But while the rich clean up, Nan Mooney, a 38-year-old journalist, wonders why so many people like her — college-educated professionals, members of the storied American middle class — still struggle to make it financially, well into their 30s and 40s and beyond, unable to pay off their student loans while trying to cover healthcare costs, save for their children’s education and plan for their own retirement. In her new book, “(Not) Keeping Up With Our Parents: The Decline of the Professional Middle Class,” Mooney argues that what it really means to be middle-class in America is suffering a rude downgrade, as college costs rise and wages stagnate at the same time that individuals must shoulder more healthcare and retirement expenses.
For her book, Mooney interviewed more than 100 social workers, product managers, college administrators, factory-equipment salesmen and other members of the middle class about what their intimate financial lives really look like. Most of them earned between $30,000 and $70,000 a year, yet despite good educations and respectable incomes, many still shouldered crushing debts and had serious doubts about their financial futures. They all aspire to basic comforts — a place to live, reliable healthcare, education for themselves and their children — but come across as a little bewildered by their seemingly perpetual state of financial insecurity. “As you get older, it becomes less okay to admit that you’re struggling,” one 42-year-old graphic designer tells Mooney. “People just assume that you must be doing okay. I’ve noticed that those who are still having trouble start to go underground about their financial lives.”
Salon spoke with Mooney, who is also the mother of a 4-and-a-half-month-old son, from her home office in Seattle.
How would you characterize the educated middle-class professional you’re writing about?
These are people who went to college and have at least a four-year degree. Oftentimes, they have extended education beyond that, a master’s or a Ph.D. They’re people who work in white-collar professions, usually not the high-end professions like law or medicine or finance.
Why did you want to write about this group?
Because I fall into this group and so many people I know fall into this group, and I feel like we fall under the umbrella of having done everything they say you’re supposed to do to be financially secure in America.
There is this myth that if everyone could just go to college and get the proper job skills we would all be financially comfortable, and I was looking around me and saying, “Well, that’s not true.”
But if you have a college education you’re more likely to be financially secure than if you have only a high school education.
Yes, absolutely. But the rhetoric goes beyond that. It says that you will be secure, and you will be comfortable. If you look at the rates of bankruptcies of people who are getting in deep credit-card debt, it’s not only the people with the high-school educations. It’s traveled well into what we consider the professional middle class.
How has college debt risen for this group in a generation?
In the ’70s, we were barely taking out student loans. In 1977, collectively students were borrowing about $6 billion. By now, they’re borrowing over $85 billion. That’s a remarkable number. The number of students enrolled in college grew 44 percent between 1977 and 2003, but student loan volume rose 833 percent in that same time period.
There are fewer grants and scholarships available. If students go through graduate school, they can end up taking out over $100,000 of student loans. And if you go into a field that’s not high-paying that can be a real burden on you for 20, 30, 40 years.
We are seeing more people going to college, which is definitely a positive move, but they’re getting into a lot of debt to do it. The college degree now is what the high school degree used to be. You really need a basic bachelor’s degree in order to be eligible for a lot of jobs.
How has the burden of healthcare cost shifted in the last generation?
Healthcare costs have shot up. Because of that, businesses, especially smaller employers, are having trouble offering healthcare to their employees, which means more of it is coming out of pocket. More people are having to stretch financially to afford healthcare, and it also means that more people don’t have health insurance because they simply can’t afford it.
And even people who are insured are paying much higher fees than they used to be.
Exactly. There are a lot of middlemen involved. You have insurance agents. You have companies making decisions about what kind of healthcare you get. You’re not just paying the doctor. You’re not just paying the hospital. You’re paying a series of middlemen. You’re paying all the people with the insurance companies who are facilitating this. It’s not an efficient system anymore. And I think that’s why it’s become such a political hot spot.
How has the burden of affording retirement shifted onto workers?
It’s taken a similar shift that healthcare has taken. It’s become more the responsibility of the individuals and less the responsibility of the institution, whether you’re talking about the state or the country or the employer. We are all very familiar with the 401K, because most of us, if we have any sort of retirement plan, that’s what we have. A 401K is giving us a tax-free shelter. Although some employers offer matching contributions, it’s basically saying that we have to pay for our own retirement. The company pension plan that was much more common 20, 30, certainly 50 years ago, was where the company put in money and took care of you during retirement, and that is no longer the case.
And it’s scary, because retirement tends to go to the bottom of the pile, because you don’t need retirement now. You need childcare, housing and healthcare now. But with retirement, we think: “OK, that can wait, and maybe I’ll just work until I’m 90, because I don’t know when I’ll have enough money to be able to afford to stash something away to retire.”
A strain of the popular literature of personal finance argues that we’re spending too much money on lattes, and if we were just thriftier we would all be better off. Why do you think that’s promoted as the cause of our money problems?
There is this mythology that it’s the individual’s fault, because America is the country of individualism. These personal-finance books promote the idea that you can be a millionaire too. And I think it takes the pressure off government and employers to help.
Are people actually spending a higher percentage of their income on the necessities, like healthcare and housing, than they did even in the ’70s?
Yes, and that’s been a critical shift. Consumer spending is about the same now as it was in the ’70s. But we’re spending more on items that require regular monthly payments, things like childcare, healthcare, housing, things that we can’t give up if money gets tighter, if someone loses a job, or gets a pay cut.
Whereas if we were spending more money on buying new suits, or new dining sets, or just lattes, it would be something we could give up. Obviously, you can’t say: “OK, this month I’m not going to pay the childcare, or I’m not going to pay the mortgage.”
What’s confusing about this is that, thanks to globalization, consumer goods are now cheaper. So, you might be buying more clothes than you were in the ’70s, but clothing costs, as a percentage of your income, could be the same.
That’s true for clothes and toys and furniture. You can go to IKEA and get a whole dining set for what would have been comparably one chair in the ’70s.
Do you think that easy access to credit lulls us, because we’re able to live beyond our means?
Imagine the kind of trouble that families would be in if they didn’t have credit cards that they could turn to in the months when the paycheck simply doesn’t stretch. But at the same time it makes it very, very easy for us to buy things that we can’t afford, to enjoy a lifestyle that is much finer than the lifestyle that we actually can afford.
But do you think that the fact that we have this access to easy credit makes us less politically active? Would people be more aggressively pressuring the government or their employers for these necessities that are slipping away, like pensions or healthcare, if they weren’t bridging the gap with credit cards?
I think that’s very possible. Our government and corporate America does everything it can to make sure that we can continue to spend, because that’s a pivotal part of the economy. And if we couldn’t do that, I think there would be much more anger and awareness about the financial state.
How do you reconcile the picture you’re painting of this declining middle class with the fact that the average [new] American house size has more than doubled since the ’50s — it’s now at more than 2,300 square feet. Or, that the average American home now has more TVs than people?
TVs are less expensive now, so it’s not as much of a luxury as it used to be. Houses are being built bigger, and we buy the houses that are available to us.
But it’s a mixed bag. We do need to lower some financial expectations, like thinking that you should be able to have a big house with four bedrooms and three bathrooms. I think that as part of the educated middle class we need to scale back our expectations about what that means. It doesn’t necessarily mean the things that it meant even in our parents’ day of being able to have two cars, because middle-class means something different now. I also think that we should be pushing for help in areas where we’re having to spend a lot of our money, especially those major areas like healthcare, childcare.
Homeownership is at a historic high, but you point out that people actually own less of their home than they used to. Does owning a home not mean what it once did?
This has really come to light with the mortgage crisis recently. Ownership has become a very shaky proposition. You can actually have very little equity in a home and “own” it these days. More and more people may actually be in “homes of their own,” but they owe an enormous amount of money on them, and if there is any unexpected financial blow they run a very real risk of losing that house.
We aren’t just taking out the classic 30-year fixed mortgage that people took out 10 or 20 years ago. We’re taking out piggyback loans, adjustable-rate mortgages, subprime mortgages. We’re taking out all of these fancy things that are going to adjust at some point, and be very tricky to pay off. These foreclosure rates that are rising are not just coming from the poor, and the working poor, they’re going to the middle class as well, because we’re over-stretched trying to afford homes.
The house is the crux of the middle-class identity. Of course if you’re a middle-class family, you can afford a home. That almost defines what middle-class is in this country. So people will stretch themselves beyond what they can afford to get themselves in a home.
Homeownership no longer means stability?
No, in order for it to provide stability and for it to be an asset that you can fall back on, you have to actually own it. You can’t have this enormous amount of debt hanging over it, or you have a real chance of losing it.
Are you at all hopeful about the leading presidential candidates’ responding to the issues that you’re raising?
I am hopeful, particularly on the Democratic side, in terms of healthcare and student loans. I think that especially with the current mortgage crisis and the economic downturn, these issues are becoming more pressing.
Why do you think the middle class has been so complacent about the benefits that have eroded, from healthcare to pensions? You’re talking about an educated population. Why hasn’t the middle class shown more resistance?
I almost feel like people don’t know what’s happening. They think that it’s something they’re doing wrong as an individual, and not a wider societal phenomenon.
It’s all about the individual, and the individual can fix it if they want to. If we have enough moxie, if we have enough energy, if we’re bright and creative enough, we can make it. And to a degree that’s a great way to think. But at the same time we have to look at the broader systems in our government, and the corporate ethic that has taken over this country. It’s not just a question of opening the right savings account or stopping buying lattes.
But aren’t we also being fed this rhetoric of personal responsibility in everything from healthcare to retirement?
Yes, “personal responsibility” has been the watchwords they’ve used to push all this down our throats, all this stuff about having to pay for our own healthcare, having to pay for our own retirement, having no job security; now we are personally free, and we are personally responsible, and aren’t we lucky?
But I think we have to take a look at that closely: Do we really want to be personally responsible for all this stuff? Why can’t somebody else take on some of this responsibility? Why can’t corporations and government, which have more money and more power than the individual, be responsible for taking care of some of it, as they are in most other Western countries?
But since the middle class is already under so many financial pressures, won’t they fear an additional tax burden for any increase in social programs, even ones that would benefit them?
I think the middle class would be behind increasing taxes on the wealthy. That’s how I would sell it politically. Those earning more than $10 million a year now pay less a share of their income in taxes than those earning $100,000.
How have women going into the workforce in great numbers since the ’70s affected the big picture? Why hasn’t that given dual-income households more security?
Because wages have stagnated, and because the cost of so many of these fixed expenses, like housing and healthcare, has risen. Of course with having two parents in the workplace, we have an added expense, which is childcare. Someone is going to have to take care of the children.
Did you find among the people you interviewed that their shame about their problems kept them from being more politicized about them, rather than thinking of them in terms of their own personal mistakes or shortcomings?
Yes, I think that absolutely happens. There is a whole rhetoric in this country that the more you make the better you are. People really fall for that. They feel ashamed that they don’t have enough money, especially as they get older, because as you get older you’re supposed to get more financially stable, and you aren’t supposed to make the kind of foolish choices that you’re allowed in your 20s. We feel like we have failed, and that we’re doing something wrong, and we hide it.
So, we don’t admit to friends and family that we have a huge amount of debt, or that we’re having trouble paying our mortgage.
We can go out there and advocate for poor people to make more money — that feels safe and OK — but to say that we aren’t making enough, or that we aren’t getting enough benefits makes us feel like we’re not successful.
Because success is conflated with financial success?
And I think also because people then don’t talk about it. We don’t understand that this is a widespread phenomenon. We’re all saying: “How are people making it? Other people seem to make it, and I’m not. What’s going on?”
What I found is that the way that other people make it is that they’re turning to two things. They’re either getting help from their families, and there is a finite limit to that kind of help, or they’re in a lot of debt. So, people aren’t making it.
People feel so overwhelmed in their individual lives that they feel like they don’t have the time and energy to look beyond that to press for broader social change. But I want them to see that nothing will change until they do that.