The middle class now worries more about holding on for dear life than about climbing the ladder to riches.
The Grain Exchange Room in Milwaukee’s old Chamber of Commerce building is a dazzling display of Gilded Age opulence. Its ornate faux-marble columns soar three stories high, and an intricately carved balcony overlooks what is believed to have been the world’s first commodities-exchange trading pit. This temple to business and success was a fitting location for Mitt Romney’s victory speech after the Wisconsin primary a year ago, on the night he eclipsed his last remaining rival for the Republican presidential nomination.
Romney used the occasion to lay out his vision of an “opportunity society led by free people and free enterprises.” Barack Obama, he charged, didn’t believe in opportunity: When the president went after the “1 percent,” he wanted only to turn the United States into “one of those societies that attack success.” Romney’s supporters cheered.
In Chicago, the Obama team cheered, too.
Led by Obama’s chief pollster, Joel Benenson, the campaign had spent 2011 examining Americans’ views on economic security and the American Dream. They concluded that something fundamental had changed. It used to be political gospel that a candidate couldn’t risk talking about inequality because such a stance was so easily caricatured as an attack on the rich and because even working-class Americans believed they had an opportunity to be rich someday. But as Benenson explained in a recent interview, “There has been a recalibration of the American mind-set when it comes to economic change.”
What his polling found is that middle-class Americans are much more concerned about holding onto what they’ve got than in pursuing more. The Pew Economic Mobility project, the Allstate/National Journal Heartland Monitor Poll, and other studies have arrived at similar conclusions. When Pew asked Americans in 2011 if they preferred financial stability or moving up the income ladder, 85 percent of respondents chose the safer, surer future.
If that seems like a defensive crouch, it is. The American middle class is broadly defined as households earning two-thirds to twice the median income, or about $35,000 to $100,000 a year. The beginning of the 21st century was a “lost decade” for the middle class, Harvard economist Lawrence Katz said, but the decline has been under way for decades. In the early 1970s, middle-class households earned 62 percent of the national income; today, they bring in just 45 percent. These households are more vulnerable, economists say, than at any time since World War II.
The Great Recession exacerbated this decline. Sixty percent of the job losses in those years occurred in middle-income jobs. The recovery, instead of restoring those jobs, has replaced them with low-wage positions. And the middle class, which once drove American prosperity with its purchasing power and stability, is shrinking. Middle-class households make up barely half the population today, down from 61 percent in 1971. People aiming to reach the middle class, or to stay there, have ample reason to worry.
Middle-class Americans’ anxieties and the shift in how they define the American Dream had consequences for the 2012 election. Romney spoke in the language of economic risk: “The promise of America has always been that if you worked hard, had the right values, took some risks, that there was an opportunity to build a better life for your family and for your next generation.” Compare that with Obama describing the “basic bargain in America,” a formulation he has used since his U.S. Senate campaign in 2004: “If you’re willing to work hard and play by the rules, you should be able to find a good job, feel secure in your community, and support a family.” So, which guy won?
But if the American Dream, and the understanding of what it means to be middle class, is changing, the reverberations will go far beyond a single election. They speak to the very story Americans tell about themselves. We were once a nation of strivers, raised on Horatio Alger and Bill Gates, confident of the possibility of moving upward. If Americans now aim simply to avoid slipping backward, they will have decided that the American Dream is but a reverie.
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If these changes in American attitudes and behaviors merely dated to the Great Recession, they might not last. But the recession simply punctuated a set of underlying economic trends that were several decades in the making. That may be why, even as the economy has recovered, insecurity hasn’t subsided much. As in earlier business cycles, employers aren’t hiring many workers as their profits bounce back; many are looking to downsize further and scale back employee benefits.
Above all, the recession made clear that the old rules—work hard and you will be rewarded with a comfortable, stable life—are no longer in effect. “This was a dramatic event that caused a lot of upheaval, not just financially and economically, but in terms of how they viewed the American economy overall,” Obama pollster Benenson said. “One of the big sources of concern for the people we talked with was that they didn’t recognize any new rules in this environment. All of the rules they had learned about how you succeed, how you get ahead—those rules no longer apply, and they didn’t feel there was a set of new rules.”
No wonder Americans are skeptical that their children will be better off than they are—a core element in the American Dream. A startling 59 percent of respondents to a 2011 Pew survey said it would be harder for their children to move up the income ladder than it was for them. The path to rising higher isn’t as clear as it was.
The older, ambitious model of the American Dream has even drawn some critiques. In the 1990s, the Clinton administration said Washington should “attempt to help all American households become homeowners.” After the housing market collapsed, the Treasury Department declared in 2011 that the Obama administration’s policy “does not mean all Americans should become homeowners.”
A similar downsizing of dreams popped up in last year’s campaign for the Republican presidential nomination, when former Sen. Rick Santorum of Pennsylvania called Obama a “snob” for thinking everyone should attend college. (Obama jumped to clarify that he meant community colleges and job training, too.) Economic research shows the advantage of a college diploma; a Georgetown University study last summer found that the unemployment rate for recent graduates of four-year colleges was 6.8 percent, compared with nearly 25 percent for recent high school grads. Even so, a majority of Americans tell pollsters (54 percent in last fall’s Heartland Monitor survey) they are skeptical that a college education is worth the burden of student loans.
Reducing one’s risk in pursuit of housing or education isn’t necessarily irrational. But a middle class that is increasingly characterized by risk aversion essentially rewrites our national narrative, the one that highlights ordinary people who take risks and create new opportunities and industries.
Scaling back may also mean accepting that people who haven’t yet made it into the middle class never will. “A growing body of evidence suggests that the United States, far from being the land of opportunity celebrated in our history and our literature,” economist Isabel Sawhill has written, “is instead a country where class matters after all, where upward mobility is constrained, especially among those born into the bottom ranks.” That isn’t a phrase likely to be inscribed on a national monument anytime soon, but for millions of Americans, it’s the new reality–and it hurts.
Being In the Middle Class Means Worrying About Falling Behind. By Ronald Brownstein. National Journal, April 25, 2013.
The Next Economy. A Joint Project of The Atlantic and National Journal.
Still the Land of Opportunity? By Isabel V. Sawhill. Urban Institute, May 1, 1999.
Five Myths About Our Land of Opportunity. By Ron Haskins and Isabel V. Sawhill. Brookings, November 1, 2009.