Squires, Gregory D.

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Notre Dame Journal of Law, Ethics & Public PolicyVolume 24Issue 2 Symposium on the Rise and Fall of the MiddleClassArticle 11-1-2012Social Insecurity: The Roller Coaster Ride ofAmerica's Middle ClassGregory D. SquiresFollow this and additional works at: http://scholarship.law.nd.edu/ndjleppThis Introduction is brought to you for free and open access by the Notre Dame Journal of Law, Ethics & Public Policy at NDLScholarship. It has beenaccepted for inclusion in Notre Dame Journal of Law, Ethics & Public Policy by an authorized administrator of NDLScholarship. For more information,please contact lawdr@nd.edu.Recommended CitationGregory D. Squires, Social Insecurity: The Roller Coaster Ride of America's Middle Class, 24 Notre Dame J.L. Ethics & Pub. Pol'y 285(2011).Available at: http://scholarship.law.nd.edu/ndjlepp/vol24/iss2/1FOREWORDSOCIAL INSECURITY: THE ROLLER COASTER RIDE OFAMERICA'S MIDDLE CLASSGREGORY D. SQuIREs*A strong middle class was the backbone of a growing and prosper-ous economy from roughly the end of World War II through the early1970s. New institutional structures put in place during the New Deal topull the U.S. out of the Great Depression (with the help of the war andthe dominant position of the U.S. immediately following that conflict),along with further innovations during the Great Society era enabledmany working families to move into a growing middle class. At the sametime, at least some of the obstacles confronting poor families were eased,allowing more than a few to enter mainstream society. These post-waryears constituted the longest period of consistent economic growth andprosperity in the nation's history, and at least for the baby boom genera-tion, a key part of the American narrative.But in recent years many of those institutional support systems havebeen weakened. Wages for many have declined or at least failed to keepup with inflation. Economic inequality has skyrocketed. Some havedropped out of the middle class, while others are increasingly plaguedwith insecurity as they struggle to retain that status. Individuals andtheir families, who do not have the resources to absorb the mountingcosts, are increasingly assuming risks previously absorbed by large institu-tions (primarily government and employers). Steps can be taken to(re)secure America's middle class and create opportunities for the poor tomove up. But those are politically contentious matters and the outcomesare by no means certain.The newly found sense of insecurity, at least for the baby boomers,has manifested itself in many ways, as illustrated by the articles in thisissue of the Notre Dame Journal of Law, Ethics & Public Policy. First, asArne Duncan asserts in Through the Schoolhouse Gate: The Changing Role* Gregory D. Squires is a Professor of Sociology, Public Policy and Public Admin-istration at George Washington University. Currently he is a member of the Board ofDirectors of the Woodstock Institute, the Advisory Board of the John Marshall LawSchool Fair Housing Legal Support Center in Chicago, Illinois, and the Social ScienceAdvisory Board of the Poverty & Race.286 NOTRE DAME JOURNAL OF LAW, ETHICS & PUBLIC POLICY [Vol. 24of Education in the 21st Century, the door to the middle class is nowthrough the classroom and not the factory gate. Unfortunately, particu-larly in many inner-city school districts and low-income communitiesthroughout the country, not all students have received the education theyneed when they walk through that door-while far greater challengesconfront those who drop out.Susan Pace Hamill, in her article A Moral Perspective on the Role ofEducation Sustaining the Middle Class picks up on Duncan's challenge.As her title suggests, there are vital moral, as well as social, political, andeconomic reasons for funding education at an adequate level-particu-larly in low-income communities where middle-class aspirations dependparticularly heavily on access to decent schooling.At least part of the remedy may be, as student author Margaret E.Azhar argues in Struggling Middle Class: Merit-Based Scholarships MeetSchool Vouchers, a system of merit-based vouchers so that families nolonger have to choose between good schools and virtually unaffordablehousing, or inadequate schools in a neighborhood they can afford. Mostmiddle-class families place a high priority on the schools their childrenwill attend. As they compete for housing in those communities that haveexcellent schools, the price of housing is bid up even further, and moreout of reach for more families. Ameliorating this vicious cycle is a criticalstep for securing America's middle class.Ironically, the nation's future elites-those attending business andlaw schools-are inculcated with a value system that undercuts the secur-ity essential for a stable middle class. As John Mixon demonstrates inNeoclassical Economics and the Erosion of Middle Class Values: An Explana-tion for Economic Collapse, the neo-classical perspective taught in thenation's professional schools, which emphasizes the pursuit of rationalself-interest, turns greed into a virtue, if not a duty of citizenship. Thisundercuts the sense of community and security that underpins a stablemiddle class.One consequence of the dominance of the neo-classical perspectiveis the damage it has done to the labor movement and other collectiveefforts so critical for creating, and now re-creating, that stable middleclass, as David L. Gregory and Stephen Martir discuss in The Catholicityof the Middle Class: Reflections on Caritas in Veritate. But as they note,Catholic teaching, along with progressive politics, can lead to a renewalof America's middle class.Perhaps the greatest threat to the middle class is the declining popu-lation of the nation generally. As student author Edward Metzger IIIobserves in Falling Fertility Rates: The Offipring of the ContraceptiveMentality, if we fail to replenish our population the economy losses pro-ductive members, creativity and entrepreneurship fall behind, and pen-FOREWORDsion plans are threatened. The spirit that engages our communities isundercut if the people are not there to give it meaning.Each of these articles points to specific areas where middle class lifehas been threatened. The roots of that insecurity go back at least to theGreat Depression, when in 1937, President Franklin D. Rooseveltfamously saw "one-third of a nation ill-housed, ill-clad, ill-nourished."'Beginning with the New Deal, and continuing with Truman's Fair Dealand through Johnson's Great Society, the country took initial steps torespond to the desperation many confronted. Many of these initiativesserved as the basis for an emerging and, at least for awhile, a stable mid-dle class. The Wagner Act' and Fair Labor Standards Act 3 guaranteedworkers the right to organize unions and at least to challenge egregiousunfair labor practices. The Federal Housing Administration insuredmortgages and helped create middle-class communities (at least in thenation's suburbs) for decades to come. The GI Bill' put many veteransthrough college. Social Security has dramatically reduced poverty amongthe elderly. More recently Medicare and Medicaid provided health careto the elderly and poor. The minimum wage, and in some cities andstates living wage requirements, helped families maintain a middle-classlifestyle. These initiatives were hardly perfect, and they often shared theglaring problem that many benefits often available to whites were notavailable to non-whites. 5 Often the intent was, basically, to limit politi-cal unrest.6 But they have lifted many working and poor families intothe middle class, and for awhile, helped them stay there.7In recent years, however, the stability and security of middle classlife began to unravel. The institutional mechanisms nurturing the mid-dle-class life that seemed like a birthright of the baby boomers in the1950s and 1960s were weakened. In many ways, the benefits and protec-tions government agencies and employers provided during the post-war1. Franklin D. Roosevelt, Second Inaugural Address, (Jan. 20, 1937) in VITALSPEECHES OF THE DAY (1936-37), at 227.2. National Labor Relations Act, Pub. L. No. 111-166, 61 Stat. 449 (codified asamended at 29 U.S.C. §§ 151-169 (2006)).3. The Fair Labor Standards Act of 1938, Pub. L. No. 75-718, 52 Stat. 1060(codified as amended at 29 U.S.C. §§ 201-219 (2006)).4. Servicemen's Readjustment Act of 1944, Pub. L. No. 78-346, 58 Stat. 284(codified as amended at 38 U.S.C. § 3011 (2000)).5. IRA KATZNELSON, WHEN AFFIRMATIVE ACTION WAS WHITE: AN UNTOLDHISTORY OF RACIAL INEQUALITY IN TWENTIETH CENTURY AMERICA 18 (2005).6. FRANCES Fox PIVEN & RICHARD A. CLOWARD, REGULATING THE POOR: THEFUNCTIONS OF PUBLIC WELFARE 22 (1971).7. See generally KATZNELSON, supra note 5; KENNETH T. JACKSON, CRABGRASSFRONTIER: THE SUBURBANIZATION OF THE UNITED STATES (1985).20101 287288 NOTRE DAME JOURNAL OF LAW, ETHICS & PUBLIC POLICY [Vol. 24years have been cut back or eliminated, with individuals and familiespicking up the costs or going without the services.'One critical area has been workers' rights. Labor laws have not beenvigorously enforced during many of the past thirty years, with one conse-quence being a decline in union membership from 35% of the workforcein the mid 1950s to around 12% today, with just 7.5% in the privatesector. Unionized workers earn 20% more than comparable workers innon-union settings, they are 28% more likely to have employer-providedhealth benefits, and 54% more likely to have employer pensions. Butthese numbers are declining. In 1980, 80% of workers in companieswith 100 or more workers had traditional pensions compared to one-third of such workers today. One-third of unemployed workers receiveunemployment insurance compared to one-half in the 1950s. Thirtyyears ago, 70% of private-sector workers had employer-provided healthinsurance compared to 55% now. The minimum wage has lost signifi-cant buying power. While it was raised in 2007 it is still not indexed tokeep up with inflation, so every day it loses value. Wages since 1979have risen by just 1% after inflation, with male workers experiencing a5% decline. Since 2001 employee compensation has risen 1% while pro-ductivity has increased by 3% and profits by 13%. 9Other underpinnings of middle class life, and gateways to that life,have also been weakened. Pell grants that enable many working and poorfamilies to send their children to college fell from 84% of the tuition at atypical public university to 32% since the mid-seventies.1" Federal hous-ing subsidies have dropped by almost two-thirds in the past three decadeswhile housing prices have shot up."1 In light of recent developments inthe financial service industry, homeownership-often the measure ofmiddle class status-has become more tentative. Homeownership ratespeaked at 69% in the third quarter of 2006 then dropped to 67.1 percentin the first quarter of 2010. 12 More recently foreclosure rates have beenskyrocketing, reaching 3.5 million in 2008 alone with another 8-10 mil-lion homes projected by Credit Suisse to go into foreclosure in the nextfive years. 13 Not unrelated to the insecurity of homeownership is theincrease in bankruptcy with the number of households filing for bank-8. STEVEN GREENHOUSE, THE BIG SQUEEZE: TOUGH TIMES FOR THE AMERICANWORKER 42-43 (2008); JACOB S. HACKER, THE GREAT RISK SHIFT: THE ASSAULT ONAMERICAN JOBS, FAMILIES, HEALTH CARE, AND RETIREMENT AND How YOU CANFIGHT BACK 11-12 (2006).9. GREENHOUSE, supra note 8, at 38-39, 43-44.10. Id. at 43.11. Id.12. U.S. CENSUS BUREAU, TABLE 14: HOMEOWNERSHIP RATES FOR THE U.S.AND REGIONS: 1965 TO PRESENT (April 26, 2010), available at http://www.census.gov/hhes/www/housing/hvs/historic/index.html.13. David Berenbaum, Strengthening Oversight and Preventing Fraud in the FHAand Other HUD Programs, Testimony submitted to the U.S. House of RepresentativesFOREWORDruptcy rising from fewer than 290,000 in 1980 to more than two millionin 2005.14 Much of the turmoil in the housing market reflects the preda-tory lending of many financial institutions, as well as the failure of federalfinancial regulatory agencies to enforce the regulations and statutes thatcould have avoided much of the havoc.15Perhaps the clearest longstanding sign of insecurity has been thetrajectory of economic inequality over at least three decades. The shareof household income going to the top quintile grew from 43.6% in 1967to 49.7% in 2007.16 Since the early 1970s, compensation for the 100highest-paid chief executive officers grew from $1.3 million, or thirty-nine times the pay of a typical worker, to $37.5 million, or more than1,000 times that of an average worker. 17 In April, the Institute for Policystudies reported that John Stumpf, CEO of Wells Fargo Bank, received$21,340,547 in compensation in 2009, further noting that it would takethe President of the United States 53 years to earn that much, and theaverage worker 665 years.' 8 Evidence of the growing vulnerability of themiddle class, and the decline of middle-class communities, is revealed byneighborhood-, as well as individual-level data. Between 1970 and 2000the number of high poverty census tracts in the U.S. (where 40% ormore of the residents are poor) more than doubled from 1177 to 2510while the population of such neighborhoods nearly doubled from 4.1million to 7.9 million. 9 During these years the number of middleincome tracts (where the median family income is between 80%and120% of that for the metropolitan area) dropped from 58% to 41% ofall neighborhoods. 20 Perhaps even more problematic, the share of low-income families residing in middle-income tracts fell from more than halfCommittee on Financial Services, Subcommittee on Oversight and Investigations, Wash-ington, D.C. June 18.14. HACKER, supra note 8, at 13.15. DAN IMMERGLUCK, FORECLOSED: HIGH-RISK LENDING, DEREGULATION,AND THE UNDERMINING OF AMERICA'S MORTGAGE MARKET (2009); JOSEPH STIGLITZ,FREEFALL: FREE MARKETS AND THE SINKING OF THE GLOBAL ECONOMY (2010).16. CARMEN DENAvAs-WALT ET AL., U.S. CENSUS BUREAU, INCOME, POVERTY,AND HEALTH INSURANCE COVERAGE IN THE UNITED STATES: 2007 49 (2008), availableat http://www.census.gov/prod/2008pubs/p6O-235.pdf.17. Paul Krugman, For Richer, N.Y. TIMES MAGAZINE, Oct. 20, 2002, at 62.18. INST. FOR POLICY STUDIES, Too MUCH (Apr. 19, 2010), http://toomuchonline.org/weeklies20 10/apr19201 0.html.19. PAUL JARGOWSKY, STUNNING PROGRESS, HIDDEN PROBLEMS: THE DRA-MATIC DECLINE OF CONCENTRATED POVERTY IN THE 1990s 4 (2003); PAUL JARGOW-SKY, POVERTY AND PLACE: GHETTOS, BARRjOS, AND THE AMERICAN CITY 34 (1996).20. JASON C. BoozA ET AL., THE BROOKINGS INSTITUTION, WHERE DID THEYGo? THE DECLINE OF MIDDLE-INCOME NEIGHBORHOODS IN METROPOLITANAMERICA 1 (2006), available at http://www.brookings.edu/reports/2006/06poverty-booza.aspx.20101290 NOTRE DAME JOURNAL OF LAW ETHICS & PUBLIC POLICY [Vol. 24to 37%, making it more difficult for working and poor families toachieve middle-class status.2 'These, and related inequalities, lead directly to a range of socialproblems that cannot be accounted for by poverty or income levels alone.In their recent book The Spirit Level. Why Greater Equality Makes Socie-ties Stronger, medical researchers Richard Wilkinson and Kate Pickettfound that higher levels of inequality are associated with increasingmental and physical health problems, declining educational achievement,greater violence and imprisonment, heightened interpersonal and com-munity mistrust, and other problems that undercut the quality of life forthe middle class and society generally. 2The vulnerability and insecurity that threatens America's middleclass is hardly the result of mysterious forces. While there is no singlecause, a major factor is the weakening of those social institutions thathelped create and maintain a stable middle class for at least a generationfollowing World War II. Many of the risks that families had confrontedfrom the birth of the country were gradually assumed by large organiza-tions-principally governments and employers-as the nation attemptedto recover from the Great Depression and to share the nation's wealththrough the Great Society. A majority of Americans, and American soci-ety generally, benefited. But over the past thirty years those institutionsand the security they provided have been weakened. The question now iswhether we will rebuild those stabilizing institutions that provided mostAmerican families a semblance of security in their lives. The followingarticles provide guidance if we choose to go down this path. And there isevidence that some leaders in Congress, the business community, andnon-profit organizations are starting to listen.Healthcare reform constitutes one important step in removing amajor source of insecurity (financial and otherwise) in the lives of thethirty million people who will obtain health insurance and the manymore who will be able to do so under more reasonable terms and condi-tions. Financial services reform, which is being hotly debated as thisforeword is being written, could restore fair access to credit and stablehomeownership for current and aspiring members of the middle class.The Employee Free Choice Act has been introduced, which, if passed,would make it far easier for those who want to join a union to do so, andthereby obtain the compensation and benefits that unions have long pro-vided their members. Even many unaffiliated workers would benefit asmore employers enhance their compensation packages precisely for thepurpose of keeping unions out.21. Id.22. RICHARD WILKINSON & KATE PicKETT, THE SPIRIT LEVEL: WHY GREATEREQUALITY MAKES SOCIETIES STRONGER (2009).2010] FOREWORD 291There are many choices to be made. In recent years we have optedfor decisions which, in the name of individual freedom and liberty, infact compromised both for all too many families. There are alternatives.We live in contentious, contested times with few, if any, inevitable out-comes before us. The choices we make will determine how bumpy theroller coaster ride, for the middle class and others, will be in the nearfuture and for generations to come.

Social Insecurity: The Roller Coaster Ride of America\u27s Middle Class

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Social Insecurity: The Roller Coaster Ride of America\u27s Middle Class

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