He discussed the painfully obvious fact that our economy, which has for many, many years now been shifted to rely on spending by the middle class for goods and services for it's health; will not be able to recover as long as the middle class is being squeezed out of the earning end of the deal.
Duh.
The thing I realized, too? I has been a really long time since we have had much spending money. And our income is somewhat above the middle class range. It isn't just putting kids through college that has bogged us down, the incredibly high cost of health insurance has been draining.
We don't have car payments; two of our vehicles are over 15 years old and we bought our "new" car 5 years ago. We don't own our home and the last vacation we took was in 2008. We don't have a flat screen TV or iPhones. Our biggest purchase in the past 4 years was a new mattress. I'd like to get the dental crown I broke a year or so ago replaced, but I can't afford it unless I put it on a credit card.
Economist Gary Burtless of Brookings Institution indicates that the middle class encompasses from one-half the median income to twice the median income. This would make the middle class income range $25,117 to $100,466. MIT economist Frank Levy believes that those in the middle class have enough money to afford the basic building blocks of a good life, including a house, a car and money to pay necessary bills. He suggests that families in their prime earning years are middle class if they fall between $30,000 and $90,000.
So while it may sound like I am whining - I really don't mean it that way. I just think that there are so many of us flying under the radar of the politicians and economists that are not part of the discussion. People who are educated, have worked hard, had some financial success and security and now it is gone and there doesn't seem to be an end in sight - and no plan that will change things for us any time soon.
I know we are lucky to have had those years of relative financial success. We have had some nice homes and furnished them well and reaped the rewards of their increased value. We never managed to take the kids to Hawaii, but we had some great shorter trips to Disneyland and Tahoe. If they needed braces, they had them, if we wanted to go out to dinner, we did. There was summer camp, swim lessons, roller blades and bikes. We had cars available for their use and we paid for sports and school activities, prom dresses and tux rentals.
Many of our financial stresses came from Tom pursuing his dream of a law practice - not many people can do the work they choose. And I had 16 years home with the kids - I would never have chosen to miss that.
So while the unexpected economic shut down has made things more of a challenge that we expected, we are hanging in there and looking for those in the know to set this country back on the rails. I don't want to be the generation that made it impossible for my kids to live at least as well as we have.
3 comments:
Great post and I applaud you for stating the obvious reality for so many people these days. 30,000 a year is not middle class I think using the median income does not tell the picture. I mean if you use the median income in China (what does the average worker earn $2.00 a day?) would that be middle class? Can a couple really pay for health insurance, run a car, pay a mortgage, put kids through school and save for retirement on 30,000. Let's be honest here, everyone in America thinks they are middle class and the reality is half of them are working class and half are the working poor.
Considering all that you have just posted how is Mitt Romney going to relate to your life. What about all those living is small towns without advanced education. Could he conceive of how to make their lives better?
The political system has got to stop catering to the needs of the corporate world because it DOES NOT trickle!
Again good post.
According to that chart we would actually be above middle class and there is no way THAT is true.
I know I am the 99%.
I feel the same. Sometimes I have a hard time believing that a dual earning couple... one with Phd and other with a bachelor's (both from premiere colleges) plus 35 yrs experience (and highly trusted reputation) in the building industry continue to struggle. So we have 1.5 children more than the natural average. Somebody has to pay for our future social security and medicare, right?
Health insurance costs are way up there on the expense and worry tree for us. We have always had higher premiums than our house payment. Recent medical issues for all three kids have set us back with more to come (wisdom teeth, anyone?)So yes, like you the medical side of things (not to mention all the other types of insurance payments) has been a real shot in the foot where our spending is concerned.
Always buy used vehicles, pay them off and coast for at least a couple years. Only the minimum in high tech gadgetry (no data here). I've lived in this house for 10 plus years and still next to nothing hanging on the master bedroom walls.
So I agree with R.Reich. The middle class can't spend like it used to. It's up to it's arse in hock thanks to rampant credit card spending. (I can say I have zero debt, so that says something, but we haven't been hit with tuition bills, YET... you can say were are in dormant spending in preparation for the winter of our kids' college years). But all that debt has meant a lot of people suddenly putting on the brakes. Slowdown economy is no surprise to me.
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