Had I Known

by Barbara Ehrenreich

  But no one, however humble, denies that there has been a profound change in the class contours of American society. No matter how you slice up the population—whether you compare the top fifth to the bottom fifth, or the top 40 percent to the poorest 40 percent—and no matter whether you look at individual earnings or household earnings, the have-nots are getting by on less and the haves are doing better than ever.

  The change is particularly striking when families with children are compared over time. In 1968, the poorest one-fifth of such families received 7.4 percent of the total income for all families; in 1983, their share was only 4.8 percent, down by one-third. During the same period, the richest fifth increased its share from 33.8 percent to 38.1 percent. The result, according to the Census Bureau, is that the income gap between the richest families and the poorest is now wider than it has been at any time since the bureau began keeping such statistics in 1947.

  So far, the middle class is still a statistical reality. At least a graph of income distribution still comes out as a bell-shaped curve, with most people hovering near the mean income rather than at either extreme. (If the middle class disappeared, the curve would have two humps rather than one in the middle.) But in the last decade, the income distribution curve has slumped toward the lower end and flattened a little on top, so that it begins to look less like a weathered hill and more like a beached whale. To the untrained eye, the shift is not alarming, but as economist Jeff Faux, president of the Economic Policy Institute in Washington, says: “These numbers are very slow to move, really glacial. So when you do get a change you better pay attention.”

  The optimists in the debate attribute the downward shift in earnings chiefly to the baby boomers—the 78-million-member generation that began to crowd into the labor market in the 1960s and ’70s, presumably driving down wages by their sheer numbers. As the boomers age, the argument goes, their incomes will rise and America will once again be a solidly middle-class society. But a recent analysis by the economists Bennett Harrison and Chris Tilly at the Massachusetts Institute of Technology and Barry Bluestone at Boston College suggests that the bulge in the labor force created by the baby boom and business-cycle effects can account for less than one-third of the increase in income inequality that has occurred since 1978.

  In fact, baby boomers may find it much more difficult to make their incomes grow over time than did their parents’ generation. A study by the economists Frank S. Levy and Richard C. Michel shows that, in earlier decades, men could expect their earnings to increase by about 30 percent as they aged from forty to fifty. But men who became forty in 1973 saw their earnings actually decline by 14 percent by the time they reached fifty. If this trend continues, the baby boomers will find little solace in seniority.

  The fate of the baby boomers is central to the debate about America’s economic future in another way, too. Contrary to the popular stereotype, the baby boomers are not all upwardly mobile, fresh-faced consumers of mesquite cuisine and exercise equipment. The baby boom is defined as those born between 1946 and 1964, and only 5 percent of them qualify as “yuppies” (young urban professional or managerial workers earning over $30,000 a year each, or $40,000 or more for a couple). Most of them, like most Americans, are “middle-class,” in the limited sense that they fall somewhere near the middle of the income distribution, rather than at either extreme. Whether they can hold on to, or achieve, middle-class status—however defined—will be a test of whether the American middle class is still capable of reproducing itself from one generation to the next.

  “Middle-class” can be defined in several ways. Statistically, the middle class is simply the part of the population that earns near the median income—say, the 20 percent that earns just above the median income plus the 20 percent whose earnings fall just below it. But in colloquial understanding, “middle-class” is a matter of status as well as income, and is signaled by subtler cues—how we live, what we spend our money on, what expectations we have for the future. Since the postwar period, middle-class status has been defined by home ownership, college education (at least for the children), and the ability to afford amenities such as a second car and family vacations.

  In the matter of home ownership, the baby boomers are clearly not doing as well as their parents. Levy and Michel calculate that the typical father of today’s boomers faced housing costs that were equivalent to about 14 percent of his gross monthly pay. In 1984, a thirty-year-old man who purchased a median-priced home had to set aside a staggering 44 percent of his income for carrying charges. The recent decline in interest rates has helped some, but it has been largely offset by continuing inflation in the price of homes. The problem is not only that housing costs have escalated, but that the median income has actually been declining. According to the National Association of Homebuilders, a family today [1986] needs an income of approximately $37,000 to afford a median-priced home. In 1985, according to census figures, the median family income was $27,735—almost $10,000 short.

  If the baby-boom bulge in the workforce is not the cause—or the sole cause—of America’s slide toward greater economic inequality, what is? Public policy is one obvious contributing factor. In the 1960s and early ’70s, public policy—and political rhetoric—favored a downward redistribution of wealth. Ronald Reagan reversed the trend and instituted policies that resulted in the government’s first major upward redistribution of wealth since World War II. As a result of the combination of reduced taxes for the better-off and reduced social spending for the poor, the richest one-fifth of American families gained $25 billion in disposable income between 1980 and 1984, while the poorest one-fifth lost $7 billion. The current [1986] tax-revision bill would correct some of these inequities. But at the same time, according to a number of the bill’s critics, including Richard A. Musgrave, professor emeritus of political economy at Harvard, it also represents a retreat from the very principle of progressivity in taxation in that it reduces the maximum rate of taxation for the very rich.

  The drift toward a two-tier society actually began before the Republicans took office in 1981, and must have been set in motion by changes that go deeper than political trends. Some of these changes may be more social than economic; divorce, for example, can have the effect of splitting the members of individual families into different social classes since, in most cases, the woman ends up with the children and most of the responsibility for supporting them. Single mothers now account for almost half the household heads in poverty.

  But if divorce is a factor in the emerging pattern of inequality, so is marriage. Mimi Lieber, a New York–based marketing consultant who has been following the impact of class polarization on consumer choices, says that we are seeing “a changing pattern of marriage; today, the doctor marries another doctor, not a nurse.” The result is that marriage is less likely to offer women a chance at upward mobility.

  On the whole, however, marriage is probably a stabilizing factor, at least if it is a “nontraditional” form of marriage. Seventy percent of baby-boom women are in the workforce—compared with about 30 percent in their mothers’ generation—and the earnings of working wives are all that hold a growing number of families in the middle class. A study prepared by Sheldon Danziger and Peter Gottschalk for the Joint Economic Committee of Congress shows that most of the income gains made by white two-parent families with children since 1967 can be accounted for by increased earnings by wives. On a husband’s earnings alone, the average family (of any race) would fall below the median income; on the wife’s earnings alone, it would fall to the poverty level of $10,990 for a family of four.

  Whatever else is changing in our patterns of marriage and divorce, something has happened to the average American’s ability to support a family. According to Bluestone and Harrison, the economy is simply not generating enough well-paying jobs anymore: Between 1963 and 1978, only 23 percent of all new jobs paid poverty-level or “near-poverty-level” wages; but of the jobs generated between 1978 and 1984, almost half—48 pe
rcent—paid near-poverty-level wages. Here again, public policy is partly to blame. The minimum wage has not gone up since 1981, and now amounts to $6,700 for full-time, year-round work—almost $4,000 short of the poverty level for a family of four.

  There are no doubt deeper—or, as the economists say, “structural”—reasons for the average American’s sagging earning power. For one thing, the economy has been “globalized.” In some industries, such as garments, toys, and electronics, American workers are competing—directly or indirectly—with workers in the southern hemisphere whose wages are a few dollars per day, rather than per hour. In a related development, the American economy has been “deindustrializing,” or shifting from manufacturing to services, fast enough to displace 11.5 million Americans from blue-collar jobs (many in highly paid, unionized industries, such as auto and steel) since 1979. For the most part, service jobs tend to be lower-paying and nonunionized. Finally, there has been the technological revolution. Computers are eating away at many skilled, mid-level occupations—middle managers, department store buyers, machinists—as well as traditionally low-paid occupations, such as bank teller and telephone operator.

  It is on the role of the “structural” changes that the economists are most fiercely divided, and, it seems to me, confused. The optimists insist that the causes of class polarization are more ephemeral than structural—if not the baby-boom bulge, then the strong dollar, or some other factor equally likely to go away by itself. Not long ago, the pessimists were convinced that polarization was the straightforward result of globalization, deindustrialization, and high technology, the combination of which, at least theoretically, could be expected to produce a nation of low-skilled helots dominated by a tiny technical-managerial elite.

  Now some of them are not so sure. “It’s incontestable,” says David Smith, an economist on Senator Edward M. Kennedy’s staff, “that as a service economy, we won’t be able to sustain the level of growth required to maintain our standard of living.” But, he says, recent data suggest that high technology does not necessarily bring about occupational polarization. As for international competition, he asks sarcastically, “Who the hell are we competing with in the insurance industry?”

  There is no question, though, that American workers are less able than they were in the recent past to hold their own at the bargaining table—and most of them (the more than 80 percent who are not union members) never even get to the bargaining table. In the last decade, citing the need to compete in the newly global marketplace, employers have launched an aggressive campaign to cut labor costs, demanding—and frequently getting—wage givebacks, two-tier contracts, and other concessions. While wage-earning workers tighten their belts, top executives are reaping salaries that might once have been considered obscenely high. According to the social critic Michael Harrington: “We’re seeing a savage attack on workers’ wages and living standards. In the long run, no one’s going to win because a low-wage society cannot be an affluent society.”

  Whatever the reasons for the growing polarization of American society, polarization creates its own dynamics, and perversely, they tend to make things worse, not better. For one thing, the affluent (say, the upper fifth) do what they can to avoid contact with the desperate and the downwardly mobile. They abandon public services and public spaces—schools, parks, mass transit—which then deteriorate. One result is that the living conditions and opportunities available to the poor (and many in the middle range of income) worsen. And, of course, as the poor sink lower, the affluent have all the more reason to withdraw further into their own “good” neighborhoods and private services.

  As the better-off cease to utilize public services, they also tend to withdraw political support for public spending designed to benefit the community as a whole. If you send your children to private school, commute to work by taxi, and find your clean air at Aspen, you are likely to prefer a tax cut to an expansion of government services. This may be one reason for the decline of liberalism among America’s upper-middle class. The liberal “effete snobs” that Spiro T. Agnew railed against are as rare today as Republicans on the welfare rolls.

  There is another way in which class polarization tends to become self-reinforcing. As the Columbia University economist Saskia Sassen says: “The growth of the new urban upper middle class stimulates the proliferation of low-wage jobs. We’re seeing the growth in the cities of a kind of ‘servant class’ that prepares the gourmet take-out food for the wealthy, stitches their designer clothes, and helps manufacture their customized furniture.”

  Traditional middle-class patterns of consumption, she notes, had a more egalitarian impact. When everyone bought their furniture at Sears and their food at the A&P, they were generating employment for workers in mass-production industries that were likely to be unionized and to pay well. In contrast, today’s upscale consumer shops are boutique-scale outlets for items that are produced, or prepared, by relatively small, nonunionized companies.

  The polarization of the extremes—the urban upper-middle class versus the “underclass”—inevitably makes it harder for those in the middle range of income to survive. As the rich get richer, they are able to bid up the costs of goods that middle-income people also consume, particularly housing. Wildly inflated housing costs hurt the affluent upper fifth, too, but they are far more likely than middle-income people to be able to command salary increases to match their escalating cost of living.

  For those in the “new collar class,” as Ralph Whitehead Jr., a University of Massachusetts professor, terms the nonyuppie plurality of baby boomers, a mortgage may be out of reach, much less a designer style of consumption. But we are all subjected to the blandishments of the booming market for upscale goods.

  To be demonstrably “middle-class” in today’s culture, a family needs not only the traditional house and car, but at least some of the regalia of the well-advertised upscale lifestyle—beers that cost $5 a six-pack for guests, and $60 sweatshirts for the teenage and preteen children. In order to be “middle-class” as our culture is coming to understand the term, one almost has to be rich.

  So far, the hard-pressed families in the middle range of income have found a variety of ways to cope. They delay childbearing; and, even after the children come, both spouses are likely to hold jobs. They are ingenious about finding Kmart look-alikes for Bloomingdale’s status goods; and, for the really big expenditures, they are likely to turn to parents for help. But these stratagems have their own costs, one of them being leisure for the kind of family life many of us were raised to expect. “We are seeing the standard two-income family,” says Ethel Klein, a Columbia University political-science professor, “and the next step will probably be the three-income family, with the husband having to take a second job in order to keep up.”

  Karl Marx predicted that capitalist society would eventually be torn apart by the conflict between a greedy bourgeoisie and a vast, rebellious proletariat. He did not foresee the emergence, within capitalism, of a mass middle class that would mediate between the extremes and create a stable social order. But with that middle class in apparent decline and with the extremes diverging further from each other, it would be easy to conclude that the Marxist vision at last fits America’s future.

  But America is unique in ways that still make any prediction foolhardy. For one thing, Americans are notorious for their lack of class consciousness or even class awareness. In the face of the most brutal personal dislocations, we lack a vocabulary to express our dismay. Furthermore, at least at this point, we seem to lack political leadership capable of articulating both the distress of the have-nots and the malaise in the middle.

  Thus there is no sure way to predict which way America’s embattled middle class will turn. Some groups that are being displaced from the middle class seem to be moving leftward. Downwardly mobile single mothers, for example, may have helped create the gender gap that emerged, for the first time, in 1980 and was still prominent in the 1984 election, in which a greater pro
portion of women than men voted for the losing Democratic ticket. But the nation’s debt-ridden farmers, another formerly middle-class group, have gone in all directions: some responding to Jesse Jackson’s liberal populist message; others moving toward extreme right-wing fringe groups. The financially squeezed middle-income baby boomers are perhaps the most enigmatic of all. After much lush speculation as to their political inclinations, we know only that they tend to be liberal on social issues and more conservative on economic issues, and that they admire both Ronald Reagan and Bruce Springsteen.

  Only at the extremes of wealth is political behavior becoming true to Marxist form. Thomas Byrne Edsall, author of The New Politics of Inequality, has documented an “extraordinary intensification of class-voting” in the eighties as compared with the previous two decades. For example, in 1956 Dwight D. Eisenhower won by nearly the same margin in all income groups, but in 1980 Reagan won among the rich but was soundly rejected by those in the bottom 40 percent of the income distribution. Party affiliation is becoming equally polarized, with the haves more monolithically Republican than at any time since the 1930s, and the have-nots more solidly Democratic.

  It is not clear that either party, though, is willing to advance the kinds of programs that might halt America’s slide toward a two-tier society. Admittedly, it will be hard to get at the fundamental causes of class polarization until we know what they are. But there is no question that the dominant policy direction of the last few years has only exacerbated the trend. If we want to avert the polarization of American society, there is no choice, it seems to me, but to use public policy to redistribute wealth, and opportunity, downward again: not from the middle class to the poor, as Lyndon B. Johnson’s Great Society programs tended to do, but from the very rich to everyone else.