When both parents are in employment...?

Question

....does this make the household more financially vulnerable? That is the view of Elizabeth Warren, a professor at Harvard Law School who says that traditionally if the breadwinner got ill or made unemployed the housewife could save the day by getting a job of some kind. Nowadays two-income households are generally earning at full stretch, so if one parent can't earn (or if a large financial burden occurs e.g. serious illness of child) it puts the household in serious financial trouble.

http://www.marketoracle.co.uk/Article5810.html

http://www.youtube.com/watch?v=akVL7QY0S8A

Do you agree with this point of view i.e. is the family less financially secure now that both parents are employed?

Answer 1

When both parents are working full-time, there is little to worry about. When one parent stops working full-time for whatever reason, as my dad did (his idiot of a boss fired him just for the h**l of it), we had to cut back a little, but we weren't in "serious financial trouble." He still brought in some income from teaching, but it wasn't nearly as much as it was if he was still in HR.

I think the more vulnerable position would be a non-working spouse supporting the family in an entry-level job, than a permanently working spouse supporting the family in a secure job.

Answer 2

The average was wage driven down by the expanding work force during a period of high inflation and the high divorce rate lead to an increased demand for housing. Alan Greenspan was nurturing this bubble by keeping interest rates low which led to increased speculation.

As well as that during this period we made the transition from cash to credit, we tend to rent money and pay the rent with our earnings plus the fees and interest. During the last credit crisis there was a strong housing market to prop up the economy. No such "luck" this time.

The middle class as usual are getting shafted here, they are losing their wealth, the article stated that mortgage payments increased by 73% since the 1970s, that equity is now gone.

The article clearly shows that the two income family is vunerable and stretched in a number of ways and that the single wage family of the 1970 was more stable. Who will go out and earn the extra now that times are hard, when itI takes both components working a full week to provied what one could have in the 1970s?.



I envisage the divorce rate soring because of fiancial problems which in turn will lead to a whole range of social problems. We are selfish spoiled and not equpied for another "great depression".

"Buy when there's blood on the streets"

All very well, but the blood tends to be ours.

We the public have steered ourselves into this with our greed, with our quick divorce, buy another house culture.

How were we to know? The banks just put the money in front of us and we believed them when they said "that's OK, you qualify", and if we didn't, well there was always a sub prime mortage/low doc loan.  

The jokes on us, really, and "they" who have been standing on the sidelines for some time now, watching us borrow and borrow thinking the good times would never end are snapping up the bargins and laughing, all the way back to the bank. Just like they were the last time and just like they will be the next.

:-D

Answer 3

I can understand that assertion and it is probably true for many families. However, if faced with an emergency, I believe a lot of these families would liquidate assets and change their spending behavior to accommodate.  "Financial security" is a relative term, and with consumerism as the driving force behind dual income families, we are now talking about how it affects their quality of life, not their survival.  

Expenses are higher because of choices these families have made.  Even the descriptors "decent housing in a safe neighborhood"  are subjective terms.    

I recognize the shrinking middle class, but again, how we define middle class has been adjusted over the years, so these days if you do without a cell phone and buy second hand clothing you are considered "poor."

Answer 4

This is a kind of warped way of looking at it, but I suppose families with more unemployed members can be viewed in a certain way as more financially 'secure,' in that the unemployed ones can try to get jobs if the employed ones are unable to work (generally, this is not true in times of economic depression, as it will be just as difficult if not more for the unemployed family members to get jobs as the one who is just recently in need of work).

I suppose, in the same sense, that a family with no employed members at all, living off of welfare programs is the most financially secure of all, as if that family for any reason falls behind its means, ANY of its members are free to seek employment.

Answer 5

It just changes the family's lifestyle a little bit. People in modern nations tend to live too extravagantly anyway.  Living off one income for a short period means living within ones means.  Nothing more. Nothing less. I don't think two incomes encourages people to live superfluously.  Easy credit is what does it.    

Answer 6

I don't know about more vulnerable. But they do have greater expenses. They pay for childcare, since nobody is home with the kids. They have to have 2 vehicles or pay for public transportation. They have to pay more in taxes since there are two incomes to tax instead of just one. I sometimes wonder how financially feasible it is for both parents to work. In some cases, I wonder if they are really making enough money for it to be worthwhile.  

Answer 7

There is some truth to that since most dual income families make financial commiments (aka borrowing) based on both incomes without actually saving any money. If a family is used to living off of one paycheck, the money can be replaced by either parent. This also allows the normal working parent the opportunity to find the best job instead of settling for a lesser job.

Answer 8

That's assuming that if one gets ill the other HAS THE SKILLS to

be able to find a job that will cover the expenses.  If one spouse is under-educated it's unlikely they will be able to do that.  If they are educated but  has taken a long lay off that will make it difficult to find a job since the demands of the field they were in have changed. There's more security for two trained and active individuals then there is one.  

In the case of the seriously ill child they have in-home nursing assistants for situations like that.  In some cases an extended family member may be able to help out.  I think the key thing is adjusting one's standard of living and budget in either situation.

This is a really good que but situations like this are tenable for people with good survival tactics.

Answer 9

If the family has two incomes, and with those two are still just making ends meet, then they are more vulnerable in that if something happens to one of the bread-winners, the other is already contributing financially to capacity, and therefore can't pull up any of the slack.

It makes sense in a way, but I certainly wouldn't interpret it as meaning "a two family income is a vulnerable state." I believe a family should be able to survive on one income, and put the second into savings. THEORETCALLY. I'm well aware that rarely works out...  

Answer 10

She's not saying that they are less secure because of the dual employment.  She's saying that you would think that the second income is being used for luxury goods but that instead it's being used for essentials.  That, even after adjusting for inflation, expenses for essentials are greater than they were in the past.

In essence that the second income is not a luxury but a necessity and that perhaps it's giving people a false sense of security and not being used as wisely as it can be.