Why Middle-class Families Can No Longer Afford America

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Author Alissa Quart talks about why the Middle Class is on the ropes -- and what can be done about it.

Squeezed Book CoverAlissa Quart, executive editor of the Economic Hardship Reporting Project, hopes readers will take her latest book, Squeezed: Why Our Families Can’t Afford America, as a call to action. Her examination of the disappearing middle class shows that the American Dream is in jeopardy. Saddled with college debt, rising housing costs and fewer well-paying jobs, younger Americans aren’t able to live or save like their parents once did. But there are solutions, Quart says. She joined the Knowledge@Wharton show on SiriusXM to shed light on the issue. (Listen to the podcast at the top of this page.)

An edited transcript of the conversation follows.

Knowledge@Wharton: There’s a great statistic at the outset of the book: Middle-class life is 30% more expensive than it was 20 years ago. What is the greatest concern regarding this problem of affordability in America?

Alissa Quart: The main problem is the cost of housing — at least that’s what I found from my research and interviews — especially in places like San Francisco, Los Angeles and New York City. The second problem was the cost of daycare. A lot of it had to do with wages that were just not keeping up with other kinds of expenses — [individuals’] own student debt and then the cost of their children’s educations.

Knowledge@Wharton: Why has the cost of housing become such an issue?

Quart: In some of these desirable places, real estate is no longer a place to live, but it’s an investment vehicle. That has driven up the cost of housing for ordinary people or the precarious middle class, as I call them. And it makes a lot of places that are desirable cities practically unlivable.

Knowledge@Wharton: But a place like San Francisco also has Silicon Valley, which pays the kind of wages needed to live there.

Quart: Yes, so I think what you need is affordable housing if you’re going to be requiring people to live in these cities that have gone nuts because of Google or other kinds of companies also moving into the cities themselves…. They often have headquarters in the cities. What I advocate in my book is for affordable housing for people like municipal workers and firefighters and teachers. I interview teachers who drive Uber on the weekends and evenings because they can’t afford to get by on a union teacher’s salary in the areas around San Francisco and Los Angeles.

“In some of these desirable places, real estate is no longer a place to live, but it’s an investment vehicle.”

Knowledge@Wharton: How much do you think we’ve lost the middle class, and do you think it is going to be an incredible challenge to get back to what it was 30 years ago?

Quart: Yes, it is a challenge. Part of what I’m hoping my book will do is open people’s eyes to the ways that they are at risk and precarious, and instead of feeling bad about it and turning it on themselves, they’ll start to vote differently. They’ll start to feel aligned with the working poor, who have long been precarious, rather than identifying with the top 1% or the top 5%. They’ll start to say, “How do we organize and vote differently and ask for reforms and things like universal pre-K that will help all of us who are vaguely precarious?”

Knowledge@Wharton: You use the word shame in the book. It’s an important word because there are many people who feel ashamed of their financial situation.

Quart: I use the word because I’m very interested in the emotional and existential elements of financial struggle, and also financial victory. I’m interested in what’s going on inside people. [“Shame”] is a word that comes up. People are blaming themselves, saying, “What did I do wrong? I did everything right. I got these degrees. I worked hard. Why is this not coming together?”

I wanted to shine a light on this stigma. There’s also a stigma [around the fact that] you’re not poor, you’re middle class — so how can you complain? There’s an added shame with that, too. I think that’s the thing that we need to open our eyes to and say, “I’m not ashamed. This is a system failure.” Maybe I do need to live my life a little differently if I’m doing what I love and it’s not paying off, but I also need to start thinking about other kinds of solutions. As a middle class, what can we do differently?

Knowledge@Wharton: Is there an area where you cast the most blame?

Quart: I think we’re looking lately at wealth. There was an article recently about how wages aren’t keeping up, prices are soaring, and who has been profiting from this recent sunshine moment on our economy? It’s all corporate wealth. Obviously, we need to be thinking differently about our so-called tax reform and trying to get some share of this wealth for workers. That’s something that is going to have to start with us by voting differently. But some of it is local. Some of it is activity we can do on a local level. We can vote differently on a local level.

“America has the greatest inequality.”

I also feel like people should start mobilizing for these so-called pie-in-the-sky things like better maternity leave. There are laws against pregnancy discrimination; they’re just not enforced. This is something that people can do in the corporate sector. They can start saying, “We’d better make sure these norms are enforced, that people are not being discriminated against on the job.”

One of the things I keep thinking, and I kind of want to write about this, is that everyone says, “Oh, this is so pie in the sky,” like the universal basic income idea that [Facebook co-founder] Chris Hughes talks about. That would provide an income guarantee for people, especially people who are lower-income, but potentially to larger swaths of the population. Or maternity leave for more than the current 14% of the population of workers.

But the question is, why are these things so out there? Look at #MeToo. Norms around harassment have seemingly changed in the course of a year. Gay marriage passed. These might have seemed strange outliers five years ago. So, my question is, why are we not seeing these meat-and-potato things — like pregnancy anti-discrimination or maternity leave or daycare – as things that could happen?

Knowledge@Wharton: A college education is becoming more expensive. It’s not just the costs associated with going to school, it’s paying off the loans for 20 or 30 years after you’re done.

Quart: It’s true. One thing that was new to me — and I call it the second-act industry — is people whose debt didn’t come from when they were in college. It was from when they were in their 40s and 50s and went back to school because they felt like they needed to be retrained. They kept being told they need to be retrained, and then they wound up quite in debt. We need to be careful of that, too. Offer free or cheap retraining programs. Have apprenticeship programs more available to adults. Oversee when people are being snookered.

I talked to a guy who is $60,000 in debt for getting retrained with a degree in IT from one of those for-profit colleges. I think it has since been shut down. It was so corrupt, but he didn’t know. I’m hoping if we keep talking about this second-act industry, people will think twice before they enroll in some of these colleges.

Knowledge@Wharton: Many young people are encouraged with a “do what you love” philosophy. That advice isn’t always beneficial. Do those conversations between parent and child need to change?

Quart: Yes. That was one of the things that really affected me and has affected my parenting. I have a 7-year-old who said, “I want to be an artist.” What do you do when they say these wonderful, creative things they want to be?

I used to teach at Columbia journalism school and other colleges, and I would try to get the students to get a job at a nonprofit or an NGO (nongovernmental organization) and then write on the side. I now run an organization called Economic Hardship Reporting Project, and we give grants to journalists who are struggling. Something like 50% of journalism jobs have shrunk since 2005. So, it’s hard to say, “Yeah, go ahead and do that.”

Knowledge@Wharton: How much is the economy influencing the decision-making of the younger generation?

“We should be identifying with people who are more vulnerable or as vulnerable as we are, and not the very rich.”

Quart: They’re not having kids at the same rate. They’re not owning homes, either…. They have a partner, maybe. They have ambitions. And they often have these degrees that are incredibly expensive, and they don’t know how they’re going to pay them back.

So, I do think it’s going to change things. One thing we should start talking about is debt forgiveness or cheaper universities and colleges, but also just keeping some of those costs of colleges in check because it’s ridiculous. If it starts to stymie our population and our productivity, that doesn’t seem like a very good education at all, does it?

Knowledge@Wharton: This division between the top income earners and the middle class is growing. How is that affecting living standards in America?

Quart: Under all of these questions is this huge division and this enormous inequality. America has the greatest inequality. There is a lot less mobility than it used to have, too. It’s almost like the mobility piece is connected to the inequality piece. That’s where you start to get people feeling like they can’t live the lives that their parents lived, and it has a chilling effect. Who are we as Americans? We’re supposed to be aspiring and progressing, right? This is the American dream. But when you know you can’t, what does that do to you as a citizen?

Knowledge@Wharton: There was a recent report about the decline in jobs in the gig economy in the last year or two. Doesn’t that indicate an even greater economic problem down the road?

Quart: Yes. This is when you start to think that we need better unions. Part of this thing that has heightened inequality is that corporate wealth and taxation is very unfair to people who are self-employed and on the poorer side. But there’s also the whole question of whether we should start to wonder why there are people who are that wealthy. Should there be people who are that wealthy? What does this do to people who are forced to do these sideline jobs, like these gig jobs? Should they have some ownership of their own gig job?

If you think about unions, 30% of workers in the 1960s were in unions. Now it’s something like 10% or even less. It’s 7% in the private sector. That just heightens it. They can’t fight for their own rights, they don’t own their part of the gig economy, and they don’t have any solidarity in the workplace.

Knowledge@Wharton: You have a chapter in the book that talks about the rise of 1% television. What is that?

Quart: We should be identifying with people who are more vulnerable or as vulnerable as we are, and not the very rich. But so many shows – “Billions,” “Downton Abbey,” “The Crown,” “Ozark” — are all about the very wealthy, and we’re supposed to be identifying with these often morally compromised people. Many of the precarious middle-class people in my book were also watching these shows and using them as an escape. I found it fascinating.

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