Harvard Magazine: Rising financial risks for American families

[jpillian]

This article was published two years ago, but I came across it today when researching the rise of dual income households (for a response to the "Moms write survival guide for coddled young adults" thread). Thought it deserved its own thread and that others might enjoy it.

Two passages that I thought needed to be highlighted:

"The bottom line: today’s median-earning, median-spending middle-class family sends two people into the workforce, but at the end of the day they have about $1,500 less for discretionary spending than their one-income counterparts of a generation ago."

and

"The modern single-earner family trying to keep up an average lifestyle faces a 72 percent drop in discretionary income compared with its one-income counterpart of a generation ago."

http://harvardmagazine.com/2006/01/the-middle-class-on-the.html

During the past generation, the American middle-class family that once could count on hard work and fair play to keep itself financially secure has been transformed by economic risk and new realities. Now a pink slip, a bad diagnosis, or a disappearing spouse can reduce a family from solidly middle class to newly poor in a few months.

Middle-class families have been threatened on every front. Rocked by rising prices for essentials as men’s wages remained flat, both Dad and Mom have entered the workforce—a strategy that has left them working harder just to try to break even. Even with two paychecks, family finances are stretched so tightly that a very small misstep can leave them in crisis. As tough as life has become for married couples, single-parent families face even more financial obstacles in trying to carve out middle-class lives on a single paycheck. And at the same time that families are facing higher costs and increased risks, the old financial rules of credit have been rewritten by powerful corporate interests that see middle-class families as the spoils of political influence.

<-- Click link for the full article -->

[Corcaigh]

I have no doubt that healthcare costs are a huge factor.

The article claims it to be a wash but I think the cost of communications and entertainment is much, much higher and is a factor. I know people who aren't wealthy but their kids have Blackberries or iPhones and they have just about every cable channel known to man. Those two items alone represent more than $4k a year.

I also think people have completely different expectations on the standard of cars they drive and vacations they take.

[PeterMP]

I have no doubt that healthcare costs are a huge factor.

The article claims it to be a wash but I think the cost of communications and entertainment is much, much higher and is a factor. I know people who aren't wealthy but their kids have Blackberries or iPhones and they have just about every cable channel known to man. Those two items alone represent more than $4k a year.

I also think people have completely different expectations on the standard of cars they drive and vacations they take.

Growing up we went to Cleveland every summer and stayed at my grandmothers house.

Cleveland in the summer, especially in the late 70's and early 80's, was NOT anybody's idea of a vaction.

To make it worse, we were resposible for any home up keep/repair that had to be carried out while we there. I spent a good bit of more than one "vacation" painting her house.

[TimmySmith]

If I did not know better, I'd say it was this article is a look at the results of women in the workplace.

[81artmonk]

This article was published two years ago, but I came across it today when researching the rise of dual income households (for a response to the "Moms write survival guide for coddled young adults" thread). Thought it deserved its own thread and that others might enjoy it.

Two passages that I thought needed to be highlighted:

"The bottom line: today’s median-earning, median-spending middle-class family sends two people into the workforce, but at the end of the day they have about $1,500 less for discretionary spending than their one-income counterparts of a generation ago."

and

"The modern single-earner family trying to keep up an average lifestyle faces a 72 percent drop in discretionary income compared with its one-income counterpart of a generation ago."

During the past generation, the American middle-class family that once could count on hard work and fair play to keep itself financially secure has been transformed by economic risk and new realities. Now a pink slip, a bad diagnosis, or a disappearing spouse can reduce a family from solidly middle class to newly poor in a few months.

Naw, you're kidding. That took a genuis to figure that one out.

[buenosdiaz]

I mean its obvious the middle class is shrinking...And the answers to address this problem is not in the past because everything a generation ago was completely different.

The types of jobs available are not the same, Culuturally (as noted above, people spend on stupid things)...

The cost of higher education is going to be a HUGE issue for this generation. A job market that has been created based on the notion of higher education is making college a requirement for many middle class families. The number of students in college is probably higher than ever, but at the same time the affordability is probably among the lowest its ever been for middle class families.

You have students with degrees coming out of college with a large range of debt and a job market saturated with talent so what happens to the student that is out of work with a college degree now living a life much less desirable than his/her parents, but followed the path that the middle class promotes?