Free Aftershock: The Next Economy and America's Future by Robert B. Reich Page A

Recession’s downturn.)
    Coping mechanism #1: Women move into paid work
. Starting in the late 1970s, and escalating in the 1980s and 1990s, women went into paid work in greater and greater numbers. For the relative few with four-year college degrees, this was the natural consequence of wider educational opportunities and new laws against gender discrimination that opened professions to well-educated women. But the vast majority of women who migrated into paid work did so in order to prop up family incomes, as households were hit by the stagnant or declining wages of male workers. Fortunately, the changing nature of work—from heavy manufacturing to services—opened jobs that demanded less brute strength; and the use of the contraceptive pill gave women more control over when they would have children and how many they would have, thereby allowing them to put more time and energy into making money.
    This transition of women into paid work has been one of the most important social and economic changes to occur over the last four decades. It has reshaped American families and challenged traditional patterns of child rearing and child care. In 1966, 20 percent of mothers with young children worked outside the home. By the late 1990s, the proportion had risen to 60 percent. For married women with children under the age of six, the transformation has been even more dramatic—from 12 percent in the 1960s to 55 percent by the late 1990s.
    Families seem to have reached the limit, however, a point of diminishing returns where the costs of hiring others to help in therunning of a household or to take care of the children, or both, exceeds the apparent benefits of the additional income.
    Coping mechanism #2: Everyone works longer hours
. What families failed to get in wage increases, they made up for in work increases. By the mid-2000s it was not uncommon for men to work more than 50 hours a week, and for women to work more than 40. Professionals put in more “billable” hours. Hourly workers relied on overtime. A growing number of people took on two or three jobs, each demanding 20 or more hours. By the 2000s, before the Great Recession, the typical American worker put in more than 2,200 hours a year—350 hours more than the average European worked, and more hours even than the typically industrious Japanese. All told, the typical American family put in 500 additional hours of paid work, a full twelve weeks more than it had in 1979.
    How did women and men work such long hours and also take care of their families, maintain their homes, pay their taxes and their bills? Not easily. Many did it in shifts. I have an acronym for such families—DINS, “double income, no sex.” Here, too, though, Americans seemed to have reached a limit. Even if they could find more work, they couldn’t find any more time.
    Coping mechanism #3: We draw down savings and borrow to the hilt
. After exhausting the first two coping mechanisms, the only way Americans could keep consuming as before was to save less and go deeper into debt. During the Great Prosperity, the American middle class saved about 9 percent of their after-tax incomes each year. By the late 1980s that portion had been whittled down to about 7 percent, and it dropped to about 6 percent in 1994. The slide continued until it reached 2.6 percent in 2008. Meanwhile, household debt exploded. During the Great Prosperity, debt hadaveraged 50 to 55 percent of annual after-tax income (including what people owed on their mortgages). But starting in 1980, debt took off. In 2001, Americans owed as much as their
entire
after-tax income. But the borrowing didn’t even stop there, especially after the Federal Reserve Board lowered interest rates and made borrowing easier. By 2007, as I said earlier, the typical American household owed 138 percent of its after-tax income.
    Americans borrowed from everywhere. Credit card solicitations flooded mailboxes; many American wallets bulged with dozens of