The decline of the middle class during the 1960s and 1970s

This was written in 1982:

People who came of age in the forties and fifties enjoyed the good fortune of having their expectations shaped during the worst of times and their achievements realized during the best of times—an unbeatable match. And for young professionals, starting a family on a low budget was not a wrenching experience. “When you’re moving up, even the bottom doesn’t look so bad,” says Herbert Gans. For their children, it is just the reverse. “It’s not downward mobility but upward futility,” says Thomas Winters, a lawyer who has just bought an East Side condominium. “My wife and I look at each other and say, ‘If we don’t have it now, we’re never going to have it.’ “

Even people who didn’t grow up in comfort feel disillusioned. “It’s not that I came from wealth; it’s just that I thought by the time I was 36 I’d easily be buying a second home, having a car,” says John Reiner, a lawyer living in an East Side studio. Such disappointments create an undercurrent of dismay felt in psychiatrists’ offices all over town. “I see it all the time,” says Dr. Ruth Moulton. “Young doctors, young lawyers who grew up expecting to go to Europe every summer or have a car and a co-op… . They wanted to do at least as well as their parents—if not better—but that’s harder to do now.”

The economic argument for this is persuasive. First, there’s inflation. A person who earns $101,000 in 1982 can’t buy any more than his parents, who earned $28,000 in 1952, could. “Funny money,” says one New York investment banker. “It sounds like so much more than it is.” What’s more, for many with higher educations, salaries have lagged far behind inflation. According to Harvard economist Richard Freeman, a liberal-arts graduate starting out today is actually earning 30 to 35 percent less in real income than one starting out in 1970.

Also, middle-class people in 1982 get to keep a smaller percentage of their money than did people in the fifties. Taxes exact the largest bite. A married couple living in Manhattan whose combined income was $66,000 in 1981 paid about 40 percent of it in taxes, according to Harvey Grosberg, of the Research Institute of America. A married couple earning an equivalent amount in 1962 (roughly $22,000 in ‘62 dollars) paid only 27 percent of their income in taxes (assuming only the husband worked, which was most often the case). This is called bracket creep, something all those commuters from Scarsdale never heard of. “Basically, tax rates haven’t kept pace with inflation,” says Martin Karlin, of the Bureau of Labor Statistics’ Manhattan office. An earned income of $50,000 put a person in the top (50 percent) tax bracket in 1972 and 1982, even though in 1982 that $50,000 was really only worth $21,561 in 1972 dollars.

Of all the taxes, the one that has had the steepest rise is Social Security, and that’s been a double blow to young couples in the 1980s. With husband and wife likely to be working, both have to shoulder the increase.

All of this induces what sociologist Blumberg calls “the Las Vegas syndrome.” “Citizens observe that success and economic security no longer depend on the usual virtues of hard work and saving, but on inflationary currents over which they have no control,” he says in his book Inequality in an Age of Decline. The result is an erosion of the Protestant work ethic and its replacement by a philosophy that puts a premium on spending.