In Two-Income Households, Can Making More Put Us Further Behind?

Photo: Josh Engroff

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.

What’s Changed?

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

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Guest's picture

This article definitely hits a nerve with me as I would love to quit my job and am happy to live off less. However it is more complicated than that. To voluntarily go from the security of a two income family to a one income one can be quite a scary thought - what if interest rates go up, or what if the main breadwinner loses their job? If both parties aren't happy with going from one income to two, it can be tricky... I wrote an article relating to this on my blog

Guest's picture

If one of you works and loses their job, you are actually in better position to maintain your income level than if two of you work and one loses their job because you'll have two people (you and your partner) who may be able to find work. In a family where both people work, and one loses their job, it's not like the other can get a second job (at least not easily).

The newly elected senator from Massachusetts wrote a book about this not too long ago called the Two Income Trap.

Guest's picture

All true. We don't sew our clothes anymore. And we have more than one car and Dad is rarely fixing it. We call people to do the plumbing, etc. The really new one is that we have to pay for college now. Also new is that we do have cell phones and computer ISPs, etc and those are good to have. But the days of hand me downs and going to the library seem to be over, and that's a little sad. Maybe credit is just too convenient.

Guest's picture

I commented before and said that families could get by on one income (except maybe for medical bills/saving for college). But I want to add, having marketable skills and being able to support yourself is important for every person. There is nothing wrong with being a two income family. We as a society have become much more careless with money and more status conscious and that is what is causing the problem. Great article.

Guest's picture

I think the toothpaste is out of the tube on this one. I'll grant that life is more expensive these days partially because people enjoy nicer things (even a new Nissan Versa costs almost what my parents paid for their first house).

But there are a few things in today's economy which are quite different from our parents days.

People live longer. Better medical care (despite America's poor showing in critical measures), safer cars, lower exposures to known poisons -- all of these things cost much more money than they used to, even after adjusting for inflation.

Even with the New Gilded Age that is forming, America is more inclusive than it ever was. It is no longer legal to pay someone lower wages simply because of their gender, skin color, or sexual preference (although apparently it's still okay if you don't have citizenship papers). Programs like the Americans with Disabilities Act help mainstream people with mental and physical challenges. But all that mainstreaming costs money -- higher wages, language translators, adapted buildings, and so on.

Our parents and grandparents had the advantages of steady employment in a largely-isolated market. Corporations like Whirlpool and GM didn't threaten to break their (implied) worker contracts by moving manufacturing to lower-cost countries like Mexico and China. Companies weren't purchased with high leverage to be financed by breaking them up. CEOs did not earn about 300 times what the average worker makes. The increasing outsourcing of even white-collar jobs like computer analyst and radiologist threaten middle-class lifestyles.

Certainly people could choose to live without the 65" hi-def TV in the "media room" or the $75,000 Escalade or the suite on their cruise ship vacation. But to suggest that the additional spending ability of a second income alone has led us to new heights of debt ignores some critical changes in our country.

Tara Struyk's picture

I agree. The world has changed, making this a very complicated issue. I could definitely write a lot more about this, so thanks for the food for thought!

Guest's picture

It's a mindset as well. Work for wages or work for yourself.

Guest's picture

I would agree that the inability to switch back to one income is due to inflated lifestyle. In fact, it's inflated even if you're on one income. When my husband and I were shopping for homes, 20s years old couples were looking at the same houses that we were.

Where were the people who were our age? Looking at houses that were $1-2Million more. My neighbors complain about my car being more than 2 yrs old because it devalue the neighborhood.

Even the Habitat for Humanity families had 60" TVs in their donated homes. We certainly didn't donate the TVs but that was their priority.

The idea of a second income is to put that money towards savings. Most people spend the money as it comes in to match society's expectations or spending it on childcare.

Guest's picture

Here's some food for thought.

With more disposable income and easy credit, one must remember supply and demand. Easy credit allows people to shop more then they would have if they didn't have it. So there is more demand, so the supply is smaller making things more expensive, things in general are also becoming more expensive.

I work with a lady that says in her teens she made 1.50(min wage) and eggs cost 10 cents a dozen. So at that time she could buy 15 dozen eggs. My grocer sells them at 2.50 a dozen and our min wage is 8.50, meaning that I at min wage ( what she had in the 60s) can by shy of 3.5 dozen eggs now.

Conclusion, my coworker could buy 4 times the amount of eggs I can now. ( creative off the hand calculations going on here)

I also agree with the standard of living. My husband I are still rock our 1970s bucket chairs ( yes the most comfortable things ever created, and no I will NEVER sell them) that are far more durable ( made it through my husband and multiple male cousins as they grew up) as well as an As-Is leather couch we bought for $300. All in all our home was furnished with less than $1000 and thats includes everything. Our condo is shy of 700 squ. Needless to say, we get made fun of.

What most of our friends and family do not realized is we make about 150,000 combined. Of that we live off of less then 2000 a month. We invest the rest. By the time we're 40 (15 years) we will have more then enough to live off of for the next 50 years.

One more note, at our income, when we walk into the mall, I still can't understand how so many young women can own designer clothes and bags as they do. I know I can't. ( okay I do, but it makes me sad). It's now come to the point where our malls are choked so with Coach, Armani and so forth, that we pretty much abstain from them.

One more point, Garage sales rock. I bought my Lagostina org price $400, for $20. Bargain hunting is MUCH funner

Tara Struyk's picture

What an inspiring story. Thanks for sharing!

Guest's picture
Christina Stephens

One income families are almost impossible in some high cost of living areas.

When all the kids are in school, I just can't see being a lady of leisure. A part-time job makes sense if you make a good living -- more than enough to cover all the expenses -- or you just keep it simple like service or retail jobs nearby while kids are in school.

Guest's picture

A part time job is a good idea, but if you're at home while the kids are at school, you can also do other things to save money instead of going out to earn it. Radical home-making takes DIY to a whole new level.

Home cooked meals can save a lot of money, and don't have to be particularly time consuming. And there are always things to be done around the house, so I'm never sure why people think it's filled with leisure time. In the summer you can grow container gardens and grow your own vegetables/herbs, dry laundry on a line or a rack, etc. In the winter there's always baking to be done, meals to be prepared. Sure, you may not be making money, but the money that's saved being a radical home-maker more than makes up for it.

Guest's picture

My goal has always been to be a stay-at-home mommy. I've been working on building my art business, so that I can do that from home. I'm down to part time. :)

My husband, who works hard at his full-time job, is a spender, not a saver. We'd be a lot closer to managing debts if he would stick to the budget that we both created.

Guest's picture

It also depends on where you live.

My husband and I live in a major metro area. In order to afford a small house on a small lot in a town with good public schools, we need to both work even with professional jobs. Our lifestyle isn't particularly inflated. We have no cable, drive 10 year old cars, clean our own house and mow our own lawn. Our kids are in two extracurricular activities each. It isn't a crazy life, but the cost is a challenge.

Guest's picture

I think most of the people out of work not because their spending habbits. It is not a choice or option. You simply can hardly survive on one income, there is no job for life any longer.

Quite frequently one is out of work for a few months...
I am not sure where the figures are comming from - 2,392....perhaps it is average divided by the number of new properties. I gues there is a fast growing gap between the rich and the poor. Can you imagine to call 2,392 a normal? What does it mean - average?

The only difference from 1950 some parents work from home, so demand for personal space is higher, than there is a PC, hence table and a some privacy is needed.

Guest's picture

There's no doubt the noughties property bubble and resulting high cost of housing is a major reason both partners need to work these days.

At the same time, it seems to me we live in an instant gratification culture, where we're encouraged to live beyond our means at every turn. As Greece and many other EU countries are finding out, it's impossible to live on the never never indefinitely.

Guest's picture

I agree that our inflation of lifestyles has a lot to do with it. Filling up those 2300 square foot homes is expensive. I know toddlers with more toys than I had my entire childhood. Then there is the endless replacement of electronics and media. In the last 50 years, music has been made available in at least 6 formats. I'm tired of paying for the same "album" over and over again.

However, a big part of the equation is the the added costs associated with working. Take out and convenience foods are more expensive than cooking at home, but who has the time? Office clothes or uniforms are more expensive than jeans. Those who can afford it hire out basic household tasks like cleaning and laundry. Not to mention the high cost of child care. I've known more than one couple who did the math and were surprised to discover how little "take-home" of the second income was left over after these costs.

Guest's picture

I think you really have to take into consideration the amount of the one income. For instance, my husband grosses $40k a year. We are a family of six. If you can find a way to live on that and not go hungry, I'd sure love to hear it. However, I work part-time at $25k a year, and that we can make work. There is not a whole lot of room for saving for kids college and very few extras, but we do save some money every month. Yet I still feel perfectly content with what we have and what we do. Now, if my husband made $65k a year and that was our one income, I'd be at home right now instead of commenting on a blog when I should be working. ;)

Tara Struyk's picture

Great point, Kathleen. I couldn't find a lot of data on wages and how they compare. I do suspect there's less job security now, which is also a factor. If someone out there is aware of some data on the wage issue, I hope they add a link to the discussion thread.