Before she was a politician trying to run to the left of Bernie Sanders while drinking a beer like a regular person, Dr. Elizabeth “Fauxcahauntas” Warren actually had some shockingly reasonable views on debt, family incomes, and solutions for financial issues facing middle- and lower-class families in America. Her book The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke was published in 2003, co-authored with her daughter, (and presumably not plagiarized like her cookbook recipes) and catapulted her onto the Doctor Phil show and into the public light as a financial guru.
Maybe if she’d stayed in that lane rather than going into politics, she would have been better off.
One of the things that I found interesting in the book is how it helps to explain a question that’s been nagging at the back of my mind for years: “How the heck did my parents accomplish what they did?” When I was growing up, we were a single-income household on a Deputy Sheriff’s salary. We certainly weren’t living the high life (I’d call us lower-middle class in retrospect), but somehow my parents managed to keep a roof over our heads, buy new vehicles a couple of times a decade, and take us on memorable family vacations. My mother was a wizard at stretching a dollar to feed four hungry boys, that’s true.
Fast forward to my days now as a sole income provider, and this single-income thing always feels like a perpetual struggle. Oh, we manage to keep a roof over our heads and food on the table, but family vacations? Ha! Have prices really inflated that much in twenty years? My wife is also a genius at keeping costs to a minimum, and I don’t think our other financial priorities are completely out of whack, so what has happened?
The short answer is that everything really has gotten more expensive, especially for single-income families just trying to keep our heads above water. With ever greater families going to dual incomes, the curve for everyone else has been totally shot. Unfortunately, this news is just as bad, or even worse, for the dual-income families.
For stable, two-parent households with a single wage earner, the non-income earning parent provides a huge family safety net. I’ve written about this before: a rough estimate of the monetary value that MLGB brings to our household by staying home is at least worth $100k per year. There’re meals made instead of eaten out, house and yardwork that’s accomplished rather than being hired out, and five children worth of private school tuition that we aren’t spending money on! Plus, if I were to suffer some kind of catastrophe rendering me unable to work, or severely reducing my earning capabilities, she could jump back into the workplace, at least temporarily, to make up most of the shortfall.
Two-income families generally have none of those options. Both incomes are usually already fully committed to the massive mortgage, multiple vehicles, and sundry other expenses. A job loss by one member sends the whole household into a tailspin. A breakup or divorce slams both households even worse.
One thing that I found particularly interesting was Warren’s proposal of a school voucher system to help combat the rising cost inflation of families moving to be near the “good” schools. Considering the adamant opposition to any kind of school choice initiative which comes from most left-leaning teacher’s unions, I wonder if Warren would be willing to still endorse such a proposal as she’s attempting to run for the presidential nomination in 2020. My wife and I have obviously side-stepped the entire home inflation process by choosing to homeschool, but that’s not really an option for most struggling single parents.
Another particularly interesting anecdote comes in her chapter on bankruptcy, specifically in her discussion of a banking bill that Congress repeatedly attempted to pass through congress. Ms. Warren pulls no punches about the duplicity and ruthlessly opportunistic behavior of Hillary Clinton and Joe Biden when it came to their support for financial bills that would have benefited big banks at the cost of middle-class Americans.
Given her current campaign’s support of free college, it’s also ironic that the book takes colleges to task for rising tuition costs. Perhaps Ms. Warren should go back and read some of her earlier material.
The book closes with a chapter on family guidance suggestions. Really, this is all stuff that’s covered better in other material by financial planners such as Dave Ramsey, but it would be a useful primer for someone who is totally unfamiliar with good financial planning.
Overall, the book is a good read for anyone looking for help answering questions about why people are struggling financially, while not playing the overconsumption blame game that some other planning books get into. There’s also a fantastic argument to be made about the value of one parent being a full-time homemaker in a two-parent household.
Given some of the campaign promises currently being made by Ms. Warren, the book also serves as an interesting time capsule back to when she had some sense, or at least a sensible co-author.