The HELP WANTED signs are out for people like Morris Shanks. The politicians don’t seem to have noticed: the American Dream Restoration Act Promising tax credits for families with children and lower taxes for married couples. leads House Speaker Newt Gingrich’s agenda. And president Clinton will play to middle-class angst in his State of the Union Message Tuesday. The grandstanding will go on until the 1996 election – and it will fall on some very receptive ears (page 42B). Yet before, Congress opens its wallet to aid the middle class, it might consider this: after two years of renewed growth, the American Dream isn’t doing badly jobs are plentiful again. Incomes are rising. Out beyond the Washiington Beltway. most families are living better than ever. And, contrary to the conventional wisdom, they are beginning to sense it. The University of Michigan’s survey of consumer sentiment (chart) shows Americans to be as upbeat as in Ronald Reagan’s heyday or, for that matter, in Dwight Eisenhower’s.
According to the political rhetoric, the middle class the 53 million households with incomes between about $25,000 and $100,000 has been devastated. At the lower end of that spectrum are the families of knitting machine operators and billing cerks whose jobs have been wiped out by imports and automation. At the top are the middle managers displaced by corporate belt-tightening in the 1990s. The statistics seem to confirm their distress. Hourly wages have lagged behind inflation for three decades, and the median income of U.S. households is down 7 percent since 1989. After adjusting for price increases, the median earnings of full-time male workers, $30,407, are about what they were in 1970.
But the gloom is overstated. For the upper-middle-class households in the $75,000 to $100,000 bracket, spending is up over the past decace, and a sharp drop in family size leaves more money for everyone. Among households earning $25,000 to $40,000, the rate of homeownership is up 4 percentage points since 1984, and the average number of cars has risen, too. According to University of Chicago sociologist Susan Mayer, the children of those lower-middle-class families were far more likely to be in homes with air conditioners and dishwashers in 1990 than in 1980 – and those homes, on average, were larger. The claim in the Republicans’ “Contract With America” that “the average family spends more on taxes than it spends on food, clothing and shelter combined” is flatly untrue; the average middle-class household pays less than $6,000 for all taxes combinedand $13,000 for the basics of life.
How can the middle class be better off when wages are stagnating? It’s not, as often argued, because there are more twoearner families. The number of earners in the average middle-class household is slightly lower than it was a decade ago. Rather, the statistics skew the story. Most economists have long suspected what Federal Reserve Chairman Alan Greenspan recently confirmed, that the, government’s consumer price index overstates yearly inflation by 1 percentage point or more. That makes it look like wages are lagging behind inflation when, in fact, buying power is increasing. There’s also confusion because the statisticians’ neat categories “household” and “family” can’t accurately depict the finances of a 10-year-old who lives with her mother’s boyfriend and gets money from her divorced dad-no rare arrangement these days. Last year’s census report that median income fell in 1993 was problematic for another reason: the figures emerged from the first survey done with laptop computers, and experts suspect that the new way in which the questions were, posed altered the results.
The rise in middle-class fortunes is tangible in Jackson, a town of 80,000 best known as home of the Miss Tennessee pageant. An industrial center with little of the Old South’s charm, Jackson struggled through the 1980s as factories closed down. Now, though, the job market is so tight that when Mascotech agreed last fall to build a faucet plant, the chamber of commerce promised not to recruit new companies for six months so it could find workers. Jeff Cupples, who runs a factory-equipment company, upped the top rate for machinists 15 percent last fall, to $15.62, but his ads in The Jackson Sun draw few resumes. “Sometimes we don’t even get one,” he savs.
Prosperity has reversed some painful trends of the 1980s. The First Tennessee Bank is replacing hard-to-find part-time tellers, starting at $6.50 an hour, with full-timers earning $8 or more. Rent-a-worker is losing its allure as good temps grow scarce. The seemingly endless creation of minimum-wage jobs is also giving way, opening possibilities for people like Suprena Brooks. Sixteen months ago, the high-school dropout supported four children with a welfare grant and an apartment in public housing. Today, Jackson Automotive pays her $7.50 an hour, plus health insurance. That won’t go far in New York or Santa Monica, but in Jackson it’s enough to rent a house and to provide treats for the kids. “Now I can get ’em Nikes … the stuff thev really want,” Brooks says.
Despite the healthy job market, politicians will keep trying to make hay from America’s middle-class malaise. There’s no question that some families have lost ground, and that others have seen only small gains. The 9.8 million single parents have done far worse financially than the 26 million two-parent families. Many who lost their jobs in the early ’90s earn less now, than they did before: the layoff rate actually hasn’t changed much since the 1970s. but many families still fear that they could lose their economic security. Evidence that the baby-boom generation saves more than its parents did hasn’t relieved worries about tuition bills and retirement. The yawning divide between high earners and the rest of the work force also fuels anxiety. The middle may be better off than it used to be but the top is prospering even more.
Today’s good times won’t roll on forever. But beneath the inevitable cyclical bumps, there’s ample reason to think that living standards for most people will be higher tomorrow than they are today. On the factory floor. the computer-literate in demand everywhere. In the service sector, the average wage may be only $315 a week, but the heavy hiring is in the $575–a-week range. And the almost boundless escalation of employers’ health-insurance premiums is finally ending, so more of each dollar of’ compensation is showing up in workers’ paychecks. But in Washington’s battle for the soul of the average American family, Such facts get drowned out. Both parties are convinced that the middle class is the horse that will carry them to the White House in 1996.And that’s the reality that matters.
Three out of five Americans are in households that many experts consider middle class.
U.S. Household Income Income % of Households $14,999 or less 23.4 $15,000-$24,999 16.9 $25,000-$34,999 14.7 $35,000-$49,999 16.3 $50,000-$74,999 16.1 $75,000-$99,999 6.7 $100,000 or more 5.8
Source: U.S. Census Bureau
