Monthly Archives: March 2010

The Slowly Sinking Middle Class

In my book, Perils of Empire, I devote some time in Chapter 8 to a discussion of the growing conflict in the Roman Republic between the small number of families who grew rich as the Republic acquired an empire and the vast majority of the population whose standard of living deteriorated.  I later suggested that the angry mob that burned down the Senate’s meeting hall in 52 B.C.E. when their champion, Publius Clodius Pulcher was murdered, was expressing the rage felt by the world’s first impoverished proletariat.

I also contrasted the situation in Rome with the last four decades of the American experience.  In Chapter 8, I point out that between 1973 and 2001, correcting for inflation, household income for the bottom 90% of the population rose at a rate of barely more than 1% per year.  This week I found more detailed information that helps explain why income grew so slowly.  A recent report by the Census Bureau shows that the average yearly wage for men has actually declined since 1973.  That year, just before the recession of 1974, men, as a group, earned an average of $48,452 (measured in 2008 dollars).  The average wage for men declined gradually, with a few brief upward swings, until 2000, when wages began to fall steadily.  By 2008, the average male earned $46,367 – more than $2,000 less than males earned in 1973.

Why has household income gone up?  Women in the household went to work.  Starting in 1965, there has been a steady rise in the workforce participation rate of women and a gradual increase in the average wage for women workers.  In 1965, a little less than 40% of the adult female population worked, but that figure grew to 58% in 2000.  The wage information reported by the Census Bureau shows that women earned an average of $22,881 in 1965 (in 2008 dollars), $29,815 in 1985, and peaked at $36,148 in 2001, just as the stock market boom was going bust.   With women earning more and more women out working, household income was able to creep ahead between 1973 and 2001.  This fits with my general impression since the 1980s that households or families where two adults work are more prosperous than households or families where only one person works.

Unfortunately, since 2001 the average woman’s wage has stagnated, falling slightly to $35,745 in 2008, and the workforce participation rate for women declined to 54% that year.  Unlike in the 1970s, 1980s, and 1990s, female household members have not been able to bring in more income to compensate as men’s wages declined during the last decade.  Consumer purchasing power jumped during the 2003 – 2006 period when people took equity out of their homes by refinancing, but that option is gone for a very long time.

We are left with a population that, in general, has had to run very hard while gradually losing ground since the crash of 2001.  In addition, most households have no significant income gains from previous decades to fall back on.  The result, in 2010, is a general rage, running straight through the once secure American middle class.  Everywhere, people who are either laid off, working part-time, or re-employed at a job with less pay have a sense that it is all slipping away.  To understand American politics in 2010, we need to remember that this nasty recession has fallen upon a population whose standard of living has stagnated since the early 1970s – a whole generation.  They have a right to be angry.