A $400 question: America’s desperate and dwindling middle class

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Neal Gabler is a successful writer whose personal account of sliding down the economic ladder due to career ups and downs, kids’ college costs, and questionable spending decisions has gone viral. Published in the current issue of The Atlantic, Gabler’s tale of being in the heart of midlife with precarious personal finances and dubious retirement prospects has struck a chord.

Before jumping into his own story, Gabler shares facts and figures that should give all of us a chill, including a recent Federal Reserve Board survey of American consumers, which featured a question about how respondents would cover an unexpected $400 expense:

The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?

Holy smokes.

Gabler counts himself among those who would have trouble scrounging up $400. He makes clear that he’s not blaming the world for his situation; in fact, he takes responsibility for his actions and decisions:

I don’t ask for or expect any sympathy. I am responsible for my quagmire—no one else. I didn’t get gulled into overextending myself by unscrupulous credit merchants. Basically, I screwed up, royally. I lived beyond my means, primarily because my means kept dwindling. I didn’t take the actions I should have taken, like selling my house and downsizing, though selling might not have covered what I owed on my mortgage.

It’s a thought provoking and sometimes disturbing piece about middle class anxieties, pressures to keep up with the Joneses, and how quickly both time and money pass through our lives.

Lingering effects of the Great Recession

Gabler may not be blaming his personal finance woes on our economic system, but plenty of evidence suggests that most Americans are subject to the slings and arrows of an unforgiving market economy and significant wealth inequalities.

Nicholas Fitz, writing for Scientific American, documents our misconceptions about wealth and income distribution in the U.S.:

The average American believes that the richest fifth own 59% of the wealth and that the bottom 40% own 9%. The reality is strikingly different. The top 20% of US households own more than 84% of the wealth, and the bottom 40% combine for a paltry 0.3%.

. . . The median American estimated that the CEO-to-worker pay-ratio was 30-to-1, and that ideally, it’d be 7-to-1. The reality? 354-to-1. Fifty years ago, it was 20-to-1.

Ben Leubsdorf, in a piece for the Wall Street Journal, writes about the lasting economic and psychological trauma of the Great Recession:

The recession ended seven years ago, but persistent joblessness and underemployment marred the economic expansion that followed. A growing body of research suggests the economic trauma has left financial and psychic scars on many Americans, and that those marks are likely to endure for decades.

About one in six U.S. workers became unemployed during the recession years of 2007, 2008 and 2009. Today, nearly 14 million people are still searching for a job or stuck in part-time jobs because they can’t find full-time work.

Even for the millions of Americans back at work, the effects of losing a job will linger, the research suggests. They will earn less for years to come. They will be less likely to own a home. Many will struggle with psychological problems. Their children will perform worse in school and may earn less in their own jobs.

Retirement prospects

Labor economist Teresa Ghilarducci (New School for Social Research) is one of the nation’s leading experts on retirement funding. Though most of her work is contained in academic articles and studies, she has recently authored a slim 116-page book, How to Retire with Enough Money: And How to Know What Enough Is (2015), which I highly recommend. Two years ago, Dr. Ghilarducci told The Week (subscription may be necessary) that “This is the first time that Americans are going to be relatively worse off than their parents or grandparents in old age.” Figures cited in the article back her up:

A stunning 45 percent of all American households with people still in their working years have nothing at all saved for retirement. Among those ages 50 to 64, 75 percent have less than $28,000 put away. Even among the most prepared Boomer households, savings average just $140,000, far too little to fund a 20-plus-year retirement. All told, Americans are at least $6.8 trillion short of what they need for a comfortable retirement, according to the National Institute on Retirement Security.

In her book, Ghilarducci avoids pointing the finger at individuals for alleged overspending or failure to save. Rather, stagnant incomes and a sharp decline in employer-sponsored pension and retirement plans are among the major culprits. She urges readers to undertake both personal and political action to improve America’s retirement security prospects.

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My conclusion? We’re facing a major reckoning on a national and global levels when it comes to economic issues big and small. I concur with Dr. Ghilarducci that the responses will have to be both personal and political.

More to come: The experience of everyday wealth differences

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A guest contributor to The Guardian‘s “What I’m really thinking” column — apparently a female student — writes about the awkwardness of making social plans with friends who have a lot more money than she does:

“I’ll meet you there,” I say. “I’ve got something to do first.” That’s a lie. I just don’t want to take an hour-long taxi with you; the fare for that is outrageous. No, better to take public transport and spend an extra hour and half to save the money.

. . . Make no mistake, I am by no means poor, but by your standards I might as well be. When we go out for dinner, I scream inside at the cost. Often I don’t eat, saying I’ve had something already or I’m not hungry. Some people ask if I’m anorexic, because they never see me eat a proper meal outside school.

Iceberg ahead…and we’re steaming into it, full throttle

Of course, the socially awkward dilemmas confronting a younger person with less disposable cash than her friends are one thing, while deep inequalities in income and wealth are quite another. At least here in the U.S., I believe those inequalities have been, and continue to be, intentionally baked into our economic and political infrastructure. And they are becoming evident across the generations.

For example, here’s a piece of writer Sarah Kendzior’s insightful take on the “post-employment economy” that confronts many recent graduates:

A lawyer. A computer scientist. A military analyst. A teacher.

What do these people have in common? They are trained professionals who cannot find full-time jobs. Since 2008, they have been tenuously employed – working one-year contracts, consulting on the side, hustling to survive. They spent thousands on undergraduate and graduate training to avoid that hustle. They eschewed dreams – journalism, art, entertainment – for safer bets, only to discover that the safest bet is that your job will be contingent and disposable.

On the other end of the generational spectrum, you have late Boomers and early Gen Xers — a cohort that just missed out on the golden era of employer-provided pensions — hurdling into middle age and beyond with scant retirement savings. For example, a 2015 study by the non-profit National Institute on Retirement Security concluded, among other things:

The average working household has virtually no retirement savings. When all households are included— not just households with retirement accounts—the median retirement account balance is $2,500 for all working-age households and $14,500 for near-retirement households. Furthermore, 62 percent of working households age 55-64 have retirement savings less than one times their annual income, which is far below what they will need to maintain their standard of living in retirement.

My prediction? Without significant changes, we are going to see more and more instances of everyday inequality staring us straight in the face. For some, this will mean quietly bowing out of pricier social activities due to a money crunch. For others, it will mean trying to maintain appearances of “middle class” status while opting for a dinner of macaroni & cheese from a box. And these will be among the folks who actually have “choices.”

I haven’t yet said a word here about climate change.

Saving ourselves from a dystopian future

Yes, I know I’m sounding overwrought. But too many indicators are suggesting that (1) we have yet to pay the full price for our inequalities and excesses, especially during the past thirty-five or so years; and (2) we have not come to a reckoning about the mess we’ve made.

For those who can afford it, there are things that can be done on an individual level: Be generous. Give to good charities. Pick up the check. Leave a nice tip. To help someone dear who is in a financial bind, give, don’t loan, and do it without fanfare. Instead, be grateful that you can afford it. (I try to hold myself to these standards, while confessing that I sometimes fall short.)

More broadly, all of us, regardless of financial status, must grasp how our economic, political, and social systems have stoked massive inequality, nationally and globally, and then help to do something about it. 

I’m not sure of all the answers, but I believe they will be a combination of changing how we live, building a more robust yet inclusive economy, and repairing our social safety net. We will have to be smarter and kinder in creating a society that places greater value on human dignity and the common good.

On being a globally oriented citizen

In my more self-deluded moments, I like to think of myself as being something of a “global citizen.” After all, I do some international travel, engage in work that has some transnational relevance, donate to global charities, and gratefully have friends in and from many different countries. Hey, I even subscribe to the Guardian Weekly and the Economist!

In reality, however, I’m yet another professor whose travel experiences, work, and network of friends have international dimensions. I’m just as likely to check on the fortunes of my fantasy baseball teams as I am to click to news stories of key developments in other parts of the world.

By contrast, I know a good number of people whom I count as genuine global citizens. Whether they travel around the world or not, they have a genuine international orientation that gives them a broader perspective on this planet we inhabit. Some, like my friends and colleagues connected with the Human Dignity and Humiliation Studies network, devote significant energies toward furthering peace, social justice, and humanitarian initiatives around the world.

How can we become more globally oriented citizens? This question has been crossing my mind frequently during the past year, especially in the wake of terrorist attacks around the world. Many of us should embrace a broader worldview, thus contributing to a more informed citizenry as a result. Sure, we can attend to our own little corners of the planet, but let’s also look at the world beyond our immediate surroundings.

This could be as simple as paying closer attention to news developments from around the world. It may mean bringing a more inclusive spirit to our lives, one that celebrates variety and diversity and naturally builds bonds with people from other cultures. At its most challenging levels, it can involve trying to understand and address the seemingly intractable differences that are causing so much strife today. For as President Kennedy said in his compelling 1963 speech on the urgent need to curb the nuclear arms race:

And if we cannot end now our differences, at least we can help make the world safe for diversity. For in the final analysis, our most basic common link is that we all inhabit this small planet. We all breathe the same air. We all cherish our children’s futures. And we are all mortal.

“Friendly Fascism”: The terrifying clairvoyance of Bertram Gross

Some three and a half decades ago, social science professor and former senior public official Bertram Gross authored a remarkably prescient book about politics and society in the U.S.: Friendly Fascism: The New Face of Power in America. First published in 1980, with a revised edition issued in 1982, Friendly Fascism eerily anticipated the descent of America into a state of plutocracy — an increasingly authoritarian society run by the wealthy and powerful for their own benefit.

A defining fork in the road

In the preface to his 1982 edition, Gross identified two conflicting trends in American society:

The first is a slow and powerful drift toward greater concentration of power and wealth in a repressive Big Business-Big Government partnership. . . . The phrase “friendly fascism” helps distinguish this possible future from the patently vicious corporatism of classic fascism in the past of Germany, Italy and Japan.

…The other is a slower and less powerful tendency for individuals and groups to seek greater participation in decisions affecting themselves and others. . . . It is embodied in larger values of community, sharing, cooperation, service to others and basic morality as contrasted with crass materialism and dog-eat-dog competition.

Gross went on to identify a group of people who were consolidating power in America:

I see at present members of the Establishment or people on its fringes who, in the name of Americanism, betray the interests of most Americans by fomenting militarism, applauding rat-race individualism, protecting undeserved privilege, or stirring up nationalistic and ethnic hatreds.

Not-so-friendly fascism?

Unfortunately, it appears that the second societal vision identified by Gross — one of community, sharing, cooperation, service, and morality — has been overcome by massive concentrations of power and wealth.

We have no clearer evidence of this than the real possibility that Donald Trump will be the Republican Party standard bearer in the fall election. At the time Gross penned his book, Trump was a young, arrogant, and obnoxious (e.g., here and here) New York businessman primarily interested in money and self-promotion. However, I doubt that even Gross could’ve guessed that the Trump of today would be an exemplar of “fomenting militarism, applauding rat-race individualism, protecting undeserved privilege, or stirring up nationalistic and ethnic hatreds.”

Indeed, we are now at a point where “friendly” fascism is being supplanted by a much more aggressive, violent brand, reminiscent of Europe in the 1930s. Folks, this is not politics as usual. If Trump wins the GOP nomination and goes on to win the Presidency, then America will have chosen a dangerous, hateful path. Recently The Economist, long a voice of solid conservatism, put it well in expressing its alarm over the possibility of a Trump Presidency:

That is an appalling prospect. The things Mr Trump has said in this campaign make him unworthy of leading one of the world’s great political parties, let alone America. One way to judge politicians is by whether they appeal to our better natures: Mr Trump has prospered by inciting hatred and violence. He is so unpredictable that the thought of him anywhere near high office is terrifying. He must be stopped.

Republican policy analyst Peter Wehner has called out Trump on his constant appeals to political violence:

It is stunning to contemplate, particularly for those of us who are lifelong Republicans, but we now live in a time when the organizing principle that runs through the campaign of the Republican Party’s likely nominee isn’t adherence to a political philosophy — Mr. Trump has no discernible political philosophy — but an encouragement to political violence.

Even if Trump is stopped short of the White House, the ripple effects of his brand of thuggish, bullying rhetoric and behavior will have seeped into our communities, schools, workplaces, and civic life. Those of us committed to a more decent, kindhearted, and inclusive nation have our work cut out for us. After all, as Bertram Gross pointed out many years ago, we didn’t get to this terrible place overnight.

The casino economy and psychological health at work

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The financial markets are in turmoil right now, making this a jittery time for investors large and small. Thankfully, the current stock market “correction,” as the financial analysts call it, is probably not the start of new recession. However, it definitely impacts people’s confidence in the state of the economy.

Stock market outlooks also affect the everyday experience of work. Just last week, I posted an article asking whether the Great Recession has stoked a continuing climate of fear in the workplace. While finances and economics may seem to be all about hard numbers, in reality markets are very psychological in nature. In times of major market uncertainties, those anxieties often trickle down to the everyday experience of work.

What will happen if the stock market is in for a rough ride? Among other things, employers in all sectors (private, public, non-profit) may be more nervous about hiring. It also means that pressures to produce more with fewer resources could intensify. Workers fearing unemployment may continue to endure bad work environments, rather than leave without another job in hand. Workplace bullying and incivility may well occur more frequently as tensions on the job rise.

This is modern life in the casino economy. The wins and losses of those playing at the big money tables affect those playing the nickel slot machines. And for folks in the latter group, the stakes are very high, even if their control over them is limited.

Did the Great Recession fuel a continuing climate of fear in the workplace?

Edvard Munch's "The Scream" (1893)

Edvard Munch’s “The Scream” (1893)

According to economists, the Great Recession is officially over, having “ended” sometime during 2009-2010. However, its negative shock waves continue to impact world economies, labor markets, and the experience of work. Among the most costly and underreported effects is how the Great Recession has enabled some employers to stoke an ongoing climate of fear in the workplace.

British psychologist and consultant Sheila M. Keegan, in her thought-provoking new book The Psychology of Fear in Organizations (KoganPage, 2015), suggests that even though the “recession has eased, . . . its psychological effects may well be with us for some years to come.” In fact, she offers the possibility that “just as the Second World War shaped the attitudes of a generation, so too the recent recession will shape the attitudes, behaviours and fears within organizational life for some decades to come.”

This does not bode well for the current state of our workplaces. In her Preface, Dr. Keegan states:

There is a considerable body of research that points to the rise of fear within organizations and indeed a climate of fear that is widespread and contagious. Employees feel fearful of job loss, of being demoted, bullied, shamed or humiliated. This level of fear can become self-sustaining so that it is difficult to separate the causes of fear; fear at work becomes normalized.

I’ll have more to say about this excellent book in a future post, but for now let’s center on the effects of the recession on psychological health in the workplace. Keegan is spot-on in her assessment: We’ve seen evidence, for example, that bullying-type behaviors tend to be more frequent in recessionary economies. We also know that this recession has led to massive job losses and continuing fears of unemployment. Less humane employers have played on workers’ fears by trying to squeeze every ounce of work out of them, while freezing or cutting their pay and benefits. Intentionally generated stress and anxiety are everyday parts of too many work lives.

Some might say that people simply have to suck it up and deal with it. Tough economic times are just that, right? Generally speaking, personal resilience is a good thing, but especially if the Great Recession has left a long-term psychological imprint on the workplace, then we need to talk about comprehensive responses and changes. Ultimately, we need to prompt a paradigm shift that puts human dignity at the center of our systems and practices of employee relations.

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Related posts

Our economic systems, psychopathy, and bullying at work (2014)

Making human dignity the centerpiece of American employment law and policy (2014)

Suicide and the Great Recession: Will we heed the tragic warnings? (2013)

For more on the links between recessionary economies and workplace bullying, go herehere, and here.

Unemployed at midlife, “faking normal”…and sometimes bullied, too

Screenshot from Next Avenue.org

Screenshot from Next Avenue.org (Photo: DY)

In a plaintive commentary posted on Next Avenue earlier this year, Lizzy White writes about professional, middle-aged women who have lost their jobs and are struggling to make ends meet as they search for work:

You know her.

She is in your friendship circle, hidden in plain sight.

She is 55, broke and tired of trying to keep up appearances. Faking normal is wearing her out.

To look at her, you wouldn’t know that her electricity was cut off last week for non-payment or that she meets the eligibility requirements for food stamps. Her clothes are still impeccable, bought in the good times when she was still making money.

To be sure, the effects of the economic meltdown that began some seven years ago continue to be felt by men and women in almost every income level and vocational category. But those of my generation (late Boomers in their 50s), and notably unmarried women within that group, have felt its impact especially hard, with livelihoods and careers interrupted or ended at what should be periods of peak earning potential. White continues:

She lives without cable, a gym membership and nail appointments. She’s discovered she can do her own hair.

There are no retirement savings, no nest egg; she exhausted that long ago. There is no expensive condo from which to draw equity and no husband to back her up.

Months of slow pay and no pay have decimated her credit. Bill collectors call constantly, reading verbatim from a script, expressing polite sympathy for her plight — before demanding payment arrangements that she can’t possibly meet.

White provides more facts and figures to document the income disparities and disproportionate caregiving responsibilities that often put women in a less advantaged position than their male counterparts. It’s an important piece, and the comments posted below it are worth reading as well, including those who rightly point out that middle-aged men who have experienced job losses are facing these circumstances, too.

The bullying effect

This topic intersects with workplace bullying, because middle-aged workers endure a lot of it. When work abuse culminates in their termination or departure, they often face multi-level challenges in trying to pull themselves together and obtain new employment.

Two years ago, I summarized Workplace Bullying Institute instant poll results showing that workers in the 40s and 50s are frequent bullying targets. The poll asked visitors to the WBI website who have experienced workplace bullying to respond to a single question, “How old were you when the bullying at work began?” WBI collected 663 responses and reported the following:

The average age was 41.9 years. Targets in their 40’s comprised 30% of all targets; in their 50’s were 26.4%; under 30 years of age were 21.3%; those in their 30’s were 18.9%. The prime productive years are also the prime years for being [targeted] for bullying.

Five years ago, I suggested that unmarried women may be specially vulnerable to being bullied at work, especially if they have kids:

Let’s start with the observation that truly abusive bullies often have a knack for sniffing out vulnerable individuals. Then we look at potential targets: Demographically speaking, is there any group more vulnerable than single women raising kids? They already are juggling work and caregiving, their schedules seem timed down to the minute, and not infrequently they are struggling financially — especially if there is no father in the picture.

Unmarried women without children may not be as economically desperate to hold onto their jobs, but they can be very vulnerable as well. Women in general remain underpaid compared to male counterparts. Those who came out of busted marriages may have re-entered the workforce later in life. In any event, they are less likely to have someone to fall back on if bullied out of a job.

Over the years, I’ve encountered many women in their 50s who have been bullied out of their jobs and then face the daunting challenges of recovering from the experience in terms of psychological well-being, employment, and personal finances. For those individuals, “faking normal” may require wearing a mask that feels like a heavy weight, in addition to carrying the burdens of their situations generally.

Sad, disturbing stuff

This makes for pretty unpleasant and unsettling reading, especially if you’re on the north side of 50. These challenges are hitting my generation of late Boomers especially hard.

Decades ago, many of us entered the workforce in the heart of a severe recession. At the same time, employers were cutting back or eliminating pensions and other benefit plans. For those going to school, loans were supplanting need-based grants and scholarships as the primary form of financial aid.

And now this group has experienced an even more severe economic downturn during the heart of what should be its peak earning years.

It distresses me greatly that we have not summoned the collective will to make this a major political and public policy issue. What will it take to make it so?

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