Separate Realities: The Dream and the Iceberg - Scarecrow Press

54 Chapter 2
American Dream. The resource base of middle-income Americans at this time
could even provide a platform for upward mobility, especially for their children.
However, “sometime around 1973, the American dream stopped working.
That’s the year that the real hourly wage (inflation-adjusted) for nonsupervisory
workers—almost three-quarters of the workforce—peaked. Since
then, it’s fallen.” 42 As real wages fell, other major structural changes in this period
transformed the national economy in ways that produced a “crisis of the
American Dream.” 43
Although not causes in and of themselves, as the most visible features of
the class polarization process, the four convergent developments cited earlier
in this section offer a starting point for understanding the extent to
which the material realities of the U.S. middle-income group have been
transformed. An examination of these developments, in conjunction with
the evidence concerning the distribution of consumption capital (income)
and related material resources in the last thirty years, supports our view that
a polarized new class system has emerged—minus a middle class. (A portion
of what has been called the middle class is best understood as part of the
comfort-class segment in our model.) To many who considered themselves
part of the middle-class, the period since the early 1970s brought the “end
of the world”—as they knew it.
Declining Middle Incomes and Wages
Although all U.S. national income studies include middle ranges, middleincome
levels do not necessarily translate into “middle-class status.” In fact,
recent income and wage studies indicate many average wage workers and
their families have experienced reduced living standards since 1973. Our
chapter 1 summary of annual U.S. family income trends over the past thirty
years revealed that the percentage of middle-income Americans declined
sharply, while the percentages in the top and bottom income groups increased.
Studies using more expansive definitions of middle income than
those cited in chapter 1 have reported similar patterns for this same period.
For example, one study, defining “middle income” very broadly, found that
the proportion of U.S. families earning between $25,000 and $100,000 (in
2004 dollars) fell from 70.9 percent of all families in 1969 to 59.7 percent
in 2004. 44 Almost all of the decline in this large range of middle-income
families occurred for those earning between $25,000 and $50,000 (in 2004
dollars), which declined from 39.5 percent of all families in 1969 to 25.7
percent in 2004. By contrast, families earning over $100,000 (in 2004 dollars)
increased from 5 percent of all families in 1969 to 20.1 percent in
2004. 45 Underscoring the shift toward greater income inequality over the last
thirty years, the U.S. family income Gini ratio (a measure of income inequality
whereby zero equals total equality and one equals total inequality)
increased from 0.356 in 1973 to 0.444 in 2003. 46