America's New Elite

A big-spending market is born: two-career couples

Gayle and Chip Swett, both 35, live well by any standard. Chip earns about $35,000 a year as a stockbroker, while Gayle designs and produces shower curtains; this year she hopes to sell $75,000 worth. They paid $80,000 last year for their five-bedroom colonial house in Sherborn, Mass, and recently filled up the place with everything from expensive wicker furniture to a large freezer. They have bought a country-club membership ($2,000 a year), two cars, two TVs and a long list of high-priced appliances. Says Gayle: "All I lack is a Cuisinart."

For the Swetts, and several million other young American couples, the good life has arrived early. More and more of them are opting for two-career marriages. Mostly both partners work because they want to, not because they have to--although many feel financially overextended. Their goal: boosting the family income as high and as quickly as possible.

The Bureau of Labor Statistics estimates that 30.4 million U.S. families (53% of the total) have at least two earners; their median income is $20,400, or $7,200 above that of one-earner families. But this includes couples of all ages with some of the spouses working only part-time. Yet there is a powerful and growing subgroup: moneyed, self-indulgent, career-oriented families in which the husbands are in their mid-20s to mid-30s. Of the 11 million families in this age bracket, nearly four million are households where the wife has a full-time job. And many of the multiple-earner families have combined incomes of $30,000--and occasionally much more.

Even after inflation, these couples have more buying power than their parents did at their age. They can afford luxuries that most single-income families cannot, but they still avoid most long-term financial obligations. Saving, even for the day when pregnancy will temporarily eliminate one income, is not common. When the young two-income families do salt funds away, it is in bonds or real estate --the one popular long-term investment --rather than stocks, since they saw their parents hurt by inflation and market plunges. Compared with young couples ten or 20 years ago, they spend more and plan less for the future, figuring that something (Medicare, Social Security or private pensions) will take care of that distant tomorrow. Collectively, these young two-earner families are a new elite.

The new elite spends more than traditional single-earner families on entertainment, furniture, cameras, kitchen equipment, cars, travel. Compared with older affluent people, they spend more casually on golf, tennis and swimming club memberships. They buy more fast-food take-outs and restaurant meals; when cooking at home, they prefer costlier foods and wines. They pay freely for child care, and the working wife needs her own full wardrobe of office clothes. Their philosophy is expressed by a community service representative for Los Angeles Mayor Tom Bradley, Robert Molina, 24, whose wife is a clerk in the sheriffs office: "When you see something on TV, you crave it."

These young couples are having a major economic impact. The U.S. League of Savings Associations reports that 45% of all 1977 home buyers were two-earner families and more than two-thirds of them were under 34. When buying houses, the elite pays large sums, but is very particular. Observes David Kosta, a broker at Swanson Associates, realtors in Winchester, Mass.: "Single-income families want the most modern homes, with everything showy. The double-income couple likes older houses with character. They want the original woodwork and even the old-fashioned plumbing fixtures."

Cars, cars--the new elite also loves cars. Many auto salesmen echo Bob Niland, who works at Volvo Village near Boston: "Before 1970 our buyers were families where just the husband worked. Now, at least among the younger buyers, the wife almost always works." These buyers, he adds, look for reliability and safety rather than glamour.

Vacations are also a big-budget item. "Before we had a house and baby we spent all our money on trips," says Ivor Bloom, 29, manager of Crimson Travel Service's Boston office. Bloom's wife also works in the travel business. "We are fairly typical," he notes. "If a couple has not made the major purchase of a house, they put their extra income into seeing the world." When the new elite travels, it is to stay longer at more distant, expensive and exotic destinations. Young two-earner couples prefer to pay more for guaranteed rather than stand-by tickets and avoid large prearranged tours; they are often willing to dish out $3,000 or more for advance bookings.

In the marketplace, members of the new elite often behave as affluent singles and thus buy two--or more--of many things. "They are two-identity couples who buy for 'me' rather than 'we,' " says Larry Light, an executive vice president of BBDO, the advertising agency. "They don't buy as a family. We have to sell to them as individuals. Everybody has his or her own bar of soap and bottle of shampoo." Rena Bartos, a senior vice president at J. Walter Thompson, suggests that career couples are a prime target for a host of products, but explains, "We are still in the discovery stage as to how this market should be tapped."

Among the big spenders whom the marketers are discovering are:

> Ira Landess, 38, a psychotherapist, and his wife, Marcia McBroom, 28, an actress and model, live in Manhattan and between them earn $80,000. But, Ira contends, they are still struggling to keep their heads above water. Says he: "We have no exorbitant expenses, but it is not easy to save." Perhaps so, but they rent a two-bedroom penthouse at $616 a month, take lots of taxis, go on frequent overseas vacations, eat in gourmet restaurants and have a housekeeper who helps look after their baby. Ira believes that "you can make do with one income, but you get accustomed to a style of living where you spend more quickly, and it becomes almost a necessity to have a double salary."

> John and Betty Jacobs, both 31, have a combined income of about $75,000 a year as attorneys for two Chicago law firms. They earn far more than their parents, whom they now help support. But they have little savings, and last year borrowed to pay their taxes. They live in a comfortable home on the affluent North Shore, for which they paid $67,000 in 1975. Even with debts from their college days, they manage to vacation in Paris and San Francisco. "We are able to be self-indulgent," says Betty. "I don't worry if I see a dress that costs a lot." Adds John: "Our life-style is like a candy store."

> Lewis Regenstein, 35, and his wife, Janice Mendenhall, 32, live in Washington in a $131,500 four-bedroom townhouse bought 18 months ago. He earns $20,000 as vice president for the Fund for Animals, and she gets $47,500 as director of administration for the General Services Administration. They do not think that they live ostentatiously and often wonder where the money goes. They eat out three times a week, share a summer house and own a nine-year-old TV and a '69 Olds. They have about $10,000 in savings and investments. "We don't go in for speedboats and expensive clothes," says Janice, "but we really don't have to make very hard decisions on what to buy."

> Sam Slay, 30, and Fay Dunson, 27, have been married only 18 months and, without going on an austerity budget, they have already saved $11,000 toward a down payment on a house. Both work for Xerox near Los Angeles, and they jointly earn $48,000. They take frequent "little jaunts" to San Diego, San Francisco and Las Vegas and a longer holiday in the East once a year. Recently, they bought a new second car; they rent an expensive two-bedroom duplex complete with spiral staircase and a swimming pool for residents of the complex. "Fay is the fiscal conservative," says Sam. "She gets uptight if the bills on our credit cards total more than $1,200. We live a comfortable life --our parents wanted us to have what they did not have."

There is a price to be paid for all this early affluence. Two-income families are hit twice for Social Security taxes, and their federal tax levies are higher too. When the husband earns a handsome income, his wife's salary, large or small, is taxed at a high rate. Generally, if his income is $25,000, she is taxed at least 32% on her earnings.

The heavy demands of two careers can cut into home and social lives; children must be postponed or reared by proxy, and there can be conflicts over moving to take better jobs. That is why quite a few of the new elite feel like Van MacNair, 34, a Washington tennis shops manager. He insists that he would like to earn enough to give his wife Gretchen, 31, a chance not to work; but Gretchen, who works for a mortgage group, maintains that "a couple like us cannot get by without two incomes."

Often the working wife is looking for self-fulfillment as much as the extra income. Dr. Abbott Ferriss, a sociologist at Atlanta's Emory University, finds that "many husbands who have large incomes marry women who are highly educated and motivated and want the outlets of full careers." Largely for that reason, the percentage of two-career couples is rising at the top end of the education and income scale. Says Joseph Minarik, a Brookings Institution researcher: "In the '60s it was people from the lower-and middle-income levels who were becoming two-income families. Now more elite families are taking two full-time jobs; households that were already above average are moving much more above average."

Fabian Linden, a director of research at the Conference Board, calculates that four of five families in the richest fifth of the population--those with combined incomes of $25,000 or more--have at least two earners. By 1980, he estimates, multi-earner families will account for about two-thirds of all consumer demand, and an ever larger proportion of them will be the young new elite. People who sell can savor these prospects, but there is another side to this golden coin. The new poor --or at least the nonaffluent--will increasingly consist of families that have only the traditional one breadwinner.

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