With unemployment at 9.1 percent and a shaky stock market, The Atlantic couldn't have planned better the release of this month's cover story, "Can the Middle Class Be Saved?" In the lengthy feature out today, Don Peck chronicles how the middle class has fared through the great recession (not well), illuminating the reasons for the ever-widening gap between America's rich and poor.
To really understand the future of the economy and the stock market, they wrote, you first needed to recognize that there was “no such animal as the U.S. consumer,” and that concepts such as “average” consumer debt and “average” consumer spending were highly misleading.
In fact, they said, America was composed of two distinct groups: the rich and the rest. And for the purposes of investment decisions, the second group didn’t matter; tracking its spending habits or worrying over its savings rate was a waste of time. All the action in the American economy was at the top: the richest 1 percent of households earned as much each year as the bottom 60 percent put together; they possessed as much wealth as the bottom 90 percent; and with each passing year, a greater share of the nation’s treasure was flowing through their hands and into their pockets. It was this segment of the population, almost exclusively, that held the key to future growth and future returns.
While the current reality isn't pretty, Peck ends offers some wisdom on how our country can close the gap.
There would be no better tonic for the country’s recent ills than a resumption of the rapid advance of skills and abilities throughout the population....
As we continue to push for better K–12 schooling and wider college access, we also need to build more paths into the middle class that do not depend on a four-year college degree. One promising approach, as noted by Haskins and Sawhill, is the development of “career academies”—schools of 100 to 150 students, within larger high schools, offering a curriculum that mixes academic coursework with hands-on technical courses designed to build work skills.
Read the whole thing here.