Tamara Draut: Strapped

I started reading Tamara Draut's Strapped: Why America's 20- and 30-Somethings Can't Get Ahead (Doubleday), but didn't have time to get through it before the library due date came up. No surprises here, but it's one of the major economic stories of our era -- an era that will eventually be recognized as a significant downturn on the welfare of most Americans. The pivotal date was roughly 1970, a fateful date for several reasons: it's when the US trade balance went negative, when US domestic oil production peaked and started to decline, when deficits started to grow, when growth slowed down and turned into what was called stagflation. It occurred in the long stuck course of a disastrous war in Vietnam, and was marked by a political turn to the right, which effectively channeled what gains there were to ever greater concentration among the rich. That this effect has been masked so long is an interesting story in its own right. But this is the only world that Draut's young adults have known, and it's increasingly hard for them to see how they reach, let alone exceed, the living standards of their parents.

I noted a couple of quotes in the introduction, which give the gist of the argument (pp. 4-5):

When our parents were starting out, three factors helped smooth the transition to adulthood. The first was the fact that there were jobs that provided good wages even for high school graduates. A college degree wasn't necessary to earn a decent living. But even if you wanted to go to college, it wasn't that expensive and grants were widely available. The second was a robust economy that lifted all boats, with productivity gains shared by workers and CEOs alike. The result was a massive growth of the middle class, which provided security and stability for families. Third, a range of public policies helped facilitate this economic mobility and opportunity: a strong minimum wage, grants for low-income students to go to college, a generous unemployment insurance system, major incentives for home ownership, and a solid safety net for those falling on hard times. Simply put, government had your back.

This world no longer exists. The story of what happened is well known. The nation shifted to a service- and knowledge-based economy, dramatically changing the way we lived and worked. Relationships between employers and employees became more tenuous as corporations faced global competitors and quarterly bottom-line pressures from Wall Street. Increasingly, benefits such as health care and pension plans were provided only to well-paid workers. Wages rose quickly for educated workers and declined for those with only high school diplomas, resulting in new demands for college credentials. As most families saw their incomes stagnate or decline, they increasingly needed two full-time incomes just to stay afloat, which created new demands and pressures on working parents. Getting into the middle class now required a four-year college degree, and even that was no guarantee of achieving the Americcan dream.

As Draut notes elsewhere, the "government had your back" angle wasn't exactly universal. There was both official and unofficial discrimination, especially racial, also sexual. One recent book describes post-WWII public aid as "when affirmative action was white"; it seems far from coincidental that the right was able to kill off or undermine such programs once it became impossible to deny those benefits to non-whites. The Republican ascendency was built on just that racism, augmented by post-defeat military bravado, and funded by an upper class determined not to let their yachts sink with the falling tide.

The description of how the world changed strikes me as weaker. The economy didn't shift to service jobs so much as service jobs took up the slack from the decline of manufacturing. The latter had two engines: technology and automation which shifted jobs to machines from people, and the capital flight that sought growth markets and lower wages abroad. Stronger labor unions might have mitigated both factors, ideally by converting productivity gains into shorter workweeks for more workers. But the political shift to the right cut the legs out from under the unions, displacing workers to the lower end of the service sector.

The other thing is that it hasn't become impossible or even all that much harder to join the middle class. It's more that the middle class isn't what it used to be, or that it's long been cracked up to be. The middle class was once imagined to be the core of a relatively egalitarian democracy, a sign that we share the same responsibilities and aspirations. Nowadays, middle class means you're just a slip away from falling into poverty, but miles and miles away from the true rich who set the standards you aspire to, but can never reach. The more society splits into rich and poor, the desperate the middle class become.

Draut sums up today (p. 6):

Becoming an adult today takes longer, requirse taking more risks, and is rife with more stumbling blocks than it was a generation ago. To get a sense of how much longer the traditional path to adulthood takes, we can compare the percentage of young women and young men meeting a traditional definition of adulthood in the yeras 1960 and 2000: leaving home, finishing school, becoming financially independent, getting married, and having a child. Four decades ago, 77 percent of women and 65 percent of men aged 30 had completed all of these transitions. In 2000, only 46 percent of women and 31 percent of men had completed all these transitions by age 30.

From the price of a college education to the new cutthroat realities of the conomy, young adults are trying to establish themselves in a society that has grown widely unequal and less responsive to the needs of ordinary citizens. At each step in the obstacle course to adulthood -- getting an education, finding a job, starting a family, and buying a house -- our nation's public policies have failed to keep up. Young adults are left to drift alone, shouldering more of the financial burden and risk than previous generations.

One major cause of this is that Draut describes as "the new brand of capitalism" (pp. 19-20):

This new economy has increasingly become a winner-take-all system in which most of the spoils go to the top -- the CEOs, big shareholders, and top executives. While technology has allowed America's productivity to soar, unlike in past eras, since about 1980, less and less of these gains have been shared with workers. Productivity grew 74.2 percent between 1968 and 2000, but hourly wages for average workers fell 3 percent (adjusted for inflation). In fact, if wages had kept pace with rising productivity between 1968 and 2000, the average hourly wage would have been $24.56 in 2000, rather than $13.74.

This slide in workers' earnings happened as corporate profits were climbing. Domestic corporate profits have risen 64 percent since 1968, adjusting for inflation. The king of the low-wage sector -- the retail industry -- has done fantastically well. Retail profits have jumped 158 percent since 1968. [ . . . ]

Back in 1950, firing workers for trying to organize unions was rare: there was one illegal dismissal of workers for every twenty union elections. By the 1990s, the National Labor Relations Board found illegal dismissal of workers in one out of every three union elections.

I skipped over the parts about WalMart, as you might well guess. Final conclusion to the introduction (p. 26):

After all my research and conversations with young adults, one thing is crystal clear. Without bold thinking and the courage to uphold our nation's most sacred values, a while generation of young adults will come of age in an America that doesn't reward hard work, family values, or collective responsibilities. I have no doubt that the grim economic reality and choked opportunity facing young adults didn't have to happen. And it doesn't have to continue.

An optimist after all. Some day I hope to get back to the book and find out why. Draut runs an Economic Opportunity Program at a think tank named Demos, and she has some straightforward ideas on how to fix this. I'm not so optimistic, and not just because her young adults haven't run into the health care meatgrinder yet. But it's a good book, full of basic info and credible stories.

posted 2006-10-17