A Fighting Chance

remained stagnant for an entire generation: We note that the typical, fully employed male earned $38,700 in 1973 and $39,000 in 2000 (adjusted for inflation), less than 1 percent real increase in nearly thirty years. See The Two-Income Trap, 50. More recent evidence indicates that median male incomes declined slightly between 2000 and 2012 when adjusted for inflation. Women have fared somewhat better, as the income gap between men and women declined over the past generation and real median incomes climbed for fully employed women. However, women’s economic progress seems to be slowing, as median earners have only gained 1 percent in real income over the past decade, and fully employed women continue to earn 21 percent less than their male counterparts. Calculated from US Census, Table P-36: “Full-Time, Year-Round All Workers by Median Income and Sex: 1955 to 2012.”


Similarly, the Center for Responsible Lending reports: “When controlling for inflation … the typical household really had less annual income at the end of the decade than it did at the beginning [2000–2010].… And though workers made less as the decade progressed, their productivity increased by 20% (Jank & Owens, 2012). Workers appear to be benefitting less from productivity gains than in prior periods.” M. William Sermons, “The State of Lending in America and Its Impact on US Households,” Center for Responsible Lending, December 2012, 9.

live without, like health care and education: In The Two-Income Trap we compare health care costs for a typical insured family of four and found that the average family was paying $1,650 more for insurance in 2000 than in the early 1970s, adjusted for inflation (51).

The cost of college at a public university nearly doubled during this period, adjusted for inflation (The Two-Income Trap, 42). Note that college costs have continued to climb even faster over the past decade. In addition, in The Two-Income Trap we discuss the growing importance—and the growing costs—of preschool education (37–38).

The Center for Responsible Lending reports that over the past decade, the trends we noted in The Two-Income Trap continued to worsen, as costs for many basic expenses continued to climb relative to incomes for middle-class families: “The declining real incomes of the last decade would not have been so hard on families if the cost of maintaining a household had also remained unchanged. While families would not have had resources to improve their standard of living, they would have at least been able to consume at the same level year after year. Instead, families were faced with increases in basic non-discretionary expenses like food, housing, transportation, medical care, and utilities with no growth—or sometimes even decreases—in income to pay for these items.” “The State of Lending in America and Its Impact on US Households,” 10.

loans appeared, and families grabbed hold: See note, “prepayment penalties,” for more on the emergence of dangerous and predatory mortgage products.

get a good education or to live in a nice neighborhood: In The Two-Income Trap we discuss the role of public schools in driving housing choices for families with children (28–36). We also note that the rise in home prices during the ’80s and ’90s was disproportionately born by families with children. The Two-Income Trap, 32.

huge, new homes remained the domain of the wealthy: In The Two-Income Trap, we found that the size of the average middle-class family home had increased only modestly: The median owner-occupied home grew from 5.7 rooms in 1975 to 6.1 rooms in the late 1990s—an increase of less than half a room in more than twenty years. The data show that the room was typically a second bathroom or a third bathroom. We also note that the proportion of families living in older homes increased by nearly 50 percent during the same period (21–22).

I had made a generation earlier: they took a job: In the mid-’70s a married mother was more than twice as likely to stay home with her children as to work full-time; by 2000, those figures had reversed: Today a married mother is nearly twice as likely to work full-time as to stay home. The Two-Income Trap, 30.

one-income family of a generation earlier: In The Two-Income Trap, we show two budgets for middle-class families, one median single-breadwinner family from 1970, and a second median two-earner family in 2000. We calculate the average earnings, and the cost of fixed costs such as housing, health insurance, car, taxes, and child care. We found that the modern two-income family has less money left over after paying their basic bills than the one-income family of a generation ago, when adjusted for inflation. We also note that the modern one-income family that tried to live a typical middle-class standard of living had a significant gap compared with a generation earlier (50–53 and 207–8). We note that because the modern two-income family owns a more expensive home than their one-income counterpart of a generation earlier, and because they have added a second earner, their tax rate has increased (206–8).