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Title: The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke by Elizabeth Warren, Amelia Warren Tyagi ISBN: 0-465-09082-6 Publisher: Basic Books Pub. Date: 02 September, 2003 Format: Hardcover Volumes: 1 List Price(USD): $26.00 |
Average Customer Rating: 3.6 (45 reviews)
Rating: 4
Summary: Belongs on the "must read" list
Comment: Warren and Tyagi offer a compelling analysis of the reasons behind middle-class financial crises. Simplified, they argue:
(1) Famillies want to live near quality school districts so their children can get good educations, go on to college and be successful;
(2) Houses and taxes in those districts cost a lot of money;
(3) To make ends meet, the wife takes a job that doesn't just contribute extras -- it puts food on the table; and therefore
(4) When the "principal breadwinner," usually the husband, loses his job or a crisis develops, the family has no safety net.
In earlier times, argue the authors, the wife didn't work and the family ran on a single-income budget. So when the wife took a job, her income was new weath, partly replacing a husband's lost income.
The authors also point out that families don't get in trouble by spending lavishly on luxuries. Tucking a baby into the back seat in a wicker basket cost a lot less than a car seat -- but who wants to save on safety?
As others have pointed out, the authors leave us readers feeling helpless and frustrated. Public programs that once offered a safety net, such as unemployment, have not been adjusted to today's realities. If you're over forty-five -- and definitely if you're over fifty - you may not get another job if you lose what you have. The authors suggest that even more families could and perhaps should declare bankruptcy.
However, I believe families need to re-examine the need for more and more education. I've attended very fine schools myself and I've seen former classmates competing with graduates of considerably less elegant universities. A recent Wall Street Journal article identified tycoons who never finished college. I've seen clients make incredible sacrifices to help their kids, while risking their own comfort and well-being. And I've seen others encourage their children to enter the military for the educational benefits. It's hard to say who's better off.
Choosing a good high school is important. However, parents can explore options before mortgaging their lives to the hilt. Some parents have begun to explore home schooling and to find lower-cost private schools, which might be cheaper than paying taxes on a house in the upper-end districts.
And I encourage everyone to start some kind of independent business, at least part-time, at least in a small way. I've met dozens of people who support families by selling Mary Kay and Tupperware. Others have lawn services. In the long run, your own business is your best job insurance -- and we need to push for laws that support small business creation.
I agree completely with the authors: Don't give up all luxuries! A two-dollar cup of coffee may keep you going while you're cutting back on buying your next car. And I admire the quality of their analysis. But we all need to stop feeling trapped and helpless and begin looking for ways to empower ourselves, even when the odds seem against us.
Rating: 4
Summary: Coyote Ugly
Comment: I found many interesting ideas in THE TWO-INCOME TRAP written by the mother-daughter team of Elizabeth Warren & Amelia Warren Tyagi. The elder Warren is the Leo Gottlieb Professor of Law at Harvard Law School. Her daughter worked as a consultant with McKinsey & Co.
They present an observation of the financial condition of middle-class families in the USA where both parents are employed outside of the home that many may find counterintuitive. The TWO-INCOME TRAP, as the term is coined by the authors, is the condition in which _Mothers now work two jobs, at home and at the office. And yet they have less cash on hand. Mom's paycheck has been pumped directly into the basic costs off keeping the children in the middle class_ . (p8) Now, these hard working, thrifty families find that they must forfeit decent public schools and preschools, health insurance, and college degrees [for their children] if Mom stays at home.
How can this be? Wasn't Mom's new job supposed to bring in more money? Provide a safety net in times of trouble? Put the family in a better neighbourhood? Send the children to safer schools and better institutions of higher learning? This may have been the well-intentioned objective, however, the authors provide bountiful statitistics that tell a different story. _After an average two-income family [in 2000] makes its house payments, car payments, insurance payments and child care payments, they have less money left over, even though they have a second, full-time earner in the workplace_ compared with the average middle-class, single-income family of 1973 (p50).
The Warrens are both professionals in presumably two-income families who add their own experiences to the data that identify the sources of this surprising situation. First, they argue strongly against the _Over-Consumption Myth_. Then, they enumerate more likely culprits, including, deteriorating public schools, a limited supply of homes in _good_ neighbourhoods that encourages a bidding war, and universities that have very little incentive to control their costs. Surprisingly, one of the culprits identified by the Warrens, even though they are both recipients of its benefits, is the Feminist Movement that encouraged equal employment opportunities for women.
Despite the statement that _this book is dedicated to all parents_, there is precious little offered that a parent could use to improve their current situation. The TWO-INCOME TRAP has been sprung and only government policies can release it according to the Warrens. To each problem, a long-range policy change is recommended: Deteriorating Public School systems are solved through a voucher program that allows parents to choose from all the public schools in their area irregardless of postal code. Shortages of pre-school programs are solved by publicly funded, universal preschool, if and only if, the authors demand, the package includes improvements to public education from kindergarten that continue through high school. Otherwise, _day-care subsidies offer no help for families with a stay-at-home mother..because they would create yet another comparative disadvantage for single-income families trrying to compete in the marketplace_. Finally, the rising cost of a college education can be solved by simply mandating that all state colleges will not be allowed to raise tuitions.
There are many who quite rightly bemoan the short-sighted interests of business and politics in our society. To their credit, the Warrens are presenting a long-term view and presenting far-reaching policy changes. The authors are suggesting that policy makers accept this opportunity to look beyond the next opinion poll.
Regretably, the solutions offered are not supported with the same level of research as the problems to which they are addressed. The merits of the solutions appear to be enough for the Warrens to insist that federal and state governments should risk the status quo to implement. Naively, the role of campaign financiers is completely ignored. Absent are examples of communities that have succeeded with school vouchers, for example. With models of successful programs, politicians and business leaders have a plan to follow rather than simply empty promises to do the right thing.
On the positive side, reading about the policies proposed in this book did influence me to contact my elected officials. Who knows? It might make a difference.
PEACE
Rating: 5
Summary: Accessable,well researched, a must read
Comment: Excellent book. Unbiased and not your party propaganda, but a frank examination of the safety net average Americans need and don't have.
A reality check indeed!
Send a letter to your congressperson and senator, because this little book should be in their hands.
Turn off the TV and read this important work. Then get active.
I would also add, that this book dispels myths and wives tales around those having troubles.
The highly Moral Millionaires who sit in the U.S. Senate are deeply out of touch with the working person's world, yet are paid visits by PAC's from the Credit, Banking, Insurance, and Medical industries with wads of cash to ensure that their interests are met.
Time for people to stick together, rather than fight against each other.
"There for the grace of God" is a byword for the middle class and these two stellar ladies bring this to the fore.
Great job!
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Title: The Fragile Middle Class: Americans in Debt by Teresa A. Sullivan, Elizabeth Warren, Jay Lawrence Westbrook ISBN: 0300091710 Publisher: Yale Univ Pr Pub. Date: 01 September, 2001 List Price(USD): $25.00 |
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Title: Credit Card Nation: The Consequences of America's Addiction to Credit by Robert D. Manning ISBN: 0465043674 Publisher: Basic Books Pub. Date: 24 December, 2001 List Price(USD): $18.00 |
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Title: The Coming Crash in the Housing Market : 10 Things You Can Do Now to Protect Your Most Valuable Investment by John R. Talbott ISBN: 007142220X Publisher: McGraw-Hill Trade Pub. Date: 28 April, 2003 List Price(USD): $14.95 |
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Title: How to Get What You Want in Life With the Money You Already Have by Carol Keeffe ISBN: 0316485187 Publisher: Little Brown & Company Pub. Date: 19 January, 1995 List Price(USD): $13.95 |
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Title: Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else by David Cay Johnston ISBN: 1591840198 Publisher: Portfolio Pub. Date: 25 December, 2003 List Price(USD): $25.95 |
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