The Two-Income Trap (17 page)

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 fast-food workers and cleaning women, than there are in the general population.
²³
Single mothers in bankruptcy are
also
more
likely to have achieved that cornerstone of the American dream, home ownership. Fully 52 percent of these women owned their own homes, compared with just 36 percent of single parents in the general population.
²⁴
Nor are they especially young. Nearly 80 percent of these women have already passed their thirtieth birthday.

The single mothers who file for bankruptcy are not some distant group imprisoned in a far-away ghetto. By every social measure we can assemble, these women are a solid part of the middle class. They are not strangers; they are our neighbors. They have flown higher than any earlier generation of women, only to discover that they fall farther.

Although Gayle Pritchard had almost everything else going for her on the day her husband moved out, there was one big black mark against her: her family’s balance sheet. In 1999, the Pritchards had cashed out their savings, sinking it all into what the couple hoped would prove to be a wise investment, their first home. At $105,000, the three-bedroom ranch in suburban Houston would undoubtedly make the family “house poor,” but Gayle was determined. “I wanted my children to have a place to call their own, to have a yard, to know their neighbors. . . . I grew up in a house, and I wanted my kids to have the same experience.”

The Pritchards had a simple financial plan. Brad’s salary was to “maintain the family” and Gayle’s was to pay the mortgage. Now that Brad’s paycheck was gone, Gayle was stuck. Her paycheck maintained the family, but there was nothing left to pay the mortgage. “I got three months behind on the mortgage because I was just trying to keep my family fed. It was just so damn hard.” When the foreclosure notice arrived, she filed for bankruptcy and worked out a repayment plan with the mortgage lender. Gayle reflects, “I knew that I was at the lowest point in my life. . . . I went ahead and filed but it was done
very, very reluctantly. I mean, I couldn’t keep asking people like my mom to bail me out again.”

The relief provided by the bankruptcy courts was only partial. The monthly payments for her home actually increased when she filed. Gayle now had to pay off an additional $10,750 in late fees and past-due interest that her lender had tacked on—and that extra money had to be paid within three years, not over the thirty-year life of her mortgage. At the time we spoke with her, Gayle’s expenditures on property taxes, mortgage payments, and utilities claimed nearly
three-quarters
of her take-home pay.
²⁵
She couldn’t expect much help from child support, either. Brad still owed child support to his first wife, so he was due to pay Gayle only $350 a month, less than one-quarter of the family’s housing expenses.

Gayle often thinks about giving up her home, but she is deeply reluctant to do so. “My kids had already gone through so much instability with the way that their dad left. I needed them to feel some stability. . . . My oldest son said, ‘Mama, if I have to get a job to help you, I will. I don’t want to move again.’ . . . He was only ten.” Gayle pauses while she thinks about her oldest child. Barely past bed-wetting, still sleeping with a night-light, he has taken on the solemn worries of adulthood. Gayle added quietly, “I felt I owed it to him to hold on to this house as long as I can.”

 

If we took the typical approach to analyzing the economic difficulties facing single mothers like Gayle Pritchard, we would start our investigation on the day her husband walked out. We would pose the usual set of queries: Did the divorce court treat this woman fairly? Did the judge order enough child support and alimony? Did the ex-husband follow through on his legal obligations?

The problem with the usual approach is that it focuses attention far too late in the story. Like so many single mothers, Gayle’s financial problems started back when she was married, when she and her husband stumbled into the Two-Income Trap by committing both of their paychecks to cover their monthly expenses. The family no
longer had a stay-at-home mother who could take a job after her husband moved out—that is, there was no way to bring in
new
dollars to cover the costs of divorce.
²⁶

And those costs add up. There are the lawyers, one for him and one for her. Court costs. Document preparation fees. Charges for photocopying the legal and financial records. The costs are substantial if the parties can agree on everything; if they fight, the lawyers just get richer. And legal fees are only the beginning. Someone has to move out, and that means cash for first and last month’s rent, phone installation charges, a separate checking account. Some furniture? Dishes? A shower curtain? Then there are the unexpected costs, which tend to creep higher when there are no longer two adults to divide the chores and help each other with life’s little emergencies. Will he send out his laundry and eat out more often? Will she hire someone to change the oil in the car and clean out the gutters? Without Dad to share the burden, will she miss work more often when the kids get sick? Will he give up overtime on Saturdays because that is his only day with the kids? With the savings account drained by the legal bills and the costs piling up, the credit card may be the only way to fill in the gaps.

After divorce, they still have to meet their regular financial commitments—those that are the hardest kind to cut back. The biggest item in the family budget is the home, which would make it the most logical place to try to downsize. But mothers like Gayle Pritchard are guided by more than a steely eye on the balance sheet. They strongly resist pulling their children out of familiar schools and neighborhoods at the same moment that their family life is disintegrating. Moreover, many women fear that without their husband’s income, they will never get approval to buy another home, even one with a smaller price tag. They are haunted by the nameless dread that if they relinquish that precious bit of real estate, they will be letting go of the middle-class aspirations they hold for their children.

Where else can they cut? Should they sell Mom’s car—the one she drives to work every day? Should they pull Junior out of day care or
tell their son to quit college? Should they drop the health insurance policy? This isn’t a matter of living more frugally. These are the costs that families incur to keep their children safe and hold them securely in the middle class, even when there is no longer a father in the home. To give these up is to admit more than financial failure; it means failing as parents.

So where does that leave the newly single mother? She is living the feminist dream, better educated and earning far more than her sisters of a generation ago. And yet, in the wake of divorce, she will learn just how far she can fall. In chapter 2 we showed that Tom and Susan, the typical one-earner family in the 1970s, had 46 percent of Tom’s income left over once the housing, health insurance, and other fixed expenses had been paid. If Tom and Susan split up, Susan’s discretionary income, once she collected child support payments and found a new job, would fall to just 19 percent of the family’s predivorce income.
²⁷
That is a staggering drop, making it tough for the newly formed fatherless household to survive a generation ago. But things are
worse
for today’s working mothers. Today, the two-earner
married
family starts out just slightly better off than the
divorced
woman of a generation ago, with only 25 percent of income available for food, utilities, clothing, and all other discretionary purchases. But if today’s two-parent family is squeezed, the postdivorce mother is crushed. If Justin and Kimberly (the typical two-earner family in the 2000s) divorce, Kimberly’s discretionary income would drop to a mere
4 percent
of the family’s predivorce income, even after she collects child support.
²⁸
(See
Figure 5.2
.) The middle-class life she and her husband once provided for their children would vanish.

The bad news isn’t over. The public face of divorce implies that the biggest struggle facing a divorcing couple is the fight over who-gets-what. Think of Donald and Ivanna Trump, or former General Electric CEO Jack Welch and the ex-wife who broadcast his lavish compensation package to an eager public. Long, protracted battles, plenty of he-said-she-said drama, and a debate in the local newspapers over who-deserved-what makes for juicy stories. But today’s
middle-class families don’t just split up the home, the bank accounts, and the kids. They must also split up the
debt
. And unlike the bank accounts, they don’t get just 50 percent apiece. They each face
100 percent
responsibility for any debts they both signed their names to.

Source:
Analysis of Consumer Expenditure Survey. For more information on calculation of discretionary income, see above and see chapter 2.