A large number of households would have gone from having a single breadwinner to two as more women entered the workforce. The expansion of the pool for workers would have had a supply-side impact on wages.
Initially many households would have seen their joint income increase substantially but most likely resulted in downward pressure on wages that saw that gain eaten away.
Two wages then became the new normal for later generations.
The graph for OECD countries on average which includes the US turns in the early 70s. From a report on Japanese women participation going the opposite direction.
And if you ask this question in good faith, the answer bubbles right up.
I'm genuinely curious. Seems like there are different arguments below-the-surface in this thread.
I don't really understand your question about throwing out graphs that don't show a phase-change. There are infinite unrelated graphs. "But, your honor, consider all these photos of my client not murdering the deceased!"
Unrelated in what sense? Your example seems a bit of a straw man. What other graphs of economic activity and change do not show a significant and sudden shift at ~1971 (is what I think the parent is asking)?
To be clear, I'm not accusing anyone of intentionally being misleading. But consider this process:
1) Notice an inflection
2) Search through a near-infinite number of economic indicators
3) Select those other indicators bearing an inflection-point
This is very non-Baysian.
Also, plays with the x-axis as convenient. And selective sourcing.
Talking about income inequality? Cut it off around WWI. Chart showing banking crises? No source showing how they're counting crises. (Surprising lack of them in the 19th century, given multiple empires collapsed in that period.) Savings rate? Post-GI bill only.
To say nothing of the liberal mis-use of nominal versus real dollars, et cetera.
Congressional votes became "transparent" in 1970. Such that a lobbyist buying a vote could check and make sure they got the vote they bought.
Forbes summary: https://www.forbes.com/sites/lisaquast/2011/02/14/causes-and...
I'm not against the gold standard per se but I have come to believe that money supply controlled by credit expansion is simply not efficient. It distorts who gets the first bite at money in circulation. It also keeps everyone forever in debt.
Humans are not supposed to be indebted forever. Money as credit has monetary system backwards af.
In addition, note that the first year of very high birth rates during the baby boom was 1952. The non-college bound high-school graduates would all be entering the labor force in 1970 and 1971. As the draft lottery numbers were drawn late in 1969, those who got the high numbers felt free to leave college and enter the work force without fear of the draft, most often at the end of the school year in June 1970, and thencefrom a large fraction of high school graduates could make their decisions about whether or not to attend college without any need for ways to avoid the draft.
It has nothing to do with fiat currency, and everything to do with deliberate policy to concentrate wealth in fewer hands.
Do you have concrete sites you would like us to see? If so, please link them.
This general trope of "just google a term I'm throwing out there" is a hallmark of conspiracy theorists. Please don't be one of them.
Friedman, Reagan, Thatcher, were surely much more impactful. In the UK, Thatcher was the first PM to have a major impact on the country since the 1940s.
Regressive moves in taxation, privatisation, deregulation, etc are also more appealing to me as an explanation for rocketing inequality etc.
Thatcher's era saw the breaking of union influence and control over employment in many industries. The few jobs that have seen year on year increases since then were those that managed to retain strong union membership such as teaching and nursing in Australia.
Deregulation, market liberalisation and financial globalisation were then factors enabling the offshoring of manufacturing to lower labour cost countries.
We've been talking for years now how technology and automation will be the next job destroyers but I think the flood of cheap capital is having a bigger effect. Even shareholders are getting left out due to share buyback schemes that's leaving the means for wealth in fewer hands.
OK, I think the author is making some vague point about the collapse of the Bretton Woods system leading to the surge in inequality.
On a superficial level that looks to be what happened. And indeed something big happened that created an economic regime very different than the post-War regime of rising GDP and rising wages.
What happened in the early 1970s?
I think that's the wrong question because it pinpoints the last 40 years as in some way exceptional. I don't think they are. It's more interesting to ask what happened in the immediate post war era to allow increasing shared prosperity.
Well, the US won a major near apocalyptic war with its home territory completely unscathed permitting the US to utterly dominate the capitalist world order.
Maintaining that dominance required appeasing American workers who agitated heavily before the war and could credibly threaten to shut down strategic parts of the economy in the midst of a Cold War that could turn hot at any moment. Furthermore, that same Cold War created a polarity between capital and labor and forced the hands of the American elite to give way more concessions to labor than they would otherwise.
So in the years following WWII, there was about two decades of relatively pro-labor policies (or at least tolerance of labor). This allowed American workers to share in the gains from productivity.
What happened in the late 1960s?
American power started to diminish as the rest of the capitalist world became more competitive. The US could no longer just print dollars to fund its war machine and a new social welfare state (Great Society).
International capital became more aggressive in pursuit of profits. Why invest in American businesses when they could invest in lower wage, more efficient, up and coming economies. That put more pressure on American wages and American labor power.
With high levels of war spending and social spending without commensurate increases in taxes inflation was an ever present threat. Another reason capitalist became less interested in holding dollars.
The inflation threat was finally stomped out by the Volker Federal Reserve policies that generated a crushing recession. This recession and the Reagan administration's anti-labor policies crushed any hope that American labor would have of regaining its share of productivity increases.
The massive Reagan tax cuts further precluded building a social welfare safety net that could have helped workers weather economic calamities. Desperate workers work for cheap and are more willing to give up gains from productivity.
So, I don't think anything magical happened in 1971. Rather it was a collection of events that spanned into the 1980s culminating in the early 1980s recessions that both ended inflation and severely weakened American labor. On top of that right-wing policies further weakened the power of workers, making it less likely that they could share in gains from productivity increases.
How can you look at those graphs and not see the unmistakable, virtually overnight phase change? There are lines that run together until 1971 and then diverge. There are lines that cross axes in 1971. There are lines than run flat, and then begin a meteoric ascent in 1971.
The whole point of putting these graphs together is to show that something sudden happened then.
Yes, it appears that way.
Not all the graphs show a total change in 1971, but around it. Perhaps what happened was a multifactor process begun in the 60s and finished in the 80s? Cultural as well as financial?