THE MIDDLE CLASS PRECIPICE

[A deep look at the problems of the middle class]

ELIZABETH WARREN, HARVARD MAGAZINE - 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.

In just one generation, millions of mothers have gone to work,
transforming basic family economics. The typical middle-class
household in the United States is no longer a one-earner family,
with one parent in the workforce and one at home full-time. Instead,
the majority of families with small children now have both parents
rising at dawn tocommute to jobs so they can both pull in paychecks. . .

Today the median income for a fully employed male is $41,670 per
year(all numbers are inflation-adjusted to 2004 dollars) - nearly
$800 less than his counterpart of a generation ago. The only real
increase inwages for a family has come from the second paycheck
earned by a working mother. With both adults in the workforce
full-time,the family’s combined income is $73,770—a whopping 75
percent higher than the median household income in the early 1970s.
But the gain in income has an overlooked side effect: family risk has
risen as well.Today’s families have budgeted to the limits of their
new two-paycheck status. As a result, they have lost the parachute
they once had in times of financial setback—a back-up earner
(usually Mom) who could go into the workforce if the primary earner
got laid off or fell sick. This “added-worker effect” could buttress
the safety net offered by unemployment insurance or disability insurance
to help families weather bad times. But today, a disruption to family
fortunes can no longer bemade up with extra income from an
otherwise-stay-at-home partner.

http://www.harvard-magazine.com/on-line/010682.html