Australia's dual-income families

Is our memory of single-income families accurate?

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Are our memories of the economic past as artificially generated as this image of the typical mid-20th-century Australian family?

In housing debates it is common to hear either that

1. more dual-income families mean more money bidding up rents and prices, or

2. high housing rents and prices are why families now need two incomes.

I get the intuition behind such claims.

But I think such comments are reflect the past through rose-coloured glasses. Just like the image above, these memories can be a bit artificial.

So, what does the best data show about the rise of dual-income families, and how should we think about the economics at play?

A century long view

In 2020, overall female labour force participation was 61% across all age groups. In 1920, it was about 25%. But as the chart below shows, the big shift took place from 1960 to 1990. By 1991 it had already doubled to be above 50%.

Source: https://www.ausstats.abs.gov.au/ausstats/free.nsf/0/4C64DE2D65803F30CA2574BF00167A44/$File/28210_1991_230_Australia_in_Profile.pdf p48

Young women shifted into the workforce during the Second World War, with a large boost in 15-19 year old women (and men) working between 1933 and 1947.

The big picture of the second half of the 20th century is that the youth began working less (both male and female) and in general, more women began working while fewer men did.

We need to remember that the 75% of women not in the formal labour force during the first half of the 20th century were mostly still working. The informal household economy was much bigger than today, especially in terms of the time needed for cooking, cleaning, etc.

In terms of housing, prior to the Second World War, homeownership was only about 43% in Australia’s urban areas. So there were a lot of single-income households, but not many buying homes.

1960s and 70s

The 1961 census recorded that of married Women in Australia, 25% of them aged 20-24 were working, while 17% of them aged 25-34 were employed (p224 of this census report). This suggests something of a decline in working after married women had children, which makes sense, as child-rearing is a time-consuming activity (a job of sorts) and in the 1950s and 1960s there will plenty of children about.

We can look to the 1971 census to see how these figures changed. By then, over 44% of married women aged 20-24 were working, up from 25% a decade prior. For married women aged 25-34, 33% were working in 1971, up from 17% a decade prior.

By 1981 the proportion of married women aged 20-24 in the workforce had increased to 57%. For those aged 25-34, it was 49%.

In terms of housing, it is interesting to note that the homeownership rate in Australia peaked in 1971. During the 1960s married women worked more and homeownership increased. In the 1970s even more married women worked and homeownership decreased.

The dramatic scale of the changes to married women’s workforce participation in the two decades of the 1960s and 1970s is clearly seen in the below chart.