Squeezed from the Bottom

With economic pain rising from the working class to the middle class, the public may be ready for fundamental reform.

It has been more than three decades since the great American economic escalator broke down. Today, despite big gains in both productivity and overall national wealth, college graduates are barely making more money than they did in 1973, adjusted for inflation, and non-college grads are making less. Some 33 million U.S. workers–nearly a fourth of the nation’s labor force–earn less than $10 an hour. As most income gains have gone to top earners, many households have struggled to pay for such necessities as housing, childcare, health care, and gasoline. Even at the height of the 1990s boom, a study by the Economic Policy Institute found, nearly a third of families with young children didn’t bring in enough money to cover basic monthly expenses.

This disaster has unfolded largely amid little public dissent, but it has been punctuated by high-profile, episodic crises: the downturn of the 1970s, the deep recession of 1982, the milder recession of the early 1990s, and the current bout of turbulence and slowed growth (the 2001 recession was the mildest and shortest on record, a relative hiccup). The response to each crisis is the same: While the wise men of Wall Street and Washington fret over how to stop the economic pain, liberal critics enjoy a brief moment in the sun, decrying rising inequality and the end of the American Dream. At the height of the anxiety curve, for a fleeting moment, it may seem a consensus is gelling in favor of dramatic action to fix an economy that is no longer working for everyone. Inevitably, though, the national mood quickly shifts when economic growth picks back up. Soon, as job growth expands and incomes climb, even those groups who have lost ground over the long term seem to think that it’s morning again in America.

Opinion polls over the past 40 years illustrate this pattern. Save for the periods of crisis, most Americans have tended to be optimistic about the economy. Since 1975, for instance, a strong majority of American workers have believed their financial situation would improve over the next year and have not worried about losing their jobs (though fear of layoffs and hardship did rise sharply during the 1982 and 1991 recessions and has been rising again over the past year). Likewise, in recent decades, a majority of Americans have believed that the younger generation would do better than their parents. But faith in upward mobility has fallen during periods of recession. In March 1982, only 43 percent of respondents to a national poll thought their children would be better off than they were; by 1986, at the height of the 1980s boom, that percentage was up to 74 percent. Then, in the first half of the 1990s, it fell back under 55 percent before starting to climb again as the economy improved. (In January 2008, 66 percent of Americans said their children would be better off.)

Liberals have offered various theories about why there has not been open revolt among the 80 percent or so of Americans who’ve either been treading water or slowly drowning since the 1970s: the dominance of money in politics, the power of wedge issues to distract working-class voters, the decline of unions. Each has some explanatory power. But the opinion data suggests another, simpler proposition: namely, that not enough Americans have felt enough economic pain over a sustained enough period of time to trigger the long-awaited rebellion. Things get bad, but then they get better and new income gains–not to mention a reflexive optimism that seems embedded in the national character–induce amnesia and obscure the bleak long-term picture.

Today, with Americans again in a sour mood about the economy, two questions arise. One, will the current pessimism abate as quickly as past bouts, or is the situation more dire and permanent this time? And second, how might a new crop of leaders arriving in Washington in January 2009 capitalize on the current crisis to make bigger reform gains than in the past?

Two powerful new books shed light on both questions: The Big Squeeze, by New York Times reporter Steven Greenhouse, and (Not) Keeping Up With Our Parents, by journalist Nan Mooney. Greenhouse’s volume concentrates on wage workers, while Mooney focuses on middle-class professionals. Together, the books suggest that the economic pain felt by Americans is becoming far more widespread than before, and that the social contract around work has now unraveled to the point that only the wealthy are immune from insecurity. All of this suggests that the moment for substantial progress in social policy is upon us.

The strength of The Big Squeeze lies in the multiple angles from which Greenhouse views the plight of American workers, along with his knack for compelling narrative. Early in the book, he sets the context with a barrage of troubling statistics. He points out, for instance, that “if wages had kept pace with productivity, the average full-time worker would be earning $58,000 a year; $36,000 was the average in 2007.” The only reason that many families have managed to make ends meet is because of increased work hours. A husband and wife in a typical middle-class household are, together, working three months longer a year than their counterparts of a quarter-century ago. And it’s not just that workers aren’t making enough money. A majority of low-wage workers don’t have health insurance, pension plans, or paid sick time, a trend that is moving higher up the economic ladder.

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