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The book the two income trap describes this. It talks about better schools etc but if you are competing with people that have two incomes as an individual you

The book the two income trap describes this. It talks about better schools etc but if you are competing with people that have two incomes as an individual you better have two incomes worth of salary. The issues starts to arise that people with two income households are more likely to lose one of those jobs and that puts a lot of pressure on the finances if you need both jobs for your house payment.

globular-toast 9mo ago
You need more than two incomes worth of salary in any country that does income tax bands. In the UK, two people earning 30k each will take home a combined 50k. A single person needs to earn almost 70k to take home the same. And for council tax you end up paying 75% of what an entire household would pay.
- alex43578 9mo ago
  In the US, two moderate incomes see a similar federal tax bill to a single person, with things actually getting worse at higher incomes for the married couple. Is the UK tax code really that different?
  - khuey 9mo ago
    Huh? In the US the married filing jointly tax brackets are exactly double the single tax brackets for every rate except the top 37% rate. A single person making 100k definitely pays a lot more in tax than than a married couple making 100k together. It's generally advantageous to be married filing jointly unless you're at the absolute top 37% rate, at the very bottom (where means tested benefits phase out), or both spouses make roughly equal incomes (in which case MFJ vs two single filers works out around the same).
    - alex43578 9mo ago
      Huh? In your $100K scenario, that single person pays about $6K more in taxes, but has $36K more in take home pay per person, so that additional tax bill seems reasonable in light of their ability to pay it and pay for their cost of living.
      - willmarch 9mo ago
        You’re moving the goalposts. The point is the tax bill, not “ability to pay per person.” On 100k total, MFJ owes thousands less in federal income tax than a single filer at 100k because the standard deduction and brackets are basically doubled. That’s exactly why marriage is usually a bonus at moderate incomes. The “marriage penalty” shows up mainly when both spouses have high, similar incomes/phaseouts, not in the $100k total case.
torginus 9mo ago
It makes more sense to me (both from a personal, and the bank's perspective), that a single person on double income goes to zero salary when he loses his job, thus its riskier lending to him with his monthly payment being 25% of his income, than say 2 people at half salary, in which case one person's income share of loans jumps from 25% to 50%, a financially difficult situation, but temporarily manageable.
- bdangubic 9mo ago
  I agree in principle but I would venture a guess that number of two-income families that can deal financially with a loss of one source of income is very low. the very first financial discussion I had with my wife (fiance at the time) was that we will always live off a single salary and 2nd salary will always go into future bucket (we tap in for larger purchases or fancy vacation here and there). I don’t think many families are setup this way though - in my limited personal experiences a loss of one source of income leads to sale of the house/condo and move (rent or downsize)
  - bombcar 9mo ago
    Another thing that is often not considered is that two salary households are sometimes similar salaries (both nurses or warehouse loaders, say) but often you have one high-paying job and another quite low - I could rattle off a whole list of teachers married to doctors, etc. Losing the lower salary will be noticeable but not hurt anywhere as much as losing the larger.
    - bdangubic 9mo ago
      absolutely… after I read your comment I started thinking about every two-income family I know and none of them have similar salaries, always one (significantly) higher earner
estearum 9mo ago
The price of rent is set by local household wages. If both partners typically work: rent rises to eat nearly all the gain. If AI makes everyone 20% more productive: rent rises to eat nearly all the gain. If minimum wages lift the bottom earners from $7.50/hr to $18.50/hr: rent rises to eat nearly all the gain.
- cheschire 9mo ago
  If you add more lanes to the interstate, people move further out, and the rent rises to eat nearly all the gain.
- ajkjk 9mo ago
  The only countervailing forces are: * landlords not wanting as much money (unlikely, although it happens at small scales) * rent control-type policies * competition And as far as I know competition is the only thing that works at scale. Although, people tend to emphasize intralocal competition as where this gets fixed. But I tend to think that the even larger issue is that so many places suck to live in (due to schools, jobs, culture, lack of prosocial governance...) that everyone with options congregates in the good ones. There's an effect every larger than all of those, though, which is wealth disparity. If incomes differ by fewer orders of magnitude then prices can't vary as much across markets. At the end of the day when rich people can and do buy 2-5 homes and everyone else can barely buy one of course you're going to have problems.
  - bryanlarsen 9mo ago
    We had two types of competition in the past that are much less common now: - competition from new builds - competition from different locations The first was killed by restrictive zoning. The second still exists but is no longer useful. You can move to West Virginia for cheap rent, but you'll have to move to a location without jobs. The combination of far less people moving across states and of jobs concentrating in expensive places to live is what killed that second type of competition.
    - bombcar 9mo ago

globular-toast 9mo ago

You need more than two incomes worth of salary in any country that does income tax bands. In the UK, two people earning 30k each will take home a combined 50k. A single person needs to earn almost 70k to take home the same. And for council tax you end up paying 75% of what an entire household would pay.

alex43578 9mo ago
In the US, two moderate incomes see a similar federal tax bill to a single person, with things actually getting worse at higher incomes for the married couple. Is the UK tax code really that different?
- khuey 9mo ago
  Huh? In the US the married filing jointly tax brackets are exactly double the single tax brackets for every rate except the top 37% rate. A single person making 100k definitely pays a lot more in tax than than a married couple making 100k together. It's generally advantageous to be married filing jointly unless you're at the absolute top 37% rate, at the very bottom (where means tested benefits phase out), or both spouses make roughly equal incomes (in which case MFJ vs two single filers works out around the same).
  - alex43578 9mo ago
    Huh? In your $100K scenario, that single person pays about $6K more in taxes, but has $36K more in take home pay per person, so that additional tax bill seems reasonable in light of their ability to pay it and pay for their cost of living.
    - willmarch 9mo ago
      You’re moving the goalposts. The point is the tax bill, not “ability to pay per person.” On 100k total, MFJ owes thousands less in federal income tax than a single filer at 100k because the standard deduction and brackets are basically doubled. That’s exactly why marriage is usually a bonus at moderate incomes. The “marriage penalty” shows up mainly when both spouses have high, similar incomes/phaseouts, not in the $100k total case.

torginus 9mo ago

It makes more sense to me (both from a personal, and the bank's perspective), that a single person on double income goes to zero salary when he loses his job, thus its riskier lending to him with his monthly payment being 25% of his income, than say 2 people at half salary, in which case one person's income share of loans jumps from 25% to 50%, a financially difficult situation, but temporarily manageable.

bdangubic 9mo ago
I agree in principle but I would venture a guess that number of two-income families that can deal financially with a loss of one source of income is very low. the very first financial discussion I had with my wife (fiance at the time) was that we will always live off a single salary and 2nd salary will always go into future bucket (we tap in for larger purchases or fancy vacation here and there). I don’t think many families are setup this way though - in my limited personal experiences a loss of one source of income leads to sale of the house/condo and move (rent or downsize)
- bombcar 9mo ago
  Another thing that is often not considered is that two salary households are sometimes similar salaries (both nurses or warehouse loaders, say) but often you have one high-paying job and another quite low - I could rattle off a whole list of teachers married to doctors, etc. Losing the lower salary will be noticeable but not hurt anywhere as much as losing the larger.
  - bdangubic 9mo ago
    absolutely… after I read your comment I started thinking about every two-income family I know and none of them have similar salaries, always one (significantly) higher earner

estearum 9mo ago

The price of rent is set by local household wages. If both partners typically work: rent rises to eat nearly all the gain. If AI makes everyone 20% more productive: rent rises to eat nearly all the gain. If minimum wages lift the bottom earners from $7.50/hr to $18.50/hr: rent rises to eat nearly all the gain.

cheschire 9mo ago
If you add more lanes to the interstate, people move further out, and the rent rises to eat nearly all the gain.
ajkjk 9mo ago
The only countervailing forces are: * landlords not wanting as much money (unlikely, although it happens at small scales) * rent control-type policies * competition And as far as I know competition is the only thing that works at scale. Although, people tend to emphasize intralocal competition as where this gets fixed. But I tend to think that the even larger issue is that so many places suck to live in (due to schools, jobs, culture, lack of prosocial governance...) that everyone with options congregates in the good ones. There's an effect every larger than all of those, though, which is wealth disparity. If incomes differ by fewer orders of magnitude then prices can't vary as much across markets. At the end of the day when rich people can and do buy 2-5 homes and everyone else can barely buy one of course you're going to have problems.
- bryanlarsen 9mo ago
  We had two types of competition in the past that are much less common now: - competition from new builds - competition from different locations The first was killed by restrictive zoning. The second still exists but is no longer useful. You can move to West Virginia for cheap rent, but you'll have to move to a location without jobs. The combination of far less people moving across states and of jobs concentrating in expensive places to live is what killed that second type of competition.
  - bombcar 9mo ago