The Downward Mobility of the American Middle Class
Robert B. Reich

January's increase in hiring is good news, but it masks a bigger and more disturbing story -- the continuing downward mobility of the American middle class.

Most of the new jobs being created are in the lower-wage sectors of the economy -- hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they've agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they've lost. Entry-level manufacturing jobs are paying half of what entry-level manufacturing jobs paid six years ago.

Other people are falling out of the middle class because they've lost their jobs, and many have also lost their homes. Almost one-third of American families with a mortgage are now underwater, holding their breath against imminent foreclosure.

The percentage of Americans in poverty is the highest in two decades, and more of us are impoverished than at any time in the last 50 years. According to an analysis of census data by the Center for Labor Market Studies at Northeastern University, 37 percent of young families with children were in poverty in 2010. It's doubtful that rate has improved.

Mitt Romney says he's not concerned about the very poor because they have safety nets to protect them. He says he's concerned about the middle class. Romney doesn't seem to realize how much of the middle class is becoming poor.

But Romney doesn't like safety nets to begin with. He has been accusing President Obama of inviting a culture of dependency. "Over the past three years Barack Obama has been replacing our merit-based society with an entitlement society," he says over and over, arguing that our economic problems stem from a sharp rise in dependency. Get rid of these benefits and people will work harder.

He and other Republicans point to government data showing that direct payments to individuals have shot up by almost $600 billion since 2009, a 32 percent increase. And 49 percent of Americans now live in homes where at least one person is collecting a federal benefit such as food stamps or unemployment insurance, up from 44 percent in 2008.

But Romney and other Republicans have cause and effect backwards. The reason for the rise in benefits is that Americans got clobbered in 2008, and many are still sinking. They and their families need whatever help they can get.

The real scandal is that America's safety nets are too small and shot through with holes. Only 40 percent of the unemployed qualify for unemployment benefits, for example, because they weren't working full time or long enough on a single job before they were let go. The unemployment system doesn't recognize how many Americans work part time on several jobs, and move from job to job.

Romney's budget proposals would shred safety nets even more. According to an analysis by the Center on Budget and Policy Priorities, his plan would throw 10 million low-income people off the benefit rolls for food stamps or cut benefits by thousands of dollars a year, or some combination. "These cuts would primarily affect very low-income families with children, seniors and people with disabilities," the Center concludes.

At the same time, Romney's tax plan would boost the incomes of America's most wealthy citizens, who are already taking home an almost unprecedented share of the nation's total income. Romney wants to permanently extend George W. Bush's tax cuts, reduce corporate income tax rates, and eliminate the estate tax. These tax cuts would increase the incomes of people earning more than $1 million a year by an average of $295,874 annually, according to the nonpartisan Tax Policy Center.

By reducing government revenues, Romney's tax cuts would squeeze programs for the poor even further. Extending the Bush tax cuts will add $1.2 trillion to the nation's budget deficit in just two years. That's the same as the amount that's supposed to be saved by automatic spending cuts scheduled to start next year -- which, by the way, will hit the poor especially hard.

Oh, I almost forgot. Romney and other Republicans also want to repeal Obama's health care law, thereby leaving 30 million Americans without health insurance.

The downward mobility of America's middle class is the big news, but the GOP apparently hasn't heard about it. Maybe it's too hard to hear about it from that far away -- and Romney is certainly far away. His unearned income last year was more than $20 million. That's about as much as the combined earnings of a thousand American families at or just above the poverty line.

 

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The Downward Mobility of the American Middle Class | Politics

 

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