Following up on my post of yesterday (to which James Joyner has contributed his thoughts at OTB), I thought I’d describe my childhood a bit. For the first ten years of my life we lived in a small house in a blue collar neighborhood making the transition from being entirely white to entirely black, which is what the neighborhood has been for the last forty-five years. I’ve posted a picture of the house here.
It was a one bedroom house with kitchen, living room, dining room and bath. Shortly before I was born my dad and his pal, Jack, added a large room at the back of the house. That room served as bedroom and playroom for me and my siblings until my youngest siblings (twins) were born. Then it was our playroom and bedroom for me, my siblings, and my parents while the twins occupied the bedroom.
Prior to marriage had worked as a teacher in the St. Louis Public Schools. After marriage she taught in a school in St. Louis County. The St. Louis Public Schools did not allow their teachers to be married but the County schools did. My dad worked two jobs: building his practice as an attorney during the day and teaching law at St. Louis University at night. We were indubitably middle class.
The neighborhood in which we lived was a gritty, working class one. There was a bar on the corner. Above the bar was a brothel. The girls used to give me a nickel to get cigarettes for them at the grocery store across the street, a tiny one room affair with shelves that went up to the ceiling and a sort of trolley that enable the storeowners to get things from the upper shelves without climbing a ladder.
The woman who lived next door to us ran numbers. Down the street there was a guy who sold drugs out of his garage. He also had a very interesting comic book collection from before the reform of the comics industry in 1954.
My parents scrimped and saved as much as they possibly could. We had a comfortable life but we didn’t own a lot of stuff. If they couldn’t pay cash for it, they didn’t buy it. That’s one of the big secrets. The way to get rich and the way to stay poor are the same: buying things on credit and paying interest.
Here’s another big secret. Most young people don’t know what their parents’ lives were like before they were born or when they were very young. They imagine that their lives as young people should be what their parents’ lives were like when they were ten years older than they are.
In case you think that my experiences were out of the ordinary, my wife’s parents’ experience was very similar. Early in their marriage he was in the South Pacific fighting in World War II. She lived with his parents working at one of a succession of fairly menial jobs. When he got out of the service he went to college on the GI Bill. They lived frugal lives and saved like crazy, eventually buying a house.
My point here is that being middle class doesn’t mean big houses in leafy suburbs, private schools for the kids, multiple cars, and vacations. That’s upper middle class. Middle class means living not just within your means but below your means and saving for the future.
There are two separate, but connected issues here:
1. Whether people have the means to live some arbitrarily defined “middle class lifeâ€
2. Whether they will do so anyway, going further and further into debt
The first is a question of large scale economics — and the percentage of people who meet 1 is decreasing, because of flat wages, increasing costs and a lack of economic stability.
The second is a question of personal morality — people are either weak and cannot help themselves, or are desperately lying to themselves and claiming they are middle class, even if it means going paycheck to pack check to do so.
They are both big issues. I think fixing the first would do a lot to fixing the second.
And fixing the first means fixing it not just in the big cities, but also rural America.
The reason people are flooding the big cities and driving up the cost of living there is that there aren’t stable opportunities elsewhere. Single employer towns in rural America have discovered that when that major employer folds up, there aren’t more opportunities. (In a city, there’s a bigger buffer to this, because there are more employers)
I don’t have an answer to this.
But the root problem isn’t just that people have too high of expectations.
It’s a beautiful day outside, why am I commenting on the internet? I’m going to go run and play.
I’m not raising a question of morality or character but one of strategy. Saving, deferring consumption until some future point, means you can spend more in that future. Simple as that.
Using leverage to build fortunes is for the big guys. For most of us it just means a less pleasant future. When wages are rising rapidly you can afford to borrow and spend. When they aren’t, as has been the case for several decades now, you can’t.
I disagree with you on why the cities are growing. I think that some cities have been subsidized ferociously and if they weren’t growing it would be a surprise. Sixteen trillion dollars have been spent by the federal government salvaging the big banks after the crisis of 2008. That dwarfs anything else spent for any other purpose whatever.
Now ask yourself: what condition would New York City be in without that? It only benefited Yazoo City or Peoria indirectly. It benefited the greater New York metro area directly. If, rather than salvaging the banks, the federal government had dissolved them, Yazoo City and Peoria would be just about in the same shape they are now. But New York would be in trouble.
The stability you’re talking about is an artifact not an inevitable feature of large metropolitan areas.
BTW, I could go on in this vein. When you remove protections for steel manufactured in the U. S. but preserve them for pharmaceuticals, you make it more profitable to manufacture pharmaceuticals and less profitable to manufacture steel. That hurts steel manufacturing towns (Pittsburg) and helps Boston, San Francisco, and San Diego. That’s no natural advantage but a consequence of policy, an artifact. The same thing could be said about protecting movies with copyrights and professionals with licensing. They’re choices not natural laws.
BTW, your hypothesis about “single employer towns” doesn’t hold water, either. That might be said of Pittsburgh or Detroit but not of St. Louis, Milwaukee, or Chicago. The difference between Chicago and New York is that New York’s industries are being subsidized to the tune of trillions of dollars and Chicago’s aren’t.
“Saving, deferring consumption until some future point, means you can spend more in that future. Simple as that.”
That’s basically what we’ve done. My parents lived through the depression and were frugal even when they didn’t need to be. It rubbed off. That, plus a lot of “propaganda”* in my youth about the Boomers running social security dry, drove me to be frugal starting in my mid-20’s (before that, I was irresponsible).
*The propaganda was prescient. The SS trust fund is slated to run out when I’m 66.
A half serious observation on which social economic class you belong to.
You are poor if you can’t handle one bad event (a bad choice of spouse leading to divorce, job layoff, an illness). You are working class if you can handle one. Middle class if you can handle 3 or 4. Upper class if you can handle 10, rich if the number is unlimited.
One can make relatively little income yet prepare and feel secure enough as if they are rich; or you can make lots of income and have so little left in reserve you have the security of the working poor.
That’s a good observation, CuriousOnlooker, and you may not be aware of it but it’s a paraphrase of something written by Victor Hugo a century and a half ago.
As to my own social class, my father had an upper middle class childhood and my mother’s family were outcastes, entertainers. That makes my own position complicated.
I had high school classmates who were from blue collar families and from some of the wealthiest families in St. Louis.
That hurts steel manufacturing towns (Pittsburg) and helps Boston, San Francisco, and San Diego.
Here’s the thing–Boston, SF and San Diego are politically, on a national level, completely irrelevant. NYC too. Since the 70s, American national politics has centered on the Rust Belt and the south. Books have been written about how Reagan Democrats changed this or that, and yet somehow, despite becoming politically powerful, they apparently have received nothing in return. As a New Yorker, I would have loved to see those banks nationalized or destroyed. But you know what? Bush–who owed zilch to New York–was the one who got the bank bailouts started. And the GOP was with him on this, just as they’re now with Trump and his idiotic tax cut, which in the end up benefiting coastal cities far more than it will St Louis.
So the question should be why are places that have little national political power benefitting so much?
Yeah, class is a fuzzy construct and not easily measured by income or material processions.
For example, in Germany and Japan; being middle class doesn’t involve owning property; until recently most Germans rented, and Japanese soured on home ownership after their bubble burst.
On the other hand, in China owning a home is a requirement to get a wife; so owning one is a must.
I agree with you; the angst about the middle class is the fact incomes aren’t rising very much combined with a much lower feeling of security. Whether it’s actual physical security, or retirement security, or job security, it feels less secure then 30, 40 years even if in actual fact crime is way down, we have more in 401k then the pension would have promised, and a 4% unemployment rate.
Dave, NYC has a lot more than just finance going on there. There is publishing, entertainment, advertising, software, and a lot of blue collar work as well. Countless non-profits are headquartered there, and a crapload of corporate law firms.
Had we let the banks collapse, NYC would have been hurt, but I question whether it would be as devastating as letting GM go under (a related bailout) would have been for the Podunks that have a factory supplying the auto industry.
That said, I think we should have let the banks fail more than we did — nationalizing the failed banks, and breaking them down to a manageable size. Or nationalize the underwater mortgages and pay those off, which would have been cheaper, and given a lot of the investment houses a haircut, as they were betting on a bailout.
I know next to nothing about Chicago, having never lived there. I’ll take you at your word that it is a miserable failure.
Rochester NY, however was a three company town — Kodak, Xerox and Bauch and Lomb. It has not recovered from the triple collapse of its major employers, and workers had few other options. And Rochester was better off than Buffalo or Syracuse. And god only knows what is happening in the smaller cities.
CuriousOnlooker, I have a friend who works for a newspaper here, and is raising two kids. She is so much better at being poor than I could be at being medium middle class that it is absurd.
She keeps her wages just below the level where she would lose a crapload of benefits, and can weather a number of crisis simultaneously. I would not call her anything other than working poor though. Just really, really competent working poor.
(I also use her as my example against strict means testing — if you’re in a situation where if you make more than $N you loose health insurance for your kids, you will stay below $N and avoid $N+1. If things tapered off, she would probably make more. Our social services can become a trap, just as the Republicans say, but the solution isn’t to do away with them, but to not actively discourage people from earning more)
Dave, when you write “I’m not raising a question of morality or character but one of strategy“ you’re being a little dishonest with yourself, and everyone else.
We are judge mental creatures. When we think someone is doing something self-destructive or outside of their best interests, we judge them. We might phrase it as “strategy†rather than “characterâ€, but we don’t really mean it.
My working poor friend hovering right below the threshold of losing a crapload of benefits has awesome strategy. Morally? She’s kind of a parasite living off the system.
A very nice parasite, I would say. I mean, I’d rather have her in my life than a tape worm. Well… tape worms are great for weight loss.
People are judgmental, which is fine. I have complicated feelings about her. And you’re clearly a bit more judgmental about people living beyond their means.
I agree with that.
This doesn’t change the overall thread, or the thrust of your protection comment, Dave, but perhaps adds a little texture for the memory banks.
The Pittsburgh district was going down no matter protectionism policy. It would have been subsumed by the Chicago district and minis. Chicagos stepchildren affected by protectionism’s withdrawal were the likes of Wisconsin Steel and US South Works. East Chicago Harbor Works, Burns Harbor, US Gary and Loraine all still stand. And of course Kankakee is home to Nucor and No. IN to Steel Dynamics. The point being natural competition not protection. Removal of protectionism weeded out the dead men walking. As a side, the only rickety old cross country mill to make it was Steel of West Virginia, which was converted to the only thing you could do with it: low volume high margin production of special sections.
As a reminder I worked briefly for Laclede Steel, a small mill and finishing shop that hadn’t been updated since the 1890s. My notional job was to build a case for full-process quality assurance in the operations. At the time the only QA was on the shipping dock.
Andy: *The propaganda was prescient. The SS trust fund is slated to run out when I’m 66.
Social Security is primarily an income transfer program. The Trust Fund will be exhausted in 2034, at which point Social Security will be able to pay about 80% of current adjusted benefit levels.
The Reagan automobile import quotas had the effect of creating new auto worker jobs. The new jobs were not United Automobile Worker jobs, but they were jobs, and when the quotas expired, the jobs remained.
The Horror. How will the US survive with all these employed Americans, and what are the moral implications of the Japanese unemployment numbers?
Furthermore, substandard goods and services are only possible because the owners desire to sell substandard goods and services. If unions are the problem, close the business and start a new one.
Of course, it took Japanese owners to figure this out. Therefore, the American owners are the problem. Oh yeah, free-market capitalism does not apply to shareholders.
Zachriel,
Oh, I’m aware of that. I’m also aware of the firestorm that a 20% reduction if benefits would bring.
Since my mid-20’s I’ve made all my financial plans assuming I would get no Social Security, so I’ll be fine with only 80% (or whatever the number actually turns out to be), but a lot of people won’t.
I do recall. Apparently your mandate was larger than just the rod mill, which I assume fed the wire business. I assume you are engaging in a bit of hyperbole with the 1890’s comment, as EAF’s post date that. But its scary that the finishing facilities could be that outdated. Probably not an inspiring environment for you.
QA was a much more sophisticated and comprehensive endeavor in LCAK operations feeding the auto and appliance flat products chain. At one point I was in the BOF/caster starting point, and later in the galvanizing finishing end. We had a derisive description of QA in simple long products: if it sinks in water, ship it.
Not by much. One of my spare time tasks was redrafting old drawings of the machinery and they were literally from 1911 (when the mill opened), falling to dust. I presume that Laclede was state of the art then.
I spent most of my time taking measurements and samples just before the billets reached the finishing mill.
“I spent most of my time taking measurements and samples just before the billets reached the finishing mill.”
Ah. Good times. Good times……