Nothing I haven't been saying for years, but more data is nice.
Even in a growing economy, only about a third of Americans can be considered upwardly mobile -- meaning they will end up with more inflation-adjusted income and a higher relative economic standing than did their parents. The rest are maintaining their standing or falling behind; about one-third slip down the income scale over the course of a generation.
Sounds bad, but not awful. One third up, one third down, one third even.
Not so fast:
When specific groups are considered, the news is even more unsettling. Men in their 30s have experienced a sustained slide in their inflation-adjusted incomes, which fell by 12 percent between 1974 and 2004.
And most shocking of all: About 45 percent of middle-income African American children end up falling to the bottom of the income scale over a generation, compared with 16 percent of white children -- meaning that even solidly middle-class African American families lead fragile economic lives.
Surprised? I'm not. When an African American gets half as many interviews with the exact same resume as a white, it'd be odd to find anything else. And the destruction of good manufacturing and labor jobs has naturally hit men hard.
Which is why women went into the workforce. Everyone goes on about woman's lib, but to me it's always looked more like ideology matching economic reality. Women have to work:
Over the decades, families have gradually adapted to these economic trends. They often have added a second income -- the proportion of married women who are in the workforce has gone from 23 percent in 1950 to 70 percent today. And families have become smaller, spreading their resources among fewer children in need of food, clothing and cellphones....
... A four-year college degree is now necessary just to tread economic water, and only a professional or graduate degree reliably ensures wage growth. But while college enrollment for men is up, graduation rates have recently declined.
They've declined, I strongly suspect, because college graduation rates track economic class very well. As college tuition has risen much faster than inflation, the lower middle class and working class have found it very hard to make it through and graduate.
And then we have some nonsense:
There are large reasons for these economic trends that have little to do with the economic policies of any single administration. Global competition has deprived America of many lower-skill, higher-paying manufacturing jobs. Rising powers such as China and India are preparing industriously to compete with Americans for higher-skill, high-tech jobs as well. No matter who is elected the next president, American workers will need to be highly educated, willing to change jobs often and prepared to move where new jobs emerge.
Free trade policies, and more relevantly, free capital flow policies and the financialization of the economy in the post Bretton Woods environment were deliberate policy choices. Wages for ordinary workers peaked in the mid seventies and have been stagnant or in slow decline ever since then. This is a question of policy. That's not to say it's only policy, America was never going to hold onto its World War II supremacy, but it's mostly a policy question. The idea that nothing can be done is something it's very convenient for the winners (which includes the class of people Senators and Members mostly come from) to claim, but it's simply not the case.
An interview with consumer debt expert Elizabeth Warren of Harvard Law makes this point:
Elizabeth Warren: No, it's not sustainable. We've built this latest economic boom on borrowed money. Consumers, to the extent that they've stayed afloat, have managed to stay afloat by using their credit cards and by taking out home-equity lines of credit.
Krizner: And they've used that credit for what? For lattes and microwaves and expensive vacations? Have Americans been over-consuming?
Warren: I wish that were the case, but the data say otherwise. Americans are in a lot of debt not because they're overconsuming, but because of big fixed expenses that they really can't wiggle out of.
Krizner: When you say "fixed expenses," what are you talking about?
Warren: Where American families are getting ruined financially is in the areas of mortgages and health insurance. The fact that they've got to have two cars, the fact that they've got to put their children in child care, their taxes -- the things over which they have little or no control.
Krizner: But can that really be the whole story? I mean, in gross numbers, consumption has tripled, apparently, in about 20 years. Surely a good chunk of that is discretionary spending.
Warren: Let's look at the basics. What families are spending on clothing in the last 30 years, it's down 33 percent in inflation-adjusted dollars. What they spend on food is down about 20 percent. What they spend on appliances, down about 52 percent. It's not stuff that's driving families to the poorhouse.
Krizner: You're describing a really tough squeeze. So how is this gonna play out in people's behavior -- what do you think?
Warren: I worry that there are gonna be some people that are going to delay marrying, there are going to be some who are not gonna have children, that the family life that sustains America, that makes us who we are, will become so expensive that many Americans will just opt out. And if that happens, everything that we understood about America starts to fade away.
(Chart from unmarried America)
Why do families need two cars? Because both the husband and the wife are working. Why do they need daycare? The same. Why is health insurance so expensive? Because of a deliberate government decision to keep it private and pay 50% more of GDP than most other OECD nations.
And Warren's behind the times. People are already delaying marriage. Actual marriage is down, with cohabitation up significantly. The American family as it was understood by a previous generation is already under siege.
If you don't spread the wealth, if you don't have a broad middle class society, this is what happens. And it's not a question of "forces beyond anyone's control", it's a matter of deliberate government policy. Want a middle class society? Great. In exchange you have to give up having tons of obscenely rich people. You can't have both.