List Of The Passages I Highlighted In My Copy Of “The Two-Income Trap”

– but which didn’t fit naturally into the review.

Today’s bankrupt families are deeper in debt than their counterparts just twenty years earlier, and their overall financial picutre – assets and debts – is worse. In 1981, the median family filing for bankrupcy owed 80% of total annual income in credit card and other nonmortgage debts; by 2001, that figure had nearly doubled to 150% of annual income.

One of the better parts of the book was its busting the myth that people use bankruptcy as an “easy way out” or that they’re declaring it willy-nilly. People are waiting much longer and trying much harder to avoid it now than a generation ago.

Many commenters seem concerned that the families filing for bankruptcy are not sufficiently contrite. Democractic Senator Patricia Murray from Washington argues that the Senate should make it a priority “to recapture the stigma associated with a bankruptcy filing”. The idea that they do not feel bad enough about their bankruptcy filings would have come to a shock to most of the families who filed…In our research, several mothers were willing to talk with us only on the condition that we not use the word “bankruptcy” during the telephone interview for fear that a child might pick up the extension phone and hear the dreaded word. Some said that just hearing the word still makes them cry, and they asked us to refer simply to “the event”. More than 80 percent of the families we interviewed reported that they would be “embarrassed” or “very embarrassed” if their families, friends, or neighbors learned of their bankruptcy.

Another quote along the same lines.

The odds that a worker will suffer an involuntary job loss have increased by 28% since the 1870s. Growing job insecurity has been hard on single-income families, who now face a 28% higher chance that the breadwinner will lose his job. But for today’s dual-income family, the numbers are doubly grim, as each spouse faces a higher likelihood of a job layoff. We estimate that in a single year, roughly 6.3% of dual-income families – one out of every sixteen – will receive a pink slip. That means that a family today with both husband and wife in the workforce is approximately two and a half times more likely to face a job losss than a single-income family of a generation ago.

I am too young to have strong opinions on How Things Have Changed. But I remember that back in the 90s, there were a lot of articles about The Layoffs Crisis and how layoffs were A Sign Of The Decline Of America. And now the understanding that people get laid off or downsized a lot is such an accepted part of everyday life that it seems weird that it was once a news item of approximately the same concern level as global warming or immigration. The people ten years younger than I am are going to have no idea that there was once hand-wringing over it, or that it is even the sort of thing over which hands could be wrung.

Make no mistake. Financial distress is a problem for both men and women. But we do not want to leave the impression that these phenomena are entirely gender-neutral. They are not. Mothers are 35% more likely than childless homeowners to lose their homes, three times more likely than men without children to go bankrupt, and seven times more likely to head up the family after a divorce.

So a while ago I recommended everyone be extraordinarily paranoid about feminist statistics. People gave me a lot of flak over that, and Jeff K wrote a blog post where he did some tests and said he found that feminist statistics were no worse than anyone else’s. I acknowledge the plausibility of his viewpoint – and yet extraordinary paranoia about feminist statistics has, at least for me, been the gift that keeps on giving. I suspect Jeff and everyone else reading that paragraph did what I very nearly did – assume it supported the conclusion it said it was supporting. But since I am extraordinarily paranoid, I made sure to re-read it and double-check. And so I noticed that it strongly implies there is a difference between women and men – but then it very deliberately avoids making the comparison. Mothers (ie women with children) are more likely than people without children (of either gender) to lose their home. Mothers are more likely than men without children to go bankrupt. There is no comparison between mothers and women without children, nor between mothers and fathers. I expect that if such a comparison showed any difference at all, Warren would have made it, rather than strongly imply she was doing so but in fact making distractor comparisons. The only place where women may be compared to an appropriate category of men – and even here it is left very vague – is in the last statistic, about being more likely to head the family after a divorce. But this is just the point that women get the children more often after divorce – which is not exactly the sort of gender disparity I feel we were promised.

Research shows that on average, a husband is three times more likely than a wife to take primary responsibility for managing the family’s money. But as a couple sinks into financial turmoil, this responsibility tends to shift. As families fall behind on their bills, it is wives who roll up their sleeves and do what must be done…Among couples who seek credit counseling or file for bankruptcy, the split over who was responsible for dealing with the bills was exactly reversed from that of secure families: three-quarters of the wives were exclusively responsible for trying to extract their families from their financial quagmire.

Okay, this one doesn’t even require extraordinary paranoia to start noticing alternative interpretations.

In the early 1970s, not only did most Americans believe that the public schools were functioning reasonably well, a sizable majority of adults thought that public education had improved since they were kids. Today, only a small minority of Americans share this optimistic view. Instead, the majority now believes that schools have gotten significantly worse. Fully half of all Americans are dissatisfied with America’s public education system, a deep concern shared by black and white parents alike.

I seriously doubt public schools became much worse in any interesting way, since as far as I can tell most educational philosophies kind of work about equally well. I wonder how much this has to do with the media spreading panic.

A group of solidly middle-class Americans – our nation’s police officers – illustrate the point. A recent study showed that the average police officer could not afford a median priced home in two-thirds of the nation’s metropolitan areas on the officer’s income alone. The same is true for elementary school teachers. Nor is this phenomenon limited to high cost cities like New York and San Francisco. Without a working spouse, the family of a police officer or teacher is forced to rent an apartment or buy in a marginal neighbhorhood even in more modestly priced cities such as Nashville, Kansas City, and Charlotte.

Stay-at-home parents are now difficult except for the well-off.

Single mothers who have been to college are actually more likely to end up bankrupt than their less educated sisters – nearly 60% more likely.

The floor is open to anyone who would like to come up with a just-so story to explain this.

In 2001, freshman Senator Hillary Clinton voted in favor of [a bill making it harder to filing for bankruptcy, which she had previously opposed violently]. Had the bill been transformed to get rid of all those awful provisions that had so concerned First Lady Hillary Clinton? No. The bill was essentially the same, but Clinton was not. As First Lady, she had been persuaded that the bill was bad for families, and she was willing to fight for her beliefs. As New York’s newest senator, however, it seems that Hillary Clinton could not afford such a principled positions. Campaigns cost money, and that money wasn’t coming from families in financial trouble. Senator Clinton received $140,000 in campaign contributions from banking industry executives in a single year, making her one of the top two recipients in the Senate. Big banks were now part of Senator Clinton’s constituency. She wanted their support, and they wanted hers – including a vote in favor of [what she had previously called] “that awful bill”.

Warren’s vicious attack on Hillary Clinton was a highlight, considering the current political situation. Apparently she gave a presentation on the problems with a bankruptcy bill to Clinton when she was First Lady, Clinton was very impressed and worked really hard to fight it, and then when she became Senator she turned around and supported it. You can bet this is coming up in the next Democratic primary.

To give a sense of just how expensive subprime mortgages are, consider this: In 2001, when standard mortgage loans were in the 6.5% range, Citibank’s average mortgage rate (which included both subprime and traditional mortagages) was 15.6%. To put that in perspective, a family buying a $175,000 home with a subprime loan at 15.6% would pay an extra $420,000 during the 30-year life of the mortgage – that is, over and above the payments due on a prime mortgage. Had the family gotten a traditional mortgage instead, they would have been able to put two children through college, purchase half a dozen new cars, and put enough aside for a comfortable retirement.

I will always reblog clever ways of putting numbers in perspective. Also, whoa. Something to remember when the news talks about how Americans can’t afford to save for retirement anymore. [EDIT: Eric finds some evidence this is exaggerated]

At Citibank, for example, researchers have concluded that at least 40% of those who were sold ruinous subprime mortgages would have qualified for prime-rate loans…A study by the Department of Housing and Urban Development revealed that one in nine middle-income families and one in fourteen upper-income families who refinanced a home mortgage ended up with a high-fee high-interest subprime mortgage. For many of these families there is no trade-off between access to credit and the cost of credit. They had their pockets picked, plain and simple.

This is part of what I meant when I praised Warren for being able to back up her accusations of market failure. Apparently there is not enough awareness of options for the market in mortgages to be well-functioning.

Most Americans guard their credit ratings jealously, living with a slightly prickly sensation that they could be cut off if they fell behind or forgot to pay a bill. What they don’t realize is that when a borrower makes a partial payment, when he misses a bill, and when his credit rating drops, he actually gets more offers for credit. He is not just down on his luck, behind on his bills, and short on cash, he has now joined the ranks of an elite group – The Lending Industry’s Most Profitable Customers…within six months of filing for bankruptcy, 84% of families had already received unsolicited offers for new credit.

As several commenters have pointed out, this means something different than I originally thought – having good credit rating may still be important to get low interest rates. But the fear that you will never get credit if your rating is poor is misplaced.

What does bankruptcy have to do with abortion? In Washington, a great deal. Over the past several years, pro-choice groups had scored significant court victories against a few prominent abortion clinic protesters by obtaining money judgments against them, only to see those victories turn to dust when the protesters declared bankruptcy and discharged their debts.

In a strange twist of politics, the credit industry’s version of the bankruptcy bill had been supported by Senator Charles Schumer, of New York, who had garnered strong support among women’s groups for his pro-choice politics. Ever responsive to his constituents, Senator Schumer inserted a provision into the bankruptcy bill that would make it more difficult for abortion clinic protesters to discharge judgments entered against them if they were sued for their protest activities, much in the same way drunk drivers and embezzlers cannot use bankruptcy to discharge judgments against themselves. Eager to appeal to women voters, the Senate had accepted the amendment in 2001. But in 2002, when the bankruptcy bill went back to the House with the abortion amendment in it, a coalition of right-to-life representatives refused to go along. They brought the bill to a standstill.

Desperate to get the bill passed, the banking lobby went back to the Senate, pressuring Senator Schumer to remove the controversial abortion provision. The industry ran attack ads against him in his home state, demanding that he support the bankruptcy bill — and claiming that he was costing every American family $550 a year. (The attack on Senator Schumer was particularly ironic, since he had received more campaign contributions from the credit industry than any other Senator, just nosing out fellow New Yorker Hillary Clinton.) But by this point, the pro-choice women’s groups were also mobilized, and they held firm, supporting Senator Schumer and threatening to withhold support from any elected official who moved to take the provision out of the bankruptcy bill. In one of those rare defining moments, Senator Schumer had to choose between big business and pro-choice women, both of whom had supported his campaign. He chose women, and the amendment remained in the bill.

Ultimately, two strange bedfellows — a small group of socially conservative Republicans and a handful of progressive Democrats — gathered enough momentum to defeat the bankruptcy bill against the best-financed lobbying campaign of the 107th Congress.

I feel like if I had to send a message to aliens to tell them everything they needed to know about US politics, it would be this story.