The Middle Class Two Income Trap

[cjppjc]

Re: The Middle Class Two Income Trap

There is so much more to spend income on now than in the 50's

Did the average American in 1950 pay for

Multiple cars?
Multiple cell phones?
Television programming?
Internet?
Dozens of consumer electronics?
Water for God sake?

The money goes.

[cjppjc]

Re: The Middle Class Two Income Trap

.

Most recent example on ABC News last night . . . insurance companies pulling in record profits.

Administration Says Insurance Companies Pull in Profits While Raising Premiums. Health and Human Services Secretary Kathleen Sebelius railed against the insurance companies … HHS Report Takes Aim At Rising Health Insurance Premiums. Wall Street Journal -- Health insurance system broken, new report says. CNN International Sebelius: Reform needed to fight insurance hikes

Not exactly. The Profits Sebelius railed at were mostly the results of a one time sale of an asset.

[MulaMan]

Re: The Middle Class Two Income Trap

Further, if you account for hours worked I'm sure you will see the 2 income parents are expected to work many more hours each month then the 1 income husband in the 50s did and without overtime, unless you are a public union employee.

The message I feel needs to get out is that "de-regulation" or less government regulation DOES NOT equal a more free market.

The less regulation the easier it is for the powerfull to steal a larger percentage of wealth.

A land of NO laws is NOT a free, democratic society.

A free market requires MUCH REGULATION by definition.

Many Americans have been brainwashed into thinking ANY laws or ANY government regulation is somehow socialist.

It is exactly strong, fair regulation and well designed laws that created the American middle class.

Fox News republicans need to stop watching Fox News and quit the republican party unless you are Ron Paul or nothing because the republicans of today are un-American.

Democrats need to support the elimination of The Fed or at least strong banking regulations and elimination of government waste such as defence/military. In general, the Democrats are WAY AHEAD of the republicans because at least thier flaws are mostly directed at helping the middle class altough they still have corrupt coporate puppets such a LIEberman, Kerry, and Clinton.

Their goal is to keep de-regulating, keep eliminating laws that created a fair playing field to enable the middle class and to keep calling anyone that stops them - socialist, communist, anti-capitalist, ... history will show this is a massive lie and how American's were brainwashed.

[flintlock]

Re: The Middle Class Two Income Trap

Yes, the list of "gotta haves" has gotten bigger.

[BK]

Re: The Middle Class Two Income Trap - Life is what happens to you...

karim0028,

What happens when life doesn't go as planned.

You get married - both you and your wife have Careers.

Next thing you know your Industry craters - High Tech 2001 and no one is hiring. Your wife and you are both laid off. The High Tech Depression of 2001 has hit and hit hard.

Your mother-in-law has a major stroke and it seems prudent to consider moving to closer to your Mother-in-law. Your wife gets a job offer in the state where your Mother-in-law lives, the job pays well and your Industry is still in the toilet. You have friends from your Industry that are taking jobs as cab drivers while they file for Debt restructuring - and you have no idea how long you'll wait until the job Market improves. You have lots of saving and have the option of moving. Your wife's new job is related to Health-care and feel its a better for the families long term financial prospects than staying in your home state.

At the same time your Industry cratered your wife gave birth to your child. You are living in the new state and if you land any Corporate job your child ends up in Day Care for 40-45 hours per week. Meanwhile your wife's job requires some travel and 40-45 hour per week work schedule. Your child is very bright and you are bright enough to know there are very few child care workers who will truly care for your child.

Find the Corporate job that will require your two-five year old to be in a DayCare center for 40-45 hours/ week 49 weeks of the year?

What do you do????



What did John Lennon say "Life is what happens to you while you are busy making plans".

[raja]

Re: The Middle Class Two Income Trap

Not exactly. The Profits Sebelius railed at were mostly the results of a one time sale of an asset.

Apparently, only $1.3 billion of the $12 billion total profits were from sale of an asset. So, to say "mostly the results of a one-time sale of an asset" may be incorrect . . . .

"The five largest insurers in America have declared more than $12 billion worth of profits in 2009," Sebelius said at a news conference.
http://abcnews.go.com/WN/report-show...ory?id=9811695

"Sebelius can't understand how a company that made $2.7 billion in the last quarter of 2009 can raise rates. Now, Ms. Sebelius . . . knows full well that half of that profit was from the sale of an asset . . . ."
http://blog.nj.com/njv_john_farmer/2...stalls_in.html

[Kadriana]

Re: The Middle Class Two Income Trap

The majority of couples could live on one income if they wanted to. I think most of the problem is people spend money on more things than their grandparents did. People are buying 4 bedroom houses in their early 20's. People don't drive used cars anymore and instead feel the need to lease a brand new SUV. It costs me less than 50 cents to make a loaf of bread but very few people my age make their food from scratch even if they do stay home. How many middle class women are carrying $300 designer purses, middle class men are driving ATV's and teenagers are playing on $500 game systems?

[jimmygu3]

Re: The Middle Class Two Income Trap

The majority of couples could live on one income if they wanted to. I think most of the problem is people spend money on more things than their grandparents did. People are buying 4 bedroom houses in their early 20's. People don't drive used cars anymore and instead feel the need to lease a brand new SUV. It costs me less than 50 cents to make a loaf of bread but very few people my age make their food from scratch even if they do stay home. How many middle class women are carrying $300 designer purses, middle class men are driving ATV's and teenagers are playing on $500 game systems?

You're right that people are not as frugal as previous generations. I would argue, however, that many of the highly visible luxury items that middle class Americans love so much- TVs, electronics, designer clothes, prepared foods- are actually a lot cheaper in real terms than they were in previous generations. It's the less noticeable, non-imported items like health care, childcare, housing, education and taxes that have risen to a point that exceeds a single income's ability to pay.

I'll give an example of a typical American family with 2 kids and one income of $30k (US average for single earner). Of their monthly $2500 paycheck, they deduct $400 in payroll tax withholding, $600 rent, $400 for a single used car (with insurance, gas, repairs, etc.), $400 for groceries, $200 for utilities, $100 for clothing, $100 for a student loan payment, and the remaining $300 ($10/day) for all other expenses. Then, they just pray they don't get sick because health insurance is $1400/mo, or $500/mo if they are fortunate enough to have employer-subsidized coverage. But either way, it isn't an option, as this very frugal family is living as lean as it gets and there's no money for health care.

So then the spouse gets a job with benefits, making another $2500/mo, and paying $500/mo for employer-based health insurance. In addition to the $400 withholding, they now have the added monthly expense of $700 child care for the toddler, $300 after-school care for the older one, another $400 car, $200 for a few more meals out after long work days, another $100 for appropriate work clothing, and $50 for another cell phone.

That leaves a whopping $350/mo 'dual-income windfall' to raise their standard of living. They might choose to move into a 3-bedroom unit for an additional $200/mo, and they just might decide to take the remaining $1800/year (3% of gross income) and buy a nice TV, a gaming system and some special clothing items. But those items aren't the reason they're broke, and they're certainly not the reason they need two incomes.

-Jimmy

[jpatter666]

Re: The Middle Class Two Income Trap

You're right that people are not as frugal as previous generations. I would argue, however, that many of the highly visible luxury items that middle class Americans love so much- TVs, electronics, designer clothes, prepared foods- are actually a lot cheaper in real terms than they were in previous generations. It's the less noticeable, non-imported items like health care, childcare, housing, education and taxes that have risen to a point that exceeds a single income's ability to pay.

-Jimmy

This, of course, fits in with the oft-stated opinion here:

Deflation in everything you want -- inflation in everything you need.

[Starving Steve]

Re: The Middle Class Two Income Trap

The majority of couples could live on one income if they wanted to. I think most of the problem is people spend money on more things than their grandparents did. People are buying 4 bedroom houses in their early 20's. People don't drive used cars anymore and instead feel the need to lease a brand new SUV. It costs me less than 50 cents to make a loaf of bread but very few people my age make their food from scratch even if they do stay home. How many middle class women are carrying $300 designer purses, middle class men are driving ATV's and teenagers are playing on $500 game systems?

1.) People are buying larger homes because their kids might have to live with them forever, especially the way the central banks are destroying the world economy and confidence in the world's monetary system.

2.) People in their 20's are buying homes because banks pay ZERO interest rates and markets do NOT compensate investors to-day for risk. Real estate has proven to be a better store of value over a lifetime than paper money.

3.) People don't drive used cars anymore because new cars are cheaper and more reliable than used cars. No-one can afford major car repairs to-day.

4.) People don't bake bread at home because of the cost of energy. It's cheaper to buy bread baked at the supermarket.

5.) Men are not going to get married anymore the way divorce laws are now, and men are not going to function as ATM's for teenage brats much longer either.

The Great Recession has changed everything.

[jpatter666]

Re: The Middle Class Two Income Trap

1.) People are buying larger homes because their kids might have to live with them forever, especially the way the central banks are destroying the world economy and confidence in the world's monetary system.

2.) People in their 20's are buying homes because banks pay ZERO interest rates and markets do NOT compensate investors to-day for risk. Real estate has proven to be a better store of value over a lifetime than paper money.

3.) People don't drive used cars anymore because new cars are cheaper and more reliable than used cars. No-one can afford major car repairs to-day.

4.) People don't bake bread at home because of the cost of energy. It's cheaper to buy bread baked at the supermarket.

5.) Men are not going to get married anymore the way divorce laws are now, and men are not going to function as ATM's for teenage brats much longer either.

The Great Recession has changed everything.

1 ) Where'd you hear *that* one? References please.
2 ) Depends. When did you buy that home? Anyone buying over the past few years I think would have a bone to pick. Probably over the next few years as well. Certainly that hasn't been the case in Japan.
3 ) *Cough* Toyoda *Cough*. Not even going to get into "new cars are cheaper than used cars"
4 ) Depends. :p You even *tasted* that bread? Not sure it deserves the name.
5 ) Ummmm.....something personal going on here?

[Starving Steve]

Re: The Middle Class Two Income Trap

1 ) Where'd you hear *that* one? References please.
2 ) Depends. When did you buy that home? Anyone buying over the past few years I think would have a bone to pick. Probably over the next few years as well. Certainly that hasn't been the case in Japan.
3 ) *Cough* Toyoda *Cough*. Not even going to get into "new cars are cheaper than used cars"
4 ) Depends. :p You even *tasted* that bread? Not sure it deserves the name.
5 ) Ummmm.....something personal going on here?

Some evidence which points to an increase in the average number of people per household in future:

1.) The rate of decrease in average household size is decreasing to almost nothing. This points to a minimum household size now being reached or to an outright reversal in the household size from one of decrease to one of increase. The latest figure for mean household size in the U.S. as of the 2000 census was 2.59 people per household.

2.) The percent of households that are non-family households is increasing. Most households are still family households, but that percentage is decreasing sharply. About one-third of all households are non-family in America.

3.) The cost of maintaining a household in America is forcing households to sub-let space. Such sub-leasing of space has taken the form of strata sub-division development. In such strata development, apartments (often un-approved apartments and un-noticed apartments) are constructed in out-buildings such as detached garages, detached barns, and other detached buildings such as trailers parked on the property.

[jpatter666]

Re: The Middle Class Two Income Trap

Some evidence which points to an increase in the average number of people per household in future:

1.) The rate of decrease in average household size is decreasing to almost nothing. This points to a minimum household size now being reached or to an outright reversal in the household size from one of decrease to one of increase. The latest figure for mean household size in the U.S. as of the 2000 census was 2.59 people per household.

2.) The percent of households that are non-family households is increasing. Most households are still family households, but that percentage is decreasing sharply. About one-third of all households are non-family in America.

3.) The cost of maintaining a household in America is forcing households to sub-let space. Such sub-leasing of space has taken the form of strata sub-division development. In such strata development, apartments (often un-approved apartments and un-noticed apartments) are constructed in out-buildings such as detached garages, detached barns, and other detached buildings such as trailers parked on the property.

OK, I'm not arguing with more people moving in together. That's definite and a logical result of economic events.

I'm more interested in the claim that people are *deliberately* buying larger places in preparation for this. Are using the conversion of out-buildings as your basis for this?

If anything, I think we'd see the reverse. Going away from the McMansions to smaller, easier on the utilities houses but with more people. You may get the occasional McMansion turned into a modern group-house....

[BuckarooBanzai]

Re: The Middle Class Two Income Trap

I agree it's all about increasing wealth disparity. It's also related to an unwillingness to reduce our standard of living as real wages decline. Most families choose to have two in the workforce rather than living on less money.

The sexist comments being made by unlucky and other posters are total BS. Blaming this on women's lib is confusing correlation with causation. If women had remained oppressed for the last 40 years, we still would have had a decline in real wages, only it would have been accompanied by a significant reduction in overall standards of living due to one-income households. Are there really people here who believe my daughter should not be allowed to pursue whatever career she chooses? That's what women's lib is about: freedom of opportunity.

-Jimmy

"freedom of opportunity" is what you WANT women's lib to be about. But what you WANT is irrelevant. The people who engineered women's lib (or any of the major social engineering endeavors of the 20th century) had an entirely different agenda in mind. Question: how do you economically exploit someone who is not in the workforce? Answer: get them into the workforce. Question: how can you reduce the economic bargaining power of a family that needs only one breadwinner? Answer: make it a family that is dependent on two breadwinners to get by.

Keep believing what you want to believe, but don't act all surprised when you wake up one day and find that everything you thought you had is nothing more than an illusion.

[cjppjc]

Re: The Middle Class Two Income Trap

"freedom of opportunity" is what you WANT women's lib to be about. But what you WANT is irrelevant. The people who engineered women's lib (or any of the major social engineering endeavors of the 20th century) had an entirely different agenda in mind. Question: how do you economically exploit someone who is not in the workforce? Answer: get them into the workforce. Question: how can you reduce the economic bargaining power of a family that needs only one breadwinner? Answer: make it a family that is dependent on two breadwinners to get by.

Keep believing what you want to believe, but don't act all surprised when you wake up one day and find that everything you thought you had is nothing more than an illusion.

Does everything that comes with unintended consequences have to be a conspiracy? Do TPTB (Whoever they are) spend all this time thinking of all these ways to beat the average person into the ground?

Isn't it just possible that life is unfair and is full of unintended consequences.