How the Two-Income Trap Made Families Less Safe
For decades, experts praised the rise of dual-income households. In books from the 1970s and even the 2000s, economists claimed that having both parents in the workforce made families more "economically diversified." If one partner lost a job, the other could keep the household afloat. But in Malaysia today, this model has become less about choice and more about necessity.
On paper, this sounded smart. In reality, it triggered risks that no one fully anticipated — least of all the families themselves.
How Budgets Became Riskier
Before, families could pay their mortgages and health insurance with one full-time salary, relying on 52 paychecks a year. As living costs rose, budgets shifted. Now, most families depend on two incomes — 104 paychecks a year — just to keep up.
This change didn’t make households safer. It exposed them to double the risk. If either partner lost their job, the family could no longer cover basic needs. What seemed like a stronger position was actually much more fragile.
Now, with rising living costs, especially in urban areas like the Klang Valley, families often rely on two incomes just to get by. The Employees Provident Fund's Belanjawanku 2024-2025 guide indicates that a married couple with two children in the Klang Valley needs approximately RM7,440 monthly to maintain a reasonable standard of living—a significant increase from previous years.
As more mothers returned to the workforce to secure better housing, prices for suburban homes shot up. Families stretched budgets further to buy homes in "good" school districts. But every time more families managed to earn dual incomes, home prices climbed again.
It became a cycle: higher costs pushed more women into the workforce, which in turn fueled even higher costs. Instead of gaining financial freedom, families trapped themselves into bigger loans and riskier lives.
Why the Trap Was Invisible
Few saw this coming. Families believed they were making smart moves — combining incomes, buying homes, investing in the future. But in reality, they were locking themselves into financial commitments that needed both incomes to survive.
Experts now agree: today's two-income families aren't necessarily better off than single-income families were a few decades ago. They may even be more vulnerable to financial shocks like job losses, illnesses, or recessions.
Housing costs have surged, outpacing income growth. In 2024, the average house price in Malaysia stood at RM471,918, reflecting a moderate annual growth of 0.9%. The house price-to-income ratio has reached 4.6, categorizing housing as "seriously unaffordable."
Expert Insights
Elizabeth Warren, one of the authors of The Two-Income Trap, explained:
"Sending mothers into the workforce has made families more vulnerable to financial disaster than ever before".
Another study from Psychology of Dual-Earner Family notes:
"Dual-earner families may earn more but are not necessarily more secure".
This disparity forces families to allocate a larger portion of their combined incomes to housing expenses, reducing their ability to save or invest in other areas. Additionally, the reliance on dual incomes means that the loss of one income—due to job loss or other unforeseen circumstances—can have devastating financial consequences. This precarious financial situation underscores the need for policies that address income growth and housing affordability to alleviate the pressures faced by dual-income families in Malaysia.
Conclusion: Escaping the Two-Income Trap
To move forward, Malaysia needs a comprehensive response: policies that address housing affordability, support real wage growth, and promote financial resilience for working families. Without structural changes, the two-income trap will continue to tighten, leaving more families one crisis away from disaster — both in Malaysia and beyond.