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The Evaporation Of Dreams
The recovery from the Great Recession is the first economic
comeback that has skipped the middle class, Prof. Smeeding notes.
U.S. census data show the percentage of U.S. households with
median incomes between $50,000 and $149,999 fell to 41 per cent last
year from 44.5 per cent in 2000. Households earning less than $15,000,
meanwhile, jumped to 13.5 per cent from 11.1 per cent in 2000.
The median U.S. household income itself tumbled to $50,054 last
year from $54,932 in inflation-adjusted 2011 dollars.
“Without a middle class, this society is in big trouble, big trouble,”
Prof. Smeeding says. “If they’re not spending money, that lowers the
demand for all goods and services.”
In the days before globalization, when U.S. companies had little
competition in their home market, middle-class demand for bigger houses
and the furniture and appliances to fill them – plus the vehicles to stuff
into two-car garages – fed a virtuous circle.
But when the middle class is squeezed as it has been for more than a
decade, the overall economy takes a hit.
The squeeze has affected more than just factory workers. Tens of
thousands of Americans in white-collar positions also lost their jobs in
restructurings and the recession.
Bob Poropatich, who was laid off in June, 2008, from his $85,000-ayear
job designing store displays for American Eagle Outfitters, can testify
to how losing a good job forces cutbacks in personal spending.
“I haven’t been anywhere on vacation since ’08,” says the 60-yearold
Pittsburgh resident, who now works 32 hours a week earning $11 an
hour stocking shelves at grocery stores. “I haven’t done anything. Haven’t
seen a movie. Haven’t bought gifts.”
He will have trouble getting to his part-time job if anything happens
to his six-year-old Subaru Forester.
“I pray that if I take it in for an oil change they don’t find $2,000 of
repairs on it,” he says.