Human evolution included a time when the men were hunters and the women managed the family unit. As late as the 50’s it was the cultural norm for most households to have a single wage earner. Over the last 50 years we all know that has changed dramatically.
Two main trends have led us in the direction of dual income families:
- Women’s liberation – we cannot deny this is the major factor. Women wanted to pursue their goals beyond the home and they were culturaly empowered to do so.
- Cost of (desired) standard of living is exceeding the single income
It is the 2nd of those trends that I am going to examine. Many families have two incomes because they need to, not because they want to. They have upgraded their standard of living to the point where they cannot achieve it without a second income. Keeping up with the Joneses has sent everyone to work at 9-5 jobs. There is a nice side benefit of having two incomes: reduction in risk. If one is laid off, the family income is only partially reduced rather than completely eliminated.
Now with the economic downturn many families are realizing that they need to reduce their risk exposure even more. A standard of living that is consuming both of those incomes and accomplishing very little savings still carries an extreme amount of risk. Many families are focused on paring their spend, but in the longer term what can we expect? If the first time around, we let spending increase and sought ways to increase revenue (adding a 2nd income), why should we believe this time will be any different. Where can we go?….third income.
Because of the massively networked economy where one can start a business with a good idea and a lot of outsourcing, it is easier and easier to start your own business. I believe that many American families are going to be keeping their job each and trying to generate an additional independent business income “on the side”.
Has anyone seen any studies on this? I would love to see if my hypothesis is backed up by the data. While good for our economy as a whole, how might this impact corporate profits as salaried employees leave work earlier in order to focus on their third income?