Washington Post, April 10, 2008: Can’t Get Ahead, Hard To Keep Up
By Michael A. Fletcher
Washington Post Staff Writer
Thursday, April 10, 2008; D01
Offeringthe gloomiest assessment of economic well-being in close to half acentury, a new survey has found that most Americans say they have notmade progress over the past five years as their incomes have stagnatedand they have increasingly borrowed money to finance their lifestyles.
Asmany Americans struggle with declining housing values, increasing foodand energy prices and growing unemployment after a long period of flatwages, well over half of respondents said they are either losing groundeconomically or are stuck in the same place, according to the reportreleased yesterday by the Pew Research Center.Only four in 10 said they have moved forward in the past five years –a record low, Pew says, and far off the record 57 percent who in 1997said they had moved forward in the previous five years.
Thesqueeze is particularly tight for those who have low incomes and forthe 53 percent of Americans who classify themselves as middle-class.Nearly four out of five middle-class adults say it is more difficultfor people like them to maintain their standard of living. In 1986,fewer than two of three middle-class people shared that opinion.
Onlytwo in five middle-class Americans say they “live comfortably,” whileone in five says he is just able to meet expenses. The others say theyare able to meet expenses with some money left over. Overall, slightlymore than half said they had to “tighten their belts” to adjust to theincreasing economic pressure.
“Everything is going up, and our incomes are not,” said Lorraine Conrad, 77, a Virginia Beachwidow who lives on Social Security and her husband’s military survivorbenefits. “I am able to get by, but I have to be really careful abouthow I spend my money.”
The Pew report, based on a telephonesurvey of a nationally representative sample of 2,413 adults taken fromJan. 24 to Feb. 19 and overlaid with demographic information from the Census Bureau,adds new information about how Americans feel about their economicsituations in the midst of a presidential campaign in which the plightof the middle class has been at the heart of the debate. Democraticcandidates Hillary Rodham Clinton and Barack Obamahave argued that ordinary Americans are slipping backward economically.The two have proposed expanding health-care coverage, increasingfinancial aid for college students and cutting taxes for the middleclass. Presumptive Republican presidential nominee John McCain also has promised to cut taxes for the middle class and to expand the availability of health care through tax incentives.
Evenas they struggle, however, nearly two-thirds of Americans say they arebetter off than their parents were when they were their age, animportant marker of upward mobility. That fulfillment of the Americandream has persevered as the nation has entered a period of wideningincome disparities and creeping insecurity brought on by the rise inincome volatility, the decline in fixed-benefit pensions and theincreasing need for households to send two breadwinners to work tomaintain a middle-class life.
“Most Americans see in the sweep oftheir lives a long arc of progress,” the report said. “Most expect toface some belt-tightening — or worse — in the coming year, but amajority is confident that their quality of life in five years will besignificantly better than it is now. And, gazing into a more distantfuture, most expect their children’s standard of living to be betterthan their own.”
Median household income increased 41 percentfrom 1970 to 2006, though it never returned to its 1999 peak. Seven in10 survey respondents said they have cable or satellite television aswell as two or more cars. Two-thirds reported having high-speedInternet service, and 42 percent said they have a high-definition orflat-screen television, the report said, adding that the typical houseis 50 percent larger and nearly twice as expensive now as it was in themid-1980s.
But those luxuries have come at a price, asmiddle-class households are assuming more risk and borrowing more thanever before. Debt-to-income ratios more than doubled from 1983 to 2004,going from 0.45 to 1.19, the report said, as more families leveragedtheir lifestyle with larger mortgages, home-equity loans to pay downother bills and larger college loans to keep up with soaring tuition.
Atthe same time, more Americans have managed to move up the incomeladder, particularly as they approach middle age. From 1970 to 2006,the share of Americans whose income was 75 to 150 percent of thenational median contracted to 35 percent from 40 percent. But thepercentage of people earning more than 150 percent of the median tickedupward from 28 to 32. The proportion of the lowest income group alsogrew, from 31 to 33 percent, led by a sharp increase in the number ofyoung people, aged 18 to 29, who are lower-income.
Americans arealso wealthier than ever, with the median net worth of middle-incomefamilies peaking at $98,286 in 2004, up from $77,031 in 1992. Thatgrowth has been most impressive for families in the upper-income group,who had a median net worth of $439,390 in 2004, nearly double thefigure of 12 years earlier. But some of that wealth has likely erodedwith the recent downturn in housing prices.
Among the groups tosubstantially improve their economic standing since 1970 are seniorcitizens, native-born Hispanics, African Americans and married couples,the report said. Meanwhile, single men and people with high schooldiplomas or less and immigrant Hispanics are among those who have lostground.
Those surveyed agree that it is harder to maintain amiddle-class lifestyle, but they do not agree on whom to blame fortheir plight. About one-quarter blame the government, 15 percent blamethe rising price of oil, 11 percent blame themselves and 8 percentblame foreign competition.
“Part of it is the natural cycle,” said Vicki Cool, 61, a retired nurse who lives in Salisbury,Md., and worries whether the Social Security payments she receives as asurviving spouse and her savings will keep her afloat throughretirement. “Everybody wants to point a finger. But I’m not sure that Iknow enough to point fingers. I just know it’s unfortunate.”