Monday, June 09, 2008

The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke

The video embedded below is an hour-long interview with author Elizabeth Warren. I've seen her in other presentations.

USA Today has an excerpt from the book. has a print interview. Business Week's review is here. PBS has a page on her that includes links to 2 videos. NPR has an audio interview. Mother Jones Magazine interviews co-author Amelia Tyagi.

The Harvard Journal of Law and Gender has a review that discusses the issue and the remedies proposed in the book:
Their solutions include a voucher system for public schools, an expansion of public schooling to include prekindergarten education, a tuition freeze on state universities, a reinstatement of usury laws, a tax incentive program for family savings, a commitment to the preservation of bankruptcy protection, and an expansion of state-funded dis-ability coverage. Of particular interest is the discussion of tax-funded daycare programs. Warren and Tyagi argue against such programs, at least in their simplest form:

[S]uch subsidies would make financial life more difficult for these families [with stay-at-home mothers], because they would create yet another comparative disadvantage for single-income families trying to compete in the marketplace. Every dollar spent to subsidize the price of day care frees up a dollar for the two-income family to spend in the bidding wars for housing, tuition, and everything else that families are competing for . . . . In effect, government-subsidized day care would add one more indirect pressure on mothers to join the workforce.

This last point is a novel idea in the daycare discourse. A typical argument for such programs is that they provide mothers the option of working, but, in reality, they provide no option at all, compelling some mothers to enter the workplace despite their own preferences to the contrary.

The list of policy solutions offered by the authors is not groundbreaking, but its application towards the newly identified problem of the “two-income trap” is innovative and useful. For example, to the list of other potential benefits, proponents of school voucher programs can add the partial alleviation of the problem of middle-class bankruptcy. Thus, old ideas, pressed into service by Warren and Tyagi, are given new life in the political arena.

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