I am always amazed at what is considered the middle-class these days. I grew up in Brooklyn, New York before the construction of the "working class" or "working poor." Back then you were either poor, middle class, or rich. The poor were those who worked but were barely making it. They had just enough to get by. The rich, as the old folks used to say back then, were "Those folks who don't have to work much because their money is working for them." So, if you were somebody who had to bust your hump working everyday like the rest of us, you damn sure weren't rich: even though you had fine house, new car, and your kids attended private school. No you were not rich; you were middle class.
The economic/financial criteria for middle class status seems to have been much higher than it is now. To buy a house you had to have at least a 20% downpayment and excellentsuperfantastic credit. You had to have things like assets and collateral to get bank loans. Financing and credit cards were not so easy to obtain. You had to demonstrate a high level of credit worthiness, have a certain level of steady income and savings in order to get a credit card. Shucks, back in the day, if you had a credit card you were considered to be "big time" (or what the kids would now consider "living large") because institutions were not giving out credit cards to all comers.
So cash was king! "Cash and carry" was a popular saying; if you had enough cash to pay for an item in full, you could carry it out the store with you that day. If you didn't have enough cash to pay for an item in full, there was financing for the middle class and layaway for the rest of us. Then something changed.
I don't know exactly what it was except to speculate that financial institutions figured out they could increase their profit margin significantly by keeping a large amount of people in a never ending cycle of debt. Everyone wants the American dream of which legends and Madison Ave advertisement firms speak. After all, you are not successful, not worthy, not good enough, not a real American if you can't continually amass an array of material things: most of them absolutely needless. But, we have been duped into believing that our self worth is in direct correlation to the types and sizes of things that we buy, and the financial institutions know this. So, they began to extend credit to practically any and everybody with little regard for their ability to pay.
What a racket! High interest rates, exorbitant late fees, sub prime mortgages, adjusted rate mortgages and no money down was the new order of the day. Make a late payment or miss a payment, and your interest rate went through the roof. Still people had the urge to buy more to "be" more, and buying on credit made it so easy. It also made it easy for people to live above their means. In many cases, as the interest rates and credit card purchases were increasing, wages for some people remained the same or decreased. Now add a recession, a few wars, mass unemployment, the near extinction of the American manufacturing base, bailouts, and the bursting of the housing bubble, and here we are--a nation of debtors.
We are stuck paying for wars, and bailouts in addition to our own debt, and we are to do this even though jobs continue to be outsourced, we continue to run a trade deficit, and corporate lobbyists continue to buy AND WRITE legislation that favors the corporations at the expense of the American people. The deck has been stacked against the people. We seem to be stuck paying off Wall Street's debt, the government's debt and our own debt as our savings and investments draw little interest, the value of the dollar continues to plunge, and everything costs more.
I am so sickened by the amount of elders I see working in Walmart and fast food restaurants. These are people who are well past retirement age and here they are standing on their feet all day working. I know that most of them are there because they have to be. There is no way they cannot be there and survive. The scary part is they may have to work until they die, especially if the powers that be get their way and all but eradicate social security.
Then there are those who have been lucky enough to have a steady job for years who still can't afford to retire because their 401k's lost so much money during the financial meltdown.
Then you have the college graduates with advanced degrees who are underemployed or can't get a job. Many of them were already behind the eight ball when they graduated because they have so much student loan debt. Now they have no job or not enough job to repay their loans.
So how are many of these people trying to make ends meet? Some are using credit cards for necessities in between pay checks and/or using the services of title loan and cash advance companies. Others are borrowing money from their pension plans, 401k's, and taking out home equity loans. It is a continual cycle of debt that waaaaay too many people will be trying to pay off practically until they die. There is a talking point that is so overused I could spit every every time I hear it, but it is so true. We have created so much debt as a country that our children and grandchildren will be trying to pay it off. Don't kid yourself ; there is no more middle class in this country and hasn't been for quite some time now. The majority of Americans are the working class (translation: working poor). 1 in 6 Americans is living in poverty. Too many Americans will never get out from under. Their paychecks are spent before they even receive them.
Welcome to 21st Century sharecropping.