Two-Income Trap: Economic Trends Leading to it and its Remedies

Two-income Trap and its Remedies
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Two-income Trap and its Remedies
Question one: Two-income Trap
Two-income trap arises when families send both parents to work thinking that it will make their houses more secure. However, in the end, things never really work out that way. Instead, it has only worsened the situations for these two-income families because one in every seven two-income families goes bankrupt at the end of a decade. People tend to assume that when they have two incomes, they are doubly secure. These families end-up counting on the pennies of both parents and if either goes away, then the families will be in trouble. So in a sense, they are trapped by the two incomes. Having two people in the workforce doubles the chance of someone getting laid off or the chance that someone could become too sick to be able to work, leaving the family to rely on one income which will not be sustainable. Therefore, two-income families would find themselves in a lot of trouble and they would run the risk of going bankrupt quickly.
Several economic trends have contributed to the two-income trap. First is the rise in most of the fixed-costs such as child care, healthcare, and getting a good home. In essence, two income families have to spend a lot on these than single income families. Consequently, they end up having less discretionary money. Secondly, in the two-income families, there is need to budget for a second car that the mother or the father can use to go to work. This means that the families would incur more expenses in terms of gas and repair costs as opposed to single income families. Therefore, the two-income families would end up having less cash at the end of the month. Changes in the taxation systems have also contributed to the two-income trap. The two working members of the family still have to pay taxes individually and this reduces their disposable income. Finally, lifestyle changes have further contributed to the two-income trap. Families tend to spend the extra income on luxuries such as purchasing better homes, taking their children to better schools and buying them luxuries and some other frivolities. Specifically, homes have been one of the areas where most families have spent a lot...