The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke

From Publishers Weekly
Warren, a law professor at Harvard (The Fragile Middle Class) and her daughter Tyagi, a former McKinsey consultant, have joined forces here to argue here that the two-parent middle-class working family is on the brink of financial disaster. The number of families declaring bankruptcy or receiving a foreclosure against their house has shot up dramatically. Presenting carefully researched economic data to support their arguments, the authors contend that, contrary to popular myth, families aren't in trouble because they're squandering their second income on luxuries. On the contrary, both incomes are almost entirely committed to necessities, such as home and car payments, health insurance and children's education costs. When an unforeseen event such as serious illness, job loss or divorce occurs, families have no discretionary income to fall back on. The authors recommend a number of useful societal solutions to get families out of this trap, such as legally prohibiting credit card companies from charging grossly unfair interest rates and exposing banks that employ a loan-to-own strategy that steers minority customers to higher mortgage rates with an eye to future foreclosures. Warren and Tyagi point out that families buy homes they cannot afford in order to live in a neighborhood with better schools. Their proposed solution, however-to institute a public school voucher system with wider choice-is less carefully thought out. Overall, however, this is a needed examination of an emerging social problem.Copyright 2003 Reed Business Information, Inc.


- Paul Krugman
"Makes a good case that the epidemic of bankruptcy is not about people being irresponsible."


- Dr. Phil
"You should read this book!"


- Time Magazine
"A startling account of the elusiveness of the American Dream."


Book Description
In this revolutionary exposŽ, Harvard Law School bankruptcy expert Elizabeth Warren and financial consultant Amelia Tyagi show that today's middle-class parents are increasingly trapped by financial meltdowns. Astonishingly, sending mothers to work has made families more vulnerable to financial disaster than ever before. Today's two-income family earns 75% more money than its single-income counterpart of a generation ago, but has 25% less discretionary income to cover living costs. This is "the rare financial book that sidesteps accusations of individual wastefulness to focus on institutional changes," raved the Boston Globe. Warren and Tyagi reveal how the ferocious bidding war for housing and education has silently engulfed America's suburbs, driving up the cost of keeping families in the middle class. The authors show why the usual remedies-child-support enforcement, subsidized daycare, and higher salaries for women-won't solve the problem. But as the Wall Street Journal observed, "The book is brimming with proposed solutions to the nail-biting anxiety that the middle class finds itself in." From Senator Edward M. Kennedy to Dr. Phil to Bill Moyers, The Two-Income Trap has created a sensation among economists, politicians, and families-all those who care about America's middle-class crisis.


About the Author
Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard Law School. She is vice-president of the American Law Institute and served as Chief Advisor to the National Bankruptcy Review Commission. She has appeared on "Dr. Phil", "Today", "ABC World News Tonight," CNN, and other programs. She lives in Cambridge, Massachusetts. Amelia Warren Tyagi worked as an Engagement Manager with McKinsey and Company, specializing in health care, insurance, and education, and she co-founded the successful healthcare start-up HealthAllies. She is a regular commentator on NPR's "Marketplace." She lives in Pacific Palisades, California.


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Warren, a law professor at Harvard (The Fragile Middle Class) and her daughter Tyagi, a former McKinsey consultant, have joined forces here to argue here that the two-parent middle-class working family is on the brink of financial disaster. The number of families declaring bankruptcy or receiving a foreclosure against their house has shot up dramatically. Presenting carefully researched economic data to support their arguments, the authors contend that, contrary to popular myth, families aren't in trouble because they're squandering their second income on luxuries. On the contrary, both incomes are almost entirely committed to necessities, such as home and car payments, health insurance and children's education costs. When an unforeseen event such as serious illness, job loss or divorce occurs, families have no discretionary income to fall back on. The authors recommend a number of useful societal solutions to get families out of this trap, such as legally prohibiting credit card companies from charging grossly unfair interest rates and exposing banks that employ a loan-to-own strategy that steers minority customers to higher mortgage rates with an eye to future foreclosures. Warren and Tyagi point out that families buy homes they cannot afford in order to live in a neighborhood with better schools. Their proposed solution, however-to institute a public school voucher system with wider choice-is less carefully thought out. Overall, however, this is a needed examination of an emerging social problem. (Sept.) Forecast: The authors are hitting on issues felt by many Americans, and this book-with an author tour and 40-city radio satellite tour-is sure to be discussed. But its bleak warning may not drive readers to the bookstands. Copyright 2003 Reed Business Information.


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