The Two-Income Trap - Elizabeth Warren [11]
OK, so if Americans aren’t blowing their paychecks on clothes, then they must be overspending on food. Designer brands have hit the grocery shelves as well, with far more prepared foods, high-end ice creams, and exotic juices. Families even buy bottles of water, a purchase that would have shocked their grandparents. Besides, who cooks at home anymore? With Mom and Dad both tied up at work, Americans are eating out (or ordering in) more than ever before. The authors of Affluenza grumble, “City streets and even suburban malls sport a United Nations of restaurants. . . . Eating out used to be a special occasion. Now we spend more money on restaurant food than on the food we cook ourselves.”12
They are right, but only to a point. The average family of four spends more at restaurants than it used to, but it spends less at the grocery store—a lot less. Families are saving big bucks by skipping the T-bone steaks, buying their cereal in bulk at Costco, and opting for generic paper towels and canned vegetables. Those savings more than compensate for all that restaurant eating—so much so that today’s family of four is actually spending 22 percent less on food (at-home and restaurant eating combined) than its counterpart of a generation ago.13
Outfitting the home? Affluenza rails against appliances “that were deemed luxuries as recently as 1970, but are now found in well over half of U.S. homes, and thought of by a majority of Americans as necessities: dishwashers, clothes dryers, central heating and air conditioning, color and cable TV.”14 These handy gadgets may have captured a new place in Americans’ hearts, but they aren’t taking up much space in our wallets. Manufacturing costs are down, and durability is up. When the microwave oven, dishwasher, and clothes dryer are combined with the refrigerator, washing machine, and stove, families are actually spending 44 percent less on major appliances today than they were a generation ago.15
Vacation homes are another big target. A financial columnist for Money magazine explains how life has changed. A generation ago, the dream vacation was a modest affair: “Come summer, the family piled into its Ford country wagon (with imitation wood-panel doors) and tooled off to Lake Watchamasakee for a couple of weeks.” Now, laments the columnist, things have changed. “The rented cabin on the lake gave way to a second home high on an ocean dune.”16 But the world he describes does not exist, at least not for the middle-class family. Despite the rhetoric, summer homes remain the fairly exclusive privilege of the well-to-do. In 1973, 3.2 percent of families reported expenses associated with owning a vacation home; by 2000, the proportion had inched up to 4 percent.17
That is not to say that middle-class families never fritter away any money. A generation ago no one had cable, big-screen televisions were a novelty reserved for the very rich, and DVD and TiVo were meaningless strings of letters. So how much more do families spend on “home entertainment,” premium channels included? They spend 23 percent more—a whopping extra $170 annually. Computers add another $300 to the annual family budget.18 But even that increase looks a little different in the context of other spending.