The two-income trap: should mothers have just stayed at home?

Laetitia@Work #24

Hi everyone,

I hope most of you are planning a summer break to recharge your batteries, as I will be recharging mine in August 🌞 

In this last newsletter before my summer break, I’d like to write about a subject that links feminism and economics: the two-income trap. Nearly twenty years ago, long before she became a senator (and an unsuccessful presidential contender in 2020), Elizabeth Warren wrote a book with that title with her daughter Amelia Warren Tyagi.

The book and its ideas are all the more interesting as they were (still are) quite controversial among feminists. First it focused on ‘traditional’ families with children, implying that having children was not just a ‘lifestyle’ choice. Second, it showed that US families started losing a lot economically after the 1970s, when women massively entered the workforce. 

In some ways, the book led its readers to the following question, which many conservatives have kept asking: would everybody not have been better off if mothers had just stayed at home? But this question is short-sighted, and Warren, the politician and presidential candidate—I can’t get over the fact that she lost the Democratic primaries 😭—brought new ideas and solutions to address the two-income trap. 

brass padlock on brown metal fence

In this newsletter you’ll find a brief summary of the book, and why in view of Warren’s subsequent political career, it must in fact be regarded as a feminist book 📚

The Two-Income Trap: the rise of economic insecurity in American households

Before she became a politician, Warren was a law professor at Harvard, and her specialty was bankruptcy law. So her (economic and political) focus was personal bankruptcy. And her 2003 book addresses the causes of increasing rates of personal bankruptcy and economic insecurity in US households.

“We began with a couple of startling facts:

  • Having a child was the single best predictor that a woman would go bankrupt.

  • More children were living through their parents’ bankruptcy than their parents’ divorce.

The Two-Income Trap was the story of what went wrong, and how so many middle-class families fell off a financial cliff. It was a story of our two generations—Elizabeth’s generation, from the early 1970s when Amelia was born, and Amelia’s generation, now raising kids. We told the story of the modern family that needed every penny of every paycheck to cover housing, health care, education costs, and other necessities.”

Why is it that the emancipation of women, their massive entry into the workforce coincided with the impoverishment of US families? Why were more families declaring bankruptcy even though more of them relied on two incomes instead of one? There are many explanations: wage stagnation due to globalisation and the decline of unions, rising costs related to housing, education and health care… to list but a few. 

Warren explains that US households have been able to maintain their revenues over the past four or five decades only because more families now counted two earners. But for a household, the additional income that comes from another worker comes with more costs than would a pay rise of the same amount for a single worker. Two-earner households are more financially precarious and a single accident can push them into insolvency. 

Warren’s two-income trap consists of three phenomena: 

  • Adding a second earner in the household comes with a lot more fixed expenses, particularly (increasingly expensive) child care, and other expenses like commuting (the two are related: as housing got more and more expensive, commuting took longer and longer, which meant more hours of child care became necessary).

  • The extra money earned by the second worker in the household is entirely consumed by higher housing costs in a race to get to good school districts, and then higher university fees.

  • Two-income households are deprived of the insurance policy that represented the stay-at-home parent (if something went wrong, she could step in and start working. If a child was sick, she was available for unpaid care).

The rise in two-income families did not come with more household savings. The extra money went into housing (renting or buying). When these families purchased a house, they had no liquid assets in case of hardship, and the only solution for them was to sell their home and move to a less desirable place (thus jeopardising their family’s economic prospects). Financial hardship could only be dealt with by turning to consumer credit, made more available by the ongoing deregulation of the financial industry. So households contracted more and more debt and put themselves at higher risk of bankruptcy.

For solutions, look to Warren’s political career

The solutions offered in the book to tackle the problems posed by the two-income trap are somewhat underwhelming. She offered more comprehensive ideas much later, as a presidential contender.

Warren spent the first part of her career focused on advocating for stricter bank regulation. Even before the 2008 crisis, she was a staunch critic of the banking industry and its predatory practices. Financial products, she argued, should be regulated to protect consumers from predators, the same way consumer products are regulated. 

This came to be known as the ‘toaster analogy’: “the government simply will not let you buy a toaster that experts deem to be unsafe. Even if the unsafe toaster could be cheaper to sell and more profitable to make, you’re just not allowed to do it.” Like toasters, financial products should be subject to regulation and protect consumers. With unsafe toasters, you risk burning down your house. With unsafe consumer credit products, you risk losing your house.

Basically the book’s solutions focus primarily on increased bank regulation and consumer protection. These may be important subjects but they do seem underwhelming in view of all the other subjects put forward by The Two-Income Trap, namely housing, child care, education and health care.

Warren became a senator in 2013. In subsequent years she started advocating for more ambitious reforms pertaining to health care and education. What triggers a family’s bankruptcy are problems specific to the US: there is no affordable health care and no affordable higher education. Wouldn’t a universal health care system comparable to what most European countries have prevent most household insolvencies in the US? What about accessible higher education that doesn’t require taking up more debt? 

A new generation of US political figures seem to have made these once ‘radical’ ideas mainstream: universal public services that would make child care, health care and higher education accessible to all Americans could effectively solve the problem of the two-income trap.

The two-income trap in Europe

It would be easy to sweep the two-income trap aside as a specifically American issue. Indeed the amount of consumer debt and the number of household bankruptcies make this trap a uniquely American one. Most European households have more consumer protections, have access to cheaper health care, and public education. 

But in some form or other, the problems that affect US households threaten to become more common in Europe too. Little by little health care is becoming less accessible and affordable. (In the UK, for example, Brexit will cause health care to be “americanised”). Education is becoming less egalitarian. In a context of growing inequalities, the desire to prevent downward mobility for their children causes European households to gobble up more and more of their resources.

In Europe too middle-class parents are going broke and the cost of keeping one’s family in the middle class is going up, as evidenced by declining birth rates. Alas it seems there are too few political figures at the forefront to advocate for better, more accessible health care, child care and higher education, as many European countries are now falling for populist or conservative politicians. 

🌳 Still in Normandy and about to enjoy a couple of weeks of much-awaited holidays. I look forward to reading more books in my free time 📚

For Nouveau départ (in French), Nicolas and I recorded lots of new podcasts. For you to discover our “à deux voix” conversations (in French), we made these two available to everyone: La grande fragmentation : comment s’y préparer ? and Les économistes nous fatiguent. I also recommend the last two interviews (both related to the future of work and the ‘passion economy’): Entreprendre sans permission, Se préparer aujourd’hui pour mieux switcher demain.

For Welcome to the Jungle, I’ve continued the “We’re all biased” series with this piece: Sexism at work: why those who deny there’s a problem are a danger.


  • 👩‍💻 COVID-19 and gender equality: Countering the regressive effects, McKinsey Global Institute, July 2020: “As COVID-19 continues to affect lives and livelihoods around the world, we can already see that the pandemic and its economic fallout are having a regressive effect on gender equality. By our calculation, women’s jobs are 1.8 times more vulnerable to this crisis than men’s jobs. Women make up 39 percent of global employment but account for 54 percent of overall job losses. One reason for this greater effect on women is that the virus is significantly increasing the burden of unpaid care.”

  • 🎥 Viola Davis: “My Entire Life Has Been a Protest”, Sonia Soraiya, Vanity Fair, July 2020: “Davis, who turns 55 in August, languished in the margins for years before vaulting into the public consciousness in the last decade. In 2015, she became the first Black woman ever to win an Emmy for lead actress in a drama for How to Get Away With Murder, which finished its twisty, unsettling six-season run this spring. In 2017, she won an Oscar for her supporting role as Rose Maxson in Fences—a part for which she also collected a Tony. She will portray Michelle Obama in Showtime’s upcoming series First Ladies”

  • 🎒The case for unschooling, Tyshia Ingram, Vox, July 2020: “Unschooling is a broad term that encompasses a range of labels, definitions, and practices unique to each person or family. At its core, it’s the opportunity — and often for new unschoolers, the challenge — for children to explore their own interests rather than adhere to the criteria and curricula predetermined by school boards or other entities. Unlike the traditional homeschool model which often seeks to mimic the classroom or follow a defined curriculum usually with parents acting as teachers, in unschooling, children take the lead.”

I’ll take a few weeks off this summer but will be back in your mailbox either the last week of August or the first week of September. I wish you all a great summer! 💌