This is part five of a series on the start of the 2008 presidential election’s general campaign. Links to the rest of the series can be found at the bottom of the article.
In September 2005, I was reporting on Hurricane Katrina’s aftermath for The Washington Post and found myself in Wiggins, Mississippi, about forty miles from the coast, where thousands of displaced people had descended on a Red Cross station set up in the high school.
It was a mess—people waited in the sun all day for a number to come back another time, and more than half couldn’t even get that—but that’s not the point. What struck me was how close to the edge, financially, the people in line had been before the hurricane hit. Many among them—school-bus drivers, mechanics, clerks—couldn’t absorb a couple of weeks without a paycheck. Some had been sent from town to town by disorganized officials, but they were frustrated less by the hassle than by the cost of the gas it took to drive between cities. One man told of burning two tanks of gas on a dispiriting odyssey from Pass Christian, Mississippi, to Laplace, Louisiana, to Ocean Spring, Mississippi, to Wiggins—about 250 miles. At gas prices then, it cost around $35.
Political reporters, and anyone else, looking to catch up on the economy as an election issue this year can probably get away with reading a single Wall Street Journal story from April, by Justin Lahart and Kelly Evans:
Trapped in the Middle The incomes of most Americans have stalled. Tackling voter angst in Pennsylvania.
Say what you want about trade, taxes, heath care, the credit crunch, and oil prices; the meta economic issue of our time is the eroding financial position of the American middle class that is now reaching an acute stage.
This graphic that accompanied the Journal story provides a pretty good snapshot. On the right are the 14,836 families at the top of the economy. The left side is basically everybody else.
Okay, cover your right eye.
We learn, first, that nine of ten Americans average $30,000 a year, and, second, that that number has been going in the wrong direction. But wait. The economy was in a period of economic growth from 2001 through 2006. Where did the money go?
Cover your left eye.
And here’s one from a slideshow that accompanied the Journal story showing how much of the pie the top 1 percent has taken since 1913. Note the near vertical climb in the last few years, resembling the north face of K2. Tracing backwards, one can see the last time the nation’s best-off took that much of the nation’s income was, well, it was a long time ago and right before something very bad happened:
Here’s another one that shows median family income in the last couple decades. Up in the ’90s, down since 2000. (The second line is from Lancaster County, Pennsylvania, where the Journal did some on-the-ground reporting.)
And while we’re at it, here’s one by one of my favorite bankruptcy experts, Elizabeth Warren, and her daughter, Amelia Warren Tyagi, from their 2003 best-seller, The Two-Income Trap.
This is what happens when median family income stagnates while the cost of essentials—housing, education, and health care—have not.
And for good measure here’s the personal savings rate since the ’30s, thanks to The Big Picture blog:
But back to the Journal story. Here’s the lead paragraph:
Lancaster, Pa. — Are you better off than you were eight years ago? For a growing number of middle-class Americans, the answer is “No.”
It also makes the makes the point that income declines for the middle class during periods of economic growth are basically unheard of.
Recessions often depress middle-class incomes and moods. What’s unusual about these declines is that they occurred during the economic expansion that began in 2001 — the first time that’s happened during a prolonged expansion in at least 40 years. The main reason: The benefits of prosperity have gone disproportionately to the families at the very top.
No, this isn’t a Democratic National Committee press release. It’s the world’s leading financial news publication.