YOU DECIDE: DOES IT TAKE TWO INCOMES TO GET AHEAD TODAY?

One of the biggest societal trends in America during the past couple of decades has been the rise of the two-worker family. A two-worker family is one where both parents work. Two-worker families increased from 43 percent of all married couple families in 1967 to over 60 percent today.

Several reasons are behind this change, but one often given is that it takes two incomes today to support a family. Many people say it takes one income to pay the taxes and the other income to pay the rest of the bills!

How true is this perception? Fortunately, there are several statistical surveys of family incomes that can be used to address this issue.

Clearly, two-worker families earn more money than one-worker families. Two-worker families have 57 percent more after-tax income, on average, than one-worker families.

But the real question is whether one-worker families could achieve a reasonable standard of living years ago but not today. Has the standard of living of one-worker families fallen during recent decades?

The available data give the following answer. Of course, remember the conclusions are based on averages for families, and your particular family situation can certainly be different than the average.

Compared to 1960, families of all types both one-earner and two-earner families are better off today. Families today are able to purchase a greater variety and greater quantity of consumer products than families in 1960, thereby resulting in a higher standard of living.

However, the conclusions dramatically change if the comparison is to 1970. Since then, the average after-tax income of two-earner families has risen 45 percent, while the average after-tax income of one-earner families has dropped by 8 percent. These changes are found after accounting for differences in the cost of living since 1970.

Therefore, one-earner families have less purchasing power today than they did in 1970, and their standard of living has fallen over 50 percent compared to two-earner families.

Can taxes account for these trends? There is no question that the tax burden on families has risen during the past 25 years, primarily due to hikes in Social Security tax rates. But this higher tax burden has affected both one-earner and two-earner families alike. Indeed, calculations show that if the tax burden on one-earner families had remained at 1970 levels, the purchasing power of the average one-earner family would still be lower today.

Instead, something else explains the differing income trends for one-earner and two-earner families since 1970. A close examination shows two job-related factors provide the answer.

First, since 1970, workers in two-earner families have increased their work hours faster than have workers in one-earner families. It's a simple mathematical fact that if you work more hours, your income typically goes up. For whatever reason, two-earner families have done this more than one-earner families during the past two decades.

The second answer has to do with occupation. Workers in two-earner families, and especially the chief earner, are more likely to be in professional, technical and management occupations than are workers in one-earner families.

This is important because salary increases for professional, technical, and management occupations have been much greater over the past two decades than salary increases in other occupations. So there have been divergent trends in the incomes of one-earner and two-earner families during the past two and a half decades, with the purchasing power of two-earner families rising and that of one-earner families falling. Differences in the work hours and occupations of the two types of families account for much of the trends. To get ahead, one-earner families either must work more hours or shift to better paying occupations. Unfortunately, both options aren't easy.

You decide if there's a better solution.