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GRAY MATTERS: Obama So Far

Imagining Life Without a Middle Class

The middle class didn't start to decline in October 2008. It began 20 years ago or more and over that time, I have put a lot of thought to the consequences of its loss to everyday life in the United States. So when I saw a headline in my email yesterday morning, I was eager to read America Without a Middle Class.

That it was written by Elizabeth Warren made it all the more appealing. Currently the chair of the Congressional oversight panel on the banking bailout (TARP), she has spent much of her academic career, while teaching law at prestigious universities, studying the economics of the middle class.

Who better, then, to imagine what life for the majority of Americans would be like if the upward trend in distribution of wealth and income to the top five percent continues?

Ms. Warren started out well:

“Can you imagine an America without a strong middle class? If you can, would it still be America as we know it?”

But the entire rest of the story only recounts the economic assaults on the middle class most everyone who follows the news already knows - statistics on unemployment, credit card and mortgage defaults, increases in costs of basic needs, higher taxes, growing debt just to pay for kids' college, medical bankruptcies, the impossibility of saving for retirement due to salaries remaining flat since the 1970s, contrasted with the upper class becoming rich as Croesus.

While valuable to know, those numbers don't imagine daily life for real people. Warren concludes:

“Tens of millions of once-secure middle class families now live paycheck to paycheck, watching as their debts pile up and worrying about whether a pink slip or a bad diagnosis will send them hurtling over an economic cliff.

“American without a strong middle class? Unthinkable, but the once-solid foundation is shaking.”

I could easily argue that the foundation of the middle class is well past “shaking” and fast falling off the cliff. But I'm more interested right now in what happened to the imagining of life without a middle class that Warren's headline promised. Since she disappointed me, let's you and me do the imagining today. It's not hard.

The Big Picture
Already tens of millions have lost their homes to foreclosure. Those houses will be bought up, for cents on the dollar, by people who still have money – the rich ones – who will then rent them to people no longer in the middle class. Some who manage to hang on to their homes won't have money for upkeep, houses will show signs of wear and tear, neighborhoods will deteriorate.

With lack of job creation, more people will sink below middle class level. They won't be able to afford college for their children. Employers then will send more jobs overseas to countries that better educate their offspring and they will import workers from those countries on H1-B visas leaving American kids to flip burgers and deliver pizza.

Warren notes in her story that between the 1970s (when salaries began flat-lining) and 2007 (pre-financial collapse), the amount families spent on cars dropped 30 percent; clothing 32 percent; appliances 44 percent while spending on health insurance and child care services doubled.

Depending on health care reform, coverage may get cheaper, but with fewer jobs for fewer qualified candidates, spending on big-ticket items - cars, appliances, clothing, etc. - will decline further. People will eke out longer lives from their durable goods rather than purchasing the next new thing. Shabby chic will become necessity.

The Small Picture
Daily life will probably come to look more like the late 1940s and 1950s when, although the economy was booming then, it took a long time for families to gain financial traction following the Depression and World War II.

My family couldn't afford a clothes dryer until I was in high school in the mid-1950s, and I was privately furious that my younger brother got his first bicycle when he was seven, and although I had asked Santa every year, I didn't get mine until I was 11 (siblings keep track of these things). My parents were doing a bit better by the time my brother came along.

That doesn't mean we lived lavishly. Rather than extravagant vacations far away from home, we traveled to places in Oregon by car. Gasoline was cheap then but not any longer, so in what we are imaging here today, it is conceivable that “middle class” vacations will be in the backyard (of their rented houses).

Among Warren's statistics, median family income jumped 33 percent during the 1960s, but during the boom in the early years of the 21st century, it increased only 1.6 percent for the typical family and today, it's not about a salary rise, but just any kind of job at all.

So with a greater percentage of income going for necessities, there won't be much left over for the all the electronic gadgets, large and small, we've been consuming for the past decade or two. Two- and three-car families will need to cut back to one, limiting families' mobility.

It will be hard or impossible to find money for the many after-school activities that have been lavished on kids since I was young. Or even for movies, restaurant dinners and outings to theme parks. Many ordinary people have been priced out of ball games, the opera and rock concerts for years.

Millions more people than now will be just scraping by and you can see where I'm going with this: since 70 percent of the U.S. economy is consumer-driven, when people can't spend, their quality of life can only spiral downward with no end in sight.

What will Become of Us
Even an increase in the number of jobs won't make much difference unless workers are granted a larger share of profits through increased salaries which is unlikely without a sea change in the moral outlook or failing that, the self-interest of corporate executives.

And that is precisely what has always puzzled me about corporate behavior toward workers, be it low salaries or shipping off jobs to countries where they can pay employees even less: if you don't pay workers enough money to buy the widgets and services corporations sell, won't the companies eventually collapse?

A century ago Henry Ford, about whom there is much to dislike, helped create the middle class when he came up with the then-novel idea to pay his workers enough to buy his automobiles. It worked out so well for Ford's bottom line that other companies followed his lead.

One would think this principle would be pounded into the heads of all those MBAs who run the corporate world. But apparently not; employers have returned to the pre-Ford era of paying as little as they can get away with.

So it is not just the big, bad, greedy bankers who have trashed the economy. They have been aided and abetted by all employers who have spent the past 20 years cutting worker salaries to the bone which has put the U.S. on the path toward becoming a nation of serfs.

Unless corporate executives return to paying living wages, they will eventually join the rest of us at the bottom of the economic heap when their companies can no longer sell enough widgets to make a profit. Life without a middle class, it seems to me, becomes poverty for all classes. What happens after that I don't know, but it will be a disaster for generations to come.

Maybe that's why Elizabeth Warren didn't really imagine life without a middle class; its logical end is, as she wrote, unthinkable.


At The Elder Storytelling Place today, Lyn Burnstine: A Different Subject: R.I.P


Comments

The countries of the prosperous North based their economies on a growth model.But that growth model was based on exploitation of the land and people of the South and on the resources that we once thought were endless, e.g. oil.
Finally we are beginning to understand that unlimited economic growth was actually cancerous. There's no way the planet can afford all that consumerism. 2 or 3-car households and clothes dryers are simply not an option any more if we want our species to survive long-term.
It is not the blinkered rich nor the desperate poor but the well-educated, middle-class people who are currently leading the move towards the greener, more sustainable lifestyles which are humanity's only hope. They are the ones shopping at the farmers' markets, downshifting to simpler ways of living, recycling and freecycling, signing the 'compact' to abstain from mindless consumerism, setting up 'transition town' models, driving hybrid cards, voting for wind farms and realizing the importance of local economies. Those people will survive. And they will teach the rest of us the survival skills we need. They are already doing so.
It's not about money. It's about awareness. And the middle class is where most of the awareness resides - and the skills to change the paradigm.

I was born in 1947 and grew up in a middle class home--Meals were homemade, my mother made most of our clothes, we had one car, my parents were very frugal and there was never any debt--even the tiny (by today's standards) house was paid off, public schools, vacations to visit relatives, etc. Looks like a pretty good picture of what the future may be.

I also read that article and have felt the same concern for a long time. To think the middle class must exist is to ignore history where it's been a rarity that a prosperous middle class is always part of a culture. What the middle class has done is be the engine for our culture where new ideas are generated and put into production. So much money today is being generated by moving money around. That creates no product and only takes money from the system that could create new things.

My husband works in the start up business arena. He is a technical person who helps bring up new products for those who had an idea and want to see it become marketable. So he is at a lot of meetings where these ideas are discussed and actually where he hears a lot of ideas that have no chance to be profitable even if they sound good.

It is interesting to hear what is being said by those people, some who have made other companies profitable before, which is basically that we have to change what we make in this country. The middle class is not something that occurs in a vacuum but rather in a culture that can afford the ideas. It can be destroyed many ways and our government has been putting into place many of them. That can change.

The U.S.A. is slipping into a third world country. Our education system is below many other countries and we all know that we rank low in health care. All of the things that made this country great are being destroyed by the military industrial complex and the other greedy corporations. We are receding back to the robber baron era.

It is my dream that the Obama is able to force investment in green energies and products. This will help save the planet and the middle class.

Well said and very, very true. My city and county has been hit very hard by it. I'd say more but I'd probably annoy too many people.

I was born to immigrant parents in 1942. We shared a house with other families. I slept on something called a studio couch in our living room and did not have my own bedroom until I married in my twenties. I know what it’s like to be lower class and how to survive. I’ve never forgotten how it was and have never stopped appreciating even the simplest things I can now afford to do. It was hard not having what everyone else seemed to have, but I knew that someday with hard work and sensible living life would improve, and it did. I don’t feel that today and I’m worried about the future for my own and others children and grandchildren. I was asked to fill out a survey form at work recently to find out how “green” I was for a better planet. I passed with flying colors. Why? Because that’s how I was raised.

I also read (and linked to) Warren's article yesterday. Your are right she dwelt on the numbers and did not examine what is behind the numbers. Everything you said is masked by the numbers. Perhaps we need to insist that our experts and elected officials look beyond the numbers to the individuals affected. I have seen several stories about Bernanke's testimony that centered on his use of Willie Sutton who robbed banks because 'that is where the money is.' And because the money right now in in the Medicare and Social Security funds he thinks the government ought to 'rob' them to pay off the national debt. Again it is numbers and not people that concern him. I am not a number. Nor are the people I know.

A great post. And the theme is one that I have echoed many times over the years with friends and relatives. Those of us born in the 30's and 40's can see this so clearly and yet it seems to draw blank stares from those younger. I was born in 1940 and later worked my way up as a union carpenter. We were solidly middle class by the time Reagan arrived on the scene, with a car and a house...then we watched it erode as Reagan tore the unions apart and instituted the evil of 'trickle down' economics.

I can easily imagine a new 'Middle Ages' now that intellectuals and science are being attacked, while financially, we are being reduced to serfdom. But I don't understand the why? when the economic model of the 50' and 60's seemed to work so well for all, employer and employee.

Baffled. Why do conservatives hate America so much?

As Claire Jean and some others point out, many of us elders grew up during the Depression or had parents who did or were immigrants, and we learned from the cradle how to be green decades before it became a catchword. It's always been part of our lives to differing extents.

I also agree with Marian Van Eyk McCain that how we live needs to change dramatically, but change will not happen fast enough or on a large enough scale to save the current and next generation or two of young people.

I am particularly worried about education. During our lifetimes, U.S. public education has declined so dramatically that a college education is now needed just for kids to learn what we got through 12 years in school. That's not going to change much in the next 20 years, but money for college is fast disappearing from family budgets, credit is non-existent for the moment and even if the banks loosen up, no one without a job gets a loan.

So I fear a lost generation with no useful education and that will further erode the ability of the U.S. to create any kind of a sustainable economy.

I deeply hope I'm wrong.

And there's another thing that worries me: Since the end of World War II, the U.S. has promoted suburbia and exurbia and Americans moved out of cities by the millions.

Living outside the city requires a car for transportation - to work, to school, to the supermarket, etc. - and those distances are what spurred the advent of two- and three-car families.

As families by necessity now cut back the number of cars and - it is easy to imagine the last one being repossessed when both parents lose their jobs - how do people in the suburbs live at all?

Business and government policies promoted the migration to the suburbs. Now that the requirements for life in those places becomes less affordable, what happens to them and to the people there?

Like many of you, I was grew up in the postwar times with a level of consumption (1 car, no washer-dryer, even no TV until well into the 1950s) that folks today can barely recognize. That level of consumption was a good life; but our present economy needs us to be able to buy and waste more.

One feature of the present that has driven me mad since the 1980s is the short time horizon that everything runs on. Economic players worry about the stock price tomorrow or maybe in 4 months and NOTHING about a more distant future.

With the prospect of runaway climate change hanging over us, that short time horizon is both madness and understandable denial these days. Who wants to think about what happens if we don't take some care for future generations? It's scary and depressing. But if we don't learn to -- soon -- future generations will hate our thoughtless profiligacy. Quite properly too.

Born in 1959 with 4 older siblings and only my father working as a pipefitter we lived a very frugal life. We did have a house and one car. My parents saved to send all of us through Catholic grade and high schools. After that we were on our own. We never ate out...NEVER. Not even MacDonalds. We never went to the movies. My two oldest sisters bought my parents a little stereo in the mid-60s. We had a black and white TV until the late 70s. Our vacations were driving up to northern Wisconsin and staying at my aunt and uncles resort for free for two weeks every summer. We considered ourselves middle-class (maybe a little lower middle-class). Everyone in our modest clean neighborhood on the West Side of St. Paul was in the same boat. The only difference I saw regarding income was whether my friends came from large families or not. With less children in the family, they had better cars and took better vacations. One of my closest friends with only one other sister always had a new winter coat every year! Imagine!

I also now live a very frugal life (in comparison to friends). I have all I need and then some. Am able to go out to dinners once in a while. Rent movies, etc. Compared to growing up, I'm living the life of Riley!

The issue of education is a big concern to me also as it has been the route upward for the middle class. The republicans have put down educated people, tried to take money from public schools, and in general done all they can to dumb down this country. Education is definitely a big target in their sites. We should be finding ways to give all kids, who have worked hard with good grades in high school, the ability to go onto college and instead it's becoming harder and harder for the middle class to see their children get what they were able to afford. This can't all be accidental. There is a reason behind it and it's not pretty to imagine what it is.

Agree with everything Ronnie says here except that I think this horrid plan to destroy the middle class can work--that's because it's a global economy now, and consumers worldwide can pick up the slack left by American consumers.

When I wrote at a publication of a major union in the first half of this decade, the left-wing economists who tutored me predicted exactly what has come to pass.

Unfortunately, for reasons not worth going into, union thinking receives little attention.

Rain, I agree with your comment. Well said.

Perhaps we are in the early stages of a century-long process...that of moving from national class strata to global strata. Assuming Warren was regretting the loss of America's middle class, I'd say our cards are getting thrown into a giant global re-shuffle. The resultant deck is hard to imagine. I just hope our great grandchildren have a hand to play.

I can agree with most of what everyone has written here. I've long thought we're in a downward spiral toward becoming a third world country as a consequence of the mechanisms you describe that would make that a reality.

Anyone who has spent time in a country that has no middle class would be acutely aware of the adverse effects on life for those on the low end of the spectrum.

Would we then begin crossing the border illegally to that nation north of us for a better life?

Those who know the bite of having little, the struggle to better their station in life, also can fully appreciate the value of a middle class.

We have to keep confronting the forces that seem dedicated to decimating our society by their actions while espousing otherwise.
The tragedy is that too many people may not realize what is happening until after the fact, when it is too late.

As I was reading this and the comments, I wondered if it was time to redefine "middle-class."

Yes, perhaps we should re-define terms, specifically what criteria constitutes today's "middle class."

Michael Moore writes about it, too: http://www.michaelmoore.com/words/must-read/america-without-middle-class-its-not-far-away-you-might-think


Hi Nikki...

It would be interesting to read Michael Moore on this subject, but he
just reprinted Elizabeth Warren's story with no commentary from him.

How are you these days?

RB

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I hope that someday there will not be a middle class. That day will be a time in which everyone is equal on the planet, sharing the life on earth without some skimming off riches leaving the middle class to give alms to the very poor of the world and paying taxes for the less fortunate as well taking care of themselves.

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