Opinion

Felix Salmon

Counterparties: The tasks of the proletariat in the present recession

By Ben Walsh
September 12, 2012

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The financial crisis and subsequent recession hasn’t just chipped away at Americans’ net worth. A new Pew poll shows it has affected their economic self-image as well — 32% of all adults now consider themselves lower class, up from 25% in 2008.

Not only has the lower class grown, but its demographic profile also has shifted. People younger than 30 are disproportionately swelling the ranks of the self-defined lower classes. The shares of Hispanics and whites who place themselves in the lower class also are growing.

Specifically, 39% of 18 to 29 year-olds and 40% of Hispanics consider themselves lower class, increases of 14 and 10 percentage points, respectively, since 2008. Three-quarters of the lower class think “it’s harder now to get ahead than it was 10 years ago”.

In that gloomy sense, America’s burgeoning lower class has something in common with its shrinking middle class. An earlier Pew survey found “85% of self-described middle-class adults say it is more difficult now than it was a decade ago for middle-class people to maintain their standard of living”.

They’re right. Census Bureau data released today show that “real median household income in the United States in 2011 was $50,054, a 1.5 percent decline from the 2010 median and the second consecutive annual drop”. Dig deeper into the data, and things look worse: real income in 2011 is basically unchanged from 1990.

Post-crisis, lower and middle-income Americans are becoming more class aware. (The rich, on the other hand, still don’t think they’re that rich.) The Economic Policy Institute’s “State of Working America” asks the key question: “how well is the American economy providing acceptable growth in living standards for most households?” The conclusion: “not well at all”.   — Ben Walsh

On to today’s links:

New Normal
A handy guide to the arguments that we’ve reached the end of economic growth – WaPo

Alpha
Lawsuit says Bain, private equity firms colluded to keep acquisition prices down – NYT

Be Afraid
How the explosive growth of REITs could put the mortgage market at risk – Sober Look
Top REIT CEOs even more overpaid than other real estate CEOs – WSJ

Long Reads
Michael Lewis’s huge new Vanity Fair profile of President Obama – Vanity Fair

Financial Arcana
An argument that naked CDS will help lessen the fallout of sovereign debt defaults - WSJ

Politicking
Mitt Romney’s weaponized Keynesianism – Slate

Primary Sources
The full text of Moody’s latest grim warning on US debt – Reuters

EU Mess
Germany’s constitutional court backs euro rescue plans – Der Spiegel

TBTF
There’s a huge difference between what Citi thinks an asset is worth and what everyone else does – WSJ

Charts
How America is missing out on a huge investment opportunity – Ryan McCarthy and Ben Walsh

Cephalopods
“Why I left Goldman Sachs” hits stores in about a month – Dealbook

Comments
One comment so far | RSS Comments RSS

There are more “lower class” people by income in the USA than this poll depicts. Lots of lower class people self-I.D. as “middle class,” which is part of the reason why our median annual wage of $26,000 has not lead to much rioting yet.

Posted by Eericsonjr | Report as abusive
 

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