Sorry for the delay in posting. I’ve been thoroughly swamped getting back from Austin. It’s the usual mid-August–I have to find referees for another 52 soccer matches this season. Plus I contributed to the economy by buying a car. I practiced saying no for a while before going in to see the dealership finance manager.
My video recap of NI Week is live at Automation World.
Jobs
I’m putting together a post on jobs. I’ve written about Martin Ford in the past who is a pessimist on jobs. Jeff Jarvis just posted a pessimistic note about loss of jobs. Jason Calacanis responded with one of his usual grandiose ideas. What I’m pondering (comment now, and you can help shape my ideas)–in the ’50s and ’60s we had great prosperity with only one person earning a salary in most households. Then we encouraged women to enter the workforce, and they did in huge numbers. Simultaneously, the price per worker went down. This driven partly by Republican politics–it’s the usual boost income for my friends and decrease for my foes something all politicians seem to think. But it’s partly due to supply and demand.
So, what I’m wondering is–do we all need to work for a wage? What’s wrong with only one earner per household who can earn enough that the family can live a middle class life. The other person could work (since I do believe that work is fulfilling) on one of various agencies that do things to help people and not worry about earning $40K to keep the family in a house.
My wife and I chose to live with any the means of one full-time income while our kids are young. To do so we had to make some conscious budgeting decisions and limit some luxuries. My wife fulfills her personal ambitions and desire to give back to the community by working for our local YMCA. I also find time to give back to the community through my participation with At no time have we felt like the sacrifice was unbearable. It's all about choices. Thanks for the interesting post Gary. Hope to see you at the in St. Louis next month.
Gary,
I think that one of the main reasons for the two-worker household is the consumption mindset. Think about the sheer quantity of "stuff" a household owned in the 50s and 60s. They didn't own two (or more) cars, a TV in every room, computers, game systems, tread mills, etc… Their lives were much more spartan compared to ours (and Europeans' lifestyles are similarly spartan).
I read an article in the WSJ this morning about the increasing skills gap in the US. Despite massive underemployment, small businesses are still having a difficult time finding qualified workers. I combine this with the Godin opinion that our education systems were designed to pump out factory workers and another opinion piece I read yesterday that similarly suggested that our schools still haven't recognized and adjusted to the digital revolution. And so I think that our political and educational systems are like an automobile plant that needs to retool to start manufacturing new car models.
As for the prosperity of the 50s and 60s, that was largely fueled by an expanding economy fueled by population growth and a rising standard of living. We've hit a ceiling on both domestically and I don't think we will ever see that level of growth again. It has to be global and, again, we're ill-equipped in that arena too.
So, unfortunately, I am very strongly planted in the pessimists' camp. I don't think we have the self discipline and foresight to do what needs to be done.
Unfortunately, your choices are affected by those around you. Let's take housing, and assume you want to buy a median priced house. If your family has one income, but most others have two incomes, the price of the median house is going to go up, because the median family income has gone up (with two incomes vs one), and it's going to be harder for you with your one income.
The same principle happened during the housing bubble: if you were sane, and wanted a realistic fixed rate mortgage in CA in 2003-2005, you had to sit the market out, because way too many people were willing to pay anything to "buy" a house, using 100% financing (often a 80% first + 20% second), stated income/no doc loan (a number of $14K strawberry pickers got $700K loans), and tricks such as pick a payment/negative amortization ("after all, we'll sell the house within two years…").
Yes, you are a resident of a particular economy and geography. There are choices you still have. You can, for example, not set your desire on a "median-priced" house, but instead on an appropriately sized house in a safe neighborhood, and so on. In many respects, the issue is adjusting your desires.
Bubbles are tricky. Easy to spot, hard to acknowledge. it's really hard to tell everyone they are wrong when a frenzy starts. Once again a conservative lifestyle (no relation to politics, by the way) will save you. When desires exceed means, bad things happen.
Gary, depending on your job it's not so easy. Jobs in some fields are all the place (nurse, accountant, teacher, auto repair, etc), but many jobs are are only in a small number of places (automation jobs are a great example, and it's hard to work remotely). Add in factors such as family, and it gets harder.
An "appropriately" sized house in Silicon Valley is still ridiculously pricey. And,yes, we all need to adjust to the reality of the situation, but we should also consider how the situation could be better. For example, requiring significant downpayments is a good thing.