The Two-Income Trap - Elizabeth Warren [46]
Adding It Up
The list of ills—job loss, family breakup, and medical problems—is brutal, but it may also appear a bit eclectic and disjointed. After all, the divorce rate has nothing much to do with health insurance coverage; a corporate restructuring has no effect on the number of elderly folks who need help from their families.
When a family disaster makes the evening news, only one problem is in the spotlight at any given time. The New York Times carries a column about the terrible problems of the uninsured, or 60 Minutes runs a story on divorce trends. Academics and other experts tend to reinforce this approach: Most of them have one highly focused area of expertise, and they usually write articles and hold forth on the talk shows about one specific category of calamity.
But families don’t experience risks in neatly segmented boxes. Whether they give it much thought or not, they all live under the shadow of multiple dangers. A woman could lose her job, she could be struck with a devastating illness, her marriage could turn sour, and her parents could grow too feeble to care for themselves—and it could all happen at the same time. There is no law requiring that these disasters be polite enough to wait until the previous one is resolved and the family has recovered before a new one wreaks additional havoc.
Risk Change since 1970s
Involuntary job loss ⇑ 150%
Wage-earner misses work due to illness or disability ⇑ 100%
Divorce 1 ⇑ 40%
Lack health insurance ⇑ 49%
Wage-earner misses work to care for sick child or elderly family member ⇑ 1,000+%
1 Because of the limitations of the data, this figure represents divorce facing a modern one-earner and a modern two-earner historical comparison. the gap between the risk of couple, rather than a
FIGURE 4.3 How risks have grown: a comparison of one-income families in the 1970s and two-income families in the 2000s
Moreover, one disaster often triggers another. A layoff may leave a family without health insurance, increasing the exposure to an exorbitant medical bill. Similarly, a job loss may actually lead to divorce; sociologists have shown that as finances deteriorate, couples tend to fight more, increasing the chances that they will split up.56 Among families in bankruptcy, nearly half report two of three problems—job loss, medical problems, or a family breakup—and about one in thirteen were hit by all three.57 We have no statistical proof of the old wives’ tale that bad things happen in threes, but there is ample evidence that disasters really do follow disasters.
There But for the Grace of God
If there is so little evidence that morals are declining, and so much evidence that slam-the-family risks are increasing, why does the Myth of the Immoral Debtor persist? Why don’t we collectively agree once and for all that in most cases financial misfortune is simply a matter of bad luck, and that declining morals have nothing to do with the long lines at the bankruptcy courts? Perhaps the myth survives because it provides much-needed comfort in a dangerous world.
There is nothing glamorous or mysterious about the events that conspire to drive families into financial ruin. They are remarkably common, ordinary—and painful. For many people, reading about this litany of disasters will evoke memories that are disturbing, sometimes bitter, and sometimes very personal: That embarrassing morning when a friend was escorted out of the office during the latest round of company layoffs. The terrifying moment when the call came from the hospital emergency room. The sad day that Michelle told her husband that she wanted him to move out. For others, the list vibrates in harmony