (even if some people do). Just more and cheaper money available to throw at the same things.

That assumes that women working weren’t producing anything, and the construction industry didn’t get more workers as women joined the workforce. Neither are true, our society is actually wealthier with more production, but because land is limited (and doesn’t expand with working population growth), we use some of that more wealth to bid up desirable housing.

> That assumes that women working weren’t producing anything, and the construction industry didn’t get more workers as women joined the workforce.

No such assumptions are necessary or intended. It doesn't make sense to assume working women produced nothing. I have no idea whether the construction industry took on more workers or not when women joined the workforce.

Regardless, most couples tend to buy one house, and two people's incomes can outbid one person's. That is all that it is necessary to assume.

Yes, but that income should equal production, so either more housing is produced, or something else more is produced, and either gets cheaper or we have more stuff. I guess it’s a combination of all three, our society is definitely wealthier with more people working, we are better off than we were in the 1950s. But that wealth maybe is spread out less evenly.

I think that sounds about right. We are wealthier than in the 1950s. We have super computers in our pockets and a global information network, for example!

For housing though, the economic unit is the household, not the individual, and land and location are not really affected by how much stuff we can produce. So housing costs will always occupy a large fraction of household wealth, no matter how wealthy we become.

I don't accept that the initial primary motivation behind more women joining the workforce was out of financial necessity. But I can see that once you have a certain critical mass of households with dual incomes then it becomes very difficult for single income households to compete in the same buyers market for housing especially (given its uniquely inelastic supply and it being a fundamental need for all of us), hence essentially forcing them to convert into (or remain as, after having children etc.) dual income households even if they wouldn't otherwise choose to be so.

This is correct. Humans are competitive, and if your peers are competing with two incomes and you are chasing after the same scarce resources they are, then prices will rise accordingly.

Scarce examples would be homes in the best school district you can afford near the best job markets. Or the best doctors, tutors, etc. And if the majority of people opt to be in dual income households, then the price of even average products/services will rise so that single income households will have to settle for less.

This would imply that women work and get paid, but do not contribute. The reality is that woman who work DO contribute. That is, they produce things for all of us, including themselves. Introducing women to the workforce does not mean there is more money chasing "the same scarce resources" - in fact there is much more stuff for us to buy with our money now, and in fact (all else equal) woman working may drive DOWN the price of good and services.

> there is more money chasing "the same scarce resources" - in fact there is much more stuff for us to buy with our money now

Humans are status seeking, so stuff is not just stuff. People value obtaining products/services that others cannot afford. The most basic example of this is the common advice to “buy the cheapest home in the most expensive neighborhood”.

Meaning, if you want your kids to hang out with kids of parents who earn at least as much or more than you, then you bid up housing prices as much as you can to minimize the number of families under a give income level that can afford the homes in the school district.

> in fact there is much more stuff for us to buy with our money now, and in fact (all else equal) woman working may drive DOWN the price of good and services.

This is also true, and it did drive down the price of many goods and services, including the price of labor itself. But it can also be true that prices for average or below average product/service decline, and above average products/services to increase.

Except prior to women joining the workforce they were providing essential services that they weren't being financially remunerated for.

Goods and services did get cheaper relative to incomes, but there is more money to bid up land prices. I think this aligns with what we have seen happen?

> It’s a result of the lack of affordability, not a cause.

Probably not. If you're familiar at all with the history of women entering the workforce, it was driven largely by women wanting to have careers and professional fulfillment and not financial necessity.

The history, yes. Today’s reality, no. If it were purely about a desire for career we’d see more stay at home dads, for example. In my social circle there are a great many working parents who would like to be full time carers.

Maybe not financial necessity, but certainly economic necessity when the men went off to war.

Rosie the Riveter, etc.

It's a tipping point, isn't it. If enough couples jump to dual-income for reasons of self-actualization, the rest have to follow just to keep up. It's a Red Queen's Race.

Also that the reality of caring for children in our fragmented society without extended family present being so difficult that working and outsourcing childcare to a non-family third party is much easier than caring for the children yourself. I think this one is under appreciated.

Do you have a citation for this? My historical understanding was that throughout the late 18th, 19th and very early 20th centuries the Industrial Revolution and urbanization made it a financial necessity for (non-farming) women to work outside of the home. Then, the enormous wealth gains in the early to mid-20th century made it possible for many to stop working or never join the workforce at all, and they took up that opportunity. I would be interested in reading more.

Looking at the labor force participation rate for women, since 1950 it's gone from 1/3 to 2/3.

It drives the average wage down as well, as now employers have almost twice as many potential candidates and therefore don’t have to offer as competitive pay.

> houses on average are much larger and feature more amenities

A lot of truth in this. I was raised in the 60's in a 3-BR house with 1 bath, a kitchen, and a living room. There were 5 of us including parents, in 850 sq ft, without central air in a climate that definitely needs it. My dad would come home from work and lay under the living room window air conditioner. We had 1 car, mom did odd jobs from home (ironing, cleaning, babysitting) and took care of us, and most other kids were in the same situation. A few moms worked but it was unusual. Quite a different living situation than most families today.

Is it though? Most of the large cities are ... mostly the same, with the same apartments like in 60s. Modern apartments are even smaller than back then. I can't find a quote but square footage per capita has barely moved in last 40 years. Couple of McMansons are not changing the stats that much apparently.

We need anti-trust, break up these companies into smaller competitors and give workers a chance to buy into the American dream again.

While I don't disagree with the notion of breaking up big companies, a have a small bone to pick about the last thing you said. The American dream was never intended to apply to more than a very specific subset of the population; those that we see with the majority of wealth today. It's already worked for those it was meant to work for, and consequently it will never be fought for again. At least, not by those with any real power today; they got what they wanted and have been pulling up the ladder on everyone else ever since. Let's quit trying to buy into the American dream, and try buy into a just and fair society for all. If only that were the goal all along :/

The American Dream to me is a just and fair society for all and I see equitable (as is feasible) ownership of the means of production as being foundational. We need everyone to be cut back into the deal somehow and anti-trust is one way to do that. I think we are looking for the same things.

> The American dream was never intended to apply to more than a very specific subset of the population

In recent times it's still been sold to everyone as if it were equally obtainable and anyone who found themselves unable to get ahead despite their hard work was told it was their own fault and they should have tried tugging harder on their bootstraps.

I agree it's time we stop thinking about the American Dream the same way. We need to either accept that it'll be out of reach for many no matter how hard they try or we change things so that's no longer the case. We can't fix it as long as we continue to buy into the fantasy that it's not broken.

It's true, though, that consumer price inflation is mostly regulated by customers at the lower end of the income range.

For instance: the supply of eggs is somewhat variable, so in times of shortage the price has to go up to make demand = supply. The rich aren't eating fewer eggs when this happens, the poor are. If everyone was rich, the price of eggs would go to infinity. (This seems to be happening to private school tuition.)

In a lot of cases in Canada it's dual-income renters.

And there's a ridiculous amount of cognitive dissonance among the Boomers I've talked with on this topic. There was a real confidence in their feeling that things were just as hard back then and there's just as much opportunity today for people to work hard and buy a home.

In their defense: every single one of them, when we got the pen and paper out and did the math to show it's not even remotely close, were shocked.

That's not a defense. They could have gotten the pen and paper out themselves and ran through some numbers to quickly verify their view of the world was way out of alignment with reality - but they didn't do it. Why? Because they preferred their view of the world, reality be damned.

So… they’re boomers? This isn’t just a Canadian phenomenon. Makes you wonder why they by and large are that way.

It’s expected generational behavior.

Younger generations want to change things and think they are unique and special, older generations are like “nah you don’t get it just wait until you are older”.

Both are right to varying degrees and depending on the circumstances. But those seems like the default views, and it takes effort to see when they don’t apply.

And you’d think Boomers would understand how that mentality is bullshit.

I think the past number of years has shown us that anyone willing to change their world view should be applauded. Standards are now very low. Maybe they'll go back up with the interest rates.

There are other drivers of inflation, but they'd likely involve hurting the interests of one group of elites over another - e.g. land owners seeing their asset values and rents slide, industrial magnates watching their profits decline or imperialists being forced to sign peace deals they really don't want to.

Wages are a good compromise they can all agree on.

Economists have failed policy makers with their narrow focus on neoliberal economic policies and mathematical models grounded in fairy dust.

If anyone wants to understand what effective economic policy is read Ha-Joon Chang’s work.

The increase in hours worked is somewhat illusory. Primary care giver (eg. in the past, usually mothers) worked full time to look after the children, cook, organize family life.

We now mostly work the same hours for money, then pay someone to do what mothers used to do for free; except possibly with some extra friction (tax, stress, commutes etc.).

Even nowadays, in the UK for example, many families are pushed to realize the soaring cost of childcare is greater than post tax earnings for one parent and skip employment to save money.

> IMO we’re trending towards multigenerational home ownership where it may require 4-6 income earners to own a house.

Nah, don't think so.

We went from multigenerational homes and kids living with their parents, inheriting their houses, and if buying -- doing it after they grew up and saved / got help to buy their own house. To a situation where everybody thinks the first thing you have to do after you get your first job is to get expensive mortgage and buy your own house. And parents basically waiting for their kids to leave the house so that they can enjoy freedom.

You suddenly need way more houses for the same number of people because people no longer want to live together. And that is what has largely been driving housing prices.

The times of prosperity caused this change but also for a long time were masking the effects.

Then multiply it by people's inflated expectations on how large their living space needs to be (houses are much larger than in the past even as they are less affordable),

It does not help that people are brainwashed that borrowing money is the way to go. It is not. It is a way to stay a slave to the bank. As a side note it is funny that there is so much debate about freedom and yet completely miss the fact that the biggest reason people are not free is that most people owe money to a bank and and most are not making good progress paying the debt.

So I think this wave of growth in the need for housing space will pass and at some point it will get more affordable.

I think future is very much to be written. In ideal world people would get educated on how to deal with debt, how to pay it and stay debt free. Also how to not get overboard buying stuff you don't really need (which I am very guilty of myself). I know this last one might cool the economy a little bit but I actually think it would be fine if it meant people had healthier financials.

What I think is likely, though, is formation of a new class which will essentially be free people in name only. Slaves to the bank from the day they are born to the day they die. Monitored and controlled at every step (which is already happening -- with banks and insurance companies digging through your private data to figure out how big risk you are). Poorly educated with both parents working, with attention grabbed by a shiny rectangle from the first years of their lives, with a noise of AI generated "media". Unable to reach real information through the noise. With no real friends, no real social interactions, no hope to upend the system because of no way to gather critical mass of people to do anything of note.

> We went from multigenerational homes and kids living with their parents, inheriting their houses, and if buying -- doing it after they grew up and saved / got help to buy their own house. To a situation where everybody thinks the first thing you have to do after you get your first job is to get expensive mortgage and buy your own house

the situation is pretty much the opposite of this, we went from where folks could afford a house pretty quickly, sometimes even on a single salary, to double incomes not being enough, and the only hope of housing for some now being multigenerational and/or inherited

Isn't this mean reversion? The US seems to have exhausted much its cheap developable land near major city centers, and I think you'll eventually see the same pattern that seems to play out through the bulk of the world: Extremely expensive land relative to salary, and an entrenched (hereditary?) land-holding baronage.

We have not done that. There's still plenty of developable land close to cities, and plenty of inefficient uses of space that can be better utilized. The problem is who owns it.

> still plenty of developable land close to cities

Hell, there's plenty within cities [1].

[1] https://escholarship.org/content/qt5gc6w0vd/qt5gc6w0vd_noSpl...

"On average, 22% of all land in city centers of metropolitan areas with over a million people was dedicated solely to parking." https://parkingreform.org/resources/parking-lot-map/

> The wealthy are buying up all the tangible assets and price gouging everyone with high rent

Why hasn't this happened in the past? A lot of property makes a lousy investment unless you get value by living in it.

Unless you buy a lot of rental properties and take some of them off the market. https://www.theguardian.com/business/2022/sep/29/blackstone-...

Also, Boomers are aging out of the job market - they're either unwilling to work any longer and/or unable to work any longer. This has been known for decades. Guess what? The day of reckoning has come. As the labor market contracts the cost of labor will rise.

This is just basic market economics.

What's interesting is that neither of those drive inflation. Inflation is the expansion of the money supply, and there is a sudden attempt to redefine it as increased costs of goods and services. Money supply goes up, costs of assets follow, then costs of goods and services, and then wages. None of the things downstream from expansion of the money supply "drive" inflation.

The most successful government propaganda ever is all the supposed reasons for inflation, anything but the real reason.

No, inflation is a generalized increase in prices / decrease in purchasing power for goods and services. Many people believe that this kind of broad increase in prices can only be driven by the expansion of money supply, but this is a contested thesis, not the definition of inflation. (For what it's worth, I tend to think it's correct.)

I am not sure if this is accurate.

I think money "throughput" matters more than absolute money supply.

The voltage supply doesn't matter at all if the resistance or impedance of a circuit is wrong.

Except historically there have been periods where increasing the money supply hasn't driven up inflation particularly (because most of the increased supply was used to fund increases in productive output) and times where high inflation has been triggered without any significant increase in money supply (often due to unusual factors restricting supply of key goods/services). But at a sufficiently large scale, then sure, inflation will tend to follow money supply. But arguably such baseline inflation is largely a reflection of the fact that the overall output of the economy has grown, and not any indication of general decreased affordability.

God Save the Rentiers is the American way. Everyone is trained from birth to aspire to be one.

> price gouging everyone

That's called cost-push inflation, and is an invalid theory. Inflation comes from government running the money printing press overtime.

Inflation is going to keep getting worse as the government has to print more and more excess money to service the national debt.

Meanwhile, the government will blame inflation on greedy corporate profiteers and excessive wage demands by workers. Oh, and the oil companies.

> the government will blame inflation on greedy corporate profiteers and excessive wage demands by workers.

That's exactly what happens in Argentina.

The democrats are following the steps of Juan Domingo Perón.

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