Two-Paycheck Marriage May Not Cure Debtor Blues

Published January 13, 1983. Like many other couples, Joan and Charles find that things are financially tight right now. In addition, they overspent on Christmas and have huge bills on their numerous credit cards. After several long discussions, they decided what approximately 60 percent of married couples in the United States have decided: Joan should get a job.

Will it financially pay for Joan to seek an income in addition to that of Charles’ salary? Are there situations where it would not pay economically for Joan to go to work? Consider the following:

Joan begins job hunting and finally finds one for eight hours a day, 50 weeks of the year. It pays $10,000 which initially appears to be a substantial addition to the $20,000 that Charles presently earns. With the additional $10,000, Joan and Charles believe they will be able to pay off many of their debts, including the recent ones attained at Christmas.

Charles and Joan have three children, two of whom are in school. That mean they will have to provide baby sitting or daycare for the youngest child while Joan goes to work. But that amount seems minimal compared to the potential $10,000 income. Joan and her husband are a generous couple and give at least 10 percent of their annual income to their church and/or other charitable causes. Even theny the $10,000 seems attractive.

Given the above facts and figures, how much of Joan’s potential $10,000 salary will be left as discretionary income? After all the taxes and expenses of Joan going to work, how much will she and Charles have left to pay off the bills? $7,000? $2,000? $3,000?

After deducting normal or average expenses, Joan and Charles will have approximately $1,620 remaining of her annual $10,000 salary. For 40 hours a week, 50 weeks a year, or 2,000 working hours, that comes out to about 81 cents an hour.

How did I arrive at these figures? Actually they are not mine. Dr. Jerry Mason is a colleague at BYU and has a degree in family consumer economics. In the situation cited, Dr. Mason points out that most couples do not realize several crucial factors when they decide to seek a second family income. First, according to Dr. Mason, they are not aware that the additional salary will put them in a higher tax bracket. And secondly, few couples realize the actual costs or expenses involved in going to work.

Here is the breakdown of average current taxes, costs, or expenses for Joan to go to work:

SALARY OFFER                                  $10,000

Expenditures:

Federal Income Taxes                              $1,400

State Income Taxes                                       360

Social Security Taxes                                    670

Child Care (net of tax credit)                     2,800

Charitable Contributions                           1,000

Clothing                                                        600

Personal Care                                               450

Food                                                             600

Transportation                                              500

Total expenditures                                   $8,380

DISCRETIONARY INCOME                $1,620

If, by chance Joan earns less than $10,000, and Charles earns more than $20,000, the disposable income would be even less. In some circumstances, they could actually lose money by Joan going to work. Only if she earned substantially more then $10,000, and he earned less than $20,000, would Joan’s employment add any discretionary income of significance.

Does the two-paycheck marriage actually pay? In the case of Joan and Charles it obviously does not. It all depends on the circumstances of each individual couple.