In Two-Income Households, Can Making More Put Us Further Behind?
It wasn’t so long ago that men dominated the workforce, and the vast majority of married women worked as homemakers. Back in 1975, only one-third of mothers headed out to the office in the morning. But according to Bureau of Labor Statistics data from 2010, in families with children, 58% of households had two working parents. Thank goodness we have more choices nowadays...or do we?
According to a Public Agenda report published in 1999, while many families like the idea of having one parent at home with young children, the vast majority don’t see it as a realistic option. In other words, while the option to either work or stay at home should mean more choices for families — especially as the stay-at-home dad becomes increasingly common — statistics show that in many cases, parents don’t feel free to make that choice because they need the money. (See also: 12 Side Jobs for Stay-at-Home Moms and Dads)
From Big Savers to Big Spenders?
To be clear, a lot of things have changed since the days when women ruled the home; housing has become more expensive, taxes and health insurance consume a larger portion of U.S. incomes, and the cost of university education has steadily increased. Those are things that can put a major dent in the family budget. But something else has changed, too. Because while two-income families earn more, they also spend more and have considerably more debt than one-income households, according to the Bureau of Labor Statistics.
In a nutshell, today’s two-income families have budgeted to the limit of their two-paycheck status. The question is, where is all that extra money going?
Breaking It Down
I’m not an economist, but I don’t think the cost of living is the only thing that’s changed over the years. Even just anecdotally, things are considerably different. My grandmother started married life with two wooden milk crates for kitchen chairs, and my parents had hand-me-downs and other misfit furniture from their respective single lives. But I’m hard-pressed to find a newly married friend without a brand-new furniture suite — and often a brand new house and car, too.
And, while housing is said to consuming a bigger portion of the family income, comparing those figures may not be comparing apples to apples when the average size of a new home continues to expand. As of 2010, the new “normal” for a new home is 2,392 square feet, according to the U.S. Census Bureau; in 1950, the average was 938 square feet, a figure that’s crept upward with each decade. If there’s anything we’ve learned from the ongoing foreclosure crisis, it’s that landing a dream home does not always lead to happy ever after. Even if it does, living that vaulted-ceiling dream is an expensive proposition. So why do we appear to be obsessed with raising our children in larger homes than the ones we grew up in?
Another thing that’s changed — debt. Credit cards were just getting their footing as part of mainstream consumer culture in the 1970s. Today, they are so ubiquitous that over 70% of the population has more than three of them. And, according to the Federal Reserve, the average consumer had more than $15,000 in credit card debt in 2010. The problem with carrying ongoing debt is that it makes everything more expensive and drags down disposable income. Maybe that’s why savings rates have also dropped so precipitously over the years. In 1970, the average savings rate was 11%. In recent years, economists count it as a good sign if the savings rate is even positive.
Critics are going to say that things have gotten harder, and that two incomes are now essential. I can’t say that isn’t true — at least not for everyone. But I’m unconvinced by arguments that suggest that getting by on one income just isn’t possible. Women have always played a central role in the household budget, even when they weren’t earning the money. But I’m not sure the move away from household budgeting and coupon clipping to bringing in a salary has always moved families farther ahead in an economic sense. And, while the world may have changed, so has our notion of what our standard of living should look like. If anything’s holding two parents in the workforce where one would rather be at home, I’d put my money on the inflation of our lifestyles.
The Bottom Line
I would venture to say that women’s move into the workforce was less about career aspirations than it was about options — which is why I find the fact that many parents now feel stuck at work so disappointing. So, it seems that the question isn’t so much whether it’s possible to live on one income so much as whether we’re willing to live on less. It’s a different kind of life, for sure — one with fewer possessions, but also fewer bills to pay. But then, sometimes different is good, especially when it means having a choice. Am I right, ladies?
This post is a part of Women's Money Week 2012. For more posts about budgeting, see womensmoneyweek.com.