Two income trap - Is two better than one?
Two income trap-CNN
I have long been a proponant of working smarter and not harder. I definately think there is more to life than the rat race called working and that any couple should devote basically as few hours as they can working for others and instead work on their own family and their own investments.
I have long claimed that two incomes really isn't doubling your money. The increase in taxes, day care, expenses related to two professional wardrobes, extra eating out, more expensive family time since there is less of it, etc. dramatically reduce the true impact of that second income to the point of not really being worth it.
Well seems families are earning more than they ever did before in the past. In fact they earn about 75% more, but instead of living better, quite a few are worse off.
The main culprits, taxes, more income a bigger cut for the government. Day care which went from 0% to 14% of the budget. Housing by being bid up and also because the acceptable definition of what is a decent house has changed. (I've screamed about this dozens of times here)
Aside from gender issues, do you think a second income is worth it in this day and age? I've contended that if more people stayed home, those that are left working could demand a better wage because the labor market would be tighter, etc.
What do you think?
Nick
I have long been a proponant of working smarter and not harder. I definately think there is more to life than the rat race called working and that any couple should devote basically as few hours as they can working for others and instead work on their own family and their own investments.
I have long claimed that two incomes really isn't doubling your money. The increase in taxes, day care, expenses related to two professional wardrobes, extra eating out, more expensive family time since there is less of it, etc. dramatically reduce the true impact of that second income to the point of not really being worth it.
Well seems families are earning more than they ever did before in the past. In fact they earn about 75% more, but instead of living better, quite a few are worse off.
The main culprits, taxes, more income a bigger cut for the government. Day care which went from 0% to 14% of the budget. Housing by being bid up and also because the acceptable definition of what is a decent house has changed. (I've screamed about this dozens of times here)
Aside from gender issues, do you think a second income is worth it in this day and age? I've contended that if more people stayed home, those that are left working could demand a better wage because the labor market would be tighter, etc.
What do you think?
Nick
Comments
10 years ago in Austin, TX you could by a house relatively cheap and stay in really cheap apartments. However, with the technology bubble and all the companies moving to Austin and paying their employees a crap load of money, housing jumped, which naturally, offset the benefits of having the extra income. That, in turn, would leave some families needing a second job.
She also assumes people are paying to send their kids to private schools rather than public schools. I see a lot of other reasoning problems in her article. What I would also like to see in the article is a comparison between single income families of thirty years ago vs. today. Are the chances of a job lost for single income families 2.5 times greater?
In short, there's lots of benefits to having a second income if you don't squander it on needless things, e.g. private schools, 5 bedroom houses, and another car. Also, this issue is far more complicated than just pinning the problems on a two income family.
I noticed that we were spending so much in Gas, Food and clothing for her to go to work that it wasn't worth it. We'd both come home from work and be too lazy to cook, so we were eating out more.
I enjoyed my job so I wasn't miserable when I got home, but she was. She's a creative type. She likes to paint and write but finding a full time job doing this is very difficult. So she ended up getting jobs at banks and offices. I think when you're an artist that can be brutal to your self esteem. So it was making us both unhappy. So I told her to quit working full time.
Now she works on her paintings all day and just finished her first book! (She's looking for an agent).
We haven't saved tons of money, but our quality of life has improved. She's much happier doing her own thing and enjoys cooking dinner for us and taking care of the house.
Now if she could just manage to sell that book or some of her paintings......
Better two of you having a 2/3 or 1/2 time jobs than 1 having the job and other (the female) unvoluntarily forced to not work out (like some of you want, staying home, cooking and cleaning for husband and overpopulating the earth).
1 person: 1 rent, 1 electricity, 1 phone, 1 car, 1 x food, 1 x everything bills.
2 persons: 1 rent, still 1 electricity and 1 phone .. 2 x food. Other still 1x.
If you add anything else by your _CHOISE_ such as more cars, more than zero kids, mobile phones, double subscriptions to main sports events those things can be double, but the essentials apart from food, are still single. Unless you have 2 homes of course.
If you have a kid, it will cost you the same amount of money whether you raise him/her alone, or with your partner. If you seriously think that kids are too expensive, don't produce them.
Just another thread to justify why women are bad (stealing your work) and should be home just for you (cooking, cleaning etc).
If you calculate it that the MAN can be as well the one who stays home to take care of the household etc, you sure must add the lost income - as the women tend not to be paid as the men for the same job. In Europe the differences are far bigger; in Southern and Northern Europe it is normal that a woman is paid e.g. 60 % of what the man is paid, for the exact same work. The only place in Europe where I had a salary that was not better for the men in the same job was in UK, and I'm pretty sure most jobs even there have the gap. IF you have kids, having one parent home for them is fine, it's luxury, but it has to be that BOTH of you want it, and especially the one of you two who will stay home. It should not be based on the sex.
My wife and I are going to single income soon. Our only worry is that she'll be bored.
Originally posted by Scott
There are some cases where two is not better than one. Some news magazine show did some analysis one some two income families. Turned out for one of them it was costing money to have both work. After mom stayed home dad starting picking up overtime and they did much better.
My wife and I are going to single income soon. Our only worry is that she'll be bored.
Moving to single income by choice, or neccessity?
Originally posted by Giaguara
A satisfying job = good self esteem and then $.
Better two of you having a 2/3 or 1/2 time jobs than 1 having the job and other (the female) unvoluntarily forced to not work out (like some of you want, staying home, cooking and cleaning for husband and overpopulating the earth).
I'm fine with that. We could say one 40 hour week per family if you like. You are the one trying to make it a gender issue. I see it as a quality of life issue where people have been fooled into thinking they are getting more when they aren't in most cases. Since there is more competition for jobs, you get paid less. People take that extra "earnings" and suddenly decide to buy a bigger home, or bid up the price on the same home. No one has said that women have to stay home cooking and cleaning.
1 person: 1 rent, 1 electricity, 1 phone, 1 car, 1 x food, 1 x everything bills.
2 persons: 1 rent, still 1 electricity and 1 phone .. 2 x food. Other still 1x.
If you add anything else by your _CHOISE_ such as more cars, more than zero kids, mobile phones, double subscriptions to main sports events those things can be double, but the essentials apart from food, are still single. Unless you have 2 homes of course.
Some costs do stay the same. However some rise due to the extra money. Say that landlord give you a rental increase. If you have one income and cannot afford it, you tell him you must move. If you have two incomes you might stay and just pay the increase. However then what happens when another one income family tries to afford that building? They can't.
So now the lost income is gone from having two incomes. The wealth from it is still concentrated at the top. (Landlord) You now "need" two incomes to get the same apartment.
Do you think the landlord could have had an empty building if all the single income families could not have afforded the more expensive rent? The thing that allowed that wealth transfer was the second income. If no one had been willing or able to pay it, it wouldn't have happened.
Then there is just the need for more housing space. The average size of a house has gone up dramatically in the United States. People are now using two incomes to buy what I call "McMansions" which are mass produced, huge, tract housing. This housing makes the older housing, still really fantastic housing that is typically a three bedroom of around 1000-1250 sq.ft. look like poverty housing.
As a result the couples will spend even more of their income, especially that second income to get "good" housing. However the definition of "good" housing has changed.
Just another thread to justify why women are bad (stealing your work) and should be home just for you (cooking, cleaning etc).
Wrong, try a quality of life issue. Likewise it might even be a U.S. specific issue since we consent to the longest number of working hours in the modern world. Is an employer getting the benefit of getting two people to work for him for not much more than the cost of one employee oppression of women by men or oppression of the poor by the rich?
In France they passed a 32-35 hour work week. Was this seem as a measure to "keep women at home in the kitchen?"
If you calculate it that the MAN can be as well the one who stays home to take care of the household etc, you sure must add the lost income - as the women tend not to be paid as the men for the same job. In Europe the differences are far bigger; in Southern and Northern Europe it is normal that a woman is paid e.g. 60 % of what the man is paid, for the exact same work. The only place in Europe where I had a salary that was not better for the men in the same job was in UK, and I'm pretty sure most jobs even there have the gap. IF you have kids, having one parent home for them is fine, it's luxury, but it has to be that BOTH of you want it, and especially the one of you two who will stay home. It should not be based on the sex.
I haven't said it should be based on sex/gender. Likewise I contend it really isn't a luxury if people kept their expectations after seeing the money from that second income the same. But they don't. Soon the cars are bought more frequently. A 1250 sq ft house is declared small and dingy. The two folks who are working all the time suddenly need a home landline phone and two cell phone plans to be able to communicate, etc.
I'm just saying that a little thinking differently can lead to a better quality of life. It doesn't have to be a sexism issue either. If half of all couples quit working, the labor shortage would likely make it impossible to pay women unequal wages as well.
Nick
Originally posted by Scott
There are some cases where two is not better than one. Some news magazine show did some analysis one some two income families. Turned out for one of them it was costing money to have both work. After mom stayed home dad starting picking up overtime and they did much better.
My wife and I are going to single income soon. Our only worry is that she'll be bored.
If it is because of children, I assure you she won't be. If anything she be crouched at the door ready to pounce and leave for some relief the second you walk in.
My wife's day is often a little to interesting for our tastes. our children are so physically and mentally active that we have thought of investing in some lead paint chips (joke) to slow them down.
For example yesterday we spent about 20 minutes locating our almost two year old who had escaped yet again. (There seems to be no combination of locks and fences that can keep him in the yard and out of traffic that we worry about.
We located him in our boat. He had find a way to scale about 5 feet worth of trailer/boat to get inside, but he did.
Multiple this by about 100 times a week, and the last word you will ever use is boring.
Nick
Originally posted by trumptman
Then there is just the need for more housing space. The average size of a house has gone up dramatically in the United States. People are now using two incomes to buy what I call "McMansions" which are mass produced, huge, tract housing. This housing makes the older housing, still really fantastic housing that is typically a three bedroom of around 1000-1250 sq.ft. look like poverty housing.
As a result the couples will spend even more of their income, especially that second income to get "good" housing. However the definition of "good" housing has changed.
[...] Likewise it might even be a U.S. specific issue since we consent to the longest number of working hours in the modern world. Is an employer getting the benefit of getting two people to work for him for not much more than the cost of one employee oppression of women by men or oppression of the poor by the rich?
In France they passed a 32-35 hour work week. Was this seem as a measure to "keep women at home in the kitchen?"
[...] If half of all couples quit working, the labor shortage would likely make it impossible to pay women unequal wages as well.
1. The housing sizes (meal sizes, car sizes, nearly everything) has gone up. To have a big house you need it filled with a lot of cr.. decoration, furniture etc. It is a CHOISE to "NEED" big housing.
In Cairo an average 7 people live in an 11 square meter apartment.
And they spend a lot more of their income to housing than what hte Americans do.
2. US is not the place with necessarily longest working hours. I wanted to do a few 28 hour shifts in UK. I did several 6 pm to 8 am shifts. And in holidays worked 7 days a week when I could. I can't imagine doing it here. (70 hours a week).
Most employers I've seen have preferred having one TIRED employee for 40-50 hours a week than having two, less tired employees doing hte same total amount of time, half day or different days. I see no reason for that preference, as if you in too short a time burn out you are forced to have a break and look for another place.
3. If half of all couples quit working, the double of Mexican couples work.
I've got a pretty nice situation I think. I have very flexible hours, and my wife works half time. So we have been able to avoid day care by switching off.
Staying at home with kids certainly isn't easy - as about a 1/3-time stay-at-home dad I know. The problem is that while it is work, so much of it is mind-numbing, ego-crushing, brainless work. I'm sure to some people it's very fulfilling and nurturing and all that, but I know my wife would go crazy if she stayed at home with our kids, and I suspect that's true of a lot more women than is generally acknowledged.
I suppose it was easier when women just never expected to be professionals. But today girls are educated the same way boys are educated. My wife and I are equal professionals in our fields, so I think it's tough to just stay home for 10 years (we have two kids, 4 years apart) after all that education and those expectations of a professional life.
I'm surprised that the mortgage and the cars are the same as they were 30 years ago. It sure seems like everyone drives more expensive cars and has more of them than in the past. I wonder if this is distorted because people stretch the payments out over a longer period of time, but this chart is only annual. I've heard that people have a lot more debt than they used to. Also, I thought one of the points of their book was that people spend a lot more on their homes than they used to, partially in order to get their kids in good schools.
It's also interesting that taxes are higher - I suppose that's a combination of the marriage penalty and just having more earnings.
Originally posted by BRussell
I'm surprised that the mortgage and the cars are the same as they were 30 years ago. It sure seems like everyone drives more expensive cars and has more of them than in the past. I wonder if this is distorted because people stretch the payments out over a longer period of time, but this chart is only annual. I've heard that people have a lot more debt than they used to. Also, I thought one of the points of their book was that people spend a lot more on their homes than they used to, partially in order to get their kids in good schools.
It's also interesting that taxes are higher - I suppose that's a combination of the marriage penalty and just having more earnings.
I think what they are showing is that it is the same percent of the 75% larger income. You would expect that with two people working, the percentage of income that would go to pay for their house would have gone down. Instead it has remained the same and they have opted for a larger house or bid up the same house they would have had. Thus they now "need" two incomes to afford that house.
I think the issue is the same with the cars as well. They are spending the same percentage, but of a larger income. Obviously both of those yearly numbers, 1973 and today, are inflation adjusted. I think you are right about the more expensive cars/longer payments issue. I know when I was in high school, any car that had gone 100k miles had really had it. My wife's Honda has had 140k miles put on it and the only repair it has ever had is we had the timing belt replace because a Honda affectionado told us they stretch and cause serious damage. We did that at 100k miles and that has been it.
The saddest thing of all about that chart is that you take the mortgage and the cars and add them together and it doesn't equal the taxes paid... and we still have deficit spending and plenty of people are still calling for more taxes and spending... amazing.
It's also amazing to me that there are people out there spending as much on daycare as on a home. I wonder how they got that number.
Nick
Originally posted by Giaguara
1. The housing sizes (meal sizes, car sizes, nearly everything) has gone up. To have a big house you need it filled with a lot of cr.. decoration, furniture etc. It is a CHOISE to "NEED" big housing.
In Cairo an average 7 people live in an 11 square meter apartment.
And they spend a lot more of their income to housing than what hte Americans do.
2. US is not the place with necessarily longest working hours. I wanted to do a few 28 hour shifts in UK. I did several 6 pm to 8 am shifts. And in holidays worked 7 days a week when I could. I can't imagine doing it here. (70 hours a week).
Most employers I've seen have preferred having one TIRED employee for 40-50 hours a week than having two, less tired employees doing hte same total amount of time, half day or different days. I see no reason for that preference, as if you in too short a time burn out you are forced to have a break and look for another place.
3. If half of all couples quit working, the double of Mexican couples work.
1. I know it is a choice to need big houses. I am glad you point that out because I say this to people who tell me they NEED to have both people work to get by. When I ask them about housing I often discover they NEED a 2300 sq ft track home to get by. However that is a want, not a need.
And yes they do fill them with crap
2. From the reports I have read, if you look at annual hours worked, the U.S. leads. I'm not saying it is a good thing. As for the 70 hour work weeks. I'm sure a few people here will volunteer that it is entirely possible to do in the U.S. However I have to ask... why work so hard? Was there some big goal associated with all this work?
3. Your comment is racist, ignorant and wrong. In the U.S. the Mexican/Hispanic women stay home much more often than any other group of women. They do so in such large numbers that for the first time in recent memory the number of stay at home mom's has gone up.
There are plenty of Hispanics that have the view that the U.S. was born "running" and that you should work for what you need and not just to generate wealth for excess consumption.
Nick
Originally posted by trumptman
3. Your comment is racist, ignorant and wrong. In the U.S. the Mexican/Hispanic women stay home much more often than any other group of women. They do so in such large numbers that for the first time in recent memory the number of stay at home mom's has gone up.
There are plenty of Hispanics that have the view that the U.S. was born "running" and that you should work for what you need and not just to generate wealth for excess consumption.
Nick
For someone who spends a great deal of time pointing out unfounded accusations of racism, sexism, and other "isms," you are quick to play the "race card" yourself.
I believe the word I'm looking for is hypocrite.
Giaguara's example was probably meant to illustrate the fact that if workers stayed at home, other people would inevitably take their jobs. Mexicans in particular would have more jobs from which to choose.
Originally posted by ShawnJ
Giaguara's example was probably meant to illustrate the fact that if workers stayed at home, other people would inevitably take their jobs. Mexicans in particular would have more jobs from which to choose.
That is exactly what I ment.
If the British decide to try your technique, trumptman, that is WORKING LESS, it's not making the overall work situation for the Brits any better. If a Briton does not want to work, it's the emigrant who does. African, East European, whatever. (Never worked with Mexicans in UK)
If a Briton does not want to work and I do, they choose me or some other emigrant, they have no choise. It is not going to change anything else. If someone works fot the same price or less, they are not going to come to beg you to work for less hours and offering you more money. Someone gets the work anyway. And it is probably one who needs cash more desperately than you, and an emigrant is a good example of that category. Mexican, Polish, whatever is the dominant in your zone. Besides, I did not exclude myself in the example either. If you choose not to work, I will.
My wife and I MUST have two incomes to live in this area. We're teachers, and now thatt we have our first child, she's working part time. We also have an inexpensive day care option...thank God (right now...about $200 a month).
It is often the cost of living that mandates two incomes. Any decent home that would meet our needs was upwards of $180K in this area. Most were WAY above that. In fact, we lucked out so to speak...we spent less on our new construction 4 bedroom home than we would have spent on a two or three bedroom rancher...(we commute longer to work as a result).
We also only have one car payment. We have minimal unsecured debt. And with all this, we could not afford to live on my $40,000 salary. No way. It's even going to be tight now that my wife is making half what she did.
I agree that sometimes two incomes might not be worth it if one partner makes enough to live on (for example, if I made 60K instead of 40K my wife would stay home for at leat a few years). But, for most people, two incomes is required.
Originally posted by ShawnJ
For someone who spends a great deal of time pointing out unfounded accusations of racism, sexism, and other "isms," you are quick to play the "race card" yourself.
I believe the word I'm looking for is hypocrite.
Giaguara's example was probably meant to illustrate the fact that if workers stayed at home, other people would inevitably take their jobs. Mexicans in particular would have more jobs from which to choose.
I'm not playing the race card. My information is based on actual data generated in part by the last census.
Her claim wasn't that a Mexican would take the job but that Mexican COUPLES would take the job. You and she can try to spin it in any manner you like, but the point is that she was just making an assumption, based on race that was absolutely dead wrong.
Now does that mean that the children of these Mexican couples might not desire the same number of children, might be more inclined to have two people within the family work, etc. I don't doubt that they will likely adopt some of these attitudes. However in the meantime her conclusion is 100% wrong.
As for your name calling, it's all you have left. You know if anyone you disagreed with made a 100% false claim about a specific ethnic group based off the fact that they are immigrants you would call it racism. All you show is that your political agenda is above all everything which means you will convince on pretty much nothing.
Nick
Originally posted by trumptman
However in the meantime her conclusion is 100% wrong.
So if Americans give up work, it's wrong to assume that other races will fill in the jobs? No Nick, I think you're wrong. You're trying to latch on to a miscommunication/understanding rather than argue a valid point.
Originally posted by trumptman
I'm not playing the race card. My information is based on actual data generated in part by the last census.
Her claim wasn't that a Mexican would take the job but that Mexican COUPLES would take the job. You and she can try to spin it in any manner you like, but the point is that she was just making an assumption, based on race that was absolutely dead wrong.
Now does that mean that the children of these Mexican couples might not desire the same number of children, might be more inclined to have two people within the family work, etc. I don't doubt that they will likely adopt some of these attitudes. However in the meantime her conclusion is 100% wrong.
As for your name calling, it's all you have left. You know if anyone you disagreed with made a 100% false claim about a specific ethnic group based off the fact that they are immigrants you would call it racism. All you show is that your political agenda is above all everything which means you will convince on pretty much nothing.
Nick
EXPLAIN HOW GIAGUARA'S COMMENTS WERE RACIST.
Immigrants, including Mexican-Americans, will take over jobs abdicated en masse by other workers. It's inevitable. Why do you think they frequently work the most dangerous, physically demanding jobs?
I'm dead set on exposing you for the hypocritical, dishonest, dirty debater you are. You have a big mountain to climb to prove this one.
Originally posted by SDW2001
This is another issue I disgaree with you on, trumptman...to an extent.
My wife and I MUST have two incomes to live in this area. We're teachers, and now thatt we have our first child, she's working part time. We also have an inexpensive day care option...thank God (right now...about $200 a month).
It is often the cost of living that mandates two incomes. Any decent home that would meet our needs was upwards of $180K in this area. Most were WAY above that. In fact, we lucked out so to speak...we spent less on our new construction 4 bedroom home than we would have spent on a two or three bedroom rancher...(we commute longer to work as a result).
We also only have one car payment. We have minimal unsecured debt. And with all this, we could not afford to live on my $40,000 salary. No way. It's even going to be tight now that my wife is making half what she did.
I agree that sometimes two incomes might not be worth it if one partner makes enough to live on (for example, if I made 60K instead of 40K my wife would stay home for at leat a few years). But, for most people, two incomes is required.
SDW, there are plenty of folks who live on half of what your family makes. As usual your presumptions lead to your own conclusions. You speak of an "area" as if you had a right to live there or that living outside that area would = death or something of that nature. That just isn't true. I have no doubt that the "needs" expressed in your homebuying go well above a true "need" and into the "want" category.
My wife and I had to move from the beach in order to avoid bad neighborhoods every couple miles and housing prices that would have us running to stand still. As a teacher you have much more flexibility than most because there happen to be schools and kids just about everywhere.
What is even funnier is you are one of the chief preachers around here of how people have to work for taxes, not themselves. How much lower do you think your tax burden will be at $40k vs. $80k? You would likely fall from the 28% to the 15% bracket. With the right deductions I doubt you would even owe taxes on that $40k.
We all basically live in comfort zones and make adjustments to those zones when we have to do so. People might have to rent instead of own. They might have to live in an apartment or condo instead of a home with a lot. They might have to own a used car instead of new. They might use the library instead of Amazon, etc.
You have 3(one of them an infant) people living in a 4 bedroom house and you call that a "need."
I'm not telling you to sell your house or even that you don't deserve it. I'm just saying don't dare call it a need when your family wouldn't have filled a two bedroom apartment a couple months ago.
My first house when we moved away from the beach is a 4 bedroom 3 bath house with a pool and spa. My current house that I live in is 4 bedroom 2.5 bath with a large lot. I'm not claiming it only meets a need though. There is about a thousand sq ft of "want" in the house, and about 4000 sq ft in the lot. We can and have gotten by with less before and could again if we needed to do so. My condo in Long Beach was 2 bedroom, 2 bath, 800 sq ft and could still have met the needs of my family today.
So we have more, but I honestly declare the more a want and not a need. I didn't "need" to move from Long Beach, I wanted a bigger house, etc.
Nick