Some things worth reading about the ongoing hollowing-out of the economic middle in the United States.
• Speaking (appropriately enough) at the Rock and Roll Hall of Fame and Museum in Cleveland, economist Alan Krueger, then chairman of the White House Council of Economic Advisers, discussed what he has called Rockonomics:
The music industry is a microcosm of what is happening in the U.S. economy at large. We are increasingly becoming a “winner-take-all economy,” a phenomenon that the music industry has long experienced. Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress. The lucky and the talented – and it is often hard to tell the difference – have been doing better and better, while the vast majority has struggled to keep up.
These same forces are affecting the music industry. Indeed, the music industry is an extreme example of a “super star economy,” in which a small number of artists take home the lion’s share of income.
The music industry has undergone a profound shift over the last 30 years. The price of the average concert ticket increased by nearly 400% from 1981 to 2012, much faster than the 150% rise in overall consumer price inflation. And prices for the best seats for the best performers have increased even faster.
At the same time, the share of concert revenue taken home by the top 1% of performers has more than doubled, rising from 26 percent in 1982 to 56 percent in 2003. The top 5 percent take home almost 90 percent of all concert revenues.
This is an extreme version of what has happened to the U.S. income distribution as a whole. The top 1% of families doubled their share of income from 1979 to 2011. In 1979, the top 1% took home 10 percent of national income, and in 2011 they took home 20%.
• Washington Post columnist Harold Meyerson wrote about the same phenomenon from the viewpoint of airline passengers:
Airlines are sparing no expense these days to enlarge, upgrade and increase the price of their first-class and business-class seating. As the space and dollars devoted to the front of the planes increase, something else has to be diminished, and, as multitudes of travelers can attest, it’s the experience of flying coach. The joys of air travel — once common to all who flew — have been redistributed upward and are now reserved for the well-heeled few.
…The new business model, apparently, is to shrink the seats, charge extra for everything and offer nothing for free that might be construed as an amenity. That’s certainly the credo of Spirit Airlines, which charges its benumbed passengers a fee for their carry-on bags, $3 for water and $10 for printing out boarding passes and whose seats don’t recline. Spirit boasts one of the highest profit margins in the industry and plans to expand by 15 percent to 20 percent every year for the next eight years, according to the Los Angeles Times. It also ranks dead last in customer satisfaction — indeed, in last year’s Consumer Reports survey, it had one of the lowest overall customer satisfaction scores of any company in any industry that the magazine had ever surveyed.
But people fly Spirit Airlines because the fares are what they can afford.
The upgrading of business and the downgrading of coach present a fairly faithful mirror of what’s happening in the larger economy: the disappearance of the middle class. As University of California-Berkeley economist Emmanuel Saez has documented, between 2009 and 2011, the incomes of the wealthiest 1 percent of American families grew by 11.2 percent while those of the remaining 99 percent shrunk by 0.4 percent. Median household income has declined every year since 2008. Profits, meanwhile, have risen to their highest share of the nation’s economy since World War II, while wages have sunk to their lowest share. In an economy such as this, the growing markets are the rich and corporations, which have more money to spend on luxury travel, and the downwardly mobile everyone else, whose travel options are increasingly confined to discount outfits like Spirit and the increasingly hellacious coach sections of other airlines.
This week, one of the last airlines devoted to what we might call a middle-class travel experience succumbed to the increasing economic bipolarization of U.S. consumers. JetBlue, which has never had a first-class or business section but which afforded its coach customers more legroom than other airlines, announced that it would create a new first-class section on its cross-country flights with suites containing seats that fold down to full lie-flat beds.
…Airplanes, like stagnating economies, are finite, and if one class takes up more space or commands more resources, the other class gets less.
The U.S. economy has not stagnated over the past four decades, but so much of its wealth has been claimed by the very top that most Americans have experienced it as a zero-sum game in which they’ve lost ground. As tax rules favored the wealthy, as employees lost the power to bargain for their wages, as globalization reduced the incomes of millions of workers, the rich grew richer at everyone else’s expense. That’s the reality that today’s air travel illustrates, as the comfortable standard seat that once was the norm goes the way of the dwindling middle class.
• Finally, anyone who wants to understand what’s been going on in the United States for the past 30 years or so should get hold of The Unwinding: An Inner History of the New America by America’s best living journalist, George Packer.
Update: Former senator Rick Santorum, who came fairly close to winning the GOP presidential nomination in 2012 and may seek it again in 2016, warns his fellow Republicans to avoid using terms like “middle class” because “that’s Marxism talk” and “there’s no class in America.”
Santorum proceeded to tear into President Obama for constantly invoking the term “middle class” in his speeches about the economy. “Since when in America do we have classes?” Santorum asked. “Since when in America are people stuck in areas or defined places called a class?”
That’s one way to avoid dealing with economic inequality– pretend it doesn’t exist or doesn’t matter all that much.