More co-worker couples losing both incomes at once

[Liberal_in_LA]

http://www.forbes.com/feeds/ap/2009/02/07/ap6023050.html?loomia_ow=t0:a16:g2:r5:c0.0182845:b21770747&partner=loomia

Associated Press
More co-worker couples losing both incomes at once
By MELISSA NELSON , 02.07.09, 12:00 PM EST

It is a well-known risk to lack diversity in an investment portfolio. Now, couples employed by the same company are learning a similar lesson, the hard way.

As layoffs mount across the country and in all sectors, couples who are co-workers are increasingly vulnerable to losing their families' twin sources of income at once. The lack of variety in job skills can also make it difficult to bounce back, especially in a struggling industry.

Such hard times have befallen Clarkston, Mich., high school sweethearts Victor and Lauri Cox, who married in 1976 and soon took jobs at the General Motors plant; Pam Podger and John Cramer, who met as reporters at The Fresno Bee in California in 1991; and Chad and Lindsey Lewis, who prospered while selling homes for a Tampa builder but now face a more than 60 percent drop in there combined income.

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Such double layoffs would have been extremely rare just a couple of generations ago.

Before the 1970s, families weathered economic downturns by sending the non-working spouse, typically wives, into the work force. But today roughly 53 percent of all married couples, and 64 percent of married couples with children under age 18, rely on two incomes, according to the U.S. Census Bureau.

In theory that should have increased financial security. Instead, couples often use the extra income to buy bigger homes, nicer cars and other luxuries, said Rick Harper, director of the University of West Florida's Haas Center for Business Research.

"In the 1980s, both spouses worked and the savings rate for families went from 12 and 14 percent to essentially zero," Harper said. "In this decade, households smoothed over the rough spots by taking equity out of their homes. Now there is no equity left to take."

[wartrace]

1. No worse than a single income household being laid off.

I am losing my income in May. The only difference between myself and those mentioned in the story is they probably made a LOT more money than I did. Hopefully they used one salary to do the simple things like pay off their home and build savings. If they used that income to buy a home that depended on both incomes they are screwed.

[CoffeeCat]

5. The savings rate in this country have been...

...horrendously low. Current stats show that people spent more than they made--making savings
ZERO. People extended their incomes with credit cards and spent money that they didn't have.

However, household incomes have gone up---with many households having two income earners.

The problem is that people bought into all of the consumerism being pushed by Bush and the Republicans.

I live in the suburbs and I see it all around me. I could write a book.

Two income earners who have huge houses and also have two or three $40,000 cars in the driveway. Plus, they're
constantly adding on to their homes and making $,000 improvements every month. They're five-year old kids are
wearing Nikes that they'll grow out of in two months. Their money has been spent on in-ground sprinkler systems,
landscaping services, boats, large RVs and other toys.

There's nothing wrong with enjoying your money. There's nothing wrong with nice houses and cars.

The problem is that so many tried to buy the "American Dream" by spending everything they had--and by
tapping into their home equity and also financing it at 18 percent on a credit card.

Dave Ramsey talks about America's dirty little secret--that the upper-middle class is broke. I imagine
many of those upper-mids are more broke that most people. Many look like they have it all--but many left
no wiggle room, and they certainly didn't anticipate our current economy.

[Liberal_in_LA]

7. wow... lots of Dave Ramsey listeners on DU. I'm surprised. I love his financial

advice but have to fast forward thru the rightwing crap.

[wartrace]

9. I find him to be a bit pompous myself.

I don't know how many times he reminds his listeners that he is a millionaire. He also seems oblivious to the fact that we are headed towards a depression. He says the economy is going to come back soon and that you can expect an average return of 12% from mutual funds. Oh, the right wing/religious aspects of his show are not enjoyable either.

[Liberal_in_LA]

11. He's a bit smug about his money. Also, he's unrealistic about income to mortgage ratios for CA

and he pushes the 15 year mortgage. 15 year mortgage not possible for the average CA homeowner (even with prices in the toilet)

[wartrace]

8. I've been listening to Dave for a while.

I own my home. I own my vehicle. I have no debt. I am being laid off in May due to my plant shutting down for good and I feel fine. I have lived a lifestyle that will allow me to survive on unemployment for as long as it lasts. I have money saved that will help cover emergencies.

There are 900 people being laid off at my plant with another 600 who will be out of work by the end of the year. I am one of the few who are not in panic mode, as a matter of fact I am thankful because I hated the job & they are paying me a good chunk of change as a "parting gift".

Anyone who mistakenly believed that the good times & employment lasts forever is about to get slapped in the face by reality.

[NNN0LHI]

2. My mother said the bank would not consider her income when they took out their mortgage in the 50's

She and my father had their heart set on a cheap little 3-bedroom one bath National home and the bank told them no go. I grew up with my parents and brother in a cheap little 2-bedroom one bath National home.

Thats the way it used to work.

Don

[fasttense]

3. Oh yeah, it's because they failed to save that caused their problems.

Who expected 3 years ago that a couple in the same workplace would lose both jobs? Who really plans to be laid off permanently with only the prospect of a minimum wage job available to them? During the roaring 2000's was the government and their hired guns economist warning and encouraging everyone to save? Even now people are Not being encouraged to save. Everyone is talking about spending so we can boost the economy.

Not that we need the gubermint to tell us to save but there is just so much planning that can be done for such a severe economic collapse like we are seeing now. Even if you saw it coming 3 years ago, how much could you have saved? What with the price of gas shooting up to $4/gal, food price skyrocketing and tuition increases how much could a family have saved? I always thought of my $60,000 credit limit on my credit cards was a good safety net if my husband ever lost his job. We rarely used the cards and thought of them as for emergency use only. We made a point of keeping our credit score high. Who could have predicted that credit would get so tight?

It isn't the fact that people failed to save, it's the fact that bush and the republicons have destroyed the economy that's causing these couples so much pain. Put the blame where it belongs.

[sohndrsmith]

4. Scary... I'll somberly add the little gem I just heard on the news, too:

I just heard (msnbc) that the unemployment rate for people over the age of 25 that DON'T have a college degree is 12% to 14%...

[Liberal_in_LA]

6. Yep. Yesterday I read in online article that had the unemployment rate breakdown by demographics

College grads = approximately 5%. Over 55 = approx 5%. So other demographics
are taking up the slack with huge employment rates.

[BlooInBloo]

10. Bound to happen. If you flip a coin enough, you're sure to get 2 heads in a row....

EDIT: And it appears as though the coin is getting flipped a LOT:

[roamer65]

12. The green line is going to drop further.

This hybrid recession/depression is going to knock the 1982 one out of the history books as the worst since the Great Depression.