Middle Class Squeeze: Families, Money and Risk

Elizabeth Warren Leo Gottlieb Professor of Law Harvard Law School March 23, 2006

Figure 1: Median Income Fully-Employed Males, 1970 – 2004

$70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0

Married Couples Males, Employed Full Time
Source: U.S. Census Bureau

Figure 1: Median Income Married Couples and Fully-Employed Males, 1970 – 2004

$70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0

Married Couples Males, Employed Full Time
Source: U.S. Census Bureau

Figure 2: Median Family Spending by Category, Percent Change 1970s – 2000s

60 40 20 Clothing
Furniture Per Car

0 -20 -40 -60

Food

-33

-23

Appliances

-30

-26

-51

Source: Updated from sources cited in The Two-Income Trap

Figure 3: Median Family Spending by Category, Percent Change 1970s – 2000s
120 100
81 100

80 60 40 20 Clothing 0 -20 -40 -60 Mortgage

74 47

Health Care

Child Care

Cars

25

-23

Appliances

Furniture

-33

-30

-26

-51

Source: Updated from sources cited in The Two-Income Trap

Per Car

Food

Taxes

Figure 4: Savings/Consumer Debt Payments, Percentage of Income 1970s – 2000s

16% 14% 12% 10% 8% 6% 4% 2% 0% 1970s
Savings Debt 11% 3% 13%

2004

Sources: U.S. Census Bureau, Federal Reserve Bank

Figure 5: Fixed Costs as a Share of Family Income
$80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000
$55,660 $19,560 $18,110

$10,000 $0

$22,890

Single-Income Family, Early 1970s

Dual-Income Family, early 2000s

Discretionary Income Fixed Costs (mortgage, child care, health insurance, car, taxes)

Source: Inflation adjusted. Updated from sources cited in The Two-Income Trap

Figure 6: How Many Hours Each Month? Mortgage, 3 Bed 1 Bath Home
55

45

hours

35
34

25
20

15

5
1973 2004

-5

1973

2004

Figure 7: How Many Hours Each Month? Health Insurance Through Employer
55 49

45

hours

35

25

15

5

7
1970 2004

-5

1973

2004

Figure 8: How Many Hours Each Month? State University Tuition (1/12)
55

45

35

hours

25

28

15
11

5
1975 2004

-5

1975

2004

Figure 9: How Many Hours Each Month? Combined, Home / Insurance / School
150 130 110
113

170

hours

90 70 50 30 10 -10
38

1975

1

2

2004

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