It wasn’t long ago at all when the concept of the female breadwinner in an otherwise traditional family was really an unusual occurrence. When Michael Keaton starred opposite Teri Garr in the wonderful 80s comedy Mr. Mom (“220, 221, whatever it takes”), the arrangement was sufficiently uncommon that it made a useful and novel premise for a movie.
Fast forward a generation, and things are a lot different. The girls who were born when that move came out are now going to university – and pursuing advanced degrees – much more frequently than their male cohorts. Meanwhile, women are increasingly moving into career areas that were formerly male-dominated – but men are making few inroads into formerly female dominated professions, such as education and nursing.
Additionally, the recent housing and mortgage crisis has caused the economy to shed hundreds of thousands of construction and trade jobs. The weight of the job losses of 2008-2010 fell largely on these traditional male occupations, as well as manufacturing. Detroit, home of the old Big Three auto companies, took it on the chin – along with hundreds of thousands of auto workers – most of them men.
These were more than just jobs. These were identities. Millions of men have had their self-identity as providers and their tickets to the middle class lifestyle for their families either threatened or destroyed in the last recession. And although the economy is beginning to sputter towards a halting, tenuous recovery, much of the recovery is taking place in the more female-oriented service sector. Those jobs in construction, the trades and manufacturing have not been coming back. Manufacturing may never come back.
These changes are going to be very long lasting, and are going to have a profound effect on the family unit. Our 20 and 30 something married couples are frequently starting families with the woman earning much more than her husband. Many of these husbands will never catch up with their spouses.
Consider: In 1970, 80 percent of men between the ages of 25 and 64 were in the work force. Today, that percentage is down to 66 percent. What happened? Layoffs, discouraged workers, extended unemployment benefits, career students, incarceration, and larger numbers of young men “checking out” of the usual career and family path to enjoy gaming and other slacker activities well into adulthood.
Meanwhile, women now make up half the work force, and 80 percent of college educated women are working in some capacity.
We are also seeing more and more households where neither spouse necessarily works an 80 hour work week, but both spouses work, and share financial responsibilities as well as child-bearing responsibilities.
That’s already had a big impact: As Elizabeth Warren documented in her 2004 book “The Two-Income Trap,” these families have already bid up the three-bedroom home in good school districts to unsustainable prices – but were insufficiently financially robust to keep the home for long once one spouse was laid off, or had a substantial income reduction.
What does this mean for financial planning? Well, the basic questions are still the same. It’s still a matter of matching means to ends and ends to means. But the process changes somewhat:
- Women have far more power and say in spending decisions – since they earn more money.
- Women are more likely to want to maintain separate checking accounts from their spouses than in the past.
- Spending decisions are therefore less collaborative. While households are less likely to suffer a 100 percent loss of income when both spouses are working, they are more likely to suffer a 30-50 percent income hit from a layoff.
- Men are taking on more and more child-rearing and household responsibilities as women spend more time in the workplace.
A recent book by Liza Mundy, The Richer Sex: How the New Majority of Female Breadwinners Is Transforming Sex, Love and Family, takes a closer look at the changing psychofinancial dynamics between the sexes.
Her take is similar to mine – this is a sea change in family dynamics – as important as the advent of affordable birth control and the invention of widely affordable labor-saving devices earlier this century, which freed up hours of time each day for women who two generations before were hauling buckets of laundry down to the river all day and hauling water back up the hill. The socioeconomic effects of these changes aren’t going away any time soon, and all of us in the financial planning community are going to have to be cognizant of these dynamics going forward as we advise our clients on how they might handle dealing with finances in their own homes.