The Two-Income Trap and the Problems and Solutions to this Phenomenon

The Two-Income Trap – Response Paper
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Institution Affiliation
The Two-Income Trap – Response Paper
Question One
The two-income trap as discussed by the authors is a phenomenon where a family sends both the husband and wife into workforce hoping to become more secure financially (Warren & Tyagi, 2016). However, this is not always achievable, and many families, including those with both parents working, are struggling. After analyzing data for double income families within the middle income bracket, the authors found that although such families generate more money than that of previous generations, when they pay for basics such as mortgages, childcare, a health insurance policy, taxes, and a second car to ferry the mother to work, they are left with less money at the end of each month (Warren & Tyagi, 2016). Families tend to think that earning double incomes make them doubly secure. However, double-income earning families are at a greater risk when one of the parents loses a job. When both parents are working, there is an increased risk that one of the individuals will be sacked or get too sick to work. If this happens, families with double income will be in serious trouble, and that is the reason why most of these families quickly file bankruptcy. The number of families filing bankruptcy is rising every day. The authors indicate that by the end of 2010, about 14% of families with a child filed for bankruptcy (Warren & Tyagi, 2016). What worsens the situation is bearing a child, and the book states that a family with a child is more likely to go bankrupt than the one without. Currently, having a child is a single predictor of bankruptcy both for families with single and double incomes. In 2002, approximately 1.6 million families were declared bankrupt, many of them being within the middle-income bracket (Warren & Tyagi, 2016). 75% of middle-income families whose parents are in the workforce are more likely to have their homes closed due to failure in paying mortgages.
Question Two
One of the myths people have used to explain the problems encountered in a two-income family is the over-consumption myth (Warren & Tyagi, 2016). Some people argue that if one is earning a decent income and they are financially troubled, it is a result of spending all of their money on expensive things. Nevertheless, this is not true considering the data on what is spent by the current families. For instance, a family of four on average spends less in comparison to what their parents spent in their generation. In the current generation, people do not often spend money on valuable goods like leather shoes or wool suits like people in past generations (Warren & Tyagi, 2016). The point is that people today do...