The Fallen Standing of the US Middle Class

[flashl]

It's no surprise to anyone in America that being middle class isn't what it used to be. Even though we have more gadgets, middle class workers in the 1950s and 1960s could afford to have stay-at-home wives. For mort households, it takes more hours of paid labor, and more borrowing, to support a bourgeois lifestyle.

This article by Christopher Caldwell in the Financial Times, "The lazy, crazy middle class," does a good job of providing an overview of middle class decline, but steers clear of articulating the causes. For that, we can consult Thomas Palley:

America’s economic contradictions are part of a new business cycle that has emerged since 1980...The new cycle rests on financial booms and cheap imports. Financial booms provide collateral that supports debt-financed spending. Borrowing is also supported by an easing of credit standards and new financial products that increase leverage and widen the range of assets that can be borrowed against. Cheap imports ameliorate the effects of wage stagnation.

...

All these features have been present in the current economic expansion. Wages have stagnated despite strong productivity growth, while the trade deficit has set new records. Manufacturing has lost 1.8 million jobs. Prior to 1980, manufacturing employment increased during every expansion and always exceeded the previous peak level. Between 1980 and 2000, manufacturing employment continued to grow in expansions, but each time it failed to recover the previous peak. This time, manufacturing employment has actually fallen during the expansion, something unprecedented in American history.

Now to Caldwell on how this is playing out. From the Financial Times:

Two years ago, several prominent economists gathered in Italy to debate the wide gap in annual working hours that separates the workaholic US from leisure-obsessed Europe. The conference was called: “Are Europeans Lazy? Or Americans Crazy?”.... But sometime in the intervening years, ordinary Americans – without stinting on craziness, of course – appear to have made their peace with laziness. On Wednesday, the Pew Research Center, based in Washington, DC, published an eye-opening study on the economic attitudes and prospects of middle-class Americans. Inside the Middle Class: Bad Times Hit the Good Life found that Americans’ number-one priority – named by 68 per cent of respondents and topping children, marriage, career, wealth and religion – was “having enough free time to do the things you want”.
...
The US middle classes have always had an empathy with the rich that is anomalous in a world context. They oppose milking high earners, thinking that they themselves might be rich someday. But that empathy is eroding. Only 42 per cent of the middle class think that “rich people achieve their wealth through hard work and ambition”; 47 per cent chalk up wealthy people’s fortunes to “connections and family ties”.

With all due respect to Pew, survey research has to be taken with a handful of salt. The fact that 68% of the respondents said having enough free time to do the things you want” was their top priority is probably aspirational and a symptom of ever-worsening time stress. I doubt that many of the participants would accept a job with lower pay and better hours.

Naked Capitalism

[AX10]

1. K & R!

Everyone should read this because the middle class is the backbone of America. Not the rich, not the poor, the middle class is what keeps this nation alive.

[Cassandra]

2. My first credit card was from Jordan Marsh...

probably around 1977. When I came back to NY in 1979, I parlayed that credit record to get a Bloomingdales card. Rather than apply for a major card, I waited for one to be offered to me. That took until 1984, when AmEx obliged. Eventually, Master Card offered a card, too, I think a few years later. This is just an example of what it could take in the days before easy credit to get a card; they weren't handed out like candy.
Note that this new business cycle began with Reagan in 1980. Thom Hartmann likes to point out that before Reagan, Americans made 97% of what we consumed right here; now that's nearly reversed. What is it we're supposed to do for money when we don't make much of anything anymore?

[FogerRox]

3. This is the result of 30 yrs of economic policies to favor the monied

A small "d" democracy as many of the founding fathers, especially Thomas Jefferson, knew, is reliant on a healthy middle class, a well educated middle class will participate in the government as the citizen legislator, providing for a more stable government. A War on the Middle Class generally attacks the 3 pillars holding up the middle class. Progressive taxes, labor & education.Jefferson said, in an 1824 letter: "This degree of education would ... give us a body of yeomanry, too, of substantial information, well prepared to become a firm and steady support to the government." Jefferson started the University of Virginia with the intent to provide the yeomanry with a free education so as to be prepared to take part in the Government, the citizen legislaters if you will.

The three pillars of the middle class are Labor Rights, Education Rights and progressive taxation.


I thought it interesting that the Great Republican Depression starting with the Crash of '29, and the 2 year recession in '89 to '90, were periods of low tax rates on the wealthy, and occurred during Republican Administrations.


The current war on the middle class started with less progressivity in tax rates, then union busting (Labor Rights). More recently, tax breaks for corporations to move our jobs overseas, increasing illegal immigrantion to enlarge the labor pool, which drives wages down. The Bush Jr. tax policy is regressive while Bill Clintons tax policy was much less regressive and was moving to true progressivity. Additionally we've seen 20 billion in cuts from student aid during the last 2 years. This is warfare my friends, the Aristocracy has attacked us, and we must defend ourselves. Taking control of the White House and winning large majorities in the the Senate and the House is the way to go.

There looks to be about 18-19 competitive races in the senate, there may be 45 to 60 competitive races in the House.

[Cresent City Kid]

4. Pew survey

What I found interesting about the Pew survey is how respondents defined the middle class. There's no consensus on how much income it takes to be middle class. Some people making $20K think it takes $30K, others making $100K think it takes $80K.

I think the word "middle" is misleading because the middle class is a lot closer to being poor than rich, because the rich are leaving everyone else behind.