Are married GenXers avoiding the 2 Income Trap?

Maybe it's the age of your friends. Hard to ditch income #2 until income #1 can cover the differential. The later you wait to make a kid the better the likelihood that mom or wife can utter those dreamy words, "take this job and shove it". Most of my friends' wives, when to opportunity presented itself they dropped their well developed career (the one they kept their maidan name for) like it was hot.
I'm just say'in...

My nephew, a grad of a big biz school, has great job at a major bank. But the big income comes with crazy hours - which include weekends. In spite of his generous salary, he has to share a crappy apt with a room mate -- it is all he can afford even on a good salary. His girlfriend is also a biz school grad and though it took her two years to find a job, she also has finally landed a great job. They are ready to move in together but they are both fed up with the lifestyle. In particular working so desperately hard , and when they are dead tired, they walk into a depressing, cramped apt with no closets , no view, no amenities.

They are both considering giving up their good jobs and move to another city where they live comfortably for a lot less. They will spend their weekends and holidays this year touring cities with good biz opportunities and better cost of living. They both love Manhattan but they are fed up.

Does apt23's nephew work weekends, or have free weekends to tour cities?

Does the girlfriend have a great job that she just landed, or is she fed up with the lifestyle ... already?

Another "sky is falling" story from apt23 without the facts quite connecting.

Ding Dong!
Is that the back door bell ringing?
Yes, it's w67 with a package delivery for apt23 ...
http://streeteasy.com/nyc/talk/discussion/28012-did-you-call-w67

Been at a big bank since 1999. With meager top lie growth profit depends the on expense side where "productivity gains" such as working ourselves to the bone is the new normal. Markedly different expectations in terms of work hours these days across all functions and levels.

Most Gen Xers are firmly in their 30s, if not already 40.

same old shit--my friends in IB training programs, and post-business-school 30 yrs ago worked constantly, until they got senior enough to delegate. Law, IB...you gotta want it...nothing new.

And these days, those who take lees competitive jobs to boost QOL, often find the hours are just as bad.

That's where i see the difference--and it's about the shitty job market--at all levels the employer has all the cards--put up, or one of the many in line for your job will.

>same old shit--my friends in IB training programs, and post-business-school 30 yrs ago worked constantly,

So basically apt23's nephew is just weak.

Apt23: since this is all anonymous on here, would you mind sharing their actual salaries? Numbers would help. What is a "generous" salary that necessitates a cramped apartment with a roommate?

> Hard to ditch income #2 until income #1 can cover the differential. The later you wait to make a kid the better the likelihood that mom or wife can utter those dreamy words, "take this job and shove it".

> Most of my friends' wives, when to opportunity presented itself they dropped their well developed career (the one they kept their maidan name for) like it was hot.

I'm not sure I see that (maybe that's the real process) and I get the "socially acceptable" explanation of how working for a demanding career seems basically designed for single people or child-less ones. Clearly, the net $ earned after taxes (which will only go up thanks to aging demographics) and childcare (for which the gov doesn't help at all).

Apt23
Totally understand. Manhattan is for the driven. Those that wish to live a more conventional life style would be better suited for smaller less demanding towns with lower cost of living. If I had to start over it would not be here. It has allowed me to grow a successful business but the cost of living is intense. I work way more hours in my middle age than I had ever considered in my youth. Education is expensive as is the life style. If we run out to diner instead of eating in it's $200 plus. You just have to want to be here. You have to possess that frenetic energy that makes you look angry and agitated to anyone who sees you outside your island habitat. Recently I had an opportunity to visit with a friend in Scottsdale. We drove his car to a "car spa" where 12 small brownish men massaged his auto for 50 minutes while we sipped cappuccino under an air conditioned white tent. He looked at me and said, "this is the life".
It took all my inner strength to suppress the urge to beat him back to his senses with that ceramic coffee mug.
Note to self....never get off the boat.

> But the big income comes with crazy hours - which include weekends

yep, that's a killer when having kids

> They will spend their weekends and holidays this year touring cities with good biz opportunities and better cost of living. They both love Manhattan but they are fed up.

Agree! we're about to do the same thing, towards Scarsdale, Pleasantville and the like.

> If we run out to diner instead of eating in it's $200 plus.

hey, you are being over-charged! I live in Manhattan too and eat out well for much less.

It is a function of who you know, bearing in mind that it is always a self-selected population sample. 1 income is as much of a trap as 2 - what happens in the case of job loss, divorce, death.

I can't generalize that much about the people I know - no one couple has the exact same circumstances. I have friends who both work so they can squirrel away savings and have mtge paid off so that one can quit when kids are in middle school. I have friends where one had a much lower earning job and potential so obvious who had to quit. Quite a few couples where wife has the better paying job and trajectory.

My kids are young, so yes, I tend to know well-educated housewives but few full time housewives remain when all the kids are in say, middle school and up.

John Mauldin published a piece on the 21st (you can find it on the big picture) on demographics and singles. The birth rate in the us has declined to 1.9 kids per child-bearing age woman, when we need 2.1 to keep population steady given all other current factors. Supposedly this will promote ever-increasing urbanization as the singles seek to play where they work and live.

I'm older, but looking around I see fewer people able to stay at home, at least in the prime metro areas. In my group, once a housewife almost always a housewife, unless necessity strikes. Very few enter the workforce when their kids are older than, say, 2nd grade. But in many, many areas the second income, despite how little it nets, pays for the utilities, perhaps has a lower premium for health care.

AR: 2 points you bring up which are interesting. 1) What necessity means. In the case of some, not so much economic as mental health. 2) Also, some jobs are easier to come back to than others, especially if one never leaves (freelance types). If economic circumstances allow, retraining is possible. I've seen women re-enter successfully in healthcare (social work, therapist, nurse, doc), retrain as teachers and work in non-profit. Most women I know with kids my age (again, small sample size) who are housewives wouldn't mind having a PT job if possible, once the kids are able to take themselves to school and back.

Notadmin: I don't know if you mean to make this point but are you also implying that "post-feminism" has something to do with it? There was certainly a strong streak of "If I have the same qualifications as a man, I'm going to do the same job" in my mother's college friends. All of them worked, and their children were raised by nannies/daycare/grandparents. It wasn't that long ago that a man would be openly and blatantly hired over a woman because he needed the job (not saying it never happens today).

> I have friends where one had a much lower earning job and potential so obvious who had to quit. Quite a few couples where wife has the better paying job and trajectory.

Bet it's also about stability. Is the finance job always better when it's so unstable?

> My kids are young, so yes, I tend to know well-educated housewives but few full time housewives remain when all the kids are in say, middle school and up.

Outside of expensive cities seems that wives are more likely to opt-out once kids are teenagers than when they need diapers. To help them out with education (facilitate their entrance into a good college). If so, it's a big change from the frame-work of staying with them while youngest and most fragile.

> I'm older, but looking around I see fewer people able to stay at home, at least in the prime metro areas

My group tends to be highly educated, what I see is that many don't even have more than a couple of years of reaping the rewards from their education (graduate at a great university) cause they marry guys with demanding jobs. Cannot really combine 2 non 9-5 schedules in a peaceful way. If marginal tax rates change significantly for the +$250k bunch, the 2nd earner is the one that will feel the bulk of the effect. Wonder whether they will respond.

> once a housewife almost always a housewife, unless necessity strikes.

SO TRUE! Is that cause of the unwillingness to pay the high tax of an unsteady labor force participation? Or is it cause tasting wage-freedom makes it "sticky"?

Notadmin: when I was thinking better job and trajectory, I wasn't thinking finance at all. Ditto with the working-like-dogs-to-pay-off-mtge and then quit when kids are in MS/HS. These aren't NYC friends.

When I think of NYC friends and acquaintances, when they quit if they quit has a lot to do with the professions they're in and how old they are when they marry/procreate and whom they marry. That's why I said that it's difficult to generalize. But if I had to generalize about NYC types:

1) Female docs/dentists/therapists/medical-services go PT if they can, few quit completely. Because of the length of training, female docs tend to be conscious of how to guide their career and when to have kids.
2) Female lawyers - if they quit completely, they tend to do so fairly early in their career. Once they've put in, say 6+ years and if they're conscious of QOL issues, they try to guide their career away from punishing hours and biglaw. Also, due to the nature of the profession here, many lawyers male and female end up in careers that they hadn't quite envisioned, maybe makes quitting easier.
3) Female finance types - I don't know enough about what would make one quit. Certainly the few senior finance women I know are extremely driven, organized and have supportive spouses.

notadmin, I hope it's different for your generation, and I think it's personal, but I feel many of my generation only comes to terms with the houseperson status when it's no longer a perceived "necessity". 10023, necessity covers many meanings, but in the scenarios i was thinking about it was largely a result of the last two recessions.

Oh, and notadmin, that's exactly why I quit my job. My husband was a big law associate. I tried working, but it just didn't work. I'm hopeful, though, that many not employed in the craziest couple of areas are now finding more balance. I'm seeing this in Brooklyn.

It's true - women I know my age-ish are skittish about calling themselves housewives.

> 1) What necessity means. In the case of some, not so much economic as mental health.

and one would expect that the more women do work for a wage just to "stay sane" the lower wages are set? wonder whether the "mental health" motivated workers go for similar sectors.

> Most women I know with kids my age (again, small sample size) who are housewives wouldn't mind having a PT job if possible, once the kids are able to take themselves to school and back.

agree, there seems to be a lack of good quality PT jobs though

> All of them worked, and their children were raised by nannies/daycare/grandparents.

think in education terms, who brings up the kids matters more than it did before. we didn't have as many "tiger moms" at the top of the econ pyramid in the 70s, for ex. that might be reflecting that the returns for a more careful upbringing (done by more educated people, not just the cheapest care-giver who also does household chores) had increased since then.

Kyle: I don't know what he makes. But consider he worked at top brokerage firm (marquis name) after college and @ 2008 collapse went to a good biz grad school. He was recruited by a top bank (big marquis name) and one of first to get a job from his class. He and his roommate live in a nice, ordinary high rise in midtown, small two bedrooms with no real neighborhood amenities. I would guess rent is $5000- 6000.

As usual, apt23's story doesn't quite add up.
$6K for a 2BR apartment but it is depressing, cramped apt with no closets , no view, no amenities.

sorry, but the "2 income trap" is such a 1% problem.

>sorry, but the "2 income trap" is such a 1% problem.

yikes attacking apt23's nephew left and right.

KW / apt23, I believe that going to biz school in 2008 would put him at a 2nd-year associate. Something in the ballpark of $250K all-in would be typical according to various websites. No idea on cash vs stock vs deferred.

Pink collar jobs.

Ino: Ok. That's the last time I am taking him to dinner. His thinking seems to be that even with a pay cut by moving to another city, the cost of living and a much better, healthier lifestyle will more than compensate. Especially since he is now thinking of kids. And he has been saving for a move -- apparently much more than I ever thought.

Though I am obviously much older, I do have some several good gen x friends. I can think of three couples where the wife is earning more than the husband. Two of those couples are now considering children and they are planning for the husband to be the househusband and stay with the kids. Of course, that is just theory at this point but it is a significant change in the conversation from my generation -- it would never have been considered an option in my day. Of course, the pay differential between m/f was much more egregious than it is now.

yikes: 2 income trap is not at all a 1% problem. This issue arose with the rise of the middle class after WWII. Just because the poor are more tied to a second income doesn't mean they don't have the same quality of life issues (who should raise the chlidren, day care issues, health care issues, special circumstances such as developmentally challenged children) The fact that less financially adept families are often forced into becoming one income families through economic turmoil, does not lessen the dilemma -- it increases.

And if you are a 1 percenter and choose to give up one income, you enter the larger population pool by default. A 1% who lucked into a gas/oil lease on their property in a low cost of living state like North Dakota is entirely different from a 1% in Manhattan where the cost of living nips at the heels of two income families. As has been stated ad nauseum in our national presidential debate -- $250K income does not make you wealthy in Manhattan but it puts you in a high percentile of income nationally.

I have to agree with ino. They make around 400 together easy. I understand that one cannot comfortably live in NYC with a family of lets say 2 kids on 200K a year. But for a couple 400K is plenty. I would say that even 200K is not bad at all. I think for a family with 2 kids in private and one income you are looking at
8K rent, 5K tuition, 1K extracurricular, 1K babysitter/cleaning, 2K groceries, 1K car with garage, 1K vacationing of some sort and at least 1K clothes per month. Are my numbers in the ballpark or am i missing something?

of course it's a 1% problem--most american families have no choice but that both parents work (that is, if both can find a job), wherever they live, incl here in nyc. were these families to lose 1 of 2 incomes, whether by choice, or if forced to, they would experience significant financial difficulty

who raises the children and all that is laughable to them--they have no choice in the matter that neither stay at home and not work

your relative pays 72k/year in rent--this alone speak of a 1% situation--sorry if they dont have enough closets, but their's is not a situation i am going to worry about

thus my comment that their "problems" are 1% problems

apt23 and her family are being torn to shreds here.

We discuss this ad nauseum with our friends. In our own non-scientific sample, we concluded that everybody who could "afford" to quit their jobs did with the exception of two categories: (1) those who love their jobs; and (2) those whose identity/sense of self is tied to being gainfully employed outside the home.

>We discuss this ad nauseum with our friends.

You should move on to other topics. Like healthcare. Or concave NBAs.

yikes: The very fact that it is a problem for the 99% is exactly the reason taxes need to be raised on !%. It is absolutely a problem for the 99%. Just because the poor are forced from their jobs doesn't mean they don't experience the more humanistic problems of the 1% regarding child care for their children and self esteem for the parents. Just because you are poor doesn't mean you cede the questions of raising your children to others --even if it means you quit a job and go on welfare.

My relative -- who pays 36K in rent, not 72K--- has been blessed by virtue of birth, something I pound into his head every chance I get. I was raised middle class and rose by virtue of working since I was 15 and putting myself thru college. I am now blessed to be in the upper percentiles by virtue of being born at the right time -- monetizing the ability to ride the greatest wealth gain of many generations -- unfortunately at the expense of younger generations. That is why I have campaigned for years with unstinting effort for candidates who champion the middle class. Because I play market every day, I am outraged at the advantages the rich have to play the market that is not available to average citizens (the gambling mechanism of options, e.g.). Until the Republicans address carry trade which allows hugely rich individuals like Mitt Romney to pay only 14% taxes-- only because he can afford lawyer and analysts that advise him how to stuff his IRA with rigged shares of IPO's that are set to gain by 1000% or more.-- I feel they don't have the right to address entitlement issues. I do believe entitlement will have to be cut to balance the budget but why should it even be on the table until carry trade is eliminated.

So the point about my nephew was that even though he was doing very well financially, he finds the apt he can afford oppressive and dark and cramped.. He would rather live in nature and live with human dignity afforded by space and light. So imagine what a small family, a 99% family would feel in the apt they are able to afford -- more evidence that prices are too high in NYC,.

So if you want to advocate for the 99% who have issues about two incomes, stop griping about my relative and call your representatives and insist that hedge fund workers pay income tax like the rest of us and insist they cap deductions for anyone who buys a million dollar apt to make living in NY more affordable.

HB - I try to change subject at every turn. We recently had dinner with a couple comprised of private equity fund manager and primary care physician who advocate state sponsored childcare so neither of them has to spend time raising their children. Many at the table had strong feelings on the subject; I had never given it much thought and still haven't. All I know is that conversation started by my trying to steer conversation away from work-life balance/can women have it all discussion that pops up all the time.

>My relative -- who pays 36K in rent, not 72K--- has been blessed by virtue of birth, something I pound into his head every chance I get.

Leave it to shrew Auntie apt23 to be the family nag.

>So if you want to advocate for the 99% who have issues about two incomes, stop griping about my relative and call your representatives and insist that hedge fund workers pay income tax like the rest of us and insist they cap deductions for anyone who buys a million dollar apt to make living in NY more affordable.

I'm entirely opposed to the tax benefits unfairly afforded benefits on private equity. But it's ridiculous to act as if all in the 1% receive this benefit. Furthermore, it's amusing that apt23 and her lazy nephew are being smashed by yikes, so she comes up with a new boogeyman to blame and divert attention.

Once again, excuse my stupid grammar. Not that anyone reads what I say to begin with.

Very very few people and very few dollars are affected by the carried interest preferential taxation.

Taxing carried interest at regular rates raises $1-2 billion a year, which is a wee bit less than the current budget deficit of $1000 billion a year.

So anyone who wastes their breath or Internet electrons talking about it has bought into leftist demonization and is wasting time.

but...isn't the issue whether or not its fair....not about how much money it brings in?

isn't it exactly like suggesting that left handed red heads should pay less tax?

>isn't it exactly like suggesting that left handed red heads should pay less tax?

Freak

>but...isn't the issue whether or not its fair

When I was very young, one of my teachers told our school class that life wasn't fair.
I guess life is really unfair to people who reach their 60s and 70s who still haven't figured the natural unfairness of life.

crescent: raising taxes on the 1% population will not bring in much revenue either. But it does not address the fact that many of those people have the advantage of an unfair playing field --- from low estate taxes to carried interest. Yet the very same 1% don't take those advantages into consideration when they call for cuts in entitlements -- like food stamps for the poor. No one mentions that cutting food stamps won't put a dent in the budget deficit either -- not to mention that it will cause a whole swath of expensive social problems. I have been on both sides of the equation and can say that the tax advantages I have received have robbed the next generation and are patently unfair.

Consider that there are thousands of wealthy people in Manhattan alone that took the tax advantage of the first $500K of profits on selling a property tax free and the remaining profits taxed at the lowest capital gains rate in the history of the country -- all while the Fed propped up an unnatural RE bubble which bubbled up over 300%. over a decade. An unprecedented bubble in the world history of RE. AND you could take advantage of this tax loophole every two years!! How many millionaires do you think took advantage of this government entitlement many times over. Not only will the current generation of owners not be able to take advantage of these wealth inducing tax advantages, they won't even get a mortgage deduction.

How fair is it that just because you were born a decade too late to participate in a government induced bubble, you have a great chance of being unemployed or buried in student debt or perhaps even malnourished. But calling for entitlement cuts in the face of this boondoggle for the wealthy and refusing any rise in taxes on those who unfairly benefitted is not right wing dogma?

i dont have the wind for this.

your nephew should count himself lucky, given the economy and job market for most young people.

crescent: A billion here, a billion there--soon you're talking about real money. Compared to most spending cuts that people point to on the discretionary size, a couple of billion dollars a year is actually pretty big chunk of deficit reduction. And it's an easy change to make that has virtually no downside on the broader economy and fixes a fundamental bit of unfairness in the tax code. So getting rid of the carried interest preference is far from wasting time, it's an obvious part of any package of changes to reduce the deficit.

Jordyn, you know very well the "it's a good start" argument loses to an avalanche called realism. You know as well as most politicians on both sides that the only way to cut a $1000 billion yearly deficit is to do it $100-200 billion at a time- that means money out of the masses- raise their taxes or cut entitlements.

Otherwise interest continues to grow as a percent of the federal budget- shutter as the thought of what happens when interest rates return to more historic non-negative real levels.

I don't care if they raise carried interest taxation rates but I do care that the political discourse chosen by the left involves distracting - you've got most of the country thinking if they raise various taxes on the top 1% that problems will be solved.

apt23 - about 80% of the tax code is custom credits and deductions- there is no presumption of fairness
I;m pretty sure that the "lowest capital gains rate in the history of the country" was 0% for the first 130 years of the Republic. Then it was well below 15% for the next 30 years.

What happens if the left gets what they want? Top rate goes to 39.6%, capital gains tax to 39.6%+3.8%, deductions to 28% ---> deficit falls from $1000 billion to $900 billion (remember that in Britain, the hike of the top rate raised only 40% of what was forecast)- now what? You can't raise taxes on them again after spending years clawing and spending political capital. Next will be the middle class....

so...what is your proposal?

apt23 only wants higher taxes on everyone but her.
And I bet that Florida is where she pays state income taxes.

crescent: you conveniently left our the issue of fairness. Why should you make the substantial fund raising cuts on the poor when you are not willing to cut the unfair advantages of perks only available to the wealthy -- in spite of the fact that they raise less revenues precisely because they are only available to the elite few.

> Why should you make the substantial fund raising cuts on the poor when you are not willing to cut the unfair advantages of perks only available to the wealthy

Because the poor have had substantial help in the form of targeted tax credits for the last 20 years.

Fair to me means that if one set of taxpayers lose their Bush-era tax cuts, so should everyone.

As to the question of my suggested solution: go after corporate taxes. That is a system that is truly broken with domestic businesses highly-taxed by the free world's highest rates while tons of export-able companies can hide their profits abroad. Corporate taxes collected are at their lowest in many generations while corporate profits are at their apex as a % of GDP. That's a way to collect hundreds of billions.

Apt23, I think the distraction / misinformation that crescent23 talks about is accurate. For example, you talk here about hedge funds & carried interest. The fact of the matter is that most positions taken by hedge funds are not held long enough for favorable tax treatment (never mind the short positions).

There was a Congressional hearing in 2008 with 5 big hedge fund guys -- Soros, Paulson, Falcone, Griffin, Simons. One congressman asks the carried interest question in a pointed manner, expecting to make a point. Four of them go down the line with responses of "Yeah, get rid of it" or "I wouldn't oppose a change.". When it gets to Griffin, he says "do whatever you like, I'm mostly fully-taxed, but just make it uniform across all industries rather than specific to one industry". I.e., real estate partnerships, whatever. Congressman turns this into "so you want to raise taxes on the entrepreneur chef" who benefits from the same carried interest provisions. Griffin re-states that he thinks a uniform treatment is good, Congressman doesn't want to hear it. Griffin says "Whatever, do what you want; it won't make a difference to my taxes."

Reality is that real estate partnerships care a lot more about carried interest. I imagine they are the lobby that gets it killed (along with PE and VC). However, much more ink is spilled on hedge funds regarding the matter.

In any case, "fair" on carried interest would be ordinary income for the value at time of investment and capital gains / loss for the rest of it.

But all this is a sideshow to the real question, as crescent23 mentions: after raising taxes on the 1%, we still need at least a few hundred billion more out the annual budget. Taxes or spending, take your pick. I'm fine with either.

When you have folks saying "keep your dirty government hands off my Medicare" while at the same time saying "keep your commie hands off my top-10% tax rates / deductions", it means the population has not come to terms with reality. If you have the top 10% whining about how their benefits should not get cut and their taxes should not be raised, WTF? If not even the top 10%, who's left?

I have half a mind that we should perhaps go off the fiscal cliff and leave it at that. It'd hurt short-term, but it'd put us on a more sustainable path long-term. There is probably a better path to accomplish the goal, but the population (and hence politicians) won't hear it.

Ino: There is no question that entitlements should be cut --significantly. There is bankruptcy for the social entitlements if they are not cut. I can't believe that politicians are not being specific about what to cut. I don't think any politician should be allowed to go on television unless they have a list of what they will cut.

Obama seems to be agreeable to cuts --he has agreed to the restructuring of how medicare benefits are calculated, which is significant--but he seems to be insisting that the GOP agrees first or at least at the same time to tax increases. I wish they would just get on with it.

I think your "fair" position is fine. But what an easy fix -- why can't they get it done. If it is the RE industry (I had no idea) then lets all raise a ruckus.

I hope we don't go over the cliff. I think there will be a lot of unintended consequences.

Oh sure,
television news producers nation-wide will prevent politicians from going "on television unless they have a list of what they will cut."
Each network will have that requirement listed in every pre-production meeting.

Right. Very intelligent input from the streeteasy comment poster/great thinker.

> Agree! we're about to do the same thing, towards Scarsdale, Pleasantville and the like.

Great, you have the same hours, and a new 2.5 hour commute!

with children?
apt23 has crossed another line

huntersburg:
apt23 was just being ironic.

She was being moronic when she threatened to contact my music business friends, whom she knows (but not as a lackey, like me!) and order them to disown me.

It seems that apt23 is obsessed with sex with children. It's always on her mind and is her weaponary tactical accusation against me, whenever any of her stupid comments are pointed out.

In the same comment above, she claims that nothing I have to say ever matters.

"Ding dong"! Avon idiot lady calling.

Truth: Amazing how many SE posters you attack. Guess that is why you are grey -- that and the fact that you never have anything of interest to post beyond ad hominem attacks. And Ding Dong the witch is dead is a film reference not an Avon Lady you pathetic fool.

Why does apt23 ignore me but read Truth?

Why would someone live in the State of Florida 183 days per year?

They are opting out because they can. Working is for the poor. Duh!