The Two-Income Trap (19 page)

Of course, Brad’s situation is particularly bad because he has two ex-wives to support. What would happen to a more typical dual-income couple if they divorced? If Justin and Kimberly (the typical two-earner couple we met in previous chapters) split up, and the courts followed the Share-the-Pain approach, Justin would be required to pay Kimberly roughly $12,400 a year—close to half his take-home pay.
⁴⁶
Kimberly’s situation would be undeniably better than under current guidelines, since her support checks would increase considerably. But if she wanted to keep the home, the car, the day care, and the health insurance, she would still face a
54 percent
drop in discretionary income, even if Justin paid every penny. To be sure, this is better than the 86 percent drop she would experience under the current system.
⁴⁷
The Share-the-Pain model might appeal to our sense of fairness, and it might even be the right response to a bad situation. But even such a drastic change to the child support guidelines is no panacea for the middle-class single mother—and no guarantee of her financial survival.

 

What if Dad shares custody of the kids? This is an increasingly likely outcome. Approximately one out of six divorcing couples are awarded joint custody.
⁴⁸
Many fathers’ rights groups support the trend, arguing
that joint custody is “in the best interest of children [and fosters] a meaningful relationship with both of their parents.”
⁴⁹
But what about the financial impact of these arrangements? Joint custody would free Mom from the overwhelming burden of bearing sole responsibility for all the day-to-day child care requirements, but the overall impact on her financial well-being is more complex. Consider housing. When the Pritchards split up, the only way Brad avoided the bankruptcy courts was to live in the cheapest efficiency apartment he could find. If he had needed to find a home suitable for his three children (preferably near their school), he wouldn’t have had a prayer of making ends meet—or of making support payments to either of his ex-wives. Joint custody effectively doubles the family’s housing expenses without creating any new income to cover the costs. Cars, furniture, clothing, utilities—there are no savings, but substantial opportunities to increase costs when both parents provide half-time homes for their children.

Joint custody can have another serious financial side effect on a woman: She may end up with less child support. With both parents providing a home for their children, courts are less inclined to order that child support flow in a single predetermined direction, from Dad to Mom. One study found that judges are three times more likely to order no child support under a joint custody case than a case where the mother is awarded sole custody.
⁵⁰
Joint custody may be the best way to involve fathers in their children’s lives, but it is no financial promised land for either single parent.

Divorced fathers have become a kind of mythic solution. Anyone concerned about the financial distress of single mothers simply joins in the rallying cry to “Make dads pay more.” Once again, we offer sobering data. There is substantial evidence that millions of fathers are already struggling to make their current payments and may not be able to pay more, regardless of what the courts order. Only 46
percent of divorced fathers own their own homes, a rate that is about half that of married fathers generally. Divorced fathers are also less likely to own a car.
⁵¹
Indeed, one out of three unmarried, nonresident fathers cannot even maintain their own household and live with their parents or other extended family.
⁵²

Even more tellingly, our data indicate that unmarried mothers aren’t the only ones filing for bankruptcy in record numbers. Divorced dads are in just about as much trouble. We estimate that more than 160,000 men with child support and alimony obligations will end up in bankruptcy this year alone. This means that fathers who owe child support are more than three times more likely to file for bankruptcy than single men who don’t owe support.
⁵³
Indeed, nonresident fathers with child support obligations are the only group that approaches single mothers in their extraordinarily high levels of financial distress.

These men are caught in the same financial maelstrom as their ex-wives. They must come up with money for an apartment and all the accoutrements of their newly single lives, not to mention thousands of dollars in legal fees, but they too have nothing in savings to cover these costs. Like their soon-to-be ex-wives, many turn to debt to get through the months following the divorce. Brad Pritchard is already a few thousand dollars in the hole, and bankruptcy may be just around the corner. “I was brought up that you sign your name, you pay your bills. Period. But if things keep on this way, I just don’t know. . . .”

Men like Brad Pritchard do not file for bankruptcy as a way of ducking out of their support obligations. Bankruptcy law is quite firm on this point. All child support and alimony orders survive a bankruptcy filing
100 percent intact
. These men may escape their credit card debts and outstanding medical bills, and they may slide out from underneath some business debts or drop their car loans (if they give up their cars), but they cannot reduce their current or past-due child support obligations by a single penny. So why do they file? Many of them are in the bankruptcy courts to shake off Citibank and Ford Motor Credit so they can free up the money they need to fulfill their
obligations to their children. Congressman Henry Hyde and his cronies may charge that these men suffer “an absence of personal responsibility,” but for many, filing for bankruptcy may be the most responsible thing these divorced fathers can do for their children.
⁵⁴

The illusion that dads can pay enough to stabilize the broken family is born partly of hope and partly of despair. If Dad can’t pay more, how does the single mother ever escape the Two-Income Trap? For that matter, how does the divorced father break free? They do it the same way the dual-income family does.

The predicament of divorced mothers has worsened not because divorce itself is any harder, but because couples today are in worse shape before they split up. Solutions that improve the financial footing of married couples will help divorcing parents by putting them in a stronger position as they embark on their newly separated lives. So, for example, if decent public schools were made available to
all
children, regardless of the child’s zip code, then the bidding wars for suburban housing would let up and the newly single mother could start off divorced life with a more modest mortgage. She also might be less reluctant to give up the family home and move into a cheaper house if a school choice policy ensured that she wouldn’t be forced to transfer the kids to an unfamiliar—and often inferior—public school. Similarly, if publicly funded preschool were made available to
all
children, a single mother with young children would have more leeway in her budget.

In addition, policies that encourage personal savings (see chapter 3) and discourage debt (which we’ll discuss in chapter 6) would help
both
spouses survive the economic aftermath of divorce. If a woman started her divorced life with no credit card debt and some money in the bank, she would have a better chance of holding on to her house and staying out of the bankruptcy courts. And if a father left his marriage on more secure financial footing, he would stand a better chance
of making his child support payments and keeping himself and his ex-wife out of bankruptcy. Likewise, policies that expand health insurance and disability coverage would particularly benefit single parents because they are most vulnerable when disaster strikes.

Are there any policies that should single out the single mother? There might be one. As we noted in chapter 2, universal publicly funded day care might have unintended financial consequences, some of which would be particularly negative for the traditional single-breadwinner two-parent family. But the government could play another role in taking care of youngsters: free (or subsidized) child care for the children of single parents. This would give the newly single mother an immediate, much-needed financial leg up, improving her chances of competing in a two-income world. And it would do so without increasing the pressure on two-parent families to send both adults to work.

During the past generation, the single mother has come into her own politically. Nearly 10 million strong, these women are no longer shunned by politicians and religious leaders. They star in sitcoms, they are featured in congressional debates, and they help swing elections. But their economic fortunes—or misfortunes—are treated as something that begin the day their marriages end. Politicians build up political capital by loudly proclaiming their support for these women, while their ex-husbands either disappear from the story or are vilified as deadbeats who don’t care about their children. In our view, all that noise just diverts attention from any meaningful changes that could actually improve the lot of middle-class mothers and fathers.

Current views of the economics of divorce accomplish little more than stoking a tired old battle between the sexes. The laws have been changed, and child support orders, while not perfect, are now reasonably well enforced for millions of middle-class families. It is time for a fresh approach to improving the circumstances of
all
middle-class parents, married and single alike.

I
n May 1998, First Lady Hillary Clinton was the star attraction at a Boston fund-raiser for candidates who supported women’s issues. The lineup was impressive: she stood shoulder to shoulder with a half dozen congresswomen, including Nancy Pelosi and Sheila Jackson Lee, arguably among the most powerful female politicians in America at the time. Mrs. Clinton was in her element, vibrant and hard-hitting in front of an almost all-woman audience that applauded her every sentence. Her speech was part policy (federal subsidies for day care and access to health insurance) and part pep rally (help send more Democrats to Congress). She swept out of the ballroom as the crowd jumped to its feet to cheer her on.

I (Elizabeth) stood waiting in the darkened hallway in a service entrance. I had been invited to meet with Mrs. Clinton, and there I stood, not knowing a single person either in the ballroom or among the entourage that trailed along with her. I listened as young women—presumably Mrs. Clinton’s aides—chatted quietly about who were the “major players” in the room and whether that neon-red jacket made one of the congresswomen look too pasty. Behind me, two beefy men in overcoats stood silently, continuously scanning in all directions.

Mrs. Clinton thrust her hand forward. “You must be Professor Warren. I read your op-ed in the
New York Times
about women
and bankruptcy, and I want to talk with you.” A few weeks earlier I had written a column that sharply criticized a bill making its way through Congress that proposed to undercut bankruptcy protections for middle-class families in financial trouble.
¹
Before I could respond, Mrs. Clinton snapped her head sharply to the side and called to no one in particular, “Where’s lunch? I’m hungry.”

We were ushered to a small office with cracked leatherette chairs, carefully set out with lunch for the First Lady—half a hamburger, French fries, Diet Coke—and an iced tea for me. The small army of aides and security agents were left behind in the hallway; there were just the two of us in the tiny room.

Before she had taken a single bite of her hamburger, Mrs. Clinton tore into the business at hand: “I have two questions for you: How are women affected by the bankruptcy laws, and how did a woman get to be a chaired professor at Harvard Law School?”

For the next twenty-five minutes, I pounded Mrs. Clinton with graphs, charts, and projections. She ate fast and asked questions even faster. I have taught bankruptcy law to thousands of students—some of them among the brightest in the country—but I never saw one like Mrs. Clinton. Impatient, lightning-quick, and interested in all the nuances. In just half an hour, she went from knowing almost nothing about the bankruptcy system to grasping the counterintuitive twist that single mothers were
helped
when their ex-husbands filed bankruptcy because these men could discharge credit card debts and use the money to catch up on their child support. I explained to Mrs. Clinton how the pending bankruptcy bill would effectively dismantle bankruptcy protections for families, forcing single mothers to compete with legions of credit card bill collectors for an ex-husband’s income and making it more difficult for families to hold on to their homes.

At the end of our discussion, Mrs. Clinton stood up and said, “Well, I’m convinced. It is our job to stop
that awful bill
. You help me, and I’ll help you.” We talked university politics for a bit, then walked outside. As we stepped through the door, she grabbed me by
the shoulder, turned me around for the obligatory photograph, shook my hand again, and headed off with her people.

Mrs. Clinton’s newfound opposition to the bankruptcy bill surprised me. Given her legal training and her devotion to women’s causes, I had certainly expected her to grasp the importance of the issue. But President Clinton’s staff had been quietly supporting the bankruptcy bill for several months. Bill Clinton wanted to show that he and other “New Democrats” could play ball with business interests, and the major banks were lobbying hard for changes in the bankruptcy laws. I had expected that it would take a lot more than thirty minutes to convince Hillary Clinton to depart from the position widely rumored to be supported by her husband.

But Mrs. Clinton stayed firm in her fight against “that awful bill.” She was convinced that the bill was “unfair to women and children,” and she intended to stand by her principles, even if it cost some Democratic party candidates campaign contributions.
²
Over the ensuing months, she was true to her word. With her strong support, the Democrats slowed the bill’s passage through Congress.
³
When Congress finally passed the bill in October 2000, President Clinton vetoed it. The following summer, an aide explained to me the abrupt about-face: “A couple of days after Mrs. Clinton met with you, we changed sides [on the bankruptcy bill] so fast that you could see skid marks in the hallways of the White House.” Thanks to Mrs. Clinton, families still had one financial refuge left—at least for the moment.