The Death of the Middle Class (Part II)

Americans have been a peculiarly optimistic people. Perhaps it is in our blood. For the last forty years, as long as we have records on such questions, the majority of Americans believed that their personal financial situation would get better in the next six months. This was true even if they believed that the majority of Americans would be worse off in six months. Although the numbers have gone up and down with the fortunes of our economy, the majority continued to think that their lives were going to get better. This remained true until 2007. Since then a majority of Americans believe that their lives are going to get worse. In the past we believed pay cuts and layoffs were temporary problems to be overcome with luck and pluck. Something has changed. A majority now believe their future and the future of their children will never get any better.

The middle class is getting squeezed. Many have lost their jobs. If they have found new work, it does not provide the pay and the benefits of their old jobs. Their retirement accounts and the value of their homes have been battered, sometimes by as much as 50%. To complicate their problems, adult children are returning to their parents’ homes. I have friends and acquaintances who have suddenly found one or two unemployed adult children with no money, school and/or consumer debt, and no where to go knocking on their doors. Covering little Julie’s car payment when their financial house is a bit shaky represents a real sacrifice, one that is not likely to be appreciated by Julie. Fathers and mothers who have always been able to provide for and protect their families from the storms and vicissitudes of life are suddenly running low on cash. One woman I met while working in Florida ran an excellent family restaurant. She said her adult daughters treated her as their own personal ATM machine. The parental ATM is closing at a time when young adult unemployment is at its highest levels since World War II.

Men and women who have successfully held jobs their entire adult lives are facing a bleak future. If they are lucky, they are watching their saving dwindle as unemployment benefits, while welcome, are not likely to be enough to cover their daily expenditures. What do you do if you can not pay your mortgage and you can not sell your home because you owe $100,000 more than its current value?

The following comes from a New York Times article titled “The New Poor,” “During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.”

Automation and outsourcing are gradually eroding the possibility of the American dream for ever larger numbers of men and women. Throw in a major medical problem and it is truly over for an unemployed American worker. There are limits to what Government can accomplish with other peoples’ money. Private charity can not begin to deal with a social transformation of this magnitude.

It is time to pray.