Still Trapped: Where Mothers Stand 18 Years After The Two-Income Trap

Welcome to Book Reviews! Here we review books that offer insight into the experience of motherhood in America. Book reviews will focus on all facets of a mother’s experience, from working motherhood to being at home with children. The following book review focuses on two questions: 1) what is the economic value of having a parent at home? and 2) should one-earner and two-earner households manage their money differently? If so, how?

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Still Trapped: Where Mothers Stand 18 Years After The Two-Income Trap

As a political junkie, I tuned in closely to the Democratic Primary race throughout 2019. Though a lot of my friends were big fans of Elizabeth Warren, initially I wasn’t convinced. However, as I listened to Warren’s suggestion to support full-time caregivers, I became more interested in what she had to say. This interest culminated in my reading The Two-Income Trap, a book written by Warren and her daughter in 2003.

And boy am I glad I did.

Though this book is 18 years old, it articulates a struggle that continues to affect families today—the threat of failing financially even when both partners work full time. In making this case, Warren makes claims that swim upstream from mainstream feminism, particularly that American families incurred real losses when women entered the workplace in the 80s and 90s. Though she might not articulate these claims with as much forcefulness today, her ideas continue to stir discussion (see this 2019 piece by Ross Douthat and this 2019 piece by Helen Andrews). In this post, I will summarize The Two-Income Trap and detail the ways American family policy is still failing moms 18 years after the book’s publication.

What is the Two-Income Trap?

A bar graph showing the difference in discretionary income between one-income and two-income households.
Two-income households in the 2000s actually have less discretionary income than one-income households in the 1970s.

Warren and Tyagi start by describing a staggering figure: in 1981, 69,000 women had filed for bankruptcy. By 1999, not even 20 years later, the number of women filing for bankruptcy had jumped to 500,000—an increase of nearly ten-fold (5). What could have caused such an explosion of bankruptcy claims in such a short amount of time? Warren and Tyagi attribute this explosion in bankruptcy claims to the book’s name-sake, the Two-Income Trap, which I summarize below:

  1. Mom joins the workforce, thinking that extra money will filter down into increased advantages for her kids.
  2. A groundswell of middle-class mothers do the same, and couples have more income to spend.
  3. This increase in income sets off a bidding war on a crucial but limited asset, housing in good school districts, making housing a much larger part of the family budget.
  4. Families taking on bigger mortgages find themselves strapped for cash, with less discretionary income than one-earner households in the 1970s (see image to the right).
  5. When disaster strikes—such as the loss of a job, a medical emergency, or divorce—the family is unprepared to handle the financial strain, often leading them to bankruptcy.

“When mothers joined the workforce, the family gave up something of considerable (though unrecognized) economic value: an extra skilled and dedicated adult, available to pitch in to help save the family during times of emergency… the stay at home mother gave her family a safety net, an all-purpose insurance policy against disaster.”

-The Two Income Trap, Pg. 7-8

Many families made a critical miscalculation when sending mom to work: that they weren’t losing much. Warren and Tyagi write, “When mothers joined the workforce, the family gave up something of considerable (though unrecognized) economic value: an extra skilled and dedicated adult, available to pitch in to help save the family during times of emergency. The stay at home mother gave her family a safety net, an all-purpose insurance policy against disaster (7–8).” This is the essence of the Two-Income Trap: the “stretched to the gills” experience of having two parents working means that when disaster struck, there is nothing more to give.

So, you think I should stay home?

No—having one parent at home is certainly not the only way to avoid the Two-Income Trap. However, Warren and Tyagi argue that there are real tradeoffs to consider if both partners choose to work full time. Whereas low-income families often turn to the government for a safety net in times of disaster, middle class families use a network of public and private resources to build their safety net—from insurance to cash in the bank (57–58). However, often overlooked is the role stay-at-home parents provide as a safety net to middle class families. Stay-at-home parents provide a logistical and emotional foundation to a home that is costly to replace when both parents work. Further, they provide a unique kind of insurance policy in the face of disaster, as we see in the following example.

The Two-Income Trap: An Example

Let’s take John and Kathy, a young couple with two kids. Together they make $120,000/year and have a take-home pay of $8,000/month. To live in a good school district, they buy a house with a monthly mortgage payment of $3,500. Between a car payment, child care, and groceries, the couple has another $3,000 per month committed to fixed costs, leaving them with about $1,500 left over every month. Then, disaster strikes and one partner loses their job. Suddenly the $8,000 they had in monthly income becomes $4,000, nowhere near enough to cover the $6,500 they have in fixed expenses. The couple is looking frantically for work for the unemployed partner, but they’re having trouble finding it, and they are exhausting their savings and credit cards fast. It looks like John and Kathy have stumbled into the two-income trap.

A bar graph showing that two-income households suffered a greater drop in  pre-tax and discretionary income when a partner lost their job, compared with a one-income household.
Families with a stay at home parent were better able to weather a lost job than families with two earners.

Warren and Tyagi argue that one-income families are often able to avoid bankruptcy because they have the full resources of two adults to manage a crisis when it comes. If John or Kathy had been home, they could throw effort into helping the unemployed partner find a job or find employment themselves to offset their partner’s lost income (60—see the above image). However, since both partners are employed, the working partner is as busy as ever and isn’t as available to help with the family crisis. Regarding this, Warren and Tyagi say, “The financial planning books typically treat one- and two-income families the same…but they are not the same. Without the safety net [of a stay-at-home parent], your two-income family must be careful not to budget as tightly as a one-income household” (172). Because John and Kathy committed nearly all of their income to fixed costs and didn’t have the flexibility of a parent at home, they weren’t prepared when disaster struck.

How Can We Avoid the Two- Income Trap?

Given the reality that 45% of families in the US have both partners working full time, what can these families do to avoid the Two-Income Trap? Warren and Tyagi recommend trying to live on one income and using the second income for fun things—vacations, splurges, meals out, etc. “As painful as it may be,” they say, “it is wiser to rent for a few more years or to buy a smaller home. An oversized mortgage will leave you no room for error, no cash for real emergencies—let alone a real disaster” (165). Striving to live off of one income gives the family the financial wiggle room that is truly protective against disaster, even if it means some desires have to wait.

What Other Solutions Can Help Couples Avoid the Trap?

Another assumption that underlies Warren and Tyagi’s message is the United States’ culture of “workism.” Derek Thomas of The Atlantic defines workism as “the belief that work is not only necessary to economic production, but also the centerpiece of one’s identity and life’s purpose.” This philosophy has driven Americans to work a number of hours that outstrips hours worked in comparable nations, with the average American worker putting in 47 hours per week. This culture of workism combined with the low value placed on employees’ family obligations mean that few options exist outside of a full-time schedule for parents. Though robust part-time opportunities exist in countries like Germany, few comparable opportunities exist in the United States. Instead, parents wishing to negotiate fewer working hours are left to the whims of their employers, often being required to drop health care and 401(k) benefits if they choose to go part-time.

If we gave our workist culture a hard look and gave parenting its proper due, companies could pivot to providing more part-time positions, which would offer parents flexibility and help them avoid the Two-Income Trap. Part-time employment could offer families the best of both worlds: fewer fixed costs tied up in child care, more logistical flexibility, and greater ability to cope when crisis hits. Policies like paid maternity leave and subsidized child care, in addition to more part-time employment options could offer an even thicker safety net for middle class families, making them less likely to fail.

The Takeaways

The Two-Income Trap is an excellent book—I recommend it. In my opinion, it was Elizabeth Warren at her best: as a heterodox academic who is not afraid to ruffle some feathers. For me, it was an eye-opening look at family finance and an opportunity to see how pervasive and hard-to-avoid financial difficulties can be. As a mom primarily at home with our one-year-old son, I also found this book validating: Warren and Tyagi gave evidence that the choice to be home is a valid option that adds real economic value to family life.

One-income families struggle to compete in a two-income world, and two-income families remain fragile in times of calamity.

Even though this book is 18 years old, its message remains fresh, relevant, and unresolved. One-income families struggle to compete in a two-income world, and two-income families remain fragile in times of calamity. If you are in a two-income household, Warren and Tyagi recommend living off one income, and using the second income for splurges and wants. I further recommend that employers and the government promote a vibrant part-time employment market, which would encourage both greater work-force participation for mothers and reduce the costs of having both parents working full time. It is time for our government to give families of all stripes some breathing room via smart economic policies—policies that take caregiving work seriously and support women in all seasons of their lives.

Editing credential to Bethany Hailstone Bartholomew.

2 thoughts on “Still Trapped: Where Mothers Stand 18 Years After The Two-Income Trap”

  1. Wow, this was a really thought- provoking review Bronwen! Too often we don’t give enough support for women and men to adequately fulfill their productive and reproductive roles to their satisfaction. Thanks for the review!

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