Pressure of the American Dream
By Robert J. Samuelson
Monday, July 26, 2004; Page A11
We'll hear a lot of complaining about the "middle-class squeeze" in this election, but the squeeze is as American as the Constitution. We live in an ambitious and striving society. Most Americans hope to get ahead. They work hard. They like to spend what they earn -- and they also compete compulsively to show how well they've done. As a result, anxiety and angst become a permanent way of life, even when the economy is doing fairly well. Enough is never enough.
Americans' very optimism breeds stress and insecurity, because it invites disappointment. For proof, look at the monthly survey of consumer confidence done at the University of Michigan. One question is: Are you and your family "better off or worse off financially than you were a year ago?" Despite steadily rising living standards -- measured by new gadgets, larger homes, better cars -- it's rare for more than 50 percent of Americans ever to say "yes."
In 1966 only 35 percent did; that was a very good year (unemployment: 3.8 percent). In 1989, seven years into an economic expansion (unemployment: 5.3 percent), 42 percent did. Even during the 1990s boom, slightly less than half said they were doing better. From 1996 to 2000, an average of 22 percent said they were doing worse and 30 percent said they were holding their own.
The pressure to get ahead generates an equivalent dread of falling behind. Politicians wanting to relieve these fears could offer practical advice. Eat out less often (about 46 percent of consumers' food bills goes for away-from-home meals); buy a $20,000 or $25,000 car -- perfectly adequate for most families -- instead of a $35,000 SUV (in 2003, 56 percent of new vehicle sales were SUVs, pickup trucks and minivans, up from 22 percent in 1980); buy a smaller home. These steps would shave debt payments, food expenses and fuel bills.
Forget it. Politicians won't blame constituents for their own "squeeze." It would seem unsympathetic, when people expect sympathy from their politicians. Worse, it would seem un-American. It would offend the ingrained get-ahead ethic. How ingrained? Well, let's examine most Americans' biggest purchase: their homes.
On average Americans are the best-housed people in history. Since 1973 the median size of new homes has jumped almost 40 percent, from 1,525 square feet to 2,114 square feet in 2002. Meanwhile, average household size has fallen almost 20 percent, from 3.14 people to 2.58 in 2002. (There are more singles, fewer children and more elderly couples.) Americans have bigger homes for smaller families. Now 36 percent of new homes have four bedrooms or more; in 1987 that was 23 percent. And everyone needs a bathroom. In 1971, 15 percent of new homes had 2.5 bathrooms or more; by 2003, 56 percent did.
No matter. Most Americans want more. The National Association of Home Builders (whose Web site provides all this data) surveys homeowner preferences. It finds that 64 percent want to "trade up" and only 14 percent would "trade down." Even among those 65 and over, 39 percent would trade up, compared with 28 percent who would trade down. On average, homeowners want houses almost 30 percent larger than at present; 44 percent want four bedrooms or more.
Housing dominates most family budgets; therefore, the quest for bigger homes underpins the middle-class "squeeze." But government won't do anything about it. Homeownership is the essence of the American dream. Indeed, various federal subsidies promote the demand for more -- and bigger -- homes.
Still, it's understandable that John Kerry likes the "squeeze" theme. The appeal is widespread, precisely because so many people feel -- or fear -- it. Kerry can also offer superficial solutions: new tax write-offs for college tuition; new subsidies for health insurance; promises to cut dependence on costly foreign oil. Similar solutions have been offered before and, had they worked, wouldn't be needed again. The other advantage of focusing on the middle class is that it distracts from dealing with the poor. Here, Kerry has made some proposals (particularly for health insurance), but his emphasis remains on the bigger political target.
The truth is that abolishing the middle-class squeeze is an impossible and undesirable task. Suppose the demand for bigger homes was suppressed. The urge to get ahead would pop up in other areas of aggressive consumption. As the upper-middle class indulges new tastes, it raises the bar for the middle- and lower-middle classes. The only way to stop this competitive cycle is to persuade Americans to be less ambitious. Why would anyone want to do that?
Americans' obsession with advancement, though easy to satirize and full of drawbacks, is both a measure of freedom and an engine of economic vigor. It encourages risk-taking and hard work. Unfortunately, it also creates stress. The economy involves other double-edged bargains. In America workers are more easily fired than in Europe; this too elevates insecurity. But Europe's job protections discourage job creation (because firms know they can't easily shed unneeded workers). In the 1990s U.S. unemployment averaged 5.7 percent, compared with 9.1 percent for the European Union.
Generally, the periods when Americans seem most satisfied occur when the economy exceeds expectations. After World War II, people feared another Great Depression. The postwar boom was just the opposite. In the 1990s the long expansion confounded wisdom that America was in decline. But these euphoric periods set up unrealistic expectations of even greater growth that are inevitably disappointed. One way or another, the squeeze is forever.
© 2004 The Washington Post Company