Bill Galston has penned an interesting compilation of statistics on the status of the American middle class at the Wall Street Journal. But this is the one graph you really need to read:
We can argue about how squeezed the middle class was in the decades between the end of the postwar expansion and the onset of the Great Recession. But two things are clear: The coping mechanisms the middle class employed in those decades (fewer children, more hours worked, more borrowing against home equity) are played out, and it will take middle-class households years to recover from the recession-induced blow to their income and wealth. If we cannot restore a vigorously growing economy whose fruits are widely shared, the struggles of the middle class will persist, and our democratic distemper will deepen.
This isn’t a novel insight; the “exhaustion of remedies” through more work and more borrowing by middle-class Americans who were unable to make real income gains was a constant lament of the Bush years before the Great Recession. But it’s more important to internalize Galston’s second point: the decimation of middle-class wealth and earning power has made a stressful but manageable situation all but impossible for many millions of Americans. And it’s been demoralizing, in the literal sense of undermining the connection between effort and reward that is rather fundamental to public acceptance of a capitalist system.