Can the Middle Class Be Saved?

The Great Recession has accelerated the hollowing-out of the American middle class. And it has illuminated the widening divide between most of America and the super-rich. Both developments herald grave consequences. Here is how we can bridge the gap between us.
Anxiety Creeps Upward

Over time, both trade and technology have increased the number of low-cost substitutes for American workers with only moderate cognitive or manual skills—people who perform routine tasks such as product assembly, process monitoring, record keeping, basic information brokering, simple software coding, and so on. As machines and low-paid foreign workers have taken on these functions, the skills associated with them have become less valuable, and workers lacking higher education have suffered.

For the most part, these same forces have been a boon, so far, to Americans who have a good education and exceptional creative talents or analytic skills. Information technology has complemented the work of people who do complex research, sophisticated analysis, high-end deal-making, and many forms of design and artistic creation, rather than replacing that work. And global integration has meant wider markets for new American products and high-value services—and higher incomes for the people who create or provide them.

The return on education has risen in recent decades, producing more-severe income stratification. But even among the meritocratic elite, the economy’s evolution has produced a startling divergence. Since 1993, more than half of the nation’s income growth has been captured by the top 1 percent of earners, and the gains have grown larger over time: from 2002 to 2007, out of every three dollars of national income growth, the top 1 percent of earners captured two. Nearly 2 million people started college in 2002—1,630 of them at Harvard—but among them only Mark Zuckerberg is worth more than $10 billion today; the rise of the super-elite is not a product of educational differences. In part, it is a natural outcome of widening markets and technological revolution, which are creating much bigger winners much faster than ever before—a result that’s not even close to being fully played out, and one reinforced strongly by the political influence that great wealth brings.

Recently, as technology has improved and emerging-market countries have sent more people to college, economic pressures have been moving up the educational ladder in the United States. “It’s useful to make a distinction between college and post-college,” Autor told me. “Among people with professional and even doctoral [degrees], in general the job market has been very good for a very long time, including recently. The group of highly educated individuals who have not done so well recently would be people who have a four-year college degree but nothing beyond that. Opportunities have been less good, wage growth has been less good, the recession has been more damaging. They’ve been displaced from mid-managerial or organizational positions where they don’t have extremely specialized, hard-to-find skills.”

College graduates may be losing some of their luster for reasons beyond technology and trade. As more Americans have gone to college, Autor notes, the quality of college education has become arguably more inconsistent, and the signaling value of a degree from a nonselective school has perhaps diminished. Whatever the causes, “a college degree is not the kind of protection against job loss or wage loss that it used to be.”

Without doubt, it is vastly better to have a college degree than to lack one. Indeed, on a relative basis, the return on a four-year degree is near its historic high. But that’s largely because the prospects facing people without a college degree have been flat or falling. Throughout the aughts, incomes for college graduates barely budged. In a decade defined by setbacks, perhaps that should occasion a sort of wan celebration. “College graduates aren’t doing badly,” says Timothy Smeeding, an economist at the University of Wisconsin and an expert on inequality. But “all the action in earnings is above the B.A. level.”

America’s classes are separating and changing. A tiny elite continues to float up and away from everyone else. Below it, suspended, sits what might be thought of as the professional middle class—unexceptional college graduates for whom the arrow of fortune points mostly sideways, and an upper tier of college graduates and postgraduates for whom it points progressively upward, but not spectacularly so. The professional middle class has grown anxious since the crash, and not without reason. Yet these anxieties should not distract us from a second, more important, cleavage in American society—the one between college graduates and everyone else.

If you live and work in the professional communities of Boston or Seattle or Washington, D.C., it is easy to forget that nationwide, even among people ages 25 to 34, college graduates make up only about 30 percent of the population. And it is easy to forget that a family income of $113,000 in 2009 would have put you in the 80th income percentile nationally. The true center of American society has always been its nonprofessionals—high-school graduates who didn’t go on to get a bachelor’s degree make up 58 percent of the adult population. And as manufacturing jobs and semiskilled office positions disappear, much of this vast, nonprofessional middle class is drifting downward.

The Bottom 70 Percent

The troubles of the nonprofessional middle class are inseparable from the economic troubles of men. Consistently, men without higher education have been the biggest losers in the economy’s long transformation (according to Michael Greenstone, an economist at MIT, real median wages of men have fallen by 32 percent since their peak in 1973, once you account for the men who have washed out of the workforce altogether). And the struggles of men have amplified the many problems—not just economic, but social and cultural—facing the country today.

Just as the housing bubble papered over the troubles of the middle class, it also hid, for a time, the declining prospects of many men. According to the Harvard economist Lawrence Katz, since the mid-1980s, the labor market has been placing a higher premium on creative, analytic, and interpersonal skills, and the wages of men without a college degree have been under particular pressure. “And I think this downturn exacerbates” the problem, Katz told me. During the aughts, construction provided an outlet for the young men who would have gone into manufacturing a generation ago. Men without higher education “didn’t do as badly as you might have expected, on long-run trends, because of the housing bubble.” But it’s hard to imagine another such construction boom coming to their rescue.

One of the great puzzles of the past 30 years has been the way that men, as a group, have responded to the declining market for blue-collar jobs. Opportunities have expanded for college graduates over that span, and for nongraduates, jobs have proliferated within the service sector (at wages ranging from rock-bottom to middling). Yet in the main, men have pursued neither higher education nor service jobs. The proportion of young men with a bachelor’s degree today is about the same as it was in 1980. And as the sociologists Maria Charles and David Grusky noted in their 2004 book, Occupational Ghettos, while men and women now mix more easily on different rungs of the career ladder, many industries and occupations have remained astonishingly segregated, with men continuing to seek work in a dwindling number of manual jobs, and women “crowding into nonmanual occupations that, on average, confer more pay and prestige.”

As recently as 2001, U.S. manufacturing still employed about as many people as did health and educational services combined (roughly 16 million). But since then, those latter, female-dominated sectors have added about 4 million jobs, while manufacturing has lost about the same number. Men made no inroads into health care or education during the aughts; in 2009, they held only about one in four jobs in those rising sectors, just as they had at the beginning of the decade. They did, however, consolidate their hold on manufacturing—those dwindling jobs, along with jobs in construction, transportation, and utilities, were more heavily dominated by men in 2009 than they’d been nine years earlier.

“I’m deeply concerned” about the prospects of less-skilled men, says Bruce Weinberg, an economist at Ohio State. In 1967, 97 percent of 30-to-50-year-old American men with only a high-school diploma were working; in 2010, just 76 percent were. Declining male employment is not unique to the United States. It’s been happening in almost all rich nations, as they’ve put the industrial age behind them. Weinberg’s research has shown that in occupations in which “people skills” are becoming more important, jobs are skewing toward women. And that category is large indeed. In his working paper “People People,” Weinberg and two co-authors found that interpersonal skills typically become more highly valued in occupations in which computer use is prevalent and growing, and in which teamwork is important. Both computer use and teamwork are becoming ever more central to the American workplace, of course; the restructuring that accompanied the Great Recession has only hastened that trend.

Needless to say, a great many men have excellent people skills, just as a great many men do well in school. As a group, men still make more money than women, in part due to lingering discrimination. And many of the differences we observe between the genders may be the result of culture rather than genetics. All of that notwithstanding, a meaningful number of men have struggled badly as the economy has evolved, and have shown few signs of successful adaptation. Men’s difficulties are hardly evident in Silicon Valley or on Wall Street. But they’re hard to miss in foundering blue-collar and low-end service communities across the country. It is in these less affluent places that gender roles, family dynamics, and community character are changing in the wake of the crash.

Presented by

Google Street View, Transformed Into a Tiny Planet

A 360-degree tour of our world, made entirely from Google's panoramas

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Google Street View, Transformed Into a Tiny Planet

A 360-degree tour of our world, made entirely from Google's panoramas

Video

The 86-Year-Old Farmer Who Won't Quit

A filmmaker returns to his hometown to profile the patriarch of a family farm

Video

Riding Unicycles in a Cave

"If you fall down and break your leg, there's no way out."

Video

Carrot: A Pitch-Perfect Satire of Tech

"It's not just a vegetable. It's what a vegetable should be."

Video

The Benefits of Living Alone on a Mountain

"You really have to love solitary time by yourself."

More in Business

More back issues, Sept 1995 to present.

Just In