Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 19, 1992 TAG: 9201190229
SECTION: HORIZON PAGE: B-1 EDITION: METRO
SOURCE: PETER T. KILBORN THE NEW YORK TIMES
DATELINE: WASHINGTON LENGTH: Long
THE MIFFED MIDDLE CLASS
If the 150 or so million people who are loosely called the middle class are so steamed up about stagnant wages and big debts, about rising taxes and medical bills, about the bosses of floundering corporations who collect multimillion-dollar salaries while firing thousands of workers, will they take it any more?Indeed they might.
In America's unpedigreed, denim-and-sneaker society, most people say they're middle class. In terms economists use, the middle class is about 60 percent of the population.
It is people who have high school diplomas and sometimes some college, family incomes of $20,000 to $60,000, a little more in cities like New York and Los Angeles, and in recent years, an equivalent amount of consumer debt. They have a house in a suburb, two vehicles, and one or two family members who work full time.
"Middle class is where you can live in a decent neighborhood, drive a decent car and can get all your necessities," said Carolyn Milini, 37, of Canton, Ohio, a home health aide whose husband, Tony, is a steelworker.
For the middle class, a living room carpet is a sizable expense and a family boat is a 12-foot skiff with an outboard motor. In the three-bedroom house where she and her husband have been raising five children from two marriages, there is a microwave oven. "But that's a luxury," she said.
Michael Dukakis tried with some success too late in 1988 to court the middle class as an economic bloc, but Democratic presidential candidates usually fear alienating the affluent voters who vote in greater proportions and contribute more to campaigns.
For the five top Democrats in the New Hampshire primary on Feb. 18, the issue is more tempting. The economic condition of the middle class has deteriorated throughout two decades of four Republican presidents and one Democrat, and today's teetering economy, with the highest unemployment rate in more than four years, has made it worse.
Over nearly two decades, non-supervisory workers enjoyed handsomely rising wages, from an average of $136 a week in 1972 to $359 by late last year. But it was all an illusion because prices rose much more. Real wages, adjusted for inflation, actually have fallen 19 percent, so workers can buy that much less with what they earn. They've kept abreast of prices only because so many wives have gone to work.
Harp on that hard enough, advises Victor Fingerhut, a pollster and political consultant to labor unions, and Bush is out: "When working and middle-income people vote against poor people and blacks, Republicans win. When they vote against the super-rich and big corporations, the Democrats win."
But even on economic issues, it might be harder for the Democrats to capture middle-class votes than people like Fingerhut presume. American voters may be miffed now, but the patterns of previous election years show they have short memories and are easily seduced.
The Federal Reserve Board's giant pre-Christmas cut in interest rates, making it easier for everyone to borrow and buy, driving rates for home mortgages to the lowest levels in almost two decades, could help to revive the economy by early summer.
If the past is a precedent and the bullish stock market an oracle, that's time enough for voters to think kindly again of incumbent politicians.
To reinforce the Fed's help, Bush is expected to offer tax breaks to middle-class voters. That could drive this year's record $350 billion budget deficit even higher, spelling more economic woe later and sticking future taxpayers with even bigger payments on the national debt.
But as President Ronald Reagan demonstrated, there's no surer election-year aphrodisiac than a promise to cut taxes.
There are indications, too, that the middle class may not feel as rebellious as polls and the state of its incomes suggest. Although wages of individual workers have plunged, the surge of women into the work force has raised living standards, if just a bit.
Americans, more than most nationalities, also live on escalators, accepting the risk of moving down in the economy with the opportunity to move up. Much as people might worry about a stagnant standard of living, they support a system that makes room for their sons and daughters to become richly paid executives, doctors and lawyers.
"What's interesting about our society is that we are, in our perceptions if not reality, a classless society," said Fabian Linden, consumer economist at the Conference Board in New York. "There's no resentment of the guy at the bottom of the totem pole toward the guy at the top."
If the middle class is hurting, it has not been showing it in some other ways. Even as their incomes have stalled, middle-class Americans have become more reluctant to join unions, which were strongest in the 1950s and 1960s when real wages jumped almost 50 percent and helped ensure their members a place in the middle class.
Voting patterns imply that much of the middle class is alienated, apathetic or content with government policies. Only 57 percent of all adults voted for president four years ago - fewer than in the elections of the prior two decades.
The economy's losers voted even less. Only 39 percent of the unemployed voted four years ago, compared with 44 percent in 1984. Among skilled factory workers, core members of the middle class, 47 percent voted in 1988.
The heaviest voters - people who gave Bush his edge over Dukakis, people whose incomes actually rose - were big winners in the '80s. Seventy-two percent of all executives and 78 percent of all professionals voted four years ago.
Among retirees, whose Social Security benefits rose in the decade and whose poverty rate fell, 69 percent voted. Of those 64 to 75 years old with incomes over $50,000, 89 percent voted.
In this election, the Democrats' opportunity may lie in perceptions, fanned by the recession, that someone is not playing fair with the middle class. Business Week magazine calculated that in the 1980s, chief executives gave themselves four times more in pay increases than they gave their average factory worker.
Executives who preside over ailing industries typically take generous pension or severance payments when their jobs fold, but their workers fare worse. F. Ross Johnson left the chairmanship of RJR Nabisco three years ago with a $53 million personal "golden parachute" after losing a takeover battle for the company. Because of the debt incurred in the battle, 2,600 employees were dumped.
Last August, Roger B. Smith, the chairman of General Motors who presided over the company's decline in the 1980s, rode into retirement with an annual pension of $1.2 million that the company raised four months earlier from an originally scheduled $700,000. Last month, the company announced the layoffs of 74,000 workers over the next four years and canceled the $600 Christmas bonuses of 100,000 middle-level managers.
The old compact that workers made with GM, AT&T, DuPont or Sears - the promise of a lifetime of loyal labor in exchange for ever-rising wages, a pension and medical care - is breaking down. Companies that long provided free health insurance now demand that workers share the cost.
In this recession, unlike those of the past, many lost jobs will not return when the economy rebounds. In past recessions, blue-collar factory workers suffered most, and now there is the additional stress of some of their jobs going south of the border. But this time around layoffs are reaching well into the ranks of white-collar workers - auditors, analysts, executive assistants, computer technicians and supervisors.
People feel betrayed. Gary Castellan, 41, lost his job in an LTV Corp. steel mill in the early 1980s, a few months before he would have qualified for a pension.
"They made sure we didn't get it," said Castellan, who now earns $9.65 an hour as a supermarket baker in Pittsburgh, about $2 less than he earned at LTV. "And there was nothing I could do about it."
Alan Machado, 44, a computer technician and college graduate in New Bedford, Mass., said that there used to be an inviolate understanding: "They'd take care of you, you'd take care of them. And you'd be all set."
But Machado's employer, AT&T, closed his plant last year and let him go after seven years with the company. He is left with $307 a week in unemployment benefits, about $220 less than he earned.
The middle class also has reason to fear that the American social escalator is running against it. Greg Duncan, an economist at the Survey Research Center at the University of Michigan, said that from 1968 to 1980, 6.3 percent of middle-income workers moved into the upper-income levels and 6.2 percent moved down. But from 1980 to 1987, the escalator accelerated, and 7.5 percent moved up while more, 8.5 percent, moved down.
Inequities show up in family finances. The Census Bureau reported last year that the 20 percent of families with the highest incomes captured 44 percent of all family income in 1990, up from 42 percent in 1980.
The top 5 percent, with an average income in 1990 of nearly $150,000, raised its share from 15 percent to 17 percent. Everyone else, 80 percent of families, lost ground.
The search is on for whom to blame. In Machado's view, "It's American industry's fault for not being competitive, for not investing in new plants." Many others see a political problem. One old Republican ally, the 1.5 million-member Teamsters union, will oppose Bush's re-election. "This time you're going to see a strong, strong swing completely in the other direction," said Larry F. Landwehr, president of a big teamsters local in Wichita.
Some others doubt that politicians have all that much to do with the condition of the middle class. Lawrence Kline, a psychiatrist in white-collar, middle-class Bethesda, Md., picks up some of the frustration. "But the people I see are more likely to blame themselves," he said.