Being newly-married, my wife and I have frequently discussed our career goals and how we want to manage our family both now and in the future when we have kids. I grew up in a family in which both of my parents worked outside the home, but when you run the numbers it often turns out that two incomes aren't better than one.
The main culprits for the financial failure of second incomes are a tax system that savagely penalizes second incomes and the high cost of quality child care. The result, among financially savvy couples with a single high wage-earner, is that spouses with much less earning power often stop working until the kids are in school. Those who stay on the job do so not for the money, but for the challenge and fulfillment they derive from work outside the home. ...Peggy Ruhlin, a financial planner and certified public accountant in Columbus, Ohio, found it necessary to relate some hard truths about second incomes to her clients. She cites the case of a highly paid executive whose wife worked for a government social work agency. Her position was consuming and paid less than $25,000 a year, but it was deeply satisfying because she was helping people in need. Ruhlin ran through the numbers and showed that the wife was taking home a grand total of $1,500 a year when all was said and done. ...
Ruhlin says the Social Security cut was especially unkind because, on retirement, the wife will be entitled to the equivalent of half her husband's entitlement (he'll still get the full amount) even if she never worked at all. Her contributions from a relatively low-wage job would never entitle her to more on her own, and so her payments will never do her any good.
On top of all this were child care, commuting and other expenses. When the planner broke the news, the woman became teary-eyed. She started considering volunteer work with more flexible hours.
Even aside from tax considerations and other costs mentioned in the article, there are plenty of intangible benefits to having an adult focus on managing the home.
(HT: Sound Mind Investing Blog.)
Update:
Further, on the myth of the working mother:
George Gilder points out that "women in the home are not performing some optional role that can be more efficiently fulfilled by the welfare state. Women in the home are not 'wasting' their human resources. The role of the mother is the paramount support of civilized human society. It is essential to the socialization of men and of children. The maternal love and nurture of small children is an asset that can be replaced, if at all, only at vastly greater cost. Such attention is crucial to raising children into healthy productive citizens. In other words, 'the hand that rocks the cradle rules the world.'"
Yup. That's one of the reasons I left Kalifornia, so Mrs. X won't have to work anymore.
The developmental psychology literature is pretty clear regarding the benefits of an intentional early education. By the 4th grade, a child's reading skills can already predict a chunk of success in college and beyond (roughly 25-30% of variance).
One-income homes can often afford the encouragement of "high cognitive" skills through one-on-one instruction from parents (even through game-playing and other mental exercises), while two-income homes often run the risk of short-term gains (for the parents, usually) versus long-term losses (for the child). Asian immigrants have shown that low income does not have to mean low performance in school. By the second or third generation, their kids are raking in the money. Often, the kids reciprocate their parents' efforts.
That is a very interesting point, Mark A. I never thought of relating whether or not both parents work with whether or not their kids get enough stimuli with whether or not the kids become smart and successful, but now that you point it out, it's clearly a fairly possible chain of causation.
But back to the economic consequences of having both parents work: Elizabeth Warren and her daughter have written a book called "The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke", which is about how bankrupcy and debt problems are getting a lot worse in modern American middle-class families. The main cause of this problem, they say, is the fact that having both parents work looks like it brings added security but it actually brings in added risk and all kinds of added expenses. It's actually pretty interesting.
Audio for an interesting interview on this book is at
http://www.npr.org/dmg/dmg.php?prgCode=ATC&showDate=08-Sep-2003&segNum=16&NPRMediaPref=WM&getAd=1
Haven't I posted about this before? Yes, I have:
http://www.mwilliams.info/archives/006487.php
And by "posted" I mean "commented". Or something.
I seem to remember something about men whose wives work in the home making more money than husbands in dual income families? I know that since I quit my office job (making 110% of what my husband made at the time), my hubby has been breaking all his records in his all-commission health club job.
I thought there was some book out there about how to help your husband make more money or be more successful at work. Written for stay-at-home moms or wives.
LT
Well, it certainly is working out in my family's case. I can make a lot more money as an actuary, and have more professional chances because my husband is staying home and bringing up the kids. Also, this way we can have 5-7 kids like we want. It's pretty impossible to have a large family if you don't have a family member doing the childcare.