Why Two is Not Always Double One

Every day, Shoshi Mandel comes home exhausted from her job at an architectural firm and wonders what she and her husband, Yossi, are doing wrong. Here they are, both making decent salaries—Yossi works as a computer programmer—yet they still have trouble covering their expenses. The situation is especially frustrating because Shoshi is out of the house almost 10 hours a day and feels like she misses out on so much of her six children’s daily lives, not to mention the stress of getting dinner and laundry and shopping done during her limited evening hours.

With so much hard work and two good incomes, why are many still barely coming out even at the end of the month?

The Two-Income Mirage

While our intuition tells us that two working parents will bring in double the income of one, the reality is much more complex. After taxes, the loss of social assistance, and the lifestyle adjustments that may accompany a super-busy household, the net financial effect of a second income is often unimpressive. And sometimes a two-income family can actually find themselves at a financial disadvantage compared to their single-income counterparts, living with more stress and less money!

What’s the Net Result?

Shoshi may think she’s bringing home almost double the salary of her friend Chani, who’s a preschool morah, but this is likely not the case. Her higher salary means she’s paying a higher marginal tax rate. A higher household income also means her family is not eligible for certain government assistance programs—or even our own communal assistance—that her lower-income neighbors have access to. (I’m not advocating for the use of social programs or charity, but it’s a numerical fact.) At the same time, both parents working full-time usually means higher expenses for childcare as well as other things that are necessary to keep a hectic household running. So a big second income is often worth a lot less than it seems at first glance.

Keeping Up With the Cohens

It’s a socioeconomic reality: if everyone in your circle is living on a low to moderate single-income budget, simchos will tend to be small, your vacations will be low-key, and secondhand clothing may be acceptable to you—and you and your family will be happy. But once the “Cohens” in your orbit upgrade to two full-sized incomes, there’s often an accompanying upgrade in their—and your—lifestyle. And the added income commonly brings more and nicer stuff into your life, but no added financial stability or wealth creation.

When large salaries in a community are the norm, most people’s list of necessary household expenses changes. Sleepaway camps, Florida vacations, designer clothing, and the occasional trip to Eretz Yisrael are no longer luxuries, but within the community’s new normal standard of living. Factor in a mortgage (perhaps for a larger house), food, tuition, and all of a family’s other basic expenses, and it’s no wonder that two middle-class incomes can’t stretch to cover all of that. Of course, one regular income REALLY won’t  cover a raised standard of living. So the communal cycle goes on. More income. More expenses. Needs more income. Etc.

The Two-Income Trap

Shockingly, this phenomenon and other challenges that are created when females entered the workplace full-time were raised by none other than the liberal Senator Elizabeth Warren. In her book The Two-Income Trap: Why Middle-Class Parents Are Going Broke, she argues that society’s shift to a two-income household has created higher financial risk versus the traditional single-income one. When a diehard feminist questions the benefits of women working, we, as a religious and traditional community, should surely take notice! 

When 1+1≠2: The Non-Linear Double-Income Equation

Claudia Goldin, an economist from Harvard University, points to another way a two-income household can experience a surprising lag in financial growth. Say you have two lawyers. One will only work a regular 40-hour week, while the other is willing to work overtime and give the firm as many hours of his time as needed. The second lawyer’s salary will typically not just be a linear increase of the first lawyer’s, based on the extra number of hours per week he works; it will be in a whole other ballpark because the firm values a totally committed employee and is willing to pay a hefty premium for that.

Consider two otherwise comparable business owners. One has the freedom to invest as much time and effort as necessary into building his business, while another is much more homebound. The unfettered entrepreneur’s profit potential will likely be exponentially greater than that of the other businessman, who is limited to working nine to five and won’t travel to pursue opportunity, etc.

The Husband and Wife as a Specialized Business Partnership

If Mom and Dad both work full-time jobs, and neither can be truly committed to their duties, then they’re both possibly losing out on significant earning potential. It’s possible that if one spouse were to work full-time and then some at their job and be a totally committed member of their firm, they would earn the same or more than the two full-time salaries they’re currently earning! Especially on a net of tax and expenses basis. Again, this is coming from a liberal Harvard economist, not one who’s trying to push women into their kitchens. In essence, she’s saying that spouses equally sharing their work and home responsibilities, a very modern arrangement, may not work nearly as well as the traditional split of family duties.

What’s Your Specialty?

Specialization is common sense. Any business owner knows that it’s much more efficient and profitable to have employees who each have their own area of specialty versus several jack-of-all-trade generalists. And it’s logical that the same concept generally  applies to spouses. If the husband’s specialty is earning a living, and the wife’s specialty is caring for the children and running the household, both elements will probably come out stronger by sticking to what they do best. This may sound like a chiddush in today’s society, but it’s really common sense.

But Life Is Complicated

Of course, there are usually many valid reasons why both spouses may work. Often, the wife begins married life supporting her husband in kollel and continues working when he enters the workforce. Sometimes it’s virtually impossible for the traditional roles to completely realign themselves later.

Then there are women whose jobs are flexible enough to allow them to manage the bulk of household responsibilities without hampering their husbands’ earning potential. In that case, their income is almost hakol revach. And some women are earning the bulk of household income, which may reach well into the six figures. This money helps the family pay the bills or perhaps have some added comforts which are important to the family. All these women are neshei chayil, going above and beyond their kesubah obligations.

And Everyone Is Different

Many women also enjoy their jobs and don’t want to be cooped up at home all day. They are 100 percent entitled to do something that’s enjoyable for them, even if it doesn’t bring in much money. And, some say they’d spend much more money shopping if they didn’t work! It’s also a very good thing that husbands can be more involved in helping their spouses and spend more time with their kids—something that may not have been possible generations ago when making parnassah was much more labor-intensive. Still, the potential downsides of women working are myriad, and many wish they could cut or eliminate their work time. If they run the numbers and rethink things really carefully, perhaps they can. Even the biggest feminists admit that.

Want to dig deeper?

Try these related articles

The Missing Balabusta in a Two-Salary Household

Peak Earnings- How to Grow your Income when your Salary is Maxed Out

Your Best Bet for a Good Parnassah Is Staying Focused

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