Turns out America’s elite — the “talking and deciding classes,” as demographer Nick Eberstadt calls it — didn’t realize until Donald Trump was elected president that things weren’t going as swimmingly for Americans in the heartland as for Americans in the “bubble.”
The wake-up call, however, has been in the making for more than 15 years. “Real America” has been suffering through most of the 21st century, and the start of the difficulties can be traced to “a grim historical milestone of sorts.”
Eberstadt, who studies poverty trends, economic development, and political economy, says that the year 2000 is when the “Great American Escalator, which had lifted successive generations of Americans to ever higher standards of living and levels of social well-being, broke down around then — and broke down very badly.”
Since 2000, America has been experiencing “an ominous and growing divergence between three trends that should ordinarily move in tandem: wealth, output, and employment. Depending upon which of these three indicators you choose, America looks to be heading up, down, or more or less nowhere.”
In terms of wealth, things look good. The estimated net worth of American households and nonprofit institutions more than doubled between early 2000 and late 2016, from $44 trillion to $90 trillion.
Although that wealth is not evenly distributed, it is still a fantastic sum of money—an average of over a million dollars for every notional family of four. This upsurge of wealth took place despite the crash of 2008 — indeed, private wealth holdings are over $20 trillion higher now than they were at their pre-crash apogee. The value of American real-estate assets is near or at all-time highs, and America’s businesses appear to be thriving. Even before the “Trump rally” of late 2016 and early 2017, U.S. equities markets were hitting new highs — and since stock prices are strongly shaped by expectations of future profits, investors evidently are counting on the continuation of the current happy days for U.S. asset holders for some time to come.
That’s the good news. But looking at the economy from a different lens casts quite a stormy picture. The economic crash of 2008 was pretty awful, granted, but the recovery has been super slow, with the total value of the U.S. economy in 2016 being just 12 percent higher than it was in 2007. However, the slowdown didn’t start in 2008.
Between late 2000 and late 2007, per capita GDP growth averaged less than 1.5 percent per annum. That compares with the nation’s long-term postwar 1948–2000 per capita growth rate of almost 2.3 percent, which in turn can be compared to the ‘snap back” tempo of 1.1 percent per annum since per capita GDP bottomed out in 2009. Between 2000 and 2016, per capita growth in America has averaged less than 1 percent a year. To state it plainly: With postwar, pre-21st-century rates for the years 2000–2016, per capita GDP in America would be more than 20 percent higher than it is today.
What is the cause of this middling performance? Economists can’t agree … except on one thing: The U.S. economy’s potential is declining — meaning that Americans should not expect growth to exceed 1 percent per year if things stay as they are.
Thirdly, Eberstadt notes that the jobs situation is shockingly pathetic. The labor force participation rate — the measure of what percentage of Americans age 20 and older are working — took a huge dive in 2007, and hasn’t come back up yet to where it was.
But again, it didn’t start there. U.S. adult work rates never recovered entirely from the recession of 2001, Eberstadt writes, even as America’s elite cite the oft-quoted “civilian unemployment rate,” to claim a rosy picture. In December 2016 the unemployment rate stood at 4.7 percent, about the same as in 1965, at a time of full employment. But as most people know by now, that rate doesn’t include people who “aren’t looking for work.” Add back in that group, and a much, much higher number is revealed of people out of work.
To put things another way: If our nation’s work rate today were back up to its start-of-the-century highs, well over 10 million more Americans would currently have paying jobs.
There is no way to sugarcoat these awful numbers. They are not a statistical artifact that can be explained away by population aging, or by increased educational enrollment for adult students, or by any other genuine change in contemporary American society. The plain fact is that 21st-century America has witnessed a dreadful collapse of work.
So how do we get to the point where we have more wealth, but slower growth and less work?
This is where Eberstadt starts to pull together some painful truths which many Americans, not just the elite, refuse to see, much less admit. These are the “nonmaterial” issues, specifically old-school notions of family breakdown and the decline of faith, but more recent and much graver concerns about society overall. They include a decline in general health, a drop in life expectancy, an increase in drug dependence, and an overwhelming number of ex-felons who have been precluded from the American Dream.
To start, the opioid epidemic has gone “mainstream” in America, with more people dying of drug overdoses since 2013 than from guns or traffic accidents. Eberstadt points to research by Alan Krueger, former chairman of the President’s Council of Economic Advisers, who found that “nearly half of all prime working-age male labor-force dropouts — an army now totaling roughly 7 million men — currently take pain medication on a daily basis.”
And whose paying for all these drugs? The federal government. The Census Bureau’s SIPP survey (Survey of Income and Program Participation), reports that “as of 2013, over one-fifth (21 percent) of all civilian men between 25 and 55 years of age were Medicaid beneficiaries. For prime-age people not in the labor force, the share was over half (53 percent).”
By the way: Of the entire un-working prime-age male Anglo population in 2013, nearly three-fifths (57 percent) were reportedly collecting disability benefits from one or more government disability program in 2013. Disability checks and means-tested benefits cannot support a lavish lifestyle. But they can offer a permanent alternative to paid employment, and for growing numbers of American men, they do. The rise of these programs has coincided with the death of work for larger and larger numbers of American men not yet of retirement age. We cannot say that these programs caused the death of work for millions upon millions of younger men: What is incontrovertible, however, is that they have financed it—just as Medicaid inadvertently helped finance America’s immense and increasing appetite for opioids in our new century.
“In 21st-century America,” Eberstadt concludes, “‘dependence on government’ has thus come to take on an entirely new meaning.”
Lastly, Eberstadt notes that about 90 percent of felons are free and living in American society today. He estimates that to be about 17 million men — or about one of every eight adult males living in the U.S.
Noting that this population is “roughly twice the total size of our illegal-immigrant population and an adult population larger than that in any state but California,” it begs the question, what is their opportunity in America?
Answer: Not good.
We might guess that their odds in the real America are not all that favorable. And when we consider some of the other trends we have already mentioned—employment, health, addiction, welfare dependence—we can see the emergence of a malign new nationwide undertow, pulling downward against social mobility.
Why does he guess that? Casual observation seems to work, but also falling numbers for geographic mobility, a drop in the churn rate of jobs (meaning the ability to move up the economic ladder as resumes are built), and the decline in the chance of achieving more than one’s parents did.
Where does this all lead? To a drop in social mobility — the ability to survive on merit and hard work, which is the heart of the America Dream.
Eberstadt notes that while America’s elite love to discuss “economic inequality,” that’s irrelevant to a lot of Americans. What does matter is the “reality of economic insecurity.” And if it took the 2016 election to wake up the wealthholders, well, then, the wake-up call is at least a start.
