It's no surprise to anyone in America that being middle class isn't what it used to be. Even though we have more gadgets, middle class workers in the 1950s and 1960s could afford to have stay-at-home wives. For mort households, it takes more hours of paid labor, and more borrowing, to support a bourgeois lifestyle.
This article by Christopher Caldwell in the Financial Times, "
The lazy, crazy middle class," does a good job of providing an overview of middle class decline, but steers clear of articulating the causes. For that, we can consult
Thomas Palley: America’s economic contradictions are part of a new business cycle that has emerged since 1980...The new cycle rests on financial booms and cheap imports. Financial booms provide collateral that supports debt-financed spending. Borrowing is also supported by an easing of credit standards and new financial products that increase leverage and widen the range of assets that can be borrowed against. Cheap imports ameliorate the effects of wage stagnation.
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All these features have been present in the current economic expansion. Wages have stagnated despite strong productivity growth, while the trade deficit has set new records. Manufacturing has lost 1.8 million jobs. Prior to 1980, manufacturing employment increased during every expansion and always exceeded the previous peak level. Between 1980 and 2000, manufacturing employment continued to grow in expansions, but each time it failed to recover the previous peak. This time, manufacturing employment has actually fallen during the expansion, something unprecedented in American history.
Now to Caldwell on how this is playing out. From the
Financial Times:
Two years ago, several prominent economists gathered in Italy to debate the wide gap in annual working hours that separates the workaholic US from leisure-obsessed Europe. The conference was called: “Are Europeans Lazy? Or Americans Crazy?”.... But sometime in the intervening years, ordinary Americans – without stinting on craziness, of course – appear to have made their peace with laziness. On Wednesday, the Pew Research Center, based in Washington, DC, published an eye-opening study on the economic attitudes and prospects of middle-class Americans. Inside the Middle Class: Bad Times Hit the Good Life found that Americans’ number-one priority – named by 68 per cent of respondents and topping children, marriage, career, wealth and religion – was “having enough free time to do the things you want”.
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The US middle classes have always had an empathy with the rich that is anomalous in a world context. They oppose milking high earners, thinking that they themselves might be rich someday. But that empathy is eroding. Only 42 per cent of the middle class think that “rich people achieve their wealth through hard work and ambition”; 47 per cent chalk up wealthy people’s fortunes to “connections and family ties”.
With all due respect to Pew, survey research has to be taken with a handful of salt. The fact that 68% of the respondents said having enough free time to do the things you want” was their top priority is probably aspirational and a symptom of ever-worsening time stress. I doubt that many of the participants would accept a job with lower pay and better hours.
Naked Capitalism