In the last 35 years or so, the wages of middle class people have been basically stagnant. So, for a third of the last 100 years, while worker productivity and the cost of living have continued rising, the ability of middle class jobs to support a middle class lifestyle have not. The result is what we have now: a whole bunch of Americans kinda sorta hanging on to what they got.
If you go back a 100 years or so, you can get some perspective on how this came about. You will see that it is the same people who grossly inflated the cost of living in the U.S. who are currently suppressing the ability of U.S. citizens to afford a middle class life. In the 1910’s and 1920’s the vast majority of Americans did not take out a mortgage to buy their homes. There weren’t that many people who were buying their own homes, for one, and those who did often saved up the money or got it from relatives or borrowed from relatives. There was no large mortgage banking industry.
Then the Great Depression hit and home ownership got even farther from the grasp of the middle class. It was only after World War 2 that a series of factors combined to have home mortgages become a viable mechanism to acquire a domicile for those in the middle class. About a million working age American men lost their lives in the war and those who did come back wanted to resume a “normal” life as soon as was possible. Because of the manpower loss due to the war and the expanding economy, work was easy to get. There was a burgeoning industrial capacity that was turning from war material back to consumer goods and a sense of “we are all in this together,” that lead to a great deal of prosperity. Men and still some women had jobs and disposable income, so all kinds of things were made for this new market, including the development of housing developments (Levittown, etc.). The U.S. Government got in the business of helping to finance home purchases (although with built-in racist limitations for people of color) and with sureties being offered by the government, so too did a great many private lenders. So, through the rest of the 40’s and then the 50’s and 60’s, the middle class of this country boomed and the number of us in the middle class owning our own homes steadily rose.
Interestingly, during the Reagan years in California and during his presidency, things took a down turn. (You know, those family values of Republicans kicked in.) In order to support the kind of life middle class people were learning to enjoy, families had to see both Mom and Dad working. The influx of money into the family from working women helped maintain the new middle class lifestyle but also launched a housing price boom. Thanks to Elizabeth Warren’s academic research, it was discovered that when women started contributing more and more to the family’s income, they also had more say where it went and it was increasingly going for houses in “better” areas, the “better” being in school districts with good schools.
Housing prices increased rapidly, first in California and then throughout the U.S. Housing consumed more and more of the family budget, often costing up to 50% of family disposable income. Government supported these price increases by making interest payments tax deductible, which seemed like a good thing for home buyers but actually just inflated prices (“You can afford this more expensive house because of the large tax deduction you will get on the interest payments!” Remember that?) Rapidly escalating home prices lead to rapidly escalating property taxes because the rates were set “before” and the “assessed value” kept rocketing upward when each house changed hands. In California, a bellwether state, a tax payer revolt lead to a state-wide proposition that put severe limits on property taxes. Other states did something similar. These limits shifted responsibility for many services that were formerly based upon property values, like education, from those local sources of income onto other sources, often based in statewide government. This resulted in less local control and a greater tax burden on the state which doesn’t collect taxes based upon property but upon sales and income, more regressive taxes.
It was President Reagan who made sure that the wealthier citizens paid much less of those federal taxes and shifted the tax burden, especially through payroll taxes, off of the well to do and onto the middle class.
Then the federal government released the shackles of the banking industry and all kinds of high jinks take place. The final culmination is in the collapse of the housing mortgage industry in 2007-2008 based upon the ability of banks to bundle very sketchy mortgages into highly rated derivative securities, so anything went, at least until everything went up in smoke.
So, the banks got bailed out, their shareholders got bailed out, Wall Street got a minor slap on the wrist and homeowners, well they were told to suck it up and take their medicine.
So, where does this leave the middle class?
Well, with the wage suppressing activities of anti-union, anti-worker conservatives, helped by neo-liberal assholes who should have known better (when your goals align with blood sucking capitalists, you no longer have the right to call yourself a liberal, “neo” or otherwise), we have a middle class in name only. Most of us work longer hours for less compensation, have fewer government services available and less hope for the future and our children’s futures since 1950. (“You don’t need a retirement program. When you sell your house, you will have plenty to live on in your golden years.” They could have asked us to turn around and bend over because they had something to shove up our assess, but their sense of propriety didn’t allow for that.)
Those of us in the middle class who were conned into investing our futures in houses and then who lost those houses have basically had to start over. (I sold my last house in 2007, one of the very few sold in my county in that year and was very lucky to get out with my skin intact.)
Since the conservatives and neo-liberals are now in charge, I do not expect better jobs, more affordable housing, less expensive education for our kids, less expensive medical care or much of any real benefit to flow toward the middle class. I see … distractions … many, many distractions in our future. Progress? Not very much, no.