Tag Archives: working class

Getting Squeezed in the Middle

The Wall Street Journal has a report that should surprise no one if they’ve been paying attention:

The American middle class has absorbed a steep increase in the cost of health care and other necessities as incomes have stagnated over the past half decade, a squeeze that has forced families to cut back spending on everything from clothing to restaurants.

Health-care spending by middle-income Americans rose 24% between 2007 and 2013, driven by an even larger rise in the cost of buying health insurance, according to a Wall Street Journal analysis of detailed consumer-spending data from the Bureau of Labor Statistics.

That hit has been accompanied by increases in spending on other necessities, including food eaten at home, rent and education, as well as the soaring cost of staying connected digitally via cellphones and home Internet service…

Consumer spending continues to make up just over two-thirds of the U.S. economy. But where households spend that money has shifted significantly.

To see how it has moved, the Journal analyzed Labor Department data on 2013 out-of-pocket spending for the middle 60% of the population by income—households earning between about $18,000 and $95,000 a year, before taxes.

The data show they are losing ground. Overall spending for the group rose by about 2.3% over the six-year period from 2007, even as inflation totaled about 12%. At the same time, income for the group stagnated, rising less than half a percent…

“Part of the story is that your income growth is slowing,” said Steven Fazzari, an economist and chairman of the sociology department at Washington University in St. Louis. “They’re spending more on necessities, cutting back on other types.”

It’s tempting to blame the Affordable Care Act for the increase in health care costs, but as the article points out, health care costs were soaring before ACA was enacted. While health care costs is probably one of the bigger issues faced by middle class Americans, probably the biggest is wage stagnation combined with fewer benefits.

Higher health are costs in and of themselves wouldn’t be as big a deal if people were making more money and still had “Cadillac” benefits from their employers. What we’ve been seeing, and what the Journal’s report highlights, is that the middle class is being hit from all sides and they’re truly feeling the squeeze. Employers have been scaling back health coverage for years, often requiring employees to pay higher percentages of their own premiums and paying 100% of the premiums on their dependents, which adds up to hundreds of dollars a month in added expenses. Tack on higher food costs, housing costs, communications costs, transportation costs, etc. and the expense side of the ledger grows very quickly while the income side stays where it is. Taken all together what you get is a middle class that is being squeezed to the point that many will be pushed into a completely different category – the working poor or just plain poor.

That’s not good for any of us.

Race as a Distraction

In college, way back in the dark ages of the 1980s, I had a roommate from Scotland who was intrigued with the racial discord he observed in America. To him it made no sense that people would hate each other based on their race, but of course it made total sense to him that the Catholics and Protestants back in Scotland were in a constant state of discord. He'd say, and I'm paraphrasing here, "Why do you Americans hate each other for what you are? At least in Scotland we hate each other for what we choose to believe."

Whenever race comes up as a topic I think about those words. Indeed, it's totally illogical for us to hate one another for something we have no control over. In fact it's probably the most absurd reason for people to hate and distrust each other. On the other hand, probably the most logical reason for any group of people to dislike another is if one group has disproportionately more of anything – wealth, food, opportunity, etc. – than the other, particularly if the group with less feels that the other group has gotten it off of their backs.

That's why the new data about the true nature of poverty in America, and the plight of working class whites in particular, should scare the bejeezus out of this country's power structure. Once all of the poor and struggling working class folks from every race realize they have more in common with each other than with the wealthy of their own race they will form a formidable body to deal with. From the article linked above:

As nonwhites approach a numerical majority in the U.S., one question is how public programs to lift the disadvantaged should be best focused — on the affirmative action that historically has tried to eliminate the racial barriers seen as the major impediment to economic equality, or simply on improving socioeconomic status for all, regardless of race.

Hardship is particularly growing among whites, based on several measures. Pessimism among that racial group about their families' economic futures has climbed to the highest point since at least 1987. In the most recent AP-GfK poll, 63 percent of whites called the economy "poor."…

While racial and ethnic minorities are more likely to live in poverty, race disparities in the poverty rate have narrowed substantially since the 1970s, census data show. Economic insecurity among whites also is more pervasive than is shown in the government's poverty data, engulfing more than 76 percent of white adults by the time they turn 60, according to a new economic gauge being published next year by the Oxford University Press.

There's another important societal component contributing to the economic struggle of millions of individuals in this country, and it's one we need to deal with head on: the breakdown of the traditional family. Again from the article:

–For the first time since 1975, the number of white single-mother households living in poverty with children surpassed or equaled black ones in the past decade, spurred by job losses and faster rates of out-of-wedlock births among whites. White single-mother families in poverty stood at nearly 1.5 million in 2011, comparable to the number for blacks. Hispanic single-mother families in poverty trailed at 1.2 million…

Marriage rates are in decline across all races, and the number of white mother-headed households living in poverty has risen to the level of black ones.

As a man who has been happily married for a long time I'm obviously a fan of the family structure. However, whenever the topic of single parent homes comes up for public debate we get pulled into the moral/religious rabbit hole and never address the economics of single parenthood. Why do we insist on approaching this problem from a moral standpoint, haranguing young men and women about their sinfulness and almost guaranteeing they'll tune us out, and not instead concentrate on developing societal structures that will help deal with a very real problem? I'm not smart enough to have a solution here, but it doesn't take a rocket science to realize that the answer is not browbeating people back into church and insisting that they live they way great-Grandma and Grandpa did. 

Our leaders, whether in industry or government, need to begin to deal with the reality that is portrayed in this new data or our country will soon be in even deeper doo-doo. They can no longer hide from the reality that our middle class is disappearing and that our "land of opportunity" could quickly become an empty slogan if they don't change things, and fast.

The Battle for the Southern, White, Evangelical, Working Class Vote

Reuters has an interesting article about the challenges Romney and Obama face with lower income whites in the south. Let's just say that being rich and Mormon complicates things for Romney:

Reuters/Ipsos polling data compiled over the past several months shows that, across the Bible Belt, 38 percent of these voters said they would be less likely to vote for a candidate who is "very wealthy" than one who isn't. This is well above the 20 percent who said they would be less likely to vote for an African-American…

According to Reuters/Ipsos polling data, however, 35 percent of voters overall, and the same proportion of lower- and middle-income white Bible Belt voters, say they would be less likely to vote for a candidate who is Mormon.

Even the fact that a (rather shocking) number of Republicans believe President Obama to be a Muslim (the horrors!) is somewhat offset by Romney being a Mormon:

In a survey conducted this summer by the Pew Research Center's Forum on Religion and Public Life, almost a third of Republicans said they believe Obama is Muslim, compared with 16 percent of independents and 8 percent of Democrats. The falsehood is a frequent theme of conservative talk radio.

Still, the challenge for the GOP is to ensure that white evangelicals, most of whom voted for other candidates in the primary, are sufficiently enthusiastic about Romney to make it to the polls…

In 2008, Parrish was a fan of former Arkansas Governor Mike Huckabee, who was defeated in the GOP primary. She counts him as a Facebook friend. She has yet to "friend" Romney, although she plans to vote for him.

"I'm not extremely excited," she confessed. "I'd prefer not to have a Mormon."

Nonetheless, she added, "Romney seems to align himself with conservative values."

Long story short, what would normally have been a slam dunk demographic for a Republican in 2012 ain't necessarily so. The Republicans certainly did themselves no favor by nominating a rich Mormon with the charisma of stale Wonder Bread.