The Two-Income Trap - Elizabeth Warren [54]
Motherhood is now the single best indicator that an unmarried middle-class woman will end up bankrupt. In the world of financial devastation, there are two groups of people: single mothers and others.
And the lines at the bankruptcy courts are not the only sign of distress. Federal Reserve data revealed that one in eleven single parents are more than 60 days past due on their bills (compared with one in thirty married couples without children).15 Single mothers are also more likely to lose their homes. When we analyzed unpublished data from the Department of Housing and Urban Development, we found that among single parents who had purchased a home in the 1980s with a mortgage backed by the Federal Housing Administration (FHA), more than one in ten had lost their home by 2002 because of foreclosure. 16
The difficulties facing single mothers are not the inevitable consequence of bringing up children without a father around. The bankruptcy courts weren’t always flooded with single mothers; quite the opposite. In the early 1980s, about 69,000 unmarried women filed for bankruptcy in a single year.17 Unfortunately, we don’t know how many of them had children. (Our current research project is the first to gather this information on a national scale.) But suppose that 45 percent of these women had children—the same proportion as today. (In all likelihood, this assumption overstates the number of single mothers in bankruptcy in the early 1980s because there were relatively fewer women raising children on their own back then than there are today.18) Even with that assumption, the data would suggest that in 1981 there were (at most) 31,000 single mothers at the end of their financial ropes. That would have been about one in every 200 single mothers filing for bankruptcy in a single year, implying that single mothers may have been somewhat more likely to go bankrupt than married couples or single men—but only somewhat (see Figure 5.1).19 This means that, for the most part, single mothers a generation ago were swimming in more or less the same financial pool as everyone else, and they had about the same chances of staying afloat.
But the economics shifted powerfully in just twenty years. Today, more than 200,000 single mothers go bankrupt each year. That translates into one in every 38 single mothers filing for bankruptcy in a single year.20 At a time when women are advancing on multiple fronts—economic, political, educational, legal—the number of single mothers going broke has increased by more than 600 percent, and the gap between single mothers and everyone else continues to widen. If current trends persist, more than one of every six single mothers will go bankrupt by the end of the decade.21
Perhaps these women are the unlucky ones the women’s revolution left behind? Could they be the teen mothers and welfare dependents the media usually associates with poor-single-mothers? No. The women represented in this graph are predominantly middle class—exactly the women who were supposed to have benefited from all those advances made by the women’s movement. Like Gayle Pritchard, these women took advantage of improved educational opportunities. In fact, single mothers who have been to college are actually more likely to end up bankrupt than their less educated sisters—nearly 60 percent more likely.22
Source: 2001 Consumer Bankruptcy Project; Sullivan, Warren, and Westbrook, 1989 and 2000.
FIGURE 5.1 Single mothers and others: bankruptcy filing rates
They are also more likely to have a good job. While few of the single mothers who crowd the bankruptcy courts are doctors or lawyers, most of these women have decent jobs. They are scattered throughout the employment spectrum, but there are more teachers, managers, and administrative assistants in the bankruptcy courts, and fewer