Safety and Education Lead to Middle-Class Debt

Even in this season of tragic storms and ongoing war, it was an unsettling book to read, a disconcerting look into the troubled financial heart of America.

            The Two-Income Trap: Why Middle-Class Parents Are Going Broke, was co-authored by Harvard Law School professor, Elizabeth Warren, and Amelia Warren Tyagi, a consultant specializing in health care and public education.

            Professor Warren was part of the research team that conducted the deepest investigation of bankruptcy ever done in the United States. And she wrote The Two-Income Trap with her daughter to encourage “meaningful changes. . . in Congress, in state legislatures, in school boards, and in families.”

            Initially, Warren thought that the research would show it was the elderly with depleted savings or the young with their new collection of credit cards who would be capsized by debt. Instead, Warren and Tyagi discovered that married couples with children were “more than twice as likely to file for bankruptcy as their childless counterparts.” The authors noted that during 2004 seventy percent of all Americans were “carrying so much debt that it [was] making their home lives unhappy,” and during that year “more children will live through their parents’ bankruptcy than their parents’ divorce.”

            Even more frightening is the authors’ claim that if the trend continues “by the end of this decade. . . nearly one of every seven families with children would have declared itself flat broke.”

            It is not too many mall stop-and-shops or wild bidding on eBay that has created the distress. Nor is it that dual-earner, median-income families aren’t working harder and earning more, in inflation-adjusted dollars, than the single-breadwinner family of a generation ago.

            “I can’t say strongly enough how decent and hardworking these people are,” Professor Warren told the Harvard University Gazette. “The cost of being middle class has shot out of the reach of the median family. For millions of families, the situation is getting desperate.”

            The reasons, according to Warren and Tyagi, boil down to “safety and education,” namely a house in a good neighborhood with good schools.

            The authors outline the dimensions of the problem in meticulous detail, particularly how dual-earner couples, bidding on houses in desirable locations, push the cost of homes into the stratosphere.

            Of course, solutions to this predicament are elusive. The authors recommend that families undergo “financial fire drills,” reducing expenses and devising a plan in the event that one of the two paychecks disappears because of job loss or illness. They also have a list of recommendations for government action, though I’m not overly optimistic. Here’s why:

            One enormous pressure on the middle class, as Warren and Tyagi point out, is the cost of health care, which has been growing at three times the rate of inflation. These costs, in turn, increase the costs of other necessities, including the centerpiece of the American dream: education.

            Public-school systems, colleges, and universities all struggle under the weight of insurance premiums that for the past several years have increased annually by 10 percent or more. And it seems unlikely that help with this dilemma will come from afar.

            As Drew Altman of the Kaiser Family Foundation, a non-partisan research group in California, told USA TODAY: “There are lots of things on the table, but there’s nothing that will have a significant impact on the rate of increase of health care costs.”

            For a member of a school board, in a district where medical-insurance premiums approach 11 percent of the overall budget, this is dispiriting news.

            Yet I hold on to my belief that these, and other budgetary challenges, can be met, to some degree, at the local level—that the hard, pragmatic choices can be made.

            My faith is rooted in the fact that it is the way things have always been done—not just in our beautiful corner of New York State, but across this nation, where people, practical and unafraid, have a remarkable record of putting their shoulders to the wheel and beating long odds to craft a brighter future.

            These victories have been won by bands of committed citizens, qualified not by their diplomas or training, but only by their willingness to speak up, their dedication to civic duty and their desire to solve problems for the common good.

            Some might label my confidence in our community’s ability to manage these issues as arrogance, but I view it as the essence of who were are as a people, the definition of our Americanness, we dreamers and pragmatists.

            I see it as nothing less than our history in all its shadings of darkness and light—a history that reaches back to the imperfect and hallowed roots of our founding.