The rapid disappearance of America's middle class

HONK if this sounds like you or someone you know.

You were born during the Great Depression or World War II. Your father either grew things or made things, your mother was primarily at home.

You graduated from high school and went to college. If you graduated, you were the first in your family to do so.

You worked for one company or institution much of your life and received a fixed pension, which with Social Security provides a decent if not rich retirement.

You have helped care for an elderly parent on Social Security and Medicare.

You have also had to help at least one of your adult children because of financial problems brought about by loss of a job or a spouse's job, serious medical expenses, divorce, or a combination of the above.

You worry about your children's ability to get and stay ahead in ways your parents never worried about you.

There is reason for that concern, according to Elizabeth Warren, a Harvard law professor who has written widely on the financial challenges to middle-class America in our globalized, outsourced and downsized world.

In Harvard Magazine (http://www.harvard-magazine.com) Warren documents what many of us have felt anecdotally: "During the past generation, the American middle-class family that once could count on hard work and fair play to keep itself financially secure has been transformed by economic risk and new realities. Now a pink slip, a bad diagnosis, or a disappearing spouse can reduce a family from solidly middle class to newly poor in a few months."

The danger, Warren finds, comes from both ends of the financial spectrum: a decline in real wages for full-time workers and huge increases in basic family expenses. As a result, families are staying afloat only because both partners work.

Male full-time workers in 2003 earned $800 less than their counterparts in 1970, after adjustment for inflation. Enter the second paycheck, and the family's combined income goes to $73,700 a year, a huge 75 percent increase from 1970.

Sounds great, right?

Not so, says Warren, and most of us would agree. Extra earnings increase costs for transportation, child care and taxes. Additional higher costs of mortgages and health care simply erase the added earnings — and then some. Warren estimates today's two-income family actually has $1,500 less per year in discretionary spending.

Don't even ask about single-parent families, the news is so grim. Divorced women with children or divorced men with child support are three times as likely to file for bankruptcy as married counterparts. "All income is budgeted, there is no one at home who can work if the primary earner loses a job or gets sick, and no one is around to take over if a child gets sick or an elderly parent needs help," says Warren.

Prefer the traditional '70s pattern, dad at work and mom at home? "The modern single-earner family trying to keep up an average lifestyle faces a 72-percent drop in discretionary income compared with its one-income counterpart of a generation ago." Mom works to keep the family afloat.

Globalization has reduced the cost of most household spending — clothing, food, appliances. Americans spend less on discretionary items than in 1970. It's the basic costs that are killing us, particularly housing and medical.

Haunting today's families is what Warren calls the "risk front," primarily insecure employment and the threat of medical emergencies. There's no room for error with both parents working and up to their necks in debt and obligations. "A once-secure middle class has disappeared. In its place are millions of families whose grip on the good life can be shaken loose in an instant."

This sounds all too familiar to many of us who were either born into the middle class or struggled to gain entry, and have now seen our kids on a treadmill to nowhere. It should be painfully evident to all, yet it seems to have escaped our leaders.

Why can't we get it right on a national health policy to reduce this huge risk to the middle class, and why are we giving tax breaks to the ultra-rich, who never have to or ever will worry about these issues?

Credit laws are stacked against consumers. Payday-cash storefronts, exorbitant credit-card interest rates and variable-rate mortgages are devastating families.

Congress has let the financial industry run wild, including legislation this year making it harder to declare bankruptcy.

All the talk about family values is just that — talk — when our financial policies are driving middle-class families to the wall.