Warren - The Two-Income Trap

November 09, 2004

Elizabeth Warren, Amelia Warren Tyagi.
The two-income trap : why middle-class mothers and fathers are going broke
New York : Basic Books, c2003

I skimmed this more than reading it, but it was enough to get the gist of it.

Warren is making a public policy argument based on the structural difficulties that she sees the middle class (defined by achievement, not wealth or income) facing.

As she points out, the best statistical indicator that a woman will file bankruptcy is that she has kids - about one in seven. Why? She argues that middle class families have been stuck trying to reproduce their class status for their children. They do this by looking for good schools, and in the U.S. schools are tied to location. As a result, middle class families bid up the price of housing in neighborhoods with good schools. And, over the last 20 years or so, more women have gone into the workforce and their paychecks, by and large, have gone not for savings, not for extra consumption, not for quality of life, not for building a safety net, but for raising the stakes in the educational bidding war.

How to get out of this trap? She suggests that public school vouchers, basically unbundling school attendance from residency, would make it impossible for families to get into bidding wars for houses in good districts.

I am not so sure. I know that on the collegiate level, when there was a strong demand for good colleges, colleges responded by going upscale. Duke used to be a nothing, now it is a very good school, largely because people demanded better schools. The same pattern continues all over the place - look at Temple University in Philadelphia, or Washington University in St. Louis, or the University of Cincinatti, all of which are engaged in a systematic attempt to upgrade their academics in order to appeal to students (and their families) who want a better education.

Will we see something similar on a local level? I know that we bought a house in a town with pretty good schools. They were not the best, we could not afford the best, but they were good schools with a tradition of college prep. The next town over has elementary schools that are about as good, but the high school only sends about half its students to college. If we had joined in the upscaling of the next town, and stayed there 16 years, then we would almost certainly have been sending our kids to a high school that DID send its graduates to college. Parental pressure leads to better schools. Parents bidding up home prices makes property taxes yield more, and that leads to better-funded schools (an aside, the biggest difference between Philadelphia's terrible schools and its suburbs wonderful schools is that the suburbs spend about twice as much per student as the city does - money does matter.)

However, Warren's piece does get me thinking about the nature of the housing bubble, especially when compared to those cartograms that have been floating around after the election. A LOT of people live on the coasts. Property values are going up along the coasts. The coasts tend to have better educated populations - Texas v. Massachusetts is a telling comparison - and by implication have parents who are trying to get their kids into better schools.

I wonder to what extent the housing bubble in the coastal markets is linked to the tradition of good public education in the coastal states, while the lack of a bubble in the South is linked to the post-Brown post-school prayer decision by the bulk of the Southern middle class to move their kids to private Christian schools.

I suspect that the data won't back that assumption, that the Southern tendency to underfund education was strong before Brown and the school prayer cases and remains strong today - Alabama recently voted to chase Mexico to the bottom - but Warren does get me thinking about the interlinked consequences of housing and education.

Posted by Red Ted at November 9, 2004 09:49 AM | TrackBack
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