Are Americans starting to embrace one-earner households again?
Americans quitting their jobs at a pace never seen before despite record job openings have left many economists scratching their heads. Conventional analyses pin the discrepancy on a host of concerns, such as lack of child care and lingering fear of COVID-19.
Left unexamined is another potential explanation: Many Americans may simply not want to run in the rat race anymore.
The U.S. economy has evolved over the past few decades to rely on a ready supply of relatively inexpensive labor. The pre-1970s economy rested on a model with singleearner households, with disproportionately higher male labor force participation. That model also had relatively low levels of immigration.
That changed during the past 50 years. Immigration, both legal and illegal, shot up. More importantly, women surged into the workforce, soaring from a mere 37% of the labor force in January 1960 to a high of 60% in December 1997. That level remained roughly constant until the Great Recession, when it dropped to a low of 56.4% in September 2015. It briefly began to recover in the hot Trump-era labor market but then dropped during the pandemicand has yet to recover.
The latest data show only 56% of women are looking for work, a number that has remained relatively stable since summer 2020. Male participation rates have also dropped and remained stagnant since last summer: Only about twothirds of men are looking for work. Together, this means millions of Americans have simply dropped out of the active economy entirely.
Conventional explanations all make some sense. The closure of schools surely kept some parents at home to provide child care. Many people remain leery of catching the coronavirus, which could lead to people avoiding jobs that require close contact with others.
And enhanced government benefits, combined with rounds of generous stimulus checks, make it easier to get by on unemployment. Some people close to retirement age probably did decide to hang it up early, especially since those stimulus checks would help them tide over their finances until their desired retirement date anyway. There’s no reason to simply dismiss these out of hand.
It’s telling, however, that elites who drive our public policy have not seemed to mention another possibility that would have been obvious to prior generations: families deciding that oneearner families are better.
Last year’s enforced idleness and economic slowdown surely pushed many families into a one-earner status — even if unwillingly. It’s not unreasonable to assume that some liked the subsequent work-life balance. Rather than struggle to care for children and satisfy bosses, not to mention carve out time for one another, some couples surely found that they could make do with one wage and have a better quality of life.
It wouldn’t take many people to decide this to throw the labor market out of whack. Government data show that the overall labor force participation rate is down from a pre-pandemic 63.4% to 61.6% today. That seemingly small 1.8 percentage point drop is the equivalent of about 5 million people. That’s slightly larger than the 4.2 million fewer jobs available today compared with February 2020. Suppose only 1% of the pre-pandemic labor force decided to embrace a one-earner lifestyle. That would reduce the labor force by 1.6 million people, explaining roughly onethird of the total labor force drop and more than 40% of the employment gap.
Such a shift in attitudes would likely surprise policy elites. Today, the twoincome family is the norm rather than the exception. The college-educated are likelier to say their job is a career than the non-college-educated, a statement that surely makes them less likely to understand people who think otherwise. That drive is partly why they are in the policymaking elite to begin with; one doesn’t get near the top without such traits. But that does not describe the majority of Americans, who tend to rate family or other pursuits as more important.
If this shift is happening, the ramifications are profound. Employers will still need workers, which means they will try to raise wages to attract people back. They’ve been doing that for months, so far with little effect, and that might be because this is a doubleedged sword: The more one earner can make, the easier it is to live on one paycheck. Raising wages, then, might not have an aggregate positive effect on overall employment numbers.
That, in turn, would leave employers with only one choice: seek an increase in immigration. If Americans in families want to return partially to the pre-modern family structure, only a significant uptick in annual immigration numbers can meet employers’ demands. That would make an already controversial issue evenmore explosive.
American businesses have benefited massively from the move toward twoearner couples. If the recent employment data signal that trend is reversing, the economic restructuring we are about to experience may be traumatic.