"Our Children and Grandchildren are not merely statistics towards which we can be indifferent" JFK

Sunday, November 14, 2010

Why middle income jobs are not coming back

The new normal is most defined by the
decimation of the middle class.

By Maureen Callahan
New York Post
Anne, 45, has always considered herself middle-class: As a single mom earning $65,000 a year in ad sales, she was able to rent a one-bedroom apartment on the Upper East Side for $1,000 a month and send her daughter, now 12, to private school. “I was able to make it,” she says. “Even go on vacation sometimes.”

In the span of 15 months, she has come to define herself as poor — even if the government won’t, denying her multiple applications for welfare and food stamps because, she says, she once made “too much money.”

Upon losing her job in June 2009 — her company was going under — “I was plunged into immediate poverty,” she says. “It was a surprise attack.”

Anne has borrowed money from her sister and her retired parents — who are struggling themselves — to pay the rent; she applied for a Section 8 and was able to slash it in half, to $500 a month. She depleted her 401(k). She had no savings, was living paycheck-to-paycheck. But she still felt economically safe, given her location and her tax bracket and her white-collar job.

“Now, when I go to the grocery store, I have to decide what is absolutely essential for my child,” Anne says. “Sometimes, I’m eating whatever-in-a-can. A lot of the time, I’m literally walking around without a penny in my pocket.” She deliberates before taking her daughter on a day trip downtown, because a round-trip subway fare will cost $9. She negotiated a tuition break with her daughter’s school, and the ease of that leads her to believe she’s not the only parent who’s asked, which she does not find especially comforting.

She’s $16,000 in debt to credit card companies. One of her local grocers, who once let her buy food on a running tab, now has a bill collector after her. She has her résumé up online, but when headhunters call and ask her age, “suddenly they never call me back,” she says. “I’m depressed. None of my friends are able to find jobs. I am living day-to-day.”

Anne’s biggest fear is that her daughter finds out how dire the situation is.

“She’ll say to me, ‘Are we poor?’ And I keep lying,” Anne says. “I think it’s a very traumatic thing for a child. I don’t want her to feel like she’s the only one, or a victim.”

When the recession does ease up, Anne fears that she will emerge as a permanent member of the lower class.

The decline of the middle class in America has been debated and discussed for 30 years — it was in the 1970s that middle-class wages began stagnating and education levels began declining — but it’s the Great Recession that has accelerated and intensified this decades-long trend. There is wealth and there is poverty, and the middle class — a category so vague that the majority of Americans, if asked, define themselves as such, whether they make $30,000 or $200,000 a year — are, in greater and greater numbers, downwardly mobile.

The median income is the US is now $50,000 a year, 5% less than it was in 2000. But whether one is middle class on that salary depends on a host of factors — your education level, how many dependents you have, where you live, whether you’re still paying off college loans, whether your mortgage is underwater.

“People with a college degree are the new working class,” says Lawrence Mishel, president of the Economic Policy Institute. He points to the long-term, exponentially increasing gap between rich and poor in America: from 1989-2007, the upper 1% of the population gained 56% of all income growth, while the bottom 90% gained just 16%.

“People have been doing poorly for a long time, but it’s not because they haven’t been working,” Mishel says. “It’s because the economy is working the way it’s designed to work.”

 Middle income jobs not coming back


  1. Hi Grandpa.. I completely agree. There is an outstanding video by Kyle Bass on youtube dated 10/13 that is a must watch on this very subject. FWIW, I consider Bass the best economist in North America. We are in a secular decline, and the current 17% U6 unemployment rate is a fact of life with which we are going to have to live.. unless it gets worse.

  2. I so concur. I watched the Kyle Bass video and it is truly scary what condition this country is in and is heading. It is truly sad that Rome II is burning and it disturbs me deeply what is in store for all grandchildren. They are the future however what they face as a result of self centered politicians, greedy CEO's, out of control BS investment community and a country lacking a core, fundamental economy is morally criminal.

    All grandchildren deserve an equitable opportunity. Mr. Kowalski, you too are grandchild friendly and we need a few more to make a difference.

  3. Thank you Ron as your comment and taking the time to visit Vigilant Grandpa is genuinely appreciated! Please offer any and all suggestions on enhancing the site as I am always open for constructive critique.