Sunday, August 26, 2007

Need to rejuvenate the middle class and paths up into it

Maybe the biggest silver lining of the subprime mortgage mess and the end of the housing boom will be that people will wake up and realize that the "middle class" that we knew and loved in the 1950's and 1960's and 1970's is now virtually non-existent. Sure, there are plenty of househoulds with incomes in the $50,000 to $200,000 range, but try finding one that isn't struggling in some significant financial way and actually feels financially "secure." And try to find one that doesn't know of someone who hasn't "fallen" precipitously from their former financial security into deep financial insecurity. It is one thing to chatter about the rich getting richer and the poor getting poorer, but the really important issue is whether there is a broad and deep enough middle class to keep our political, social, and economic system afloat, on an even keel, and thriving. It won't do much good to help the poor if they don't have a secure middle class future to strive for. The middle class is now truly an endangered species in need of saving.

Try finding someone who doesn't know somebody who had a "secure", high-paying job and has fallen financially and now considers themselves lucky to have something even at half or less of their former pay.

Try finding someone who doesn't know of someone who has completely lost their sense of financial security due to corporate "downsizing."

Try finding someone who doesn't know of a household that is only able to stay financially afloat because both spouses had decent incomes and could cover (barely) when they lost one of those incomes.

Try finding someone who doesn't know of multiple households that are only able to support a middle class lifestyle if two members of the houshold work full time.

Try finding someone who isn't worried about rising health care costs and the pace at which employers are shifting health care costs onto the shoulders of employees.

Try finding someone who doesn't know of somebody who has had to stifle higher education plans due to outrageously high college and graduate school costs.

There is something wrong with this picture. Seriously wrong.

It is one thing to encourage people to strive to better themselves and to work harder to move up in the world, but it is an entirely different matter when people have worked really hard in school and their jobs but are finding it increasingly difficult to simply tread water, let alone get ahead.

The status of middle class has classically been driven less by level of raw income, but by a sense of security and a sense that pathways upwards were readily available. Today, even households with income levels of $200,000 or higher will tend to find themselves obsessing over the lack of security of their jobs and the difficulty of both making ends meet and moving up in the world.

Personally, I am doing "okay" right now, but I have had significant financial and employment difficulties in recent years, so I can relate to some of these problems, and if even I feel susceptible to some of these issues, I can only imagine how difficult things must be for so many others who are less fortunate than me.

I like to think of myself as being at the 50% level in all things, meaning that 50% are doing better than me and 50% are doing worse. And if even I am unable to feel that I have a "secure" position in the middle class of America, that says that a lot of people are much worse off. Actually, I'm in the top 25% and maybe even the top 20% based on househould income, so if even I feel significantly less than "secure", the thought that 75% or even 80% of households are struggling and suffering from higher levels of financial anxiety than me is quite breathtaking. Oh, and housholds with $200,000 in income who are still strugling and suffering from financial anxiety are in the top 5%, so we are talking about 95% of American households feeling that they have been deprived of the bright middle class future that they had been promised when they were young.

And, things only seem to be trending to get worse.

There is no quick and easy magic solution that I know about, but we do need to get started thinking about how to rejuvenate the middle class, coupled with robust pathways from poverty and near-poverty into a newly-healthy middle class.

On the bright side, I actually do believe that there are a number of relatively quick fixes that could relieve a lost of middle class anxiety and pain and enhance the stability of our political, social, and economic system at the same time. Summoning the political will to make such changes is another matter. In any case, there is a lot to think about here.

-- Jack Krupansky

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