Academic journal article Mankind Quarterly

The Two-Income Trap: Why Middle Class Parents Are Going Broke

Academic journal article Mankind Quarterly

The Two-Income Trap: Why Middle Class Parents Are Going Broke

Article excerpt

The Two-Income Trap: Why Middle Class Parents are Going Broke Elizabeth Warren and Amelia Warren Tyagi Basic Books, 2003

This book concentrates on the economics of married life in contemporary America, but it also reflects reality in most West European countries, and although the authors do not touch on this aspect of the subject, it goes a long way toward explaining why Western societies are currently suffering a birth dearth. Married members of the European and North American middle classes have financial difficulty in making ends meet, and this results in small families, and too often in divorce.

The situation is graphically presented by a comparison of the budget of a typical American married couple with four children in the first years of 2000, with that of a similar family in the 1970s (inflation adjusted). This appears on page 208.

In the 1970s, men tended to be paid proportionately more than women, and the authors cite the example of a husband who was earning $38,700 per year. His wife did not have to work, and consequently their budget had to cover only one car, and they had no day care expenses for their children. Thus, although the total income for the 1970s family was only $38,700, and the income for a comparable family in 2000, with both husband and wife working, is $67,800, income tax on the combined incomes is some $11,000 higher than on the one 1970 income. A second car is necessary because the wife is working, and this costs more than $4,000 a year, while day care/preschool costs $9,700 per year. Allowing for a few other variables unrelated to the need for the wife to earn money, a two-income four-person middle class family in the early 200Os is worse off than a similar one-income family in the 1970s, after adjusting for inflation. The result is uhappiness and, too often, bankruptcy.

Why, therefore, do more wives work? …

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