The Two-Income Trap (10 page)

Months later, Gabe still needed the support of a machine to breathe. He was a quiet baby who rarely fussed, but Carmen checked on him constantly. One evening, after putting Gabe to bed, Carmen started to fix dinner for her two older children. The macaroni had just started boiling when she left the kitchen abruptly and ran to the baby’s room. “I don’t know why, but I just needed to check again.” She was confronted by a terrifying silence. Her heart began to race. “He aspirated. I had to do CPR on him.”

Gabe survived, and over the next three years, he made some advances, but his progress was slow. Carmen explains that at age three, “He can’t really walk or talk yet. . . . He’s still on the bottle, [and] he’s just now starting to eat table food. We have to make sure it’s chopped up real fine. He could choke.” Gabe is less passive now.
He screams incessantly when he is anxious, which presents a particular challenge because he still needs so much medical attention. “He’s traumatized by doctors. He’s traumatized by nurses, because of being stuck and probed. He knows the uniforms.”

She had gone back to her job as a lab technician shortly after the birth of each of their other two children, but it didn’t occur to either Carmen or her husband, Mike, that she could leave Gabe. “People are afraid to keep him, because of him being delicate,” which made child care impossible to arrange. Even family members were reluctant to look after Gabe: “My mother-in-law was afraid to take him because of his condition. If I had her to watch him, I had to be back in an hour.”

When Gabe was first born, Carmen had arranged a leave of absence from her job. But when the leave ran out, “I just resigned,” explains Carmen. She pauses, adding hopefully, “But just until he’s better.”

 

Like many of the couples we interviewed for this book, Carmen and Mike ultimately filed for bankruptcy. The reason? Not the one their friends might guess: the staggering expense of tending to Gabe’s medical needs. That is not to say that Gabe’s care was inexpensive. He had undergone four surgeries by the time he was three years old, and, as Carmen explains, “His diaper bag comes along with a lot of medication.” Then there are the specialists, the lab tests, the breathing machine, the special supplies. Gabe is well on his way to becoming a “million-dollar baby.”

But Carmen and Mike were also very lucky: Nearly all of Gabe’s expenses were covered by Mike’s health insurance. Carmen reflects, “Thank God we had insurance. . . . We only paid for a few medications from time to time, the rest are copays.” Three years after Gabe’s birth, the family had paid less than $2,000 in medical bills—a tiny fraction of the debts they owed when they entered into bankruptcy.

So how did Carmen and Mike end up in so much trouble?

When trouble strikes, the family falls back on its safety net. They seek out extra resources—more medical care, extra cash, someone to lend a hand—hoping they can regain their stability at some future time.

Liberals (and many moderates) are quick to point out that America’s safety net has frayed. Welfare has been slashed, hospitals no longer offer free care to the poor, public housing has been shuttered, Medicaid funding has been cut, and so on throughout the pages of the
New York Times
.

There is something beyond the obvious hardship implied in this litany that is important to notice. The “safety net” provided by each of these programs serves only one segment of the population: the poor. Nearly all these programs involve a stringent means test, making them available only to those near or below the poverty line. They are designed to keep hunger, disease, and destitution at bay for the poorest members of society, at least for a while.

But what about the middle class? What is their safety net? Where do they turn in the case of a calamity? Unemployment insurance offers modest protection, and Social Security protects against penury in old age. But there is little more. For most families to qualify for any other form of government assistance, they would have to forgo everything that makes them middle-class—their homes, their jobs, their places in their communities.

There is little discussion about the safety net for middle-income families, no wise folks expounding about it on the Sunday talk shows, no long articles about it in the newspapers. The reason may be that the middle-class safety net isn’t built with taxpayers’ dollars. It is a private safety net, built family by family, home by home, far from the spotlight of media attention. The first lines of defense are the insurance policies, offering at least some financial protection against accident, illness, and death. Next is cash in the bank that can be tapped when the family has sudden needs. But there is another line of defense for families with children, another type of insurance that has been widely overlooked.

For middle-class families, the most important part of the safety net for generations has been the stay-at-home mother.

Today’s wisdom holds that a couple that sends both spouses into the workforce is better off economically. They may be stressed out, they may feel guilty about sending their kids to day care, and they may have too little time for each other, but the one piece of good news that the family can count on is that they are more financially secure. The view is familiar, repeated with comforting regularity. “Jason’s company isn’t doing well. But if something happens to his job, at least Melinda is working.” Or “The new house will be a stretch, but at least there are two of us to manage it.” A recent book entitled
She Works /He Works: How Two-Income Families Are Happier, Healthier, and Better-Off
sums up this perspective:

Stability and protection—delicious ideas for the modern family—and exactly what everyone knows a second income provides.

But what if it doesn’t? What if the modern two-earner couple is actually
more vulnerable
than the traditional single-breadwinner family?

A generation or so ago (and even today), the typical one-earner family usually described the father as responsible for the economic health of the family, with the mother assigned to roles such as homemaker or helpmate. To the extent that she had an economic role, it was seen as one of careful spending; it was her job to ensure that Dad’s salary went as far as possible, and so she mended torn shirts, packed bag lunches, and counted the family’s pennies. Her economic contribution, in effect, was that of careful guardian of what her husband brought home.

But this traditional view was far too narrow. It conjures up an image of the stay-at-home mother who was forever confined to the home, unable or unwilling to make a financial contribution even when her family faced disaster. If her husband lost his job, she could do little more than stand by helplessly and wring her hands, or maybe clip a few more coupons and dilute the soup with more water. In reality, the stay-at-home mother was never such a cartoon figure. She has always worn many hats, changing roles as circumstances demanded. When her husband was working steadily, she would forgo a paycheck to spend her days at home taking care of the children and keeping house, but if circumstances changed, so did she. If her husband was laid off, fired, or otherwise left without a paycheck, the stay-at-home mother didn’t simply stand helplessly on the sidelines as her family toppled off an economic cliff; she looked for a job to make up some of that lost income. Similarly, if her husband had a heart attack and was expected to stay home for a while, she could find work and add a new income source to help the family stay afloat financially. A stay-at-home mother served as the family’s ultimate insurance against unemployment or disability—insurance that had a very real economic value even when it wasn’t drawn on.

Consider Tom and Susan, the typical one-earner family from the 1970s we introduced in chapter 2. If Tom, who earned $38,700 a year (inflation-adjusted to 2000 dollars), was laid off from his job, he could dip into the public safety net and draw unemployment. But his unemployment check would cover only half of his previous salary, leaving a huge shortfall for basic expenses. Without half of his income, the family might face imminent disaster. But if Susan then entered the workforce to help her family through this rough patch, she could bring in much-needed income at just the right time. She wouldn’t earn nearly as much as Tom did, but on average she would bring in nearly $22,000 a year.
²
Assuming it took Susan a couple of months to find work, the family would just about break even. If Tom could find another job within six months (the limit imposed by most states on how long someone can collect unemployment benefits),
³
the family
should be able to weather the storm without any serious injury to their financial health.

What if Tom never made it back to his original income? Susan’s new paycheck could still make the difference between their long-term survival and collapse. If Tom were able to return to work at a lower-paying job, or if he could find only a part-time job, even with his income cut in half, the now-two-earner family might approximate its earlier lifestyle—and its long-term economic prospects. Susan might need to remain in the workforce permanently, and the family would have no reserves to meet any future setbacks, but they could weather one hard economic blow—the permanent reduction of the primary breadwinner’s income—intact.

Of course, Tom and Susan are merely an illustration; the realities of a father losing his job are far more varied and complex.
⁴
Researchers have found, for example, that a woman whose husband loses his job is more likely to enter the workforce if her children are older, perhaps because the higher cost of day care for small children can make a young mother’s return to work too costly.
⁵
Some longtime stay-at-home mothers may find that they lack marketable skills; others may be frustrated that only low-wage jobs are available to them. In addition, a stay-at-home wife may have difficulty finding work when layoffs, such as the one that caught her husband, are making jobs scarce in their locale.
⁶
Notwithstanding these difficulties, there is considerable evidence that as a family’s economic position deteriorates, stay-at-home wives do exactly what one might predict: They look for a job. Sociologists have found that a woman is far more likely to enter the workforce if her husband takes a permanent wage reduction, if he faces an extended period of unemployment, or if he receives little or no unemployment compensation.
⁷
This squares with common sense: If Tom found a well-paying job just a few weeks after being laid off, there would be little need for Susan to begin a job search. If, on the other hand, Tom couldn’t find a job, or if the only jobs he could find paid considerably less than his previous position, then there would be far more pressure on Susan to find a way to bring home some additional
money. Researchers have found that the effect of wives’ added income is not trivial; for the average married man who loses his job, his wife’s new income offsets more than 25 percent of his lost wages.
⁸
Indeed, that all-purpose insurance policy provided by the stay-at-home mother has paid off for millions of families.

One of us [Elizabeth] lived this story back in the 1960s in Oklahoma. I was thirteen when my father had a heart attack. Daddy had been working on our car, lying on the driveway on a cold November weekend, when his chest began to hurt. He put off going to the doctor until the next morning, when he was immediately hospitalized. Forty years later, the snatches of conversation I overheard remain as vivid as if someone had just spoken the words: “the possibility of more attacks,” “not sure if he can ever work again,” “have you made arrangements?” Daddy came home, gray and shaking, and he sat around the house for weeks. My mother had been at home for more than thirty years bringing up my three older brothers and me. She looked for a job for the first time since she was a nineteen-year-old girl with a part-time job singing the latest hits at a Tulsa radio station. After a few weeks of searching, she took a job in the catalog order department at Sears.

Eventually, Daddy went back to work, but to a job that paid about half what he had been earning. We lost the car, and there was more talk about what groceries cost and how expensive winter coats and dental visits had become, but no one went hungry and we stayed in our home. My mother continued with her job, and life settled back down. When I was a senior in high school, she talked about quitting, but she decided to keep working so that she and my father could help with the cost of my college tuition. When I left for college, they sold the house and moved into an apartment. The year I graduated, Mother quit her job.

Not only did stay-at-home wives like my mother function as backup workers, insuring against their husbands’ loss of income, they were also available when the family had unexpected expenses. If there was an illness in the family, a stay-at-home mother could go to work to cover the deductibles, copayments, and other medical expenses not covered by insurance. If the family was uninsured, a stay-at-home
mother could join the estimated 4 to 5 million women who now stay in full-time jobs just so that they can provide health insurance for their families.
⁹

Divorce, which we will discuss in depth in chapter 5, is the single most common trigger for stay-at-home wives to enter the workforce. During the 1970s, when fewer than half of all married women were in the labor force, 83 percent of divorced women were working within two years of separation from their husbands.
¹⁰
A sudden need for cash can arise from all sorts of causes, encompassing both good news (“Cynthia got into Yale”) and bad news (“Termites have eaten away the foundation of your house”). Either way, the key point remains the same: Families with a stay-at-home mother have a backup earner, someone who can add a jolt of income to the household—a jolt that can make the difference between covering the kids’ tuition and keeping up with the doctors’ bills rather than giving up health insurance or taking on a second mortgage.