The collapse of the middle class
By Errol Muirhead, Sympatico / MSN Finance
According to Elizabeth Warren, renowned U.S. law lecturer and speaker, the collapse of the middle class in America is a systematic degradation of family values. She argues that the risk factors of both parents in the workforce have led to the collapse of the middle class due to higher risks, lower rewards and a shrinking safety net.
In a generation, approximately 30 to 35 years, there are millions more mothers in the workforce today than in 1970. Warren argues that with more mothers in the workforce, families should be very wealthy; more secured, have more disposable income, able to take more vacations, have more savings, and so on.
However statistics have proven otherwise. In 1970, with only one bread-winner, families had only 1.4 per cent in revolving debt (credit cards, lines of credit, etc) in relation to net income and 11 per cent in savings. Fast forward to 2005, families with both mothers and fathers working had 15.6 per cent in revolving debt - and get this, -.8 per cent in savings. That’s negative savings.
Family income rose because mothers entered the workforce, but income for men fell by $800 in the same period. But if the family was making more money, where did all the money go? Where were families spending the extra money?
According to Warren’s research and in inflation adjusted numbers, families are spending 32 per cent less on clothing, 18 per cent less on food, 52 per cent less on appliances and 24 per cent less on automobiles now than they did in 1970. So where are families spending the extra money?
Mortgage payments have gone up by 76 per cent, health insurance has increased by 74 per cent, and car expenses went up 52 per cent as both parents are now working and need two cars versus one. Furthermore, child care went up by 100 per cent and taxes went up by 25 per cent. Listen to the lecture.
As a society, we’ve advanced by leaps and bounds, but have we really gained anything?
Posted by: François Villeneuve | Apr 16, 2021 4:35:39 PM
The Canadian Center for Policy Alternative (policyalternatives.ca), sometimes known as the "pink tank", has an entire blog dedicated to the disappearance of the middle class, at http://growinggap.ca/ . Their findings correlate to what you talk about in the U.S.
Posted by: Jack Zufelt | Apr 16, 2021 5:50:37 PM
Wow, those are huge increases in childcare, health care and mortgages. Great blog.
Posted by: caseynjennifer | Apr 16, 2021 7:01:59 PM
Hell both my husband and I got laid off from our good paying jobs and now both work for minimum wage jobs. If it wasn't for what we did on the internet we wouldn't be able to feed the kids or pay the mortgage! We were middle class, now the only way to stay that way is to basically "sell" ourselves doing amateur porn on our own website!( http://www.caseynjennifer.com ) But hey, in doing so all bills are paid, foods on the table and the kids are clothed, so are we really bad people for doing what we've done? We think not.
Posted by: Adam | Apr 16, 2021 8:15:20 PM
Finally, a blog that was worth reading. Great report! Very factual and makes you wonder how relatively better off we really are..
Posted by: Tomjay | Apr 16, 2021 10:20:10 PM
Our family is double-income, no-kids and we're barely making ends meet. I don't know how the single income families in our middle-class neighborhood are getting by. We don't have a monster RV or SUV parked out front, or all the toys that everyone else seems to have. The families on our street must either be massively in debt, the husband is making a huge salary or they've inherited a fortune. Our modest salaries give us a comfortable lifestyle, but we've had to be very careful with our spending. I can see that a bigger portion of our salaries are spent today on mortgage payment, car payments and groceries than they would have been in the 1970s. However, we're spending on things we didn't have way back then: cell phones, Internet, satellite TV, electronics and "stuff". This latest recession will hopefully make people think twice about their out-of-control consumerism.
Posted by: GuildCompounder | Apr 17, 2021 12:09:05 AM
Interesting lecture on the declining standard of living. Lower S of L is what you can expect when the government blows out the treasury. And we were not even at war. Maybe we should be at war with our own government. Although it is hard not to blame the voter and the media. The situation gives me a yen for nuclear war. Probably however, we can expect chit chat.
Posted by: EddieM | Apr 17, 2021 7:44:40 AM
Corporations such as GM have offered a good living for so many in North America.Sadly people wil have to recoil and settle for much less. A good education is not good enough anymore it has to be the right education. Manufacturing is dying in North America.How will we support the infastructure we have, without decay?
All shores touch and when the greedy people that have run wild cheating the system realize this it will be too late. Like the end of the Roman Empire. it is someonelses turn to call the shots. Call it human nature ,not pretty really.Cash out Now!
Posted by: jojo | Apr 17, 2021 8:19:19 AM
the middle class is going to disapear in the near future, there will be the elite class and then the poor. People cant resist cheap credit and basically destroyed themselves with material possesions along with huge amounts of credit debt.
Posted by: Steve | Apr 17, 2021 7:58:44 PM
Some of these points are unsurprising some foreboding. Women's liberation resulted in most women being forced into work by the inflationary pressures created by the families where the woman chose to work creating a vicious house price bubble. The corporate and upper class welfare that has gone on for years resulting in a disappearance of the middle class is the most foreboding, think back to the French revolution (it wasn't gentle and it wasn't without cost). We can decide to continue as we are & copy the French while China takes our place or we can level the playing field and move forward as a society. After all not everyone can get rich with Madoff or Stanford.
Posted by: mcshane | Apr 20, 2021 7:43:32 AM
couples are afraid to have children as it has become too expensive, they cannot afford to lose a salary nor can they afford to put a baby into daycare when it costs $1200 per month (0-1 year old). An event (pregnancy) that used to be exciting is now regarded as a dreadful event when you head for the drugstore for the pregnancy test.
Posted by: Larry Kirk | Apr 20, 2021 10:36:13 PM
The middle class took a serious nosedive in the early 80s recession, and when things started to
revive again, the middle class did not revive with it. What was left of it, has been steadily eroded away.
The gap between the haves and the have nots, has been steadily widening to such a point, that the middle
class has become almost a thing of the past. There needs to be an immediate use of surplus material, and
an immediate use of surplus man power. This is probably the only way that things are going to revive out
of the serious slump that we are in again.
Posted by: Scott | Apr 21, 2021 3:00:05 PM
It seems like people blame everything but themselves for hard times, we see some people on this blog coming up with creative ideas, maybe not everyone agrees with their choices but they are trying, I would guess that 90% of people don't even follow a budget let alone plan thier spending, use coupons, check flyer, ensure companies price match, or take on extra jobs. Don't forget either it is not necessarily what you make but what you spend and a lot of folks could pass on some discretionary spending that would make a huge difference. For instance quit smoking, you and your family will be healthier and you will save that $10.00 a pack x 1 pack a day = $300.00 month and you will live longer. How much did you pay this month in bank fees - bet you don;t even know!! If we all started watching our pennies we would be better off, how much money do you make in a year don't forget to take off the taxes from that amount before you start thinking you can spend it all - I know people are not stupid but I think often we act before we think!! Hopefully these tough times are quick and get better for everybody soon, however we have to play the game intelligently not emotionally.