Forget the current “Great Recession”: the US Middle Class never left the “Carter Recession”

This Diane Rehm interview deals directly with a historical thesis I’ve been ruminating on for some time (and at least four abortive blog posts!). The jist of my theory is that the American Middle Class has actually never gotten out of the late 70s/early 80s Recession.  That they’ve merely employed various coping mechanisms to create the appearance of on-going growth and prosperity (the “each generation does better than its parents” mantra) but that in the reality of working wages and upward mobility the American Middle Class hit their glass ceiling about 1979.

Since this blog post has been delayed and procrastinated for so long what I am going to do is break it into pieces. Here is what I believe are the various successful (and often creative) bandages, delusions, and coping mechanisms American Middle Class households have used–since 1978/1979-ish–to fool themselves that they’ve been still climbing the American post-war wealth ladder.  Then, through the rest of the summer, I’m going to devote a blog post to each:

  • US Middle Class women solidifying their place in the workforce in large numbers. We associate this move of Middle Class women into the paid workforce with the 1960s and 1970s but the full effect really didn’t take hold until the Reagan years.  This made household incomes rise, even as individual living wages stagnated and certain professions saw their pay grades lower as it became associated more with women (bank tellers, for instance).
  • Reaganite and Clintonian misguided deregulation of Wall Street and the rise of (1920s style) Middle Americans feeling “rich on paper”.
  • Easy credit.  In the 1980s and 1990s Middle Class Americans suddenly had access to credit at levels that hadn’t been seen since–you guessed it: the 1920s.
  • The post-1995 Real Estate Bubble.  People are often shocked that from 1890 to 1990 years the idea that “housing values always go up” would have been considering very Pollyanna-ish. Getting rich on real estate meant owning warehouses and property to rent out: not feeling a sense of wealth based on your own home’s equity.
  • The Reagan Revolution and its impact on the psyche of the American Middle Class: both good and bad.
  • The passing of the GI Generation (and older) and the loss from living, day-to-day memory of those who could remember when government WAS the solution and the vehicle–not the barrier–to assisting Middle Class expansion.

These books have really influenced my thinking as of late, and Charles Murray’s hypothesis has been one of the most influential ones I’ve read this year. I went into it a bit skeptical, too.

Charles Murray: Coming Apart: The State of White America 1960-2010

Jeff Faux: The Servant Economy: Where America’s Elite is Sending the Middle Class

Frederick Lewis Allen: Only Yesterday

Paul Krugman: End This Depression Now

Robert D. Putman: Bowling Alone: The Collapse and Revival of American Community

Will Bunch: Tear Down This Myth: The Right Wing Distortion of the Reagan Legacy

3 responses to “Forget the current “Great Recession”: the US Middle Class never left the “Carter Recession”

  1. Although admittedly, I have not read Your Money or Your Life, I believe (based on a radio interview I heard some years ago) that authors Joe Dominguez and Vicki Robin disagreed with this thesis. They argued that the reason a single income can no longer support an entire family is that we are spending more and differently than we did right after World War 2 and before. Back then, families maybe had one car and one TV. Today, there are TVs in almost every room; families have to have at least 2 cars; then there are computers, cell phones, music systems (both portable and elaborate in-house ones), and a lot more. They believed not that wages had stayed flat but that people’s consumerist hunger had increased. Thoughts?

  2. I should read “Your Money or You Life” and see what their spin is! It seems like a vicious circle for me: you NEED two cars because both parents work, you move further and further out to the exurbs for more affordable housing, which makes it necessary to put more money into the car, home-entertainment system, etc. Not that women entering in the workforce is in any way, shape, or form a bad thing—I just think the double-income necessity perhaps masked the fact that earnings for working class and middle class jobs have stagnanted. Interestingly, I think the Gen X two-parent households have acknowledged the vicious circle a bit more and are employing more stay-at-home decisions with kids: ramping down expenditures severely compared to the “helicopter parents” of the 1990s. Yet, also having the parent who stays at home be whoever is the most economically feasible: so very often the father.

  3. Pingback: Who still refers to Reagan Democrats in 2013? Pat Buchanan, that’s who! | CaucuttCaucus

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