If this excerpt is any indication, Past Due, a new book by New York Times economics writer Peter S. Goodman will deserve wide attention by business-press practitioners and their readers and viewers.
The book will expand on what to me has long been an obvious but wildly underplayed (to the point of overlooked) story behind the current financial crisis—the decades-long erosion of the financial position of the American middle class that forced it to rely on ever-growing piles of consumer debt because stagnating incomes did not keep up with the cost of housing, education, health care, and other necessities.
I’ve long argued that the business press has been strangely oblivious to this increasingly obvious economic reality—strange because business journalists were and are experiencing it themselves.
I’ve also taken issue with what I believe has been a longstanding tendency by business media, particularly during the pre-crisis period, to attribute rising consumer debt to moral decay, profligacy, and excessive spending on knickknacks. (Ironically, the author of the story I took to task in the last link was one Peter S. Goodman; nobody’s perfect.)
The excerpt is a moving profile of a hospital administrative worker whose low wages keep her so close to the financial edge that even the tiniest financial shock can send her over. In this case, it’s getting her car towed. The story opens with her begging an Oakland police officer not to give her a ticket for failing to register her car:
As she watched her car being hauled off, she sensed that this was the beginning of a descent into a crisis from which she might not easily escape. Without money to pay the towing and storage fees, she could not extract her car from the lot, and the tab soon grew to $1,600. Without a car, she could not reach the hospital where she worked in the administrative offices, so she lost her $16-an-hour job. Without a paycheck, she could no longer pay the rent on her modest home. She moved to Oakland, where a friend lived in a beaten-down, rented house on a street they called Crack Avenue. By year’s end, Ms. Thomas, then 49, was occupying a bunk at a homeless shelter, searching in vain for a job in an economy plagued by unemployment.
The story then links this hard-luck story to the macroeconomic reality:
Across the United States a sense has taken hold that the Great Recession and the financial crisis are predominantly a result of national profligacy, as if the economy had been undone by insatiable shoppers, foolhardy home buyers and greedy investment bankers. Extravagance and recklessness certainly played crucial roles, and yet they are only part of the explanation.
Many have lived beyond their incomes simply because incomes have been outstripped by the costs of middle-class life. By the fall of 2008, most American workers were bringing home roughly the same weekly wages they had earned in 1983, after accounting for inflation.
“For middle- and low-wage workers, the median wage basically went nowhere over these years,” said the economist Jared Bernstein.
One line—“By the fall of 2008, most American workers were bringing home roughly the same weekly wages they had earned in 1983, after accounting for inflation.—explains a lot.
If the book is as compelling as this excerpt, it may take its place alongside some of my other recent favorites, including Elizabeth Warren and Amelia Warren Tyagi’s Two-Income Trap and fellow Timesman Steven Greenhouse’s overlooked Big Squeeze.
Can’t wait to read it.
Dean Starkman Dean Starkman runs The Audit, CJR’s business section, and is the author of The Watchdog That Didn’t Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.