Future historians, if they are objective, will look back on the "Great" Recession and its aftermath (2007-?) as the time when America's Middle Class was largely wiped out. They will further note that the current economic catastrophe merely catalyzed a process that had been well underway in the 3 decades prior to the recession itself.
The Middle Class that arose in America in the decades after World War II has no historical precedent. America's Empire ascended with its appearance, and our fall coincides with its disappearance. This is not an accident. The United States became the largest economic & military power the Earth has ever seen in the vacuum left by the wars in Europe and the Far East. Roosevelt's New Deal during the Great Depression, World War II, and the boundless opportunities that opened up after 1945 had the effect of leveling & expanding America's wealth. Thus America's great Middle Class, aided by measures like the G.I. Bill and affordable housing, was born.
And now that Middle Class is disappearing. Business Insider's 22 Statistics That Prove The Middle Class Is Being Systematically Wiped Out Of Existence In America is the latest attempt to quantify the disaster. Signs of the extermination of the Middle Class generally fall into a few broad categories—
- The resurgence of great wealth & income disparities (see my Trickle Down Economics)
- The enormous debt accumulated by the Middle Class during the Great Moderation (1983-2007) (i.e. living paycheck-to-paycheck, the inability to make ends meet)
- The nearly total lack of opportunity or upward mobility (i.e. no jobs, or poor-paying service jobs)
- The terrible effects of Globalization (i.e. jobs outsourcing, wage depression)
This list is not complete, and nor is it not meant to be. I have commented here on DOTE about each of these issues more than once, and will continue to do so. Go through Business Insider's 22 slides to get the grisly details. Here's #21 to give you a taste of what the list contains—
Approximately 21 percent of all children in the United States are living below the poverty line in 2010—the highest rate in 20 years. Source
The study, funded by the private philanthropy Foundation for Child Development, found that families' economic well-being has plummeted to near 1975 levels, said Kenneth Land, project coordinator and professor of sociology and demography at Duke University.
"Virtually all of that progress is wiped out through job losses, through declines in real income, and other aspects of family economic well-being," Land said.
Matthew Stagner, director of the University of Chicago's Chapin Hall Center for Children, views the study as important but not surprising. He noted also that some of the trends described, in terms of family relationships and other indicators, are not necessarily caused by the recession.
The report's prediction that indicators of family economic well-being will "bottom out" in 2010 will depend on the length of the recession and the state of the overall economy, Stagner said.
Bad economic times have not ended in the United States—not by a long shot. The next few years are likely to tell us how bad things are going to get. There is little chance that family economic well-being will "bottom out" this year.
The Rise & Fall of America's Middle Class poses a broader question. Was the existence of such a broad swathe of people with real wealth just an aberration? Was it just an anomaly in the greater historical scheme of things? This question is complex, and I will address it in a later post. For example, wealth & income inequality is much greater in the United States than it is in Europe or Japan, so the Middle Class in these countries is not declining at the same pace as it is in America.
Here is a 1-hour video of Elizabeth Warren talking about the coming collapse of the Middle Class. She gave this lecture on January 31, 2008. Everything that has transpired since then only reinforces her premise. It is ironic how most observers of the economy miss the forest for the trees. Unbelievably, they focus on what this quarter's GDP number will be without seeing the larger destructive trend that Warren talks about. Her presentation is long and tortuous, but she put a lot of evidence together to support her view that America's Middle Class is collapsing. I don't expect you'll watch it all at once, but perhaps you can watch it in bits & pieces.