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Middle-Class Tightrope
It's More Dire Than The Numbers Show
By Jacob S. Hacker, Washington Post, August 10, 2004; Page A19
American politicians have always seen pure profit in siding
with the middle class. Bill Clinton invoked the "forgotten
middle class"; Richard Nixon called on the "silent
majority"; FDR sided with the "forgotten man." In
a country where being middle class is a badge of honor and even
the super-rich identify themselves as "upper middle class," rare
is the candidate who does not claim to speak for the unheard
American middle.
It may pass with little notice, therefore, that during his acceptance
speech in Boston, John Kerry said he represented "the middle
class who deserve a champion, and those struggling to join it
who deserve a fair shot," and that his running mate, John
Edwards, spoke of middle-class "Americans who work hard
and still struggle to make ends meet." But the invocations
of the middle class by Kerry and Edwards should not be ignored,
because they tap into one of the most important and potentially
explosive issues of the 2004 campaign: the increasing economic
strains on average American families. In an election dominated
by terrorism and Iraq, the outcome may not come down to what
Democrats are calling the "middle-class squeeze," but
no one should pretend that the issue isn't real.
Of course, the Bush campaign and its allies are claiming just
that. They note that unemployment and inflation are low and that
the economy is growing at around 3 percent -- far from stellar
but also far from a recession.
Family incomes rose across the board in the lead-up to the recent
downturn, and housing wealth -- most families' main asset --
increased handsomely. Even the jobs picture, seen as Kerry's
biggest weapon, has shown some improvement, though last week's
figures demonstrate how shaky it remains. As a result of all
this, many commentators have joined the Bush campaign in openly
wondering what the continuing fuss is all about.
But the commentators, and the numbers, are missing the deeper
story -- a story reflected in the continuing anxiety about the
economy that survey after survey shows. Over the past two decades,
two great transformations have been on a collision course --
the rise of the two-earner family and all but stagnant real wages
for most workers. The sluggish economy of the past few years
has made the resulting strains unmistakable. By many measures,
American families in the middle of the income ladder are stretched
thinner today than at any point since the early 1980s. Perhaps
more important, their economic situation has, in ways both big
and small, become notably more precarious.
This may come as a shock, but it shouldn't. Middle-class earnings
are up, but this is mostly because women have moved into the
workforce. Without the huge one-shot boost of a second breadwinner,
according to Jared Bernstein of the Economic Policy Institute,
most families would barely have moved upward since 1980.
And that might have been fine -- if the cost of a middle-class
lifestyle had remained stable. It has not, as Harvard Law professor
Elizabeth Warren and her daughter, Amelia Tyagi, argue in their
book "The Two-Income Trap." Two-earner families need
to spend more, not less, than the "Leave It to Beaver" set.
They need child care, help when kids are sick, a second car.
Plus, they pay more in taxes. (It's rarely noted that two-earner
families are the ones hit by the "marriage penalty";
traditional one-earner families usually get a "marriage
bonus.") Above all, the things that Americans value most
-- health care, housing, college -- have simply gotten much more
expensive. These higher costs often bring major benefits. But
they mean that being middle class is a lot more costly than it
used to be.
Unfortunately, as powerful an issue as this is, it's a devil
to actually address. Kerry said in his convention speech that
Democrats "value an America where the middle class is not
being squeezed, but doing better." Yet the cost of closing
the gap between middle-class incomes and expenses, when earnings
are stagnant and key living costs are rising at double-digit
rates, will be immense. Kerry and Edwards have proposed new programs
and tax breaks. But there's a limit to what they can fund by
rolling back the Bush tax cuts for the wealthiest. Worse, subsidizing
middle-class expenses could end up driving costs even higher,
adding fuel to the inflationary fire in markets that are often
only weakly competitive. And there's the ever-present risk that
the forgotten middle class, once found, will turn against its
rescuers when the distance between rhetoric and reality becomes
apparent.
It may well be that the language of "squeeze" is leading
Democrats astray. Economic anxiety isn't just about the strain
of paying the bills; it's about the threat of economic ruin --
what Edwards, in his convention speech, called the "cliff" that "you
go right off" when "you have a child that gets sick,
a financial problem, a layoff in the family."
And while most of the attention has been on the road to that
cliff, there's powerful evidence that middle-class families are
at massively increased risk of going over the precipice.
My own recent analyses of income statistics, for instance, suggest
that family incomes have become two to three times more unstable
in the past three decades, even for well-educated workers and
two-earner families. The causes are multiple: Jobs are less secure,
wages are more volatile, government programs and employment-based
benefits have been cut, and families with two earners in the
workforce are more exposed to job instability than one-earner
families. But what seems clear is that many of the arrangements
that once protected the middle class from economic risk -- not
just public programs but also private workplace benefits and
help from within communities and families -- aren't doing the
job today.
If America is to remain a nation in which economic security
isn't just the province of the affluent, these arrangements must
be rebuilt. The most daunting task will be to encourage strong,
broadly distributed growth, and this goal will require private
leadership as well as public policy. But government can and should
deal with the pervasive risks that mark our postindustrial economy
-- and, indeed, only government can deal with many of them. America's
ever more creaky structures of risk protection must be adapted
to the new realities of work and family. Expanding health coverage
and helping families with major expenses is an important start.
But the task we face today is greater, and more necessary, than
even Kerry and Edwards may realize.
The writer is an assistant professor of
political science at Yale and a fellow at the New America
Foundation. He is completing a book on economic insecurity, "The
Great Risk Shift."
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