July 26, 2018
Book Review: the Middle-class Squeeze
Marketplace recently estimated that a family’s common expenses have increased 30 percent since the 1990s. This was based on the inflation-adjusted prices for 11 necessities and small luxuries, from food, housing, college, and medical care to movie tickets and air fare.
On the income side of the household ledger, one well-known study estimates that the lifetime, inflation-adjusted income of a typical 60-year-old man today is substantially less than it was for a man who turned 60 back in 2002. Women, who have benefitted from getting more education, are earning more, but they started out at much lower pay levels and still trail men.
These trends – rising expenses and shrinking paychecks – get to the essence of the middle-class struggle described in Alissa Quart’s new book, “Squeezed: Why Our Families Can’t Afford America.”
Putting faces to the numbers, she had no trouble finding workers who feel they are losing their tentative grip on the middle class. Her focus is the 51 percent of U.S. households earning between $40,000 and $125,000.
That’s not to say that Americans’ quality of life hasn’t improved in some ways. Consider the dramatic increase in the square footage of U.S. houses over the past 30 years or the enormous strides in medical technology. In today’s strengthening economy, the Federal Reserve Board reports that a majority of adults say they are doing okay or even living comfortably, and they are feeling more optimistic. Yet this doesn’t entirely square with another of the Fed’s findings: a large majority of adults would not be able to cover an unexpected $400 expense without selling something or borrowing money.
Quart contends that a growing share of workers’ incomes are consumed by the essential expenses that have increased rapidly, namely housing, college, and health insurance. The federal Consumer Financial Protection Bureau (CFPB) agreed that these same costs have created a growing economic divide between the country’s haves and have-nots. One-third of workers in CFPB’s 2017 survey said they are barely making it and another third aren’t exactly thriving.
Squeezed devotes considerable time to the high cost of raising children. Infant care, at $10,000 per year, falls hard on most families. But she notes that the growing ranks of single mothers mean that more parents are finding it extremely difficult to afford full-time day care on a single income. One in four women today are their family’s breadwinner, yet the vast majority of middle-class women earn less than $75,000.
Quart sometimes reports on workers’ lives in numbing detail. But it is these details that bring home to readers the financial struggles of regular people. A mother of two works two retail jobs and requires day care for both shifts: from 8 a.m. to 2 p.m. at a supermarket and from 6 p.m. to 10 p.m. at Home Depot. Neither job provides the hours required to qualify for health insurance from her employers. “I need more money to be surviving,” she says.
Or consider teaching, which used to be a profession chosen by working-class people with middle-class aspirations. But today grade school and high school teachers are striking over pay and moonlighting as Uber drivers to stay in the middle class – Uber has even pitched this as an option in company-produced videos. Indeed, a 2017 study of checking account activity found that most people are participating in the gig economy – whether Uber, AirBnB or eBay – not as full-timers but as a part-timers supplementing their regular income.
For many better-paid members of the middle-class, well-being can be a function of where they live. A father whom Quart profiles earns $100,000 but has difficulty paying his bills. That’s because he lives in a $680,000 “starter home” in the San Francisco Bay Area, where the housing market caters to the 1 percent, who push up everyone’s cost of living. Renters face a similar situation: burdensome rents are “the new normal” in U.S. cities, concluded a 2017 report by Harvard University’s Joint Center for Housing Studies.
Quart argues that financial struggles often go hand in hand with psychological degradation. “Being squeezed involves one’s finances, one’s social status, and one’s image,” she writes.
She identifies the problem of “extreme schedule stress.” The average full-time job requires workers be on the job 47 hours per week – not 40 hours, as is usually assumed. The Federal Reserve reports that one in six workers has irregular work schedules and one in 10 gets a schedule from their employer less than a week in advance. One beneficiary has been round-the-clock daycare centers, which is a growing business that reflects “the upheaval in American work lives,” she writes.
It’s human nature to blame oneself for economic hardship – a poor career choice, not working hard enough, spending money on frivolous expenses. But Quart makes a compelling case that the middle-class squeeze is just the reality.
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