The Two-Income Trap - Elizabeth Warren [18]
It is also the middle-class family whose finances have been most profoundly affected by women’s entry into the workforce. Poorer, less educated women have seen small gains in real wages over the past generation. Wealthy women have enjoyed considerable increases, but those gains were complemented by similar increases in their husbands’ rapidly rising incomes.60 For the middle class, however, women’s growing paychecks have made all the difference, compensating for the painful fact that their husbands’ earnings have stagnated over the past generation.61
For millions of middle-class families hoping to hold on to a more traditional mother-at-home lifestyle, the bidding wars crushed those dreams. A group of solidly middle-class Americans—our nation’s police officers—illustrate the point. A recent study showed that the average police officer could not afford a median priced home in two-thirds of the nation’s metropolitan areas on the officer’s income alone.62 The same is true for elementary school teachers. Nor is this phenomenon limited to high-cost cities such as New York and San Francisco. Without a working spouse, the family of a police officer or teacher is forced to rent an apartment or buy in a marginal neighborhood even in more modestly priced cities such as Nashville, Kansas City, and Charlotte. These families have found that in order to hold on to all the benefits of a stay-at-home mom (which we will discuss in chapter 3), they will be shoved to the bottom rungs of the middle class.
What about those families with middle-class aspirations who earned a little less than average or those who lived in a particularly expensive city? Even with both parents in the workforce, they have fallen behind. Rather than drop out of the bidding war and resign themselves to sending their kids to weaker schools, many middle-class couples have seized on another way to fund their dream home: take on a bigger mortgage. In 1980, the mortgage lending industry was effectively deregulated (see chapter 6). As a result, average families could find plenty of banks willing to issue them larger mortgages relative to their incomes. As the bidding war heated up, families took on larger and larger mortgages just to keep up, committing themselves to debt loads that were unimaginable just a generation earlier.
With extra income from Mom’s paycheck and extra mortgage money from the bank, the usual supply and demand in the market for homes in desirable areas exploded into an all-out bidding war. As millions of families sent a second earner into the workforce, one might expect that they would spend less on housing as a proportion of total income. Instead, just the opposite occurred. A growing number of middle-class families now spend more on housing relative to family income.63 As demand for the limited stock of desirable family housing continued to grow, prices did not reach the natural limit that would have been imposed by the purchasing power of the single-income family confined to a conventional 80 percent mortgage. Instead, monthly mortgage expenses took a leap of 69 percent at a time that other family expenditures—food, clothing, home furnishings, and the like—remained steady or fell.64
Parents were caught. It may have been their collective demand for housing in family neighborhoods that drove prices up, but each individual family that wanted one of those houses had no choice but to join in the bidding war. If one family refused to pay, some other family would snatch up the property. No single family could overcome the effects of millions of other families wanting what it wanted.
Each year, a growing number of stay-at-home mothers made the move into the workforce, hoping to put their families into solidly middle-class neighborhoods. But the rules quietly changed. Today’s mothers are no longer working to get ahead; now they must work just to keep