The Two-Income Trap (30 page)

We owe other debts as well. Eric Keil, an economist at the Bureau of Labor Statistics, was a patient and resourceful guide through much of the government data, and we offer our thanks. We also thank Margaret Brinig, Brenda Cossman, David Himmelstein, Michael Schill, Teresa Sullivan, Susan Wachter, Brady Williamson, and Steffie Woolhandler for reading and commenting on chapter drafts and suggesting additional data sources. Jean Avnet Morse provided thoughtful advice across a range of topics, making literally hundreds of useful suggestions that have made this a better book. Bruce H. Mann read the entire draft and listened to endless interpretations of the data; he provided wise counsel, gentle advice, and unconditional support, for which we publicly acknowledge our gratitude.

This book reports on original data from the Consumer Bankruptcy Project, but it also incorporates data from more than three dozen other data sources, both public and private. We were blessed with superb research assistance from Harvard Law School students who added their energy to this project by helping us track down
particularly elusive data and by fact checking our findings. Yolanda Rodriquez, Harvard Law ’03, was a thoroughgoing professional, working through citations and locating financial data. James Hart, Harvard Law ’04, also checked references, while he dug into various calculations and engaged in spirited conversations about how best to understand the federal data. Daniel Ebner, Harvard Law ’04, rechecked all the Consumer Bankruptcy Project data runs, assuming the huge task of verifying their accuracy down to the second decimal point. Lea Krivinskas, Harvard Law ’04, tirelessly verified hundreds of facts. Angie Littwin, Harvard Law ’02; Susan Lee, Harvard Law ’02; Amy McNutt, Harvard Law ’04; Nathan Oman, Harvard Law ’03; Michael Roh, Harvard Law ’04; and Daniel Volchok, Harvard Law ’03, also provided important assistance with the research work. Catherine Dick, Harvard Law ’05, was the lifesaver at the end whose creativity, initiative, and old-fashioned spunk helped us locate the last statistics we needed. To Yolanda, James, Dan, Lea, Angie, Sue, Amy, Nate, Mike, Dan, and Cassie—we say thank you for your hard work, your good brains, and your cheerful approach to difficult research assignments.

Our agent, Susan Rabiner, and our editor, Jo Ann Miller, have provided sound guidance. Their enthusiasm for the project has kept us warm, and their experience has kept us on track. Ann Deville, Cathleen Ellis, Candace Taylor, and Randi Segatore have given first-rate technical support, an addition of great value. Frank Carrere was our talented project photographer.

1
Ruth Ann and James and the other families whose stories appear in this book were interviewed as part of the 2001 Consumer Bankruptcy Project. In order to protect their privacy, all names and identifying information have been altered. See the appendix for more information.

2
My two longtime coauthors are Teresa A. Sullivan, a sociologist and now executive vice chancellor of the University of Texas, and Jay Lawrence Westbrook, a legal scholar who holds the Benno C. Schmidt Chair in Law at the University of Texas School of Law. For more on our earlier work, see the appendix.

3
The 1981 data are based exclusively on court records, which do not list marital status. We have therefore treated women filing alone as unmarried; joint filers are married. In 2001, since marital status is listed, this simplification is not needed. See more detailed discussion in chapter 5.

4
In 2001, the bankruptcy filing rate for couples with children was 14.7 per 1,000, compared with 7.3 for couples without children. For unmarried women with children, the filing rate was 21.3 per 1,000, compared with 7.2 for childless women and 6.1 for childless men.

5
The bankruptcy rolls increased rapidly during the late 1980s and again in the late 1990s, both of which were expansionary periods. Bankruptcy data from Administrative Office of the United States Courts.

6
This projection is based on a linear regression of personal bankruptcies in the United States between 1980 and 2002. The R-squared value was 0.937. This calculation assumes that the proportion of bankrupt families with children remained constant throughout this period. Based on these assumptions, 5.1 million families with children, or 13.5 percent of all households with children, would file for bankruptcy between 2003 and 2010.

7
In 2002, 2 million people filed for bankruptcy (including both husbands and wives who filed jointly). By comparison, 1.1 million Americans had a first or a recurrent coronary attack. American Heart Association, “Targeting the Facts: Our
Quick Guide to Heart Disease, Stroke and Risks” (2002). Available at
http://www.americanheart.org/downloadable/heart/1014993119046targetfact.pdf
[2/14/2003]. Approximately 1,284,900 new cancer cases were diagnosed. American Cancer Society, “Cancer Facts and Figures 2002.” Available at
http://www.cancer.org/downloads/STT/CancerFacts&Figures2002TM.pdf
[2/14/2003]. In 2001, American universities and colleges awarded 1.2 million bachelor’s degrees. U.S. Department of Education, National Center for Education Statistics, Table 247, Earned Degrees Conferred by Degree-Granting Institutions, by Level of Degree and Sex of Student: 1869-70 to 2010-11 (August 2001). Available at
http://nces.ed.gov/pubs2002/digest2001/tables/dt247.asp
[2/14/2003]. In 2001, there were 1.1 million divorces in the United States, compared with 1.5 million bankruptcy filings. Calculated from Centers for Disease Control and Prevention, “Births, Marriages, Divorces, and Deaths: Provisional Data for 2001,” National Vital Statistics Report, vol. 50, no. 14 (September 11, 2002). Bankruptcy data from Administrative Office of the United States Courts, including unpublished data on joint filings.

8
“Late Payers,”
Cardweb.com
(October 22, 2002). Available at
http://www.cardweb.com/cardtrak/news/2002/october/22a.html
[2/14/03].

9
Harvey Altes, the CEO of Time Finance Adjusters Inc., a trade association of accredited repossessors, “estimated that between 1998 and 2002 the number of cars repossessed nationally doubled from 1.2 million to around 2.5 million.” Adam Fifield, “For the Repo Man, These Are Good Times: The Sluggish Economy Makes for Busy Nights in a Ticklish Job,”
Philadelphia Inquirer,
December 29, 2002.

10
The proportion of mortgages in foreclosure proceedings at the end of the quarter increased from 0.31 percent in 1979 to 1.1 percent in 2002, an increase of 255 percent. Unpublished data, Foreclosure at End of Quarter, Mortgage Bankers of America (2002). For homeowners who were initially backed by FHA single-family mortgage insurance between 1982 and 2000, married couples with children were, on average, 39 percent more likely to undergo foreclosure by 2002 than married couples without children. Single parents were 28 percent more likely than single individuals without children. U.S. Department of Housing and Urban Development (HUD), unpublished data, FHA Single-Family Mortgage Insurance Cumulative Number and Percent of Foreclosures, 1982-2002.

11
Michelle J. White, “Why It Pays to File for Bankruptcy: A Critical Look at the Incentives Under U.S. Personal Bankruptcy Law and a Proposal for Change,”
University of Chicago Law Review
65 (Summer 1998), 685-732.

12
Among families in bankruptcy, 92 percent include a filer who completed at least some college (57 percent), held a job in the upper 80 percentile of occupational prestige (70 percent), and/or owned a home (58 percent). Two-thirds of filers met two or more criteria, and 27 percent met all three. Elizabeth Warren, “Financial Collapse and Class Status: Who Goes Bankrupt?”
Osgood Hall Law Review
41, no. 1 (2003).

13
Our projection of the number of bankruptcies by single mothers between 2003 and 2010 is based on a linear regression of the number of women filing alone for bankruptcy in 1981 and 1991 and the number of single mothers filing in 2001. Chapter 5 has a further discussion of single mothers who file for bankruptcy.

14
Lillian P. Rubin,
Worlds of Pain: Life in the Working-Class Family
(New York: Basic Books, 1976). “Men manage the money in three-quarters of the [middle-class] families” (p. 107). Quoted in Deborah K. Thorne, “Personal Bankruptcy Through the Eyes of the Stigmatized: Insight into Issues of Shame, Gender, and Marital Discord,” Ph.D. dissertation, Department of Sociology, Washington State University, Pullman, WA, May 2001.

15
Three-quarters of wives were exclusively responsible for assembling the necessary paperwork for credit counseling. Thorne, “Personal Bankruptcy Through the Eyes of the Stigmatized,” p. 190. Similarly, we found that among families in bankruptcy, wives were about twice as likely as husbands to be exclusively responsible for paying the bills and dealing with bill collectors. Thorne concludes that once families get into financial trouble, the burden of “debt management and bankruptcy is overwhelmingly shouldered by women; husbands sidestep and off-load the responsibilities” (p. 219).

16
W. Jean Yeung and Sandra L. Hofferth, “Family Adaptations to Income and Job Loss in the U.S.”
Journal of Family and Economic Issues
19, no. 3 (Fall 1998): 255-283.

17
Foreclosure data, see HUD, unpublished data, 1982-2002. Custody was awarded to the wife in 72 percent of cases, compared with just 10 percent of awards going to the husband. The remainder were joint awards or awards to someone other than one of the spouses. Advance Report of Final Divorce Statistics 1989-1990. Available at
http://www.cdc.gov/nchs/products/pubs/pubd/mvsr/supp/44-43/44-43.htm#43_9s
[5/2/2003].

1
John de Graaf, David Waan, and Thomas H. Naylor,
Affluenza: The All-Consuming Epidemic
(San Francisco: Barrett-Koehler, 2001), p. 13.

2
Graaf, Waan, and Naylor,
Affluenza,
p. 13.

3
Juliet B. Schor,
The Overspent American: Upscaling, Downshifting, and the New Consumer
(New York: Basic Books, 1998), p. 20.

4
Robert H. Frank,
Luxury Fever: Why Money Fails to Satisfy in an Era of Excess
(New York: Free Press, 1999), p. 45.

5
Schor,
The Overspent American,
p. 21.

6
Graaf, Waan, and Naylor,
Affluenza,
back cover.

7
Schor,
The Overspent American,
p. 11.

8
The Bureau of Labor Statistics maintains the Consumer Expenditure Survey (CES), a periodic set of interviews and diary entries that analyze the spending behavior
of over 20,000 consumer units. For much of our analysis we compare the results of the 1972-1973 CES with those of the 2000 CES. In some instances, we use prepublished tables from the 1980 or the 2000 survey in order to use the most comparable data available. We gratefully acknowledge the valuable assistance of Eric Keil, an economist at the Bureau of Labor Statistics, in locating and interpreting these data.

9
All comparisons of expenditures and income are adjusted for inflation using the Inflation Calculator, U.S. Department of Labor, Bureau of Labor Statistics. Available at
www.bls.gov/cpi/home.htm
[1/22/2003].

10
Daniel McGinn, “Maxed Out,”
Newsweek,
August 27, 2001, p. 37.

11
U.S. Department of Labor, Bureau of Labor Statistics (BLS),
Consumer Expenditure Survey: Interview Survey, 1972-1973
(1997), Table 5, Selected Family Characteristics, Annual Expenditures, and Sources of Income Classified by Family Income Before Taxes for Four Person Families;
Consumer Expenditures in 2000,
BLS Report 958 (April 2002), Table 4, Size of Consumer Unit: Average Annual Expenditures and Characteristics, Consumer Expenditure Survey 2000 (data are for four-person families). See also Mark Lino, “USDA’s Expenditures on Children by Families Project: Uses and Changes Over Time,”
Family Economics and Nutrition Review
13, no. 1 (2001): 81-86. According to USDA estimates, the total amount of money an average family will spend on clothing for a child between birth and age eighteen decreased 38 percent between 1960 and 2000 (Lino, p. 84).

12
Graaf, Waan, and Naylor,
Affluenza,
p. 28.

13
BLS,
Consumer Expenditure Survey: Interview Survey, 1972-1973,
Table 5;
Consumer Expenditures in 2000,
Table 4. See also Eva Jacobs and Stephanie Shipps, “How Family Spending Has Changed in the U.S.,”
Monthly Labor Review
113 (March 1990): 20-27.

14
Graaf, Waan, and Naylor,
Affluenza,
p. 28.

15
BLS,
Consumer Expenditure Survey: Interview Survey, 1972-1973,
Table 5;
Consumer Expenditure Survey, 2000
(prepublished data), Table 1400, Size of Consumer Unit: Average Annual Expenditures and Characteristics (data are for four-person families).

16
Walter L. Updegrave, “How Are We Doing? So Far, So Good. But Prosperity in the ’90s Means Meeting Seven Basic Goals,”
Money,
Fall 1990, p. 20.

17
BLS,
Consumer Expenditure Survey: Interview Survey, 1972-1973,
Table 5;
Consumer Expenditure Survey, 2000,
Table 1400.

18
BLS,
Consumer Expenditure Survey: Interview Survey, 1972-1973,
Table 5;
Consumer Expenditure Survey, 2000,
Table 1400. Electronics comparison includes expenditures on televisions, radios, musical instruments, and sound equipment. Computer calculation includes computer hardware and software.

19
For example, in 2000 the average family of four spent an extra $290 on telephone services. On the other hand, the average family spent nearly $200 less on floor coverings, $210 less on dry cleaning and laundry supplies, and $240 less on tobacco
products and smoking supplies. BLS,
Consumer Expenditure Survey: Interview Survey, 1972-1973,
Table 5;
Consumer Expenditure Survey, 2000,
Table 1400.