Washington seems to have gotten the midterm message from middle-class voters. No less than three congressional committees held hearings yesterday on the economic plight of the American middle class. The problem, in a word, is "insecurity," caused chiefly by:
- steadily declining real wage growth in the the middle class over the 25-30 years (see chart)
- technological change
- increased international competition
- rapidly rising education costs
- large-scale corporate downsizings
- risk shifting -- especially in health care insurance and pensions -- from employers to employees
At the same time that "the real hourly pay of rank-and-file workers has risen only 3 percent since Mr. Bush took office ... productivity — that is, the value of what the economy produces per hour — has risen 18 percent," according to an article last week in the New York Times. Rep. Charles Rangel is quoted in today's Washington Post: "the middle class are scared to death they could become poor."
Democrats have pressed an agenda in the new Congress focused on middle-class angst, with legislation to raise the minimum wage, cut interest rates for college loans, and reduce prescription drug prices for Medicare recipients.
Even President Bush is getting into the act, going to Wall Street yesterday, where he addresses income inequality. What is prompting this newly compassionate response among conservatives? House Financial Services Committee chair Barney Frank (D-MA) speculates:
They recognize the unhappiness voters have with inequity in this country... For much of last year, they tried to deny this. But the election finally clinched it. So I guess there's no point in denying it anymore.
Yale University Political Science Professor Jacob Hacker, testifying at yesterday's House Ways & Means hearing on economic challenges facing middle class families, confirms:
Little surprise, then, that insecurity was a central issue in the 2006 midterm elections, during which fully three-quarters of voters, Republicans in almost as large a proportion as Democrats, said they were 'worried about their overall economic security, including retirement savings, health insurance, and Social Security.'
