America's high anxiety
The Democratic primaries were increasingly taken over by one issue that is now likely to dominate the presidential election. It is anxiety among the middle-class families of America. Today, they are living on the edge of a decline very different from the traditional ebb and flow of the economic cycle. A fear that has long gnawed at blue-collar workers in manufacturing now reaches white-collar workers in the service and technology sectors.
Why? The average two-income family today earns far more than did most single-income families a generation ago, so one might reasonably conclude that a second paycheck would put enough money in their pockets to make them feel financially secure. Not so. Once they have paid the mortgage, payments on two cars, taxes, health insurance, and day care, these apparently prosperous two-income families have less discretionary income today and less money to save for a rainy day than a single-income family of a generation ago. Virtually all of their higher earnings go directly to keeping their families in the middle class.
The sputtering American job machine contributes to the stagnation. Instead of the average increase of 6.5 percent in private-sector hiring over the first 26 months of the past six recoveries, we have had a decline of a little less than 1 percent. That translates into a shortfall of 8 million Americans who would have been at work if our recent economic recovery had followed the typical trajectory, according to Stephen Roach of Morgan Stanley. He points out that private-sector wage and salary disbursements are down about 1 percent, relative to levels seen at the trough of the recession, in November 2001. That compares with gains that averaged 9 percent over the 25 months of the previous six upturns. The result is that many in the middle class, those earning $65,000 and less, who make up roughly 80 percent of the people who work, feel they are falling further and further behind, no matter how hard they work. Some can still afford to send their children to college, but for many higher education for their children is simply beyond their reach. Some in the middle class receive world-class medical care, but most see their health costs soaring, with healthcare limited to HMOs or to the waiting rooms and emergency rooms of hospitals. Many see their middle-class lifestyle under threat and their very livelihoods at risk. They seem to be doing poorly in good times and bad, in boom periods and busts. Now they feel that global capitalism has brought into play a vast, new workforce ready and willing to do the jobs of American workers, at a fraction of their pay. Outsourcing has become the symbol of middle-class anxiety over the seepage of information jobs to India, and even to China, that were supposed to take the place of all those lost manufacturing jobs. Is it any wonder so many Americans today see economic opportunities dissolving, with jobs, wages, and benefits getting squeezed and squeezed again?
Millions of middle-class Americans are living from paycheck to paycheck, struggling to pay their bills, having to borrow money and go into debt. Many families are just one layoff or one medical emergency away from going into bankruptcy. A silent tidal wave of bankruptcies is now cresting across America's middle class. More people this year will end up bankrupt than will suffer a heart attack or be diagnosed with cancer or graduate from college or file for divorce.
advertisement
