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The Downward Mobility of the American Middle Class, and Why Mitt Romney Doesn’t Know
January’s increase in hiring is good news, but it masks a bigger and more disturbing story – the continuing downward mobility of the American middle class.
Most of the new jobs being created are in the lower-wage sectors of the economy – hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they’ve agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they’ve lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid six years ago.
Other people are falling out of the middle class because they’ve lost their jobs, and many have also lost their homes. Almost one in three families with a mortgage is now underwater, holding their breath against imminent foreclosure.
The percent of Americans in poverty is its highest in two decades, and more of us are impoverished than at any time in the last fifty years. A recent analysis of federal data by the New York Times showed the number of children receiving subsidized lunches rose to 21 million in the last school year, up from 18 million in 2006-2007. Nearly a dozen states experienced increases of 25 percent or more. Under federal rules, children from famlies with incomes up to 130 percent of the poverty line, $29,055 for a family of four, are eligible.
Experts say the bad economy is the main factor driving the increase. According to an analysis of census data by the Center for Labor Market Studies at Northeastern University, 37 percent of young families with children were in poverty in 2010. It’s likely that rate has worsened.
Mitt Romney says he’s not concerned about the very poor because they have safety nets to protect them. He says he’s concerned about the middle class. Romney doesn’t seem to realize how much of the middle class is becoming poor.
But Romney doesn’t like safety nets to begin with. He’s been accusing President Obama of inviting a culture of dependency. “Over the past three years Barack Obama has been replacing our merit-based society with an entitlement society,” he says over and over, arguing that our economic problems stem from a sharp rise in dependency. Get rid of these benefits and people will work harder.
He and other Republicans point to government data showing that direct payments to individuals have shot up by almost $600 billion since 2009, a 32 percent increase. And 49 percent of Americans now live in homes where at least one person is collecting a federal benefit such as food stamps or unemployment insurance, up from 44 percent in 2008.
But Romney and other Republicans have cause and effect backwards. The reason for the rise in benefits is Americans got clobbered in 2008 and many are still sinking. They and their families need whatever help they can get.
The real scandal, as I’ve said before, is America’s safety nets are too small and shot through with holes. Only 40 percent of the unemployed qualify for unemployment benefits, for example, because they weren’t working full time or long enough on a single job before they were let go. The unemployment system doesn’t recognize how many Americans work part time on several jobs, and move from job to job.
And even those who are lucky enough to be collecting employment benefits are about to lose them. A record and growing percent of the unemployed have been jobless for six months or more, and Republicans in Congress are unwilling to extend their benefits.
Romney’s budget proposals would shred safety nets even more. According to an analysis by the Center on Budget and Policy Priorities, his plan would throw 10 million low-income people off the benefit rolls for food stamps or cut benefits by thousands of dollars a year, or some combination. “These cuts would primarily affect very low-income families with children, seniors and people with disabilities,” the Center concludes.
At the same time, Romney’s tax plan would boost the incomes of America’s most wealthy citizens, who are already taking home an almost unprecedented share of that nation’s total income. Romney wants to permanently extend George W. Bush’s tax cuts, reduce corporate income tax rates, and eliminate the estate tax. These tax cuts would increase the incomes of people earning more than a million dollars a year by an average of $295,874 annually, according to the nonpartisan Tax Policy Center.
By reducing government revenues, Romney’s tax cuts would squeeze programs for the poor even further. Extending the Bush tax cuts will add $1.2 trillion to the nation’s budget deficit in just two years. That’s the same as the amount that’s supposed to be saved by automatic spending cuts scheduled to start next year – which, by the way, will hit the poor especially hard.
Oh, I almost forgot. Romney and other Republicans also want to repeal of Obama’s health care law, thereby leaving 30 million Americans without health insurance.
The downward mobility of America’s middle class is the big news, but the GOP apparently hasn’t heard about it. Maybe it’s too hard to hear about from that far away – and Mitt Romney is certainly far away. His unearned income last year was more than $20 million. That’s about as much as the combined earnings of a thousand American families at or just above the poverty line.
Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.
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38 Comments so far
Show AllWhat more of Reich? A neoclassical economist who utterly failed to predict and warn us about the financial crisis?!
The economists who did and have great SOLUTIONS to our economic woes absent? Specifically Dr. Steve Keen and Dr. Michael Hudson. Why do they not appear here? They have predicted many bubbles and crises over the last decades, arguably the most accurate academic economists around, yet no mention here.
I guess failure is better than success and accuracy as long as you toe the line of accepted D/R duopoly framework.
Prof. Steve Keen won the top spot for the Revere Award for Economics (for example) by a landslide. Reich was not even in the running.
NO MORE REICH, BRING IN HUDSON AND KEEN!!
Gerald Celente, Michael Ruppert and Paul Craig Roberts are three more who predicted this years ago. Sometimes counterpunch.org puts up Roberts, who recently did an article skewering the latest jobs data, showing it to be a blatant lie. But all the progressive economists are as bad as any. All they want to do is talk about increase taxes and spending. None of them look touch on the foundations of the problem, how methods of money creation keeps us enslaved to the banks through debt.
Ellen Brown is the only economist on this site who writes anything worth reading on the issue.
FYI http://www.informationclearinghouse.info/
They post a lot of articles by both PCR and Hudson.
Commondreams is a good site but they don't venture to far outside of mainstream progressive thought.
I think it's primarily the clean and simple comments system and overall clean presentation that's great about CD, not the content.
Reich didn't mention the millions of older US workers who are delaying or cancelling retirement solely to stay on their employer's subsidized medical insurance, thereby eliminating millions of job opportunities for young Americans whoare experiencing a higher unemployment rate than any othe age group.
Obamacare makes Americans MORE dependent on employer sponsored medical insurance. Had Obama instead simply reduced the eligibility age for medicare from 65 to 55 or even 60 years of age, millions of jobs would be opening up for young Americans.
When Obama guts Social Security, Medicaid and Medicare (after the 2012 elections are over) ever more older workers will delay or cancel retirement, resulting in ever fewer job opportunities for young Americans.
Seconded. Reich is dead wood, a careerist (neo)liberal who has lagged behind on every substantive issue over the last 25 years. Now he's got a cushy gig at Berkley and holds forth in order to avoid total irrelevance. CD needs to stop posting this dreck.
A better take on political economy comes from Connor Kilpatrick, linked at The eXiled: http://exiledonline.com/thirty-more-years-of-hell/
Unfortunately, the article is full of apologia for Democrats. The yardstick being how much WORSE a rich scum like Romney would be, which conveniently means we need not mention the wonders Obama has put forth in such things as a joke of a settlement with the big bank heisters, NDAA, putting Social Security ON the table, and financing the continued MIC build-up where a monster of that nature must inevitably cast about in pursuit of the next set of enemies.
Then this gem:
"Romney and other Republicans also want to repeal of Obama’s health care law, thereby leaving 30 million Americans without health insurance."
It's a remarkable statement... as it presumes those same 33% of underwater homeowners are suddenly going to come up with the $800-1200. a month to satisfy the health insurance scammers. Or that the states, most behind with existing costs and established expenses, are going to somehow find a way to subsidize this GRAFT to the big insurance frauds (also known as corporations).
Not buying the BS any longer.
Clearly you type more quickly than I (and seem to write consistently better too) SR. Now, if I could only figure out a way to get you to think exactly like me, I could retire from these pages :-}.
Maybe it's about time to do that.
Kudos on your comment.
You are right SR. Obamacare is a scam. The right opposes it on principle because they oppose anything that would help ordinary people with health care. Sensible people oppose it because it deivers us all kicking and screaming to the chaotic, corrupt, useless layer called the health insurance industry, imposes few cost or quality controls on them, and is downright unaffordable for most people.
"The right" will publicly oppose Obamacare as long as there continue to be enough Democrats voting for Obamacare so the GOP doesn't need to take the heat for a program a majority of Americans loathe.
Obamacare was introduced by Newt Gingrich in the 90s, instituted by Romney in Massachusetts and refined to further enhance corporate profits by Obama. The GOP loves Obamacare and will make many faux attempts to dump it, all the while making sure that they never really do.
The GOP's Brer rabbit strategy is working flawlessly...PLEEEEASE DON'T THROW ME IN THE BRIAR PATCH !
You are correct in adding that nuance and history. Some Rs hate Obamacare in public, either on principle or to continue the two party theatrics demonizing Obama for a certain sector of their constituency. Others who are tied into the insurance industry just love it but won't say so. It is the Briar Patch.
I don't know how I will afford Obama's Mandated Health Insurance Purchase. That is all it will take to push me over the edge into poverty and the loss of my home. I guarantee I make too much to get any subsidy that will prevent my fall into poverty as I am just barely able to pay my bills right now.
Although I cuss the Democrats for selling out the working class I really blame the stupid American voter for our predicament. Americans could do something but just about everyone just sits around blaming the other. We do still have the vote although for how much longer I do not know.
Even if he did know, Full Of It Mitt wouldn't care.
Every time I want to defend Reich for some good work he does, he falls back on one of these ridiculous "Republicans are bad..." columns. Of course they are, but it is irrelevant. Too much saturated fat is bad for people too, but people continue to eat it.
And if Republicans are saturated fat, Dems are sugar and salt in excess.
The economic debate has nothing to do with our current duolopy political system other than the fact that Repubocrats deliever for their masters. We already know that. Ad nauseum...
Reich knows too, but he just can't break with the paradigm that gave him birth and he continues to shoot himself in the feet. Given his height, he should protect every inch he has left.
Even more depressing is Ralph Nader's piece today implying that the Democratic Party could win in a landslide only if it reformed itself and became populist/progressive.
It won't. It can't. That's not its purpose. Its purpose is to deliver for its owners.
Ralph Nader knows that.
This shit is just so exhausting.
Out for now.
"This shit is just so exhausting". Agreed.
TJ: You're not a bad writer, yourself. I can type 100 words per minute; but as I've mentioned to kids who stand around watching me type at public libraries: "The real trick is THINKING coherently, that fast!" In junior high school, I had a German, anal retentive piano teacher. My Goddess, he turned Mozart scales into abject torture for me. But years of piano lessons left my fingers ready for the good fight... in typing here. And I fully agree, THE SHIT is beyond exhausting! I'll bet a few of us feel a lot like Nero inside the machine-driven dead world of The Matrix.
Thanks for the compliment. Chinese master say: Wit likes yours is like gentle stream flowing over smooth rocks.
I've never been accused of gentleness before, but I'll take it. I do like the comparison to Neo though, assuming "Nero" is a Fraudian slip. ;-}
Another perspective:
The middle class is now losing because they never defended the poor. Now capitalism is waging war with the middle class. If the middle class had defended the poor in the first place, with justice, and simple fairness, you wouldn't have em- bolded predatory capitalism to prey on the middle class. It's like in past Nazi Germany, they first came for the Jews, then the.............and again, shame on Christianity and their gospel of prosperity for failing to stand up to very near fascist political oppression.
Really, really, good point.
And another point, as a so called "Christian nation" , hypocritical Christianity in America has has failed to push for a decent minimum wage. Frankly, the U.S. wouldn't be in the present situation with predatory capitalism ruling every aspect of our lives if Christianity in America had been true the the radical teachings of Christ.
Further, if Christianity does not join the Occupy Movement, it has become totally irrelevant to the evolution of mankind.
"Frankly, the U.S. wouldn't be in the present situation with predatory capitalism ruling every aspect of our lives if Christianity in America had been true the the radical teachings of Christ."
The "Christians" you refer to are actually part of a deliberately constructed right wing social movement launched in the 1970's by right wing operatives. It was never "Christian", but rather, it was set up from the beginning to be an appendage of the political right wing in America to counter Christian churches that followed people like Martin Luther King Jr, or William Sloan Coffin. One could call it antichristian, and not be far off the mark. Pat Robertson and Jerry Falwell were among the main architects, working with right wing Republicans from the outset ...
To RV: The Christians I referred to included Christian fundamentalists, but it includes fundamentalist Catholics and fundamentalist Protestants as well who do not question religious absolutes and are authoritarians in nature. . Christianity as a whole has also failed to transcend our nations materialistic consumer culture. American culture has robbed them of their true humanity, what it means to be fully human, which the life of Christ was all about. Early Christianity and the early mystics of all the major religions of the world recognized the dysfunction of the human ego and the evil of loving money. Modern corporate consumer capitalism and the witchcraft of Madison Avenue feeds on the human ego and the love of success and money. Christian fundamentalism is a factor in a shift to the right, but not the sole influence. ,
I recall an essay, by Arthur Schlesinger Jr. I think, remarking on the rather unexpected resurgence of "Evangelical Christianity" after the 1970's. Before that period, Christianity in America was the National Council of Churches as much as anything, a liberal group most of the time. After that period, it was the Moral Majority more than anything else for a period. It was a deliberately engineered sea change financed by right wing money in an organized way. The other groups you mention were there before the change too, but didn't hold the stage. People like Martin Luther King Jr. fought materialism, and Coffin fought against the wars. During all of that, the Catholic Church went from Pope John XXIII to Pope John Paul II, which was a left to right shift as well.
And don't forget groups like the Quakers and the abolitionist churches going back to the early history of the country. There was a wide variety among churches, across the spectrum at least, with some groups striving then and now to fight materialism. After the 1970's, it all careened (was driven) rightward ...
Good post. Racism and a false sense of security were the background against which lay the failure to defend the poor.
Exactly. So many in the so-called "middle class" still want to believe they are better than those dirty, lazy poor people as we all sink further into the abyss.
Well, I have to say I agree with getting rid of Obamacare. Adding another 8 grand to my tax bill would raise my tax level to about 40-45% of my income. Because I'm self employed, my tax rate is about 20-25%, which is bad enough. I don't make anywhere near the millions upon millions upon millions that these guys make.
Once again (as happens so often here on CD), I find myself far more edified by the comments than by the article itself.
Steven V Riley writes:
"The middle class is now losing because they never defended the poor."
So true, and so Karmic. But of course this is an extension of the American myth of "rugged individualism" massively promoted by the MSM in every corner of our lives, as opposed to the Solidarity the old unions used to promote. I find the anecdotal stories on the local evening news quite telling. Some middle class couple with three kids and a mortgage, and no job, savings depleted, at wit's end, saying "We never thought this could happen to US"! The poor are the Other.
Meanwhile, there are structural issues that transcend issues of politics and policy---issues that make it impossible for Americans to compete against low wage nations globally. One glaring example is post-war suburban sprawl, built entirely on the presumption of cheap oil. If you have to commute 60 miles a day to get to a job, that's an overhead cost few other economies have to bear. Just one of many examples. (Before the war, most of the productive industrial centers were small cities where workers could walk or bike to work, lunchpail ready. Today they are hollowed out.)
-30-
Thanks for mentioing structural issues. In this country, we seem culturally unable to consider their significance. We can't understand our economy because we don't even have a language for our political economy -- which describes and analyzes structural issues..
The post-war suburban sprawl that you mention, for example, was the result of a series of quite conscious decisions made by our political and corporate elites to devote our national resources almost solely to the building of a consumer-driven capitalist economy and the world's largest military.
One of the famous examples of this was GM buying up (private) mass transit companies and tearing up tracks in Southern California. The government followed that up with superhighways etc. under the guise of the National Defense Highway System (interstates).
These structures, both physical and political, then defined the patterns of economic (mis) development. Central planning anyone?
The same can be said of the failure to make Medicare universal, the failure to establish a minimum wage as a living wage, creating a special tax for so-called "unearned income" (all income that is not wages and salaries, making the tax structure regressive, Taft-Hartley, etc,. etc., etc.
The fundamental problem is that the public could not understand most of this, and was especially susceptible to the massive political propaganda campaign that we mis-call "advertising," accompanied by genralized brainwashing through our school systems.
The prime mover behind this de-politicization, in my opinion, was the so-called Cold War which (rather easily) terrorized most of our population the way the "War on Terror" (rather easily) does now.
What I can't get is how easy it all was -- for our masters. The best I can figure is that there was enough material wealth around to numb our collective brains and senses.
To enact a maximum wage, we'll need direct democracy
"January’s increase in hiring is good news"
January's increase in hiring is bullcrap. Paul Craig Roberts dissects the numbers and pulls the mask off the lie that is the official unemployment statistics....
http://www.informationclearinghouse.info/article30451.htm
I work in manufacturing and what I am seeing is temps being hired in to replace older workers who are retiring at $2.00 dollars an hour less.
So, I wonder how they plan on driving a consumer based economy at the same time they are driving down wages? All I hear from management is we have to compete with cheap foreign labor markets.
Well I ask them so instead of them following our model we are following theirs?
Globalization, a race to the bottom for the middle class, and the poor.
Now wasn't that the part of the plan they didn't tell us?
Thank- you Bill! Oh, you too Robert.
Wait a minute. Globalization has brought us mountains of cheap warez. We're supposed to get all addicted to those mountains of garbage, and thank the elites who brought them to our communities! Weee!
14. Every gain of the working class has been won through struggle. From the 1870s and the fight for the eight-hour day and child labor laws; to the mass strikes of the 1930s and the right to organize industrial trade unions; to the fight for racial equality and democratic rights—everything the working class has achieved it has had to fight for. The Great Depression of the 1930s led to a wave of mass actions. These included the bonus marches of 1932, the mass strikes of 1934 in Minneapolis (Teamsters), Toledo (auto workers) and San Francisco (longshoremen), and the great sit-down strikes in Flint, Michigan in 1936-37, which spearheaded the formation of the United Auto Workers. Throughout the 1950s, ’60s, and ’70s, mass working class strikes were a common feature of American life.
15. For the past 20 years, however, open class struggle has virtually disappeared in the United States. This is not due to the decline in class antagonisms or social tensions—in fact, social inequality has risen enormously during this same period. It is due above all to the bankruptcy of the old organizations that supposedly represent the working class. The bureaucratic apparatuses organized today in the AFL-CIO and the Change to Win Coalition—trade unions in name only—function as accomplices in the corporate assault on workers.
16. These organizations long ago made their peace with the capitalist system. In the aftermath of the Second World War, the labor bureaucracy, with the support of the state, organized a purge of militants and socialists—the very people who had led the creation of the unions. They said that the interests of workers could be looked after within the framework of capitalism, without any radical change in the economic system or challenge to corporate control and management of factories and workplaces. As a central part of their nationalist outlook, the union bureaucracy supported American militarism, lending its services to advancing the interests of the ruling class abroad.
17. The response of the union bureaucracy to the corporate-financial onslaught on the working class that was launched three decades ago was to integrate itself ever more fully into the management structure. Beginning in the 1980s, the union leadership worked consciously to isolate and betray every major strike. Since then, the number of strikes has declined dramatically, even as the assault on the working class has intensified. Every contract agreed by the unions has included more concessions in wages, benefits and jobs. No longer can these organizations be called “unions.” They function as a branch of corporate management, policing the working class, containing social unrest, and enforcing concessions. As part of the current assault on auto workers, the UAW will become a principal owner of both Chrysler and GM, with a direct interest in the exploitation of the workers it supposedly represents.
http://wsws.org/articles/2009/may2009/reso-m21.shtml
No doubt the unions are in bed with Das Kapital. But probably the biggest element in the numbing of Merkans these past three decades has been the stoning of Merkans - on mountains of petro-opiates. The class war in Merka today is another Opium War, like the British waged against the Chinese. To keep them stoned out of their minds.
"The reason for the rise in benefits is Americans got clobbered in 2008 and many are still sinking"
What clobbered Merkans in 2008? Robert Reich's elite establishment. Though he wants to paint the culprit to be his Demoks' fake opponents, Repuks, in a fake contest, on a fake theatrical stage. It's a fake contest because the real contest is between Robert Reich's elite sponsors, and the people, the victims. Reich's fake contest is fake though it appears real. Like in pro sports, the contestants take their game seriously, but that's because they get paid for playing, not because it's a true contest. It's the tail wagging the dog. They get paid, so that must mean it's real. But it's fake! You focus your eyes on the fake contest between Reich's Demoks and their fake opponents, and don't mind that the elites, who sponsor the theatrics, are picking your pocket. You vote for Reich's Demok candidates so the pickpocketing may continue, so that you may continue to be enslaved, so that Robert Reich may continue to enjoy the spoils that YOU reap for HIM! Love your master!
Ok, so we enjoy discrediting Reich, the champion of class hierarchy. The wolf in sheep's clothes. But we're most happy to get him out of our way, because we have something great to build. Something infinitely greater than Berkeley. Berkeley is part of the hierarchy that is almost completely discredited today. We don't need it because we know the stable society is flat, in the class sense. Stability is something we value because we know our fellow human beings thrive in a stable society, a stable economy. Not growing. Not like Robert Reich wants. Too bad for that poor guy. He can't enjoy what true people enjoy.
Our society is from our own hands. You know the satisfaction people get from building something themselves. Robert Reich cannot allow you to know that satisfaction. Because he has chosen for you everything already. He has chosen that your economy will always grow and that when it crashes you are to accept handouts from that monstrous government that everyone on the planet fears. He has chosen that you will stand by while elites at Berkeley and elsewhere decide everything for you. You take orders. You let the coordinators decide.
But our society is from our own hands. And our own minds. And just look at that virtuous cycle: We build, we benefit, we build better, we benefit better, we build the best, we benefit the best. We know the biosphere. We know human nature. Out of this knowledge, we build what benefits people, and nature. I see no role for elites who cannot acknowledge the people. Get out of our way, Reich.
Progressive response to the usual obfuscation: "Obama’s health care law" forces "30 million Americans without health insurance" to buy Corporate insurance -- during a worldwide Depression, and a worldwide Austerity campaign. Reich propagandizes this area (health care mandate -- without a public option), over and over, while ignoring "how much of the middle class [will] [become poorer]" because of it.