The Grain Exchange Room in Milwaukee’s old Chamber of Commerce building is a dazzling display of Gilded Age opulence. Its ornate faux-marble columns soar three stories high, and an intricately carved balcony overlooks what is believed to have been the world’s first commodities-exchange trading pit. This temple to business and success was a fitting location for Mitt Romney’s victory speech after the Wisconsin primary a year ago, on the night he eclipsed his last remaining rival for the Republican presidential nomination.
Romney used the occasion to lay out his vision of an “opportunity society led by free people and free enterprises.” Barack Obama, he charged, didn’t believe in opportunity: When the president went after the “1 percent,” he wanted only to turn the United States into “one of those societies that attack success.” Romney’s supporters cheered.
In Chicago, the Obama team cheered, too.
Led by Obama’s chief pollster, Joel Benenson, the campaign had spent 2011 examining Americans’ views on economic security and the American Dream. They concluded that something fundamental had changed. It used to be political gospel that a candidate couldn’t risk talking about inequality because such a stance was so easily caricatured as an attack on the rich and because even working-class Americans believed they had an opportunity to be rich someday. But as Benenson explained in a recent interview, “There has been a recalibration of the American mind-set when it comes to economic change.”
What his polling found is that middle-class Americans are much more concerned about holding onto what they’ve got than in pursuing more. The Pew Economic Mobility project, the Allstate/National Journal Heartland Monitor Poll, and other studies have arrived at similar conclusions. When Pew asked Americans in 2011 if they preferred financial stability or moving up the income ladder, 85 percent of respondents chose the safer, surer future.
If that seems like a defensive crouch, it is. The American middle class is broadly defined as households earning two-thirds to twice the median income, or about $35,000 to $100,000 a year. The beginning of the 21st century was a “lost decade” for the middle class, Harvard economist Lawrence Katz said, but the decline has been under way for decades. In the early 1970s, middle-class households earned 62 percent of the national income; today, they bring in just 45 percent. These households are more vulnerable, economists say, than at any time since World War II.
The Great Recession exacerbated this decline. Sixty percent of the job losses in those years occurred in middle-income jobs. The recovery, instead of restoring those jobs, has replaced them with low-wage positions. And the middle class, which once drove American prosperity with its purchasing power and stability, is shrinking. Middle-class households make up barely half the population today, down from 61 percent in 1971. People aiming to reach the middle class, or to stay there, have ample reason to worry.
Middle-class Americans’ anxieties and the shift in how they define the American Dream had consequences for the 2012 election. Romney spoke in the language of economic risk: “The promise of America has always been that if you worked hard, had the right values, took some risks, that there was an opportunity to build a better life for your family and for your next generation.” Compare that with Obama describing the “basic bargain in America,” a formulation he has used since his U.S. Senate campaign in 2004: “If you’re willing to work hard and play by the rules, you should be able to find a good job, feel secure in your community, and support a family.” So, which guy won?
But if the American Dream, and the understanding of what it means to be middle class, is changing, the reverberations will go far beyond a single election. They speak to the very story Americans tell about themselves. We were once a nation of strivers, raised on Horatio Alger and Bill Gates, confident of the possibility of moving upward. If Americans now aim simply to avoid slipping backward, they will have decided that the American Dream is but a reverie.
WHEN THE DREAM WAS REAL
The United States was already mired in the economic disaster known as the Great Depression when historian James Truslow Adams, in his 1931 book, The Epic of America, first turned “American Dream” into a commonly recognized phrase. The dream may have been put on hold for many Americans at the time, but Adams sought to remind his fellow citizens, “It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable.”
The cars and high wages would come soon enough, during the economic boom that followed World War II. Agricultural workers moved into towns and cities for higher-paying jobs, and the GI Bill financed higher education for millions of veterans. Americans’ entrepreneurial spirit, backed by capital and opportunity and pent-up consumer desires, sent the economy soaring. And unlike in earlier eras of rising prosperity, the gains weren’t limited to those at the top but were distributed relatively equally across economic classes. The result: an expanding, robust middle class.
Sophie Quinton contributed contributed to this article.