What do you think about the idea of a two income trap? - Page 3

[That Is Nice]

Originally Posted by PenelopeJune

We were doing just fine on one income until about a year ago. We live in a low income area, with low taxes, in a modest house, and only have one car. We don't spend a lot of money frivolously, but one income just wasn't enough to pay just our basic bills.

We did a lot of talking and thinking about it, and my husband took a second job, rather than me taking one. He makes more per hour than I could, and he decided he'd rather work an extra full-time job than be a stay at home parent while I worked. (Because we wouldn't have done day care, I would have worked opposite shifts.)

I hadn't thought of us as a two-income family until you posted this. How dumb is that? But really, we are, it's just that one person in this house works two full time jobs.

I think in this economy, especially, the idea that living on one income is attainable for every household, and that every family can have a SAHP if they so choose and plan for is unrealistic.

There are many sacrifices and hard choices that families make to make it happen, just like your example of having a husband who takes on two jobs, or part time work on top of full time work.

But it's definitely not easy, and it's definitely not possible for every household to make it on one job alone. It's nice when it can happen, but it is quite challenging for many people, even with planning and frugal living.

[That Is Nice]

Originally Posted by faerierose

The second big point I remember was that a SAHM is a sort of safety net, a person available to care for a sick family member, the kids when they are young, and or to pick up some extra income when it's needed. That safety net isn't there for families with both parents in the work force.

Thank you. You did a good job of summing up this concept of "parent in reserve" or safety net SAHP.

One point in this discussion that more than a few people brought up was that the concept of parent in reserve is not that realistic.

Say a SAHP cares for the family for a number of years, a real contribution and a good thing, we can all agree. Say then that the sole breadwinner loses the income that supports the family (and this can happen in multiple ways, particularly in this economy today).

Now, wil lthe SAHP in reserve be able to jump into the job market and get a job that supports the family?

Maybe. But probably not likely. Skills and resumes often become obsolete in this fast moving, electronic economy. I remember there were mothers who pointed out in the discussion that they were nurses or computer programmers before they became a SAHP - good jobs with good pay. But their skills could be outdated in a year or two of being out of the workforce. Medications change, computer programs change all the time. They were worried that they would not be very competitive, especially in a bad economy and tight job market, due to the years they had chosen to be SAHPs.

[That Is Nice]

Originally Posted by bobandjess99

Anyway..I really think the fact that society has changed in terms of the composition of families...

I'm glad you brought up this point.

This was another really interesting part of the discussion in this thread from the working/student moms forum (a sister thread to this one on the same topic).

There were quite a few MDCers who brought up the historical inaccuracy that many of us assume...that the "traditional" model of family is that of the stereotypical 1950s and 1960s.

That is wholesale untrue! If you look at a history of family life, the 1950s and 1960s image of Ward and June Clever, etc is but a blip on the timeline.

Historically, women were not unpaid or unsalaried homemakers with a husband who was the breadwinner. Women did the bulk of the childrearing AND worked and brought in money for the family, depending on the time period, in various ways: working alongside their family on the family farm, raising chickens and selling eggs, being a seamstress, spinning wool, knitting, working in factories, teaching, nursing, nannying, wet nursing, etc, etc, etc.

It's interesting to view the history of women and our place in the economy. It's almost as if the post-modern is the traditional, in a sense.

[That Is Nice]

Related thread

There was a related thread on this topic from the working and student parents forum. There were so many interesting posts (over 200) and some very interesting perspectives and insights on the economics and history of women and mothers.

Here is the link:
http://www.mothering.com/discussions...wo+income+trap

[That Is Nice]

Originally Posted by faerierose

I read "The Two Income Trap" and I really felt what the authors were trying to point out was the trend of two income families created the higher cost of living. As more families had two incomes and therefore more money to spend on housing, preschool, college, the prices of these things went up essentially creating the NEED for two incomes in order to stay in the middle class.

It's sort of chicken and egg in a way, I guess. Did the growing number of two-income families cause higher prices, or did higher prices necessitate that families respond to the economy by having two-incomes?

I guess I don't personally see that two-income families are the cause.

Inflation has far outpaced the rise in personal income, so families' money stretches less and less. In recent years, I think it's gotten worse due to the housing baloon, the rising cost of health care, and job instability (downsizing, outsourcing, lay offs in what historically had been pretty safe fields to work in).

Anyway, my point is I don't think it's a "trap" that we fall into by having two incomes instead of one. It's not so much that people get used to having more money, and buying expensive things, with two incomes and set up their lives as such (although there will be some anecdotes about this).

I don't think for the majority of us it's a matter of just living more frugally and "learning" to live on one income instead of two.

There really is no way to get back to the previous generations' ability to live on one income until we address national and global concerns such as housing baloon, the rising cost of health care, and job instability (downsizing, outsourcing, lay offs).

I got that impression, like you, when reading the book, that the authors were correlating the rise in two-income families to rise in prices, but then later, conversely, I found the book pointed to outlying economic factors.

The book points out, accurately I think, that the reasons for this change are because of the changing economics, not changing family roles, which when viewed over history, wasn't much of a change, really.

[Tradd]

It's a combination of a lot of factors, but I think a lot of it has to do with personal choices - and some people tending to be short-sighted.

For example, a pricey private college is probably not needed in most cases, unless you're into law, medicine, engineering. Choosing an expensive private college if you're going to be a teacher, for example, is not a good choice. You come out with your undergrad degree with a huge debt load, in a field where you're not going to make a ton. Yes, you'd probably still have student loans, but if you went to a state school, even a "second-tier" one, your debt would be much lower. That huge student loan debt load plays into the picture later when you want to be a SAHM and you can't, because you've got all of this debt.

A lot of young couples want everything NOW - the nice house with the nice furniture, two new cars, etc. - the same standard of living level that their parents had when the young person left home to go to college/get married. They seem to forget that it took their parents YEARS to get to that standard of living. They forget the earlier years when maybe there was hand-me-down old furniture and all cars were bought used, there were less extras, etc.

A lot of the stuff people "have to have" are luxury items. I'm not talking internet access, which many need for work/school at home. But things like expensive flat-screen TVs, huge cable/satellite packages that are $100/month, vehicles with payments over $400 a month, iPhones, the latest in video games, eating out all the time.

If people could get their "needs vs. wants" calculators adjusted, they would stand a much better chance of being able to get by on one income, or maybe 1.25-1.5, saving the rest of the second income - if one partner wants to work rather than staying home.

I've also seen a lot of young folks who are spendthrifts, running up as much credit card debt as the card issuers will allow. When you enter a marriage with $10K-$15K in credit card debt, then throw $50K in student loans on top of that - for EACH half of a couple, you've got some major issues right there.

[That Is Nice]

Originally Posted by Tradd

It's a combination of a lot of factors, but I think a lot of it has to do with personal choices - and some people tending to be short-sighted.

For example, a pricey private college is probably not needed in most cases, unless you're into law, medicine, engineering. Choosing an expensive private college if you're going to be a teacher, for example, is not a good choice. You come out with your undergrad degree with a huge debt load, in a field where you're not going to make a ton. Yes, you'd probably still have student loans, but if you went to a state school, even a "second-tier" one, your debt would be much lower. That huge student loan debt load plays into the picture later when you want to be a SAHM and you can't, because you've got all of this debt.

A lot of young couples want everything NOW - the nice house with the nice furniture, two new cars, etc. - the same standard of living level that their parents had when the young person left home to go to college/get married. They seem to forget that it took their parents YEARS to get to that standard of living. They forget the earlier years when maybe there was hand-me-down old furniture and all cars were bought used, there were less extras, etc.

A lot of the stuff people "have to have" are luxury items. I'm not talking internet access, which many need for work/school at home. But things like expensive flat-screen TVs, huge cable/satellite packages that are $100/month, vehicles with payments over $400 a month, iPhones, the latest in video games, eating out all the time.

If people could get their "needs vs. wants" calculators adjusted, they would stand a much better chance of being able to get by on one income, or maybe 1.25-1.5, saving the rest of the second income - if one partner wants to work rather than staying home.

I've also seen a lot of young folks who are spendthrifts, running up as much credit card debt as the card issuers will allow. When you enter a marriage with $10K-$15K in credit card debt, then throw $50K in student loans on top of that - for EACH half of a couple, you've got some major issues right there.

I think you make a lot of valid points. I think choice certainly does play a large role.

I hear these examples a lot, especially in this forum, of the role choice played in finances - accumulating debt, carrying credit card debt, and not being able to differentiate well between wants and needs.

I guess I'm always a bit stunned...like, is this real? Is it an accurate picture?

For instance, with the student loan example, I went to an affordable school (but still a pretty well rated one) AND I had a pretty decent amount of scholarships. It wasn't a private college but I still ended up with significant student loan debt because I paid for 100% of everything myself. I've just about paid all that student loan debt off, and it's taken me years of being dilligent about it.

I was pretty selective about what major I chose, with an eye for career use and being able to support myself, but also making a good contribution to the world. I just know that without the degree, I would not be in good financial shape so that student loan debt was a blessing in every way! It did delay when I had children, for sure, and it was a small factor in whether I could stay at home or not, but mostly it was other economic forces that determined that one for me.

For what it's worth, I've always been frugal and lived within my/our means. I save and have a retirement nest egg. No vacations, luxury things, etc. Never had an ounce of credit card debt.

It's really the cost of living, and the stability that also comes with having an income and career of my own that I can rely on, that makes it impossible for us to live permanently on one income.

Cost of living is the number one factor, though.

I was lucky enough and frugal enough to be able to save up a bit and be a stay at home parent in the early years, and that is a blessing. I plan to return to work sooner rather than later, though. The ability for us to live on one income in a permanent arrangement is simply out of the question.

And we're two college educated, good income, frugal, wise money managers. It really comes down to cost of living in the area you live for a lot of people.

[shayinme]

Originally Posted by bobandjess99

I haven't reaqd everything, but I think a HUGE reason why many families can't get by on one income is due to the fact that so many families have divorce/support issues whereby one person isn't supporting 1 family, but 2 or 3 or even more families....
for example, when I met dh, he had 2 seperate previous families he was paying support to..his first ex-wife for his 2 kids with her, and his third exwife, for his 3 kids with her.
Now, of cours,e this is all based on choices and things that happen, but quite frankly, the vast majority of women my age (30s) that I know, have a spouse who is paying child support, to either a previous wife or "babymama", such that his 1 income is supporting more than just 1 household. On the other end, of the women I know have money coming into their household fom someone other than their dh.... most of their dh's are paying out support as well, so at best it tends to be a wash, but usually it seems like they get less in than the dh is required to pay out...so you have these "families" where there is money coming in and going out all over the place, but the old concept of one single, nuclear family is a lot less common.
for a long time, we joked that the best way to make our family financially stable would be to get me knocked up by someone other than DH, such that we could get some child support rolling into our household budget. Crass, but true.
Also, families such as mine often aren't eligible for any help/benefits, because programs look at gross income before deductions. SOm even though yoiur family income and mine might be equal in actuality, my family income looks a lot bigger on paper, because it includes the money dh pays out in support that our family never even sees, so *my* kids aren't eligible for any of the help that so many families take for granted ( state health insurance, wic, reduced lunch at school, etc) because on paper, it looks like we are a family of 4 making $40K a year...when in reality, it is a family of 4+3(half the time) making $30K a year.
HUGE difference.
Anyway..I really think the fact that society has changed in terms of the composition of families, the huge rise in divorces, and the child support/alimony issues, are all serious issues to look at, that play into the changes just as much as other factors.

I think you bring up a really good point about family composition these days. Considering that what half of marriages in the US ends in divorce there are a lot of blended families...I have a son from my first marriage, he lives between my ex and I and its costly. In fact its one of the reasons, I cannot compare myself to friends who only have 1 kid but the same career because where I have 2 kids, one requires paying for airline tickets and other costs that if he were just with me 100% of the time, I wouldn't have. Like you on paper, we look ok but we aren't and haven't been for a long time.

Shay

[That Is Nice]

Originally Posted by Tradd

It's a combination of a lot of factors, but I think a lot of it has to do with personal choices - and some people tending to be short-sighted.

For example, a pricey private college is probably not needed in most cases, unless you're into law, medicine, engineering. Choosing an expensive private college if you're going to be a teacher, for example, is not a good choice. You come out with your undergrad degree with a huge debt load, in a field where you're not going to make a ton. Yes, you'd probably still have student loans, but if you went to a state school, even a "second-tier" one, your debt would be much lower. That huge student loan debt load plays into the picture later when you want to be a SAHM and you can't, because you've got all of this debt.

A lot of young couples want everything NOW - the nice house with the nice furniture, two new cars, etc. - the same standard of living level that their parents had when the young person left home to go to college/get married. They seem to forget that it took their parents YEARS to get to that standard of living. They forget the earlier years when maybe there was hand-me-down old furniture and all cars were bought used, there were less extras, etc.

A lot of the stuff people "have to have" are luxury items. I'm not talking internet access, which many need for work/school at home. But things like expensive flat-screen TVs, huge cable/satellite packages that are $100/month, vehicles with payments over $400 a month, iPhones, the latest in video games, eating out all the time.

If people could get their "needs vs. wants" calculators adjusted, they would stand a much better chance of being able to get by on one income, or maybe 1.25-1.5, saving the rest of the second income - if one partner wants to work rather than staying home.

I've also seen a lot of young folks who are spendthrifts, running up as much credit card debt as the card issuers will allow. When you enter a marriage with $10K-$15K in credit card debt, then throw $50K in student loans on top of that - for EACH half of a couple, you've got some major issues right there.

I was just thinking again about your post, and I think you are right. That's not the only reason, or the full reason, but I bet that is a big part of the reason.

I was just thinking in terms of my own life with your scenario, and if I had gone to a private college (and as a consequence had substantially more student loan debt), if I'd accumulated credit card debt from consumer spending, if I'd not saved money, then with absolute certainty, the ability to be a SAHP would be a forgone conclusion for me (a resounding NO!!).

It's only because I kept debt low, and credit card debt zero, worked and saved that I could do it for a short while and play around the idea of having any choice.

Overall, I do think cost of living is the biggest factor, if you are frugal and still can't pull it off. But choice and spending obviously is the single biggest determinant, other than actual income.

[Tradd]

That is Nice, yes, those numbers are pretty accurate. They're what I know from personal experience with people I know IRL, as well as from listening lots to Dave Ramsey's radio show, as well as lots of reading online.

I know people whose parents gave them $10K-$20K for college, which would have paid for a great part of it (I'm almost 40, graduated in 1991, and went to a second-tier state school for $30K total, including living off campus), but they chose instead to go to an expensive private school, which made them have much more of a debt load than they would have otherwise. Having $40K rather than $10K in student loans is a huge difference.

Because I chose to go to a second-tier state school, the money my parents offered was enough to pay for it. I did work enough to pay for 25% of rent and everything else. Parents paid for tuition, books, and 75% of rent. No school debt.

I've not yet been married, but am dating someone who looks like He Might Be It. My only remaining debt is about $2300 on my car loan. No more cc, let alone cc debt. My guy is an Eastern European immigrant and they seem to be much more wary of debt over there. So, if I'm able to have kids and want to be a SAHM, I have a much better chance of doing it, because of no debt.

I also have no TV (so no cable/video games), have prepaid cell phone, and don't eat out much. My social life revolves around my church, so I don't have expensive social activities.

Makes a huge difference.

[That Is Nice]

Originally Posted by Tradd

That is Nice, yes, those numbers are pretty accurate. They're what I know from personal experience with people I know IRL, as well as from listening lots to Dave Ramsey's radio show, as well as lots of reading online.

I know people whose parents gave them $10K-$20K for college, which would have paid for a great part of it (I'm almost 40, graduated in 1991, and went to a second-tier state school for $30K total, including living off campus), but they chose instead to go to an expensive private school, which made them have much more of a debt load than they would have otherwise. Having $40K rather than $10K in student loans is a huge difference.

Because I chose to go to a second-tier state school, the money my parents offered was enough to pay for it. I did work enough to pay for 25% of rent and everything else. Parents paid for tuition, books, and 75% of rent. No school debt.

I've not yet been married, but am dating someone who looks like He Might Be It. My only remaining debt is about $2300 on my car loan. No more cc, let alone cc debt. My guy is an Eastern European immigrant and they seem to be much more wary of debt over there. So, if I'm able to have kids and want to be a SAHM, I have a much better chance of doing it, because of no debt.

I also have no TV (so no cable/video games), have prepaid cell phone, and don't eat out much. My social life revolves around my church, so I don't have expensive social activities.

Makes a huge difference.

No, I know what you mean. I read those figures in Money magazine, or the financial sections of the major newspapers, and I also have listened occassionally to Dave Ramsey/Suze Orman, etc. I'm just always like really? Seriously? It doesn't seem real how clueless some people are with money.

It might be the easy come, easy go mentality. I don't know. Or the live now, think about it later mentality. Or something else. Our society does seem hung up on instant gratification (like wanting parents lifestyles when you just start out, like you said, and admitting it took that generation well a generation to build it!)

I have done pretty much everything in a self-sufficient way. College, getting established, motherhood. It was all through my own work (and DH's) and saving and being frugal. There were definitely no hand outs and the only breaks were being offered positions we interviewed for. It wasn't easy come, so for me, I think I was more careful about things.

We've had a few set backs, but I think overall we've been pretty frugal and that has paid off.

I think waiting until you're older to have children plays a bit of a role, too. It's hard to compare incomes at age 20 to incomes at age 40 when you've already built a career and start to (hopefully) see some rewards.

In the book I was recently reading called "Opting Out: Why Women Really Quit Careers and Head Home" the author talked about how women in their mid to late 30s and early 40s often had more of a choice to stay at home or continue working because they were financially in a better place, having spent their 20s and some of their 30s working and building a career and assets.

It does make sense.

And I think you are right. It is cultural. I've noticed among my European friends that they tend to be a bit more savvy about finances. And they still live too!

[oneKnight]

A lot of young couples want everything NOW - the nice house with the nice furniture, two new cars, etc. - the same standard of living level that their parents had when the young person left home to go to college/get married. They seem to forget that it took their parents YEARS to get to that standard of living. They forget the earlier years when maybe there was hand-me-down old furniture and all cars were bought used, there were less extras, etc.

A lot of the stuff people "have to have" are luxury items. I'm not talking internet access, which many need for work/school at home. But things like expensive flat-screen TVs, huge cable/satellite packages that are $100/month, vehicles with payments over $400 a month, iPhones, the latest in video games, eating out all the time.

If people could get their "needs vs. wants" calculators adjusted, they would stand a much better chance of being able to get by on one income, or maybe 1.25-1.5, saving the rest of the second income - if one partner wants to work rather than staying home.

Many many people that I know of would think they were living in "utter desolation" if they had to live in a TINY old house like mine, drive 16 and 20 year old beater cars, and work at WalMart.

We feel like we're living on the top of the world!

[JTA Mom]

For the most part, I agree with Tradd. Consumer culture really took off in the US starting in the 50s. It was only 'sustainable' back then because 1) gas/energy was cheap and 2) the US was the only one to have a fully functioning manufacturing sector after the war. With more people employed, and getting really good $$, marketing took off and decided it was better to make people NEED to buy new things to feel good about themselves. It's gone crazy since the credit loosening in the 70s, as the authors mentioned in their book.

I think a lot of people are getting hung up on the 'two income' part of the 'two income trap'. I don't think the authors are saying that having two incomes is the SOLE or the BIGGEST reason it has become very difficult nowadays to support one family on one income. It's a factor of many different things--loosening credit, more disposable income (in the beginning), the deterioration of the public school system, globalization, etc etc. The impression I got was that the whole 'trap' part was that in order to stay in the middle class and ensure one's children could continue on as middle class, both parents HAVE to work. In the book, the authors state that a single income family is seriously at risk in today's environment. Nowhere did I get the impression that the authors were advocating that every family have one SAHP. Their advice was to lobby for changes (with credit, etc), and try, as much as possible to live off of one income & SAVE the other one. In this way, financially, the family is protected as much as possible, esp if one of the partners loses their income for any reason.

I think the major point was that it should NOT have to take two full-time income earners to live a middle class life. In this way, single parents are even worse off today than they were back in the 70s. By making it more difficult for the majority of people to be middle class, a country is in serious danger. A large middle class signifies that one's population is mostly educated and has at least their basic needs met. To have a small 'upper class' and a large under class' is not good for democracy or the important indicators (literacy, health, etc).

Btw, I also found the whole 'worker in reserve' concept shaky, at best. Like you said, after years out of the workforce, one's earning power is diminished. Even 'back in the days' a SAHM jumping into the workforce after hubby's layoff wouldn't make enough to support the family, esp not if they had a mortgage. I remember reading that back then it was acceptable to have huge discrepancies in a man's & woman's wages since 'the man would be supporting a family'. So a woman jumping back into the workforce would not have as much earning potential.

Ami

[katheek77]

Originally Posted by JTA Mom

Btw, I also found the whole 'worker in reserve' concept shaky, at best. Like you said, after years out of the workforce, one's earning power is diminished. Even 'back in the days' a SAHM jumping into the workforce after hubby's layoff wouldn't make enough to support the family, esp not if they had a mortgage. I remember reading that back then it was acceptable to have huge discrepancies in a man's & woman's wages since 'the man would be supporting a family'. So a woman jumping back into the workforce would not have as much earning potential.

Ami

I never read the book as saying "SAHM will suddenly have same earning potential" (and I'm using "mom" and "dad" in those terms b/c that's the USUAL if you have a SAHP)

I read it as:

Scenario A: Dad loses job making 40,000/yr. SAHM AND Dad, now go out and try to find new jobs. Dad finds one making 25,000/yr. Mom finds one making 10,000 yr. They have a 5000/yr deficit. Hard, put *probably* doable, with some hard cuts to the budget - it's about 415/month deficit. If they've been putting 10% of their former income away each month, that's $82/month they have to find to cut (assuming 333 was going into savings each month)

Scenario B: Mom and Dad each make 40,000 yr, total 80,000/yr. One earner loses job (we'll say Dad, again). Dad goes out and manages to find a job making 25,000. That leaves a shortfall of 15,000. That's about 1250/month defecit. If they were putting away 10%, that's 666. Leaving an "absolute" defecit of 584/month. That's pretty significant ( UNLESS they've been "living" on only one salary, and have used the other for "extras" and savings and what not.)

That's what I thought the author's point about a parent in reserve was.

[That Is Nice]

Originally Posted by JTA Mom

For the most part, I agree with Tradd. Consumer culture really took off in the US starting in the 50s. It was only 'sustainable' back then because 1) gas/energy was cheap and 2) the US was the only one to have a fully functioning manufacturing sector after the war. With more people employed, and getting really good $$, marketing took off and decided it was better to make people NEED to buy new things to feel good about themselves. It's gone crazy since the credit loosening in the 70s, as the authors mentioned in their book.

I think a lot of people are getting hung up on the 'two income' part of the 'two income trap'. I don't think the authors are saying that having two incomes is the SOLE or the BIGGEST reason it has become very difficult nowadays to support one family on one income. It's a factor of many different things--loosening credit, more disposable income (in the beginning), the deterioration of the public school system, globalization, etc etc. The impression I got was that the whole 'trap' part was that in order to stay in the middle class and ensure one's children could continue on as middle class, both parents HAVE to work. In the book, the authors state that a single income family is seriously at risk in today's environment. Nowhere did I get the impression that the authors were advocating that every family have one SAHP. Their advice was to lobby for changes (with credit, etc), and try, as much as possible to live off of one income & SAVE the other one. In this way, financially, the family is protected as much as possible, esp if one of the partners loses their income for any reason.

I think the major point was that it should NOT have to take two full-time income earners to live a middle class life. In this way, single parents are even worse off today than they were back in the 70s. By making it more difficult for the majority of people to be middle class, a country is in serious danger. A large middle class signifies that one's population is mostly educated and has at least their basic needs met. To have a small 'upper class' and a large under class' is not good for democracy or the important indicators (literacy, health, etc).

Btw, I also found the whole 'worker in reserve' concept shaky, at best. Like you said, after years out of the workforce, one's earning power is diminished. Even 'back in the days' a SAHM jumping into the workforce after hubby's layoff wouldn't make enough to support the family, esp not if they had a mortgage. I remember reading that back then it was acceptable to have huge discrepancies in a man's & woman's wages since 'the man would be supporting a family'. So a woman jumping back into the workforce would not have as much earning potential.

Ami

Great points!

[That Is Nice]

Originally Posted by katheek77

I never read the book as saying "SAHM will suddenly have same earning potential" (and I'm using "mom" and "dad" in those terms b/c that's the USUAL if you have a SAHP)

I read it as:

Scenario A: Dad loses job making 40,000/yr. SAHM AND Dad, now go out and try to find new jobs. Dad finds one making 25,000/yr. Mom finds one making 10,000 yr. They have a 5000/yr deficit. Hard, put *probably* doable, with some hard cuts to the budget - it's about 415/month deficit. If they've been putting 10% of their former income away each month, that's $82/month they have to find to cut (assuming 333 was going into savings each month)

Scenario B: Mom and Dad each make 40,000 yr, total 80,000/yr. One earner loses job (we'll say Dad, again). Dad goes out and manages to find a job making 25,000. That leaves a shortfall of 15,000. That's about 1250/month defecit. If they were putting away 10%, that's 666. Leaving an "absolute" defecit of 584/month. That's pretty significant ( UNLESS they've been "living" on only one salary, and have used the other for "extras" and savings and what not.)

That's what I thought the author's point about a parent in reserve was.

I think that's true...it's also about to what extent you spend the money you earn...whether it's scenario A or scenario B.

DH and I are more like scenario B...we make or have similar earning powers. We've never lived/spent in a manner that uses up all of our money. So that means we live pretty well on two incomes and have a lot of disposable income left over (with two incomes). On one income, we don't make ends meet. We don't need two incomes fully...we need about 1.5, due to the cost of living in our area, mostly (cost of housing, cost of rentals, taxes, etc).

We might be the norm; or maybe not. We definitely haven't fallen into a two income trap with spending, but we also can't make it work on one income long term (not that DH even wants to try - another story entirely!!)

I've really been interested reading your posts!

[That Is Nice]

Originally Posted by JTA Mom

Btw, I also found the whole 'worker in reserve' concept shaky, at best. Like you said, after years out of the workforce, one's earning power is diminished. Even 'back in the days' a SAHM jumping into the workforce after hubby's layoff wouldn't make enough to support the family, esp not if they had a mortgage. I remember reading that back then it was acceptable to have huge discrepancies in a man's & woman's wages since 'the man would be supporting a family'. So a woman jumping back into the workforce would not have as much earning potential.

Originally Posted by katheek77

I never read the book as saying "SAHM will suddenly have same earning potential" (and I'm using "mom" and "dad" in those terms b/c that's the USUAL if you have a SAHP)

I read it as:

Scenario A: Dad loses job making 40,000/yr. SAHM AND Dad, now go out and try to find new jobs. Dad finds one making 25,000/yr. Mom finds one making 10,000 yr. They have a 5000/yr deficit. Hard, put *probably* doable, with some hard cuts to the budget - it's about 415/month deficit. If they've been putting 10% of their former income away each month, that's $82/month they have to find to cut (assuming 333 was going into savings each month)

Scenario B: Mom and Dad each make 40,000 yr, total 80,000/yr. One earner loses job (we'll say Dad, again). Dad goes out and manages to find a job making 25,000. That leaves a shortfall of 15,000. That's about 1250/month defecit. If they were putting away 10%, that's 666. Leaving an "absolute" defecit of 584/month. That's pretty significant ( UNLESS they've been "living" on only one salary, and have used the other for "extras" and savings and what not.)

That's what I thought the author's point about a parent in reserve was.

Essentially, I do think the book has valid points. It's really the concept of parent in reserve that throws me for a loop.

I know that for me, personally, if I were to be a SAHP for more than 5 years...10 years...18 years...my skill set would be so outdated and my resume so completely obsolete and irrelevant that I most likely would not be getting any job in my field and using my degree specifically, which is the only way I can really get a "family supporting" type job.

But like Katheek said, the "reserve" concept is more about getting a job to scape by until the family finds itself on it's feet again. I think I could probably get that type of job, with a lot of determination and luck, but maybe not. I mean, if DH loses a job, it's most likely going to be due to a lousy turn in the economy (like now) where many people are getting laid off and many people are looking for jobs. I've looked for jobs outside of my field before...when I was trying to figure out how to be a SAHM and looking for work on the side (nights/weekends). There's not much. There is some, but most jobs like that pay less than $10 per hour - more like $7 per hour and do not have any benefits. It would be the benefits part that would do us in under either scenario with the parent in reserve.

[major_mama11]

I skimmed “The Two Income Trap” a while back. While I don’t think it applies to all families across the board, I do agree with much of what they said.


As an RN, I am able to get PT work with a flexible schedule and still contribute enough to the budget to make a difference, and I don’t have to be near a large city to find work. The house we live in is a manufactured home, meaning that it not much more than a double wide. Not the nicest house by any means. However, it has an acre of land, so we are able to grow a garden to help with the food budget, and being in the country, we can hang clothing on the line to dry without the neighbors complaining, etc. Since I’m home most evenings, dh can work all the overtime he needs to, rather than rushing home by 5 pm, the way he had to when I worked FT night shift. In those ways, our situation makes my being mostly at home financially beneficial.

But I can certainly see how this would not be the case for those in different areas of the country, with different career/job skills. I feel blessed to be in a career where I can work very part-time and keep my job skills up as “parent in reserve”, while still being mostly SAHM.

Originally Posted by That Is Nice

I think the big factors are this: cost of living in the location you live (big, big factor that can vary greatly from state to state, and country to country), good choices early on, and luck.

Yes. Although we both come from working-class backgrounds, a lot of the reason why we are more financially stable than many people our ages (28 and 32) is due to luck. Yes, I drove beater cars all through my late teens and early twenties, but they were given to me, so I never had a car payment until age 22. I pd most of my way through (state school) college, but my parents were able to pitch in a lot the last couple years of school. And in my husband’s case, he was able to save up to buy his first house by living at home until age 23 while working 50-60 hrs per wk- not an option everyone has at that age.

[Azuralea]

I feel like a lot of the books and analysis that came out over the past ten years or so regarding two-income and one-income families are going to look quaint and antiquated in ten years due to the financial collapse. I feel that the cultural discussion around working parents is going to be permanently changed by what I think is going to be a very long period of economic difficulty.

For instance, take the "parent in reserve" concept from the Two-Income Trap. It used to be that going out and getting any job (e.g., a "scraping by" job) was generally fairly feasible even for women who'd been out of the workforce for a long time. It wouldn't be glamorous, but it would let the family scrape by for a little while. But I think that's changing as more primary earners are out of work and willing to do whatever it takes to get a job. In that case, employers who have the ability to hire will generally take the person who has been most recently employed.

I feel like a lot of the discussion going forward about working or SAH is going to be fundamentally shaped by the economic crisis. Already, some of the books and articles I remember reading a few years ago seem antiquated because the "choice" element of having two or one income has been removed for so many families.

[That Is Nice]

Originally Posted by major_mama11

I skimmed “The Two Income Trap” a while back. While I don’t think it applies to all families across the board, I do agree with much of what they said.


As an RN, I am able to get PT work with a flexible schedule and still contribute enough to the budget to make a difference, and I don’t have to be near a large city to find work. The house we live in is a manufactured home, meaning that it not much more than a double wide. Not the nicest house by any means. However, it has an acre of land, so we are able to grow a garden to help with the food budget, and being in the country, we can hang clothing on the line to dry without the neighbors complaining, etc. Since I’m home most evenings, dh can work all the overtime he needs to, rather than rushing home by 5 pm, the way he had to when I worked FT night shift. In those ways, our situation makes my being mostly at home financially beneficial.

But I can certainly see how this would not be the case for those in different areas of the country, with different career/job skills. I feel blessed to be in a career where I can work very part-time and keep my job skills up as “parent in reserve”, while still being mostly SAHM.




Yes. Although we both come from working-class backgrounds, a lot of the reason why we are more financially stable than many people our ages (28 and 32) is due to luck. Yes, I drove beater cars all through my late teens and early twenties, but they were given to me, so I never had a car payment until age 22. I pd most of my way through (state school) college, but my parents were able to pitch in a lot the last couple years of school. And in my husband’s case, he was able to save up to buy his first house by living at home until age 23 while working 50-60 hrs per wk- not an option everyone has at that age.

I used to think hard work, planning ahead, living frugally, etc had more to do with it than luck, but now I really think luck is the biggest factor.

I worked for about about a decade before having a baby, and I saved, saved, saved, and live very frugally.

DH and I have done everything on our own pretty much...well, DH more or less since college, and me pretty much all my life.

I think a lot of it has to do with luck because I have talked to so many SAHPs in real life and on these boards who are able to stay at home because they live within their means and set up their lives as such AND often were able to set up their lives because their parents helped them with college costs, or with major purchases such as vehicles or houses, or allowed them to live with them for low or no rent while they saved.

I come from a very different situation. My parents never worked and never had any assets, and I've always been some what of their provider and their support system/emergency back up. I have to stop doing that, and I have already to some extent, because I've found that I just can't make my own life what I want while financially helping so often...hard to turn my back though.

Also, I think luck about when and where you entered the housing market plays a big, big role. Prices have risen and fallen so astronomically with the bubble and burst, that some people were caught at the exact wrong time. Along with the housing market, rents have skyrocked in major metro areas so not owning a house is sometimes more expensive in some markets than renting.