Reply #6: More from Warren on "income volatility"

[Elspeth]

In 1970, a family needed 52 paychecks (one income) to meet all its bills, including fixed expenses.
In 2004, a family needed 104 paychecks (two incomes) to meet these same bills.

Unemployment: In a two income family, there is theoretically twice as much of risk of unemployment occurring as in a one income family. While the two-income family will have some money coming in (about half), it still may not be able to meet its mortgage or fixed expenses. In a 1970's one-income family, there is another person (usually the wife) who can go out to work in her husband's place temporarily. She would not make what he does, but the fixed expenses are lower and they have a better chance of at least making the mortgage.

In other words, the two-income family carried inherently MORE risk than the one income family, considering the whopping fixed expenses of our times.

This is all BEFORE taking into account job volatility, the stability of workers' jobs. In 1970, the stability of jobs was far stronger, and there was far less likelihood of losing a job. In 2004, jobs are much more unstable and there is far more of a likelihood of losing a job (per person).

Hence, our current two-income families are actually LESS stable because of current market conditions.