Spiraling Debt, Mortgages and the Two-Income Family

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Warren believes that the two-income family has contributed to the bankruptcy rate. “For middle-class families, the most important part of the safety net for generations has been the stay-at-home mother,” Warren and her daughter, Amelia Warren Tyagi, wrote in “The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke” (2003), a book aimed at a wider audience than Warren’s earlier, academic work. (“Mom, you are boring,” Tyagi told Warren. “Collaborating with my daughter is not for sissies,” Warren says.) It used to be that when a middle-class family was faced with a financial crisis the woman in the house could get a job, to tide things over, which is what happened when Warren’s father had a heart attack and her mother got a job at Sears. This cushion doesn’t exist in the two-income family, which, in its short history—it has its origins, as a middle-class phenomenon, in the nineteen-seventies—has also taken on a great deal more housing debt. The 1974 Equal Credit Opportunity Act required lenders to count a wife’s income when evaluating borrowers; the deregulation of the mortgage lending industry began in 1980. With two wage earners and low down payments, middle-class families took on bigger mortgages and contributed to an increase in the cost of housing, especially when families with children paid a premium for property in school districts with high test scores. Financial crisis, for a two-income family, usually means having to live, quite suddenly, on one income. In these straits, families with children tend to totter on the edge of ruin. “Having a child is now the single best predictor that a woman will end up in financial collapse,” Warren and Tyagi reported. Between 1981 and 2001, the number of women filing for bankruptcy rose more than six hundred percent.

-Jill Lepore, in The New Yorker, on the books of Elizabeth Warren. Read more on Warren in the Longreads Archive.

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