FRONTLINE

TWO AMERICAN FAMILIES

The State of America’s Middle Class in Eight Chart

JULY 9, 2013

by JASON M. BRESLOW Digital Editor •

EVAN WEXLER

In 1992, both Tony and Claude had recently lost their manufacturing jobs. For the next 20 years, our cameras followed them and their families as they struggled to avoid poverty. When they could find work, it was often for longer hours, less pay and no benefits. Bills piled up, tensions rose and relationships became strained.

Of course, their story is far from unique. Over the last several decades, the middle class has struggled to keep pace with smaller paychecks, mounting debt and shrinking opportunities for steady work. The following eight charts offer a brief snapshot:

#1: Wages are down

Middle class incomes have shrunk 8.5 percent since 2000, after enjoying mostly steady growth during the previous decade. In 2011, the average income for the middle 60 percent of households stood at $53,042, down from $58,009 at the start of the millennium.

#2: Less income for the middle class

Partly as a result of lower pay, the middle class’s share of the nation’s total income has been falling. In 1980, the middle 60 percent of households accounted for 51.7 of the country’s income. By 2011, they were less than half. Meanwhile, the top fifth of households saw their slice of the national income grow 16 percent, to 51.1 percent from 44.1 percent.

#3: Union positions are shrinking

One factor behind the decline in income has been a drop-off in the number of workers earning union salaries. In 2012, the median salary for a unionized worker stood at roughly $49,000. The median pay for their non-union counterparts was just shy of $39,000. Since 1983, however, the share of the population belonging to a labor union has gone from one-in-five workers to just over one-in-ten.

#4: More workers stuck in part-time jobs

A second factor weighing down pay is the rise in the number of Americans stuck in part-time jobs. In 2012, more than 2.5 million Americans worked part-time jobs because they could not find a full-time position, the most since 1993.

#5: Fewer jobs from U.S.-based multinationals

Part of the challenge for job seekers is that U.S. multinational corporations having been hiring less at home. These large, brand-name firms employ roughly a fifth of American workers, but from 1999 to 2008 they shed 2.1 million jobs in the U.S. while adding more than 2.2 million positions abroad.

#6: Rising debt

Predictably, the economic pressures facing the middle class have left families deeper in debt. . In 1992, the median level of debt for the middle third of families stood at $32,200. By 2010, that figure had swelled to $84,000, an increase of 161 percent.

#7: Families are saving less

The rise in debt has meant fewer families have the ability to put away money for things like retirement or a child’s tuition bills. In 2001, more than two-thirds of middle class families said they were able to save money in the preceding year. By 2010, that figure was below 55 percent.

#8: Net worth has plunged

The impact on family net worth — the amount by which assets exceed liabilities — has been painful. In 2007, median net worth peaked at $120, 600. Then came the financial crisis, which pushed millions of Americans into joblessness and home foreclosure. By 2010, net worth had plummeted 36 percent, to $77,300.

• WORLD

Trump Gives Generals More Freedom on ISIS Fight

Pentagon brass take lead on decisions that were made by White House under Obama; ‘I authorize my military,’ Trump says

By

Dion Nissenbaum in Washington and

Maria Abi-Habib in Beirut

Updated April 14, 2017 10:29 p.m. ET

U.S. military commanders are stepping up their fight against Islamist extremism as President Donald Trump’s administration urges them to make more battlefield decisions on their own.

As the White House works on a broad strategy, America’s top military commanders are implementing the vision articulated by Defense Secretary Jim Mattis: Decimate Islamic State’s Middle East strongholds and ensure that the militants don’t establish new beachheads in places such as Afghanistan.

“There’s nothing formal, but it is beginning to take shape,” a senior U.S. defense official said Friday. “There is a sense among these commanders that they are able to do a bit more—and so they are.”

While military commanders complained about White House micromanagement under former President Barack Obama, they are now being told they have more freedom to make decisions without consulting Mr. Trump. Military commanders around the world are being encouraged to stretch the limits of their existing authorities when needed, but to think seriously about the consequences of their decisions.

The more muscular military approach is expanding as the Trump administration debates a comprehensive new strategy to defeat Islamic State. Mr. Mattis has sketched out such a global plan, but the administration has yet to agree on it. While the political debate continues, the military is being encouraged to take more aggressive steps against Islamic extremists around the world.

The firmer military stance has fueled growing concerns among State Department officials working on Middle East policy that the Trump administration is giving short shrift to the diplomatic tools the Obama administration favored. Removing the carrot from the traditional carrot-and-stick approach, some State Department officials warn, could hamper the pursuit of long-term strategies needed to prevent volatile conflicts from reigniting once the shooting stops.

The new approach was on display this week in Afghanistan, where Gen. John Nicholson, head of the U.S.-led coalition there, decided to use one of the military’s biggest nonnuclear bombs—a Massive Ordnance Air Blast bomb, or MOAB—to hit a remote Islamic State underground network of tunnels and caves.

Gen. Nicholson said Friday it was too early to say how many militants had been killed in the previous day’s bombing. The Afghan Defense Ministry retracted an earlier statement that the strike had killed 36 militants, saying it was unable to provide precise figures yet.

A military official for the coalition who viewed footage of the bombing said it was difficult to make out details of its effects beyond a “mushroom cloud” of smoke rising into the sky. He added that a second MOAB was available for use in the country, but no decision had been made on whether it should be deployed.

Islamic State’s Amaq news agency posted a statement on Friday saying none of its fighters were killed or wounded in the strike, which took place in Nangarhar province, along the country’s mountainous border with Pakistan.

Gen. Nicholson indicated that he—not the White House—decided to drop the bomb. “The ammunition we used last night is designed to destroy caves and tunnels. This was the right weapon against the right target,” he told reporters Friday. “I am fortunate that my chain of command allows me the latitude to make assessments on the ground.”

A senior administration official said Mr. Trump didn’t know about the weapon’s use until it had been dropped.

Mr. Mattis “is telling them, ‘It’s not the same as it was, you don’t have to ask us before you drop a MOAB,’” the senior defense official said. “Technically there’s no piece of paper that says you have to ask the president to drop a MOAB. But last year this time, the way [things were] meant, ‘I’m going to drop a MOAB, better let the White House know.’”

Indeed, on Thursday Mr. Trump himself emphasized the free rein he gives the Pentagon. “I authorize my military,” Mr. Trump said. “We have given them total authorization.”

On Friday, the U.S. military said it has sent dozens of soldiers to Somalia, where Mr. Trump recently gave the head of the U.S. Africa Command more leeway to carry out counterterrorism operations against al-Shabaab, the al Qaeda affiliate in the area.

The more aggressive military approach comes as the long slog against Islamic State is bearing fruit. The group is on the back foot in its Iraqi stronghold, Mosul, and is facing a hard battle to defend its de facto Syrian capital, Raqqa.

The U.S. has sent more forces into Iraq and Syria, stepped up support for Saudi Arabia’s fight against Houthi militants in Yemen, and dispatched an aircraft carrier to the Korean Peninsula amid growing evidence that North Korea is preparing for a new nuclear test.

Loren DeJonge Schulman, who served as senior adviser to Mr. Obama’s national security adviser, said a more assertive military campaign is destined to fail unless it is part of a broader strategy against Islamic State, also known by the acronyms ISIS and ISIL.

“It’s crazy that the Trump administration thinks that ‘taking the gloves off’ is either a winning strategy against ISIL or a useful narrative for the White House or the military,” said Ms. Schulman, now a senior fellow at the Center for a New American Security.

Derek Chollet, a former assistant secretary of defense for international security affairs in the Obama administration, said giving the Pentagon more freedom is one of the most significant things Mr. Trump has done.

“It’s not clear to me that he’s making any tough decisions,” said Mr. Chollet, now executive vice president at the German Marshall Fund of the United States. “All that he’s essentially done is ceded decision authority down to protect himself from making tough calls.”

The flip side of the Trump administration’s emphasis on a more-free-wheeling military approach to Islamic State is an apparent reduction of the use of soft-power tools—economic development, diplomacy and democracy-building—favored by the Obama White House.

Some State Department officials describe being cut out from the White House’s counterterrorism strategy in the Mideast, with efforts to nurture democratic governments and push for more secular education systems carrying less weight in the White House’s evolving approach.

“State is being systematically sidelined,” said a State Department official who has worked on counterterrorism issues in Washington and abroad.

The official said the White House strategy of prioritizing military might over diplomacy makes it hard to persuade Mideast allies to relax their grip on power. Many of Washington’s closest Arab allies are autocratic regimes guilty of human-rights abuses that critics say fuel terrorism.

“The problem there is that in many of the places where you need carrots, those carrots are often seen as threats to local governments,” the official said, referring to democracy and society-building programs the State Department funds across the Mideast.

Egypt offers a prime example of the Trump administration’s leanings. When Egyptian President Abdel Fattah Al Sisi, a military strongman, visited the White House earlier this month, Mr. Trump gave him a warm welcome. Mr. Obama had refused to meet him because of his regime’s alleged human-rights abuses.

U.S. officials in the Mideast say a counterterror approach that focuses solely on military might without programs to fight the causes that feed extremism could backfire, leading groups like Islamic State to go underground and wait for future opportunities to re-emerge. They are particularly concerned about Raqqa, where a U.S.-led military coalition is closing in around the city but post-liberation stabilization plans aren’t finalized as State Department officials wait for White House guidance.

—Jessica Donati and Habib Khan Totakhil in Kabul and Carol E. Lee in Washington contributed to this article.

Write to Dion Nissenbaum at dion.nissenbaum@wsj.com and Maria Abi-Habib at maria.habib@wsj.com

Appeared in the April 15, 2017, print edition as ‘Military Takes Lead on ISIS.’

• Erika Rawes,
•  The Cheat Sheet
• In its discussion of historical middle class societies, The Economist reports, “Their members are neither rich nor poor but somewhere in-between…’Middle-class’ describes an income category but also a set of attitudes…An essential characteristic is the possession of a reasonable amount of discretionary income. Middle-class people do not live from hand to mouth, job to job, season to season, as the poor do.”

Some argue that the most sensible income amount to attach to the middle class would be the median household income, of around $54,000.

Perhaps, anyone who earns between the 25th percentile and 75th percentile is a member of the middle class.

Diana Farrell, once Deputy Director of America’s National Economic Council, told The Economist she thinks a middle class income begins at the point where a person (or family) has one-third of their income left over for discretionary purposes after they’ve provided themselves with food and shelter. In other words, someone who earns $3,000 per month would have $1,000 left after they’ve paid their mortgage or rent, utilities, and grocery bills.

Though there is some debate over the exact income a middle class household brings in, we do have an idea of who the middle class are — most working class people. Today’s bourgeoisie is composed of laborers and skilled workers, white collar and blue collar workers, many of whom face financial challenges. Bill Maher reminded us a few months back that 50 years ago, the largest employer was General Motors, where workers earned an equivalent of $50 per hour (in today’s money). Today, the largest employer — Walmart — pays around $8 per hour.

The middle class has certainly changed. We’ve ranked a list of things the middle class can no longer really afford. We’re not talking about lavish luxuries, like private jets and yachts. The items on this list are a bit more basic, and some of them are even necessities. The ranking of this list is based on affordability and necessity. Therefore, items that are necessity ranked higher, as did items that a larger percentage of people have trouble paying for.

Vacations

A vacation is an extra expense that many middle-earners cannot afford without sacrificing something else. A Statista survey found that this year 54% of people gave up purchasing big ticket items like TVs or electronics so they can go on a vacation. Others made sacrifices like reducing or eliminating their trips to the movies (47%), reducing or eliminating trips out to restaurants (43%), or avoiding purchasing small ticket items like new clothing (43%).

New vehicles

Very few people who earn the median income can afford to buy a new car or truck. Interest.com recently analyzed the prices of new cars and trucks, as well as the median incomes across more than two dozen major cities, and found that new cars and trucks were simply not affordable to most middle-earners.

“Median-income families in only one major city [Washington DC] can afford the average price Americans are paying for new cars and trucks nowadays.” As of 2013, new cars are priced at $32,086, according to the study. Mike Sante, Interest.com’s managing editor reminds us, “just because you can manage the monthly payment doesn’t mean you should let a $30,000 or $40,000 ride gobble up all such a huge share of your paycheck.”

To pay off debt

These debt statistics come from Debt.org:

• “More than 160 million Americans have credit cards.”
• “The average credit card holder has at least three cards.”
• “On average, each household with a credit card carries more than $15,000 in credit card debt.”

Not only do we have large amounts of credit card debt, we also have student loans, mortgages, cars, and medical debts. Our debt is growing faster than our income, and many middle class workers have trouble staying afloat. >Money-Zine evaluated debt growth and income growth over the past few decades and found that “back in 1980, the consumer credit per person was $1,540, which was 7.3% of the average household income of $21,100. In 2013, consumer debt was $9,800 per person, which was 13.4% of the average household income of $72,600. This means debt increased 70% faster than income from 1980 through 2013.”

Emergency savings

To provide ourselves with a degree of financial security, we are supposed to have emergency savings to protect ourselves in the event of job loss, illness, or some other catastrophe. Most members of the middle class don’t have at least six months of emergency savings, however, and some working people have no such savings.

A Bankrate survey found that only around one out of four households have six months of emergency money saved, and many of them are in the higher income groups. Another one-fourth have no emergency savings at all, and the remaining household have a small to moderate amount of savings, but not enough to cover six months of expenses.

Retirement savings

If you reach the retirement age with little or no money saved, Social Security is probably not going to be enough to cover your basic needs. Even if you want to work for your entire life, you have no way of knowing whether or not you will be physically capable of doing so.

Although having a lack of a retirement savings is a risky move, so many people bet on double zero, just hoping that things will work out in their favor. While some members of the middle class neglect this aspect of financial planning because they are procrastinating, there are also some workers who cannot afford to set this money aside. Nearly half of those who don’t save for retirement say it’s because they simply don’t have the money.

As of late, around 20% of people near 65 have not saved anything for retirement at all, and the majority of people — 59% — worry that they don’t have enough money saved for retirement, according to a Gallup Poll.

Medical care

Medical care is a basic necessity and something we’d think would be affordable for someone earning a middle income. A Forbes article published data indicating that workers in large companies — many of whom are members of the middle class — “face nearly $5,000 in premiums, co-payments, deductibles and other forms of co-insurance.”

During the past few years, these costs have had a large impact on working Americans. A report by Feeding America found that a shocking 66% of households say they’ve had to choose between paying for food and paying for medical care — 31% say they have to make that choice each and every month.

Dental work

According to the U.S. Department of Health and Human Services, “the U.S. spends about $64 billion each year on oral health care — just 4 percent is paid by Government programs.” About 108 million people in the U.S. have no dental coverage and even those who are covered may have trouble getting the care they need, the department reports.

Oftentimes, people will purchase medical coverage and forgo dental because it’s so expensive. Plus, dental insurance may cover only 50% of the more expensive procedures, like crowns and bridges. This leaves those who have insurance with large co-payments.

In many cases, middle-earners will delay or even forego some of these procedures in efforts to save on costs. According to the CDC, nearly one in four adults between the ages of 20 and 64 have untreated dental caries (like cavities or infections).

 

A new report suggests much of the country has yet to actually witness a full economic recovery.

By Andrew Soergel, Economy Reporter |July 13, 2017, at 1:06 p.m.

Study: 3 in 10 Americans Haven’t Recovered From Great Recession

A new report suggests 30 percent of Americans have yet to recover from the financial crisis.

The U.S. is now nearly 10 years removed from the onset of the worst financial crisis the economy has weathered since the Great Depression back in the 1930s. But a new study suggests 3 in 10 Americans still feel as though their personal finances haven’t fully recovered or never will.

And nearly half believe the U.S. economy has yet to fully recover from the crisis and the Great Recession.

A survey published Thursday by Country Financial polled 1,000 adults across the country. It found that 26 percent of respondents are still in recovery mode while another 4 percent believe they will never recover. And 42 percent said they think the broader economy has not “fully recovered financially since the 2007/2008 financial crisis.”

These feelings have led many to adjust or delay their planned retirement years, as only 39 percent of respondents said they’ll be able to retire as anticipated in the aftermath of the crisis. More than 1 in 5 said they’ll have to delay retirement at least five years if they’ll be able to retire at all.

Government data, however, shows various branches of the economy have indeed returned to their pre-recessionary levels of health. The unemployment rate ticked up slightly in June to 4.4 percent but is still comparable to where it was at the end of 2006. Home prices have hit new highs, as have major stock indexes on Wall Street. And consumer and business confidence metrics have risen to their highest levels in years.

But the Country Financial survey suggests not all Americans have enjoyed those gains and still aren’t completely confident in the trajectory of the U.S. economy. Doyle Williams, an executive vice president and chief marketing officer at Country Financial, says this is, in part, a story of geography.

“Ten years ago, during the housing crisis, people were locked into geographies, they couldn’t follow jobs or job opportunities because of where they were located,” Williams says. “People are now more mobile, but you still see people that may not have the skill sets and may not be in the right location. … Some of the rural areas being left behind.”

The Country Financial poll is hardly the first to highlight a growing disparity between economic success in the nation’s major metropolitan areas and the erosion of opportunity in smaller rural communities across the country. A study published earlier this year by the National Association of Counties found that slightly more than a quarter of America’s counties had fully recovered from the recession in terms of unemployment, job availability, economic output and median home price.

A separate wage report from the Pew Charitable Trusts found a deeply uneven landscape in terms of personal income growth since the recovery. Resource-rich states like North Dakota, Texas and Alaska saw average annual income growth of 4.7 percent, 3 percent and 2.3 percent, respectively, between the end of 2007 and the middle of last year.

Nevada, Illinois and Alabama, meanwhile, saw gains of just 0.5 percent, 0.8 percent and 0.9 percent, respectively.

Still, Williams points out that Americans do seem to feel fairly comfortable with their own financial situations, even if many believe they haven’t fully recovered from the recession. Three in 5 respondents said they feel their overall level of financial security is “excellent” or “good,” while 85 percent expect their current conditions to get better or stay the same over the course of the next six months.

And 84 percent of those surveyed said they’re “very” or “somewhat” confident they’ll be able to pay off their existing debts.

“The positive piece is this sense of personal responsibility. People feel like they’re in control, for the most part. And I think we should all feel good about that,” Williams says.

But the more concerning piece of the puzzle is the percentage of respondents who said they wouldn’t be able to make ends meet if they found themselves unemployed. More than 30 percent of those surveyed said they would be able to go one month at most without any income and still be able to pay bills on time. Only 28 percent said they’d be able to go more than five months and still be in the clear.

“This really is a national issue, that people aren’t prepared,” Williams said. “The vast majority of people have saved nothing. And this point on people not being able to go by a month [without income] speaks to that. It is a real concern.”