Throughout the postwar period, some of our most influential social commentators, including many from the affluent society and post-industrial society school, argued that while living standards for all Americans were inexorably and inevitably rising, the position of the lower strata was improving fastest, thus narrowing the gap between rich and poor, producing a kind of convergence of class which would culminate shortly in a kind of non-communist classlessness in America.
Recent trends have shown that these cheery predictions, made with rose-colored glasses firmly in place, were wrong. Workers' earnings today are lower than they were 15 years ago. And family income has barely held its own in the last decade, even though the number of working wives has increased sharply. Within the general stagnation, moreover, the affluent are managing to tread water while the have-littles and the have-nots sink, creating not the expected pattern of class convergence, but its opposite, class divergence, not growing equality but growing inequality.
Since 1967, prices have increased nearly 2 1/2 times; the 1967 dollar is today worth only 40 cents. Superficially it may seem that this unprecedented inflation strikes rich and poor alike. Yet the rich are protected while the poor are most vulnerable.
Examples abound. The price of home heating oil rose about 60 percent last winter. This across-the-board increase appeared to strike all users equally, rich and poor. Yet it is obvious that the rich and poor were not affected equally. To pay the added cost of heating oil, the affluent could spend more from their current income, draw from savings, cut out a few theater tickets, or forgo a few dinners on the town. The poor, on the other hand, had no such cushion in their budgets, and it was generally recognized that with such inflation, many of the poor last winter had to choose between heating and eating. Federal money to help the poor pay their fuel bills alleviated the situation only partially, and for the have-littles whose income was too high for aid, such inflation has been devastating.
Low-income families already live so close to subsistence that any increase in the cost of living produces immediate hardship. The affluent, however, with their large discretionary income, remain comparatively impervious to similar rates of inflation and can keep on spending while others have to retrench. At an auction, a rich man can keep on bidding long after everyone else has to drop out.
During the burst of double-digit inflation in the mid-1970s, e.g., when almost everyone was cutting back, US auto sales tumbled. Yet while sales of new cars in 1975 fell 20 percent from the previous year, Cadillac sales increased 9 percent, sales of luxury Lincolns rose 8 1/2 percent, and sales of such expensive foreign cars as Mercedes, BMW, and Rolls-Royce increased 18-29 percent.
As the price of housing soars, an ordinary single-family home has become a luxury that only the affluent can afford. Today, lower- and even middle-income Americans are buying a smaller proportion of all homes than at any time in the postwar era.
Under the burden of double-digit inflation today, most working- and middle-class New Yorkers are straining just to pay the grocery bills. Yet on the East Side of Manhattan, affluent New Yorkers shop at a posh new store that sells such exotica as sueded lizard pumps with prices up to $1,000 a pair. And a half dozen new luxury hotels are about to open in Manhattan with single rates up to $150 a day.
For still another reason, equal rates of inflation are having very unequal effects. The poor spend a far greater share of their income on necessities -- food, fuel, housing, medical care -- than do others. A distinctive feature of the current inflation is that prices for these necessities are rising faster than prices for everything else (an 18 percent rise for necessities in 1979, e.g., compared to only 7 percent for non-necessities). As the poor spend a greater share of their income on necessities, and as the cost of necessities is increasing faster than all else, the poor are again hit harder than the rest.
Opinion research also confirms the unequal impact of inflation. A national study by sociologist David Caplovitz on how the economic time of troubles in the mid-1970s was affecting Americans found that the lowest income groups were far more likely than all others to be suffering consciously from inflation, to be undergoing mental stress as a consequence of economic difficulties, and to report marital and family conflict arising from the economic crunch.
What is crucial about these developments is that they confound those rosy predictions of a generation of America's leading social scientists. We seem now in fact to be on the outer edge of what was never anticipated by all the believers in American "exceptionalism." It is the Europeanization of the American class system, with lower levels of living for most, a more rigid class structure, and greater inequality.