You already know that the recession punched Americans in the wallet and vaporized years of hard-earned wealth. But middle-class Americans have steadily lost income, assets and benefits over the past 10 years.
"This hasn't been a sterling decade," says Isabel Sawhill of the Brookings Institution and the author of "Creating an Opportunity Society." She argues that the American dream of prosperity and advancement has turned into a myth. "The average American family hasn't been able to improve its financial situation."
Of course, it's impossible to compare 1999 with 2009 without noting that in 1999, the economy was still floating happily in a dot-com bubble, while this year we've been mired in the worst recession since the Great Depression.
But experts say these are just details. They argue that dozens of indicators -- after adjusting for 30% inflation since 1999 -- have been marching in the wrong direction for years, in ways big and small:
- In 1999, 67% of workers had to pay part of their health care benefits cost, says the Bureau of Labor Statistics. In 2008, that had risen to 75%.
- According to the Census Bureau, 10.3% of U.S. families lived under the poverty line in 2008, versus 9.3% in 1999.
- Households in the bottom 10% made $12,181 or less in 2008, which was down 8.1% from 2000. But the threshold for household incomes in the top 5% was $180,000, down just 0.9% from 2000.
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Making less and spending it . . . less wisely
Let's start with earnings. Although Wall Street wages and bonuses for Fortune 500 CEOs have soared over the past decade, average Americans aren't earning much more than they were 10 years ago.According to the Bureau of Labor Statistics, the average hourly wage for workers not in management positions -- such as reporters, food servers and teachers -- is $18.72, up an inflation-adjusted 6.8% since 1999.
In that same period, however, personal income for all Americans rose 14%. Why the discrepancy? Economists say Americans at the top of the income ladder keep making more money each year, while those in the middle have, in some cases, seen their wages drop.
"We've seen some of the widest gaps between the top 1% of Americans and everyone else," says Arloc Sherman, a senior researcher at the nonprofit Center on Budget and Policy Priorities. "The income growth that happened during most of the decade didn't reach the middle and bottom levels."
It's not just that incomes have stagnated. Americans are now spending more than they did 10 years ago on necessities.
College tuition at public universities, for example, jumped 61% -- or about twice the inflation rate -- to $7,020, according to the College Board. National spending on health care jumped to an annual $4,289 per American from $2,534, according to the government.
Granted, the prices of some other items have declined over the past decade, and Americans now spend less of their incomes on food than ever before. The real question is: Have Americans' earnings kept up with their spending needs?
Economists say no.
"Americans are spending less than they used to on food, partly because demands on their budgets have increased," says Ephraim Leibtag, a senior economist at the Economic Research Service of the U.S. Department of Agriculture. "We now have cell phones and Internet, multiple cars and expectations for living standards that have increased our housing costs."
That's the polite way of saying that Americans want to buy a lot of stuff but aren't making enough money to pay for it:
- The percentage of Americans with a cell phone account had risen to 90% by 2009, up from 27% in 1999.
- In 2000, only about 4% of households had broadband Internet access. By 2007, that figure was 50.8%, according to the Organization for Economic Co-operation and Development.
- In 1999, 17% of houses were larger than 3,000 square feet, according to the Census Bureau. In 2007, 26% were.
Continued: Credit cards and debt