The Side Income Trap, and the Rise of the ‘4-Income Household’

Photo by WAYHOME studio / Shutterstock.com

The side hustle? It’s a trap! And if we’re not careful, we’re going to end up with a new economic category: the Four-Income Household. In fact, we might already be there.

A new Bankrate survey found that 45% of American workers say they have a side hustle. At the moment, 3 in 10 hustlers who have full-time work say they need their side job to pay for the basics. But as I read the numbers, it’s worse than that.

The other two-thirds say they use the extra cash for savings or discretionary spending. But a generation or two ago, those categories were covered by middle-class jobs. They need a side hustle to save money. That’s not a hustle. It means their primary employment wages are depressed.

Sure, there are cases where a side hustle is a passion project that’s blossomed — the Etsy storefront that turned a hobby into a vacation home or early retirement. But the gig economy has a dark, dark side.

The trap is this: Side hustle income is now being built into the cost of living. We’ve been here before.

Long before U.S. Sen. Elizabeth Warren became a nationally known political figure, she wrote a book called “The Two-Income Trap,” which every American should read. She notes this oft-overlooked consequence of social change from the 1950s and ’60s: Basically, a middle-class life that once required only one income now requires two.

There’s plenty of good and bad that flow from this change, but one thing that did not happen: The rise in household income that came from both partners working didn’t lift our standard of living. It mainly raised the price of things. When there’s that much more money chasing the same number of houses, the price of housing goes up.

I wrote about this a couple of years ago:

“The rise of the two-income family is one of the most dramatic social changes of the past century. From 1960-2010, the share of American households supported by dual earners rose from 25% to 60%, according to Pew. But there’s another massive social change underway that might be impacting our lives even more dramatically, and at a faster rate: We’re going to name it here for the first time: The Four-Income Family.”

Today, many families can’t afford housing near good schools unless both parents work. For them, it’s the cost of doing business, or of wanting to have a family.

I worry this is changing again. Side hustles are becoming, to use today’s overused word, normalized. Hey, who doesn’t like “hustle”? America is becoming the land of small entrepreneurs. Now, there are millions of them! It’s great. But is it, really? Imagine competing for the purchase of a house with a family that has four incomes to throw at the mortgage. You and your spouse only have two. That’s going to end badly for you.

Also, think about this: The Four-Income Household raises all sorts of other issues. Young families are already overwhelmed with child care costs. How will parents keep their kids safe while doing their side hustle? Is it OK for parents to take their kids along when they drive for Uber? (No, it’s not, but of course that doesn’t stop them from trying.) What about taxes? Self-employment taxes, which often apply to side hustle jobs, can be deadly for the uninitiated. What about other, hidden risks, like added liability for drivers or Airbnb “landlords”? Many sharing-economy workers are underinsured and assume far more risk than they realize.

America is right now racing recklessly towards an economic structure that requires adults to have a full-time job for health insurance, credit, and stability — and a part-time job to pay for the rest of their lives. Left unchecked, the shift to a Four-Income Household is not going to end well.

The Bankrate survey ads a bit more fuel to my anxiety fire. It found that 40% of millennial side hustlers say they earn at least half of their income from side jobs, compared with 22% of members of Generation X and 9% of baby boomers.

In other words, the Four-Income Household is a young person’s game. Of course it is. Who else can manage to work that many hours? If the word “unsustainable” isn’t leaping into your mind, you aren’t paying attention. Meanwhile, 50-somethings need housing, too. Should they really be driving for Uber at night to pay the rent?

More from Bob Sullivan:

What’s your take on this news? Sound off by commenting below or on Money Talks News’ Facebook page.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Read Next
9 Indestructible Products That Are Worth the Price
9 Indestructible Products That Are Worth the Price

If you’re willing to pay a little more for these products, you may never have to shop for another again.

Top 5 Activities That People Dream of Doing in Retirement
Top 5 Activities That People Dream of Doing in Retirement

No. 1 isn’t visiting grandkids, and No. 4 might surprise you.

Why Half of Retirees Now Owe Taxes on Social Security
Why Half of Retirees Now Owe Taxes on Social Security

Growing numbers of seniors are paying taxes on their Social Security benefits, but you might be able to avoid this fate.

Eat This Food If You Want to Avoid Alzheimer’s Disease
Eat This Food If You Want to Avoid Alzheimer’s Disease

One type of food associated with the Mediterranean diet offers especially large benefits.

7 Reasons You Should Not Pay Off a Mortgage Before Retirement
7 Reasons You Should Not Pay Off a Mortgage Before Retirement

Here’s why it often makes financial sense to carry a mortgage into retirement.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

7 Unusual Ways to Declutter Your Home
7 Unusual Ways to Declutter Your Home

Tired of possessions weighing you down? Here are seven ways to declutter painlessly and effectively.

This Is the Most Popular Age for Claiming Social Security
This Is the Most Popular Age for Claiming Social Security

Both men and women are most likely to start receiving Social Security benefits at this age.

21 Things You Should Always Buy at a Dollar Store
21 Things You Should Always Buy at a Dollar Store

Dollar stores have great bargains on both everyday and occasional purchases.

6 Things You Should Never Buy at Trader Joe’s
6 Things You Should Never Buy at Trader Joe’s

We love Trader Joe’s for plenty of reasons. But think twice about this handful of products.

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?
Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

You could save more than $30,000 by setting aside these costly expenses for just one year.

Don’t Toss These 7 Household Items — Sell Them
Don’t Toss These 7 Household Items — Sell Them

Here’s how to earn cash as you give new life to these unwanted items.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have these documents that are crucial to their golden years — especially during a pandemic.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Awesome Places You Can Retire Overseas on $2,000 a Month or Less
5 Awesome Places You Can Retire Overseas on $2,000 a Month or Less

In this week’s podcast: tips on retiring overseas — from someone who’s been helping American expats for decades.

11 Expenses That Quietly Drain Your Wallet
11 Expenses That Quietly Drain Your Wallet

It’s scandalously easy to overspend in these areas of your life.

9 Dumb Ways You Are Ruining Your Home Value
9 Dumb Ways You Are Ruining Your Home Value

Homeowners, beware these mistakes that can drive away potential buyers.

18 Amazon Purchases That We Are Loving Right Now
18 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

15 Outrageously Overpriced Products — and How to Save on Them
15 Outrageously Overpriced Products — and How to Save on Them

Retailers mark up products by hundreds of times their cost — but you don’t have to pay the premium.

10 Deep Discounts Available on Amazon This Friday
10 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

10 Surprising Foods You Can Freeze — and How I Freeze Them
10 Surprising Foods You Can Freeze — and How I Freeze Them

How many of the foods have you thought to put in the freezer?

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.