Economic risk and the middle class

An interesting discussion is happening over at The American Prospect. Called Debating the Middle it asks “Just how is the middle class faring in the modern American economy, and how should progressives tailor their message and program accordingly?”

As in other posts on the US inequality debate, there are some insights and implications to be gleaned for Canada. And while the debate has tended to focus on the tails, the pulling away of the super-rich and the growing ranks of homeless, there is need for some substantive thought about how the middle fits in.

One post stands out for me: Yale’s Jacob Hacker adds in the element of economic risk faced by many families. A health care crisis or a job loss – bad luck from circumstances beyond a family’s control – can be devastating, especially south of the border where much of the social insurance infrastructure has been tied to corporate benefits that are now being severely eroded. Hacker comments:

[T]he truth is that, after a generation in which more and more economic risks have been shifted onto the shoulders of hardworking middle-class Americans, the middle class is insecure and in need of a serious agenda of economic change. … [T]he size of year-to-year swings of family income has skyrocketed since the early 1970s. Meanwhile, the chance that families will experience large income drops has risen dramatically. Indeed, this sort of instability — how far people move up and down the income ladder over time — has grown much faster than income inequality — the gap between people on different points on the income ladder. And while low-skilled workers have long borne the brunt of these changes, the educated are getting hit harder and harder. People who went to college now experience as much income instability as people without a high-school degree did in the 1970s.

This risk is completely invisible in most of the statistics … [b]ut it is at the heart of the increasingly negative verdict of most Americans — and, yes, married Americans with degrees and kids — about the direction of the economy. And it is the issue with the greatest potential to unify Americans across lines of class, race, and education behind a new economic agenda that provides a basic foundation of security so as to guarantee true opportunity. It is also, not incidentally, the issue with the greatest potential to create a powerful new coalition behind the Democratic Party — that is, if the party shakes off its timidity and speaks to Americans’ growing concerns in a way that is both true to their legitimate worries and faithful to their fundamental aspirations.

See also a series for the LA Times from last year by Peter Gosselin, The New Deal, while waiting for Hacker’s book (entitled The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement—And How You Can Fight Back) to come out.