A long, steep drop for Americans' standard of living
Not since at least 1960 has the US standard of living fallen so fast for so long. The average American has $1,315 less in annual disposable income now than at the onset of the Great Recession.
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He and his wife now eat out once a month instead of once a week, do no socializing, and eat less expensive foods, such as ground chuck instead of ground sirloin. "My mom was hoping her kids would lead a better life than her, but so far that has not happened," says Kowal.Skip to next paragraph
With disposable incomes falling, perhaps it's not surprising that 64 percent of Americans worry that they won't be able to pay their families' expenses at least some of the time, according to a survey completed in mid-September by the Marist Institute for Public Opinion. Among those, one-third say their financial problems are chronic.
Income loss is hitting the middle class hard, especially in communities where manufacturing facilities have closed. When those jobs are gone, many workers have ended up in service-sector jobs that pay less.
"Maybe it's the evolution of the economy, but it appears large segments of the workforce have moved permanently into lower-paying positions," says Joel Naroff of Naroff Economic Advisors in Holland, Pa. "The economy can't grow at 4 percent per year when the middle class becomes the lower middle class."
He would get no argument from Jeff Beatty of Richmond, Ky., who worked in the IT and telecommunications businesses for most of his career – until he hit a rough patch. He and his wife are living on his unemployment insurance benefits (which will run out in months), his early Social Security payments, and her disability payments from the Social Security Administration. Their total income comes to $30,000 a year.
"Our standard of living has probably declined threefold," he says.
Mr. Beatty, who used to make a comfortable income, now anticipates applying for food stamps. He and his wife have sold much of their furniture, which they no longer need because they have moved into a one-bedroom apartment owned by his sister-in-law.
Even people with college degrees are feeling the squeeze. On a fall day, Hunter College graduate and Brooklyn resident Paul Battis came to lower Manhattan to check out the Occupy Wall Street protest. He tells one of the protesters that America's problem is the various free-trade pacts it has approved.