Working Harder to Fall Behind: The American Dream Is Dead

The American Dream is long gone.

The expectation of rising living standards for each generation of workers has given way to a low-wage economy in which young workers will struggle just to match their parents' income -- and are increasingly likely to end up worse off.

Even before the current economic crisis took hold, workers were working harder for less and carrying big debts to compensate for falling income. Record numbers of workers endured long and fruitless searches for employment, while those who had jobs are plagued with insecurity over their employment, health care and retirement.

Employers routinely violate labor laws, combining 21st century surveillance technology that monitor workers' every movement with 19th century management practices like locking in workers on the night shift at Wal-Mart, and forcing them to work off the clock.

Two new books reflect the increasingly difficult lives of U.S. workers today. The forthcoming State of Working America 2008-2009, published by the Economic Policy Institute (EPI), marshals a mass of statistical material to show how workers are slipping further behind on virtually every score. Complementing the EPI study is The Big Squeeze: Tough Times for the American Worker by New York Times reporter Steven Greenhouse, who gives a voice to those who struggle mightily just to get by -- and, all too often, fail.

Together, the books portray a society in which class lines are more rigid than the nations of Western Europe, once dominated by a wealthy aristocracy. Some 26.4 percent of U.S. workers receive poverty wages, and in the economic expansion just ended workers' productivity grew by 11 percent, while real wage gains (after inflation is taken into account) amounted to nothing.

At the other end of the spectrum, the richest 1 percent has seen its share of annual earnings almost double from 7.3 percent in 1979 to 13.6 percent in 2006, the most recent year for which figures are available. And the top 0.1 percent did far better -- its annual earnings increased 324 percent from 1979 to 2006, to more than $2.2 million.

The liberal writer Thomas Frank wrote about this trend earlier this year: "The landmark political fact of our time is the replacement of our middle-class republic by a plutocracy."

With this dramatic rise in class inequality comes increased burdens on African Americans and women. Some 40 years after the height of the civil rights movement, 34 percent of Black workers still earn poverty wages, as do 41.8 percent of Latino workers. Women, whose mass entry into the workforce since the 1960s seemed to be an unstoppable trend, have suffered a decline in workforce participation of 1.8 percent as a result of anemic job creation in the 2000s.

In the recovery that began in 2002, "we saw a really dramatic break in the trend in employment by gender," said Heidi Shierholz, who, along with Lawrence Mishel and Jared Bernstein, is a co-author of the State of Working America. "Women have been making huge gains, decade by decade. But the women's employment rate actually declined over the 2000s. The economy wasn't strong enough to bring more women in to the workforce, but actually shed women."

What's notable about that trend, Shierholz said, is that "women historically are less buffeted by the business cycle, since they are overrepresented in industries that are less cyclical, like health care and education. But this business cycle was so hard for working people that it really hit everyone."

In fact, according to estimates in the State of Working America, some 1.4 million people who could have held jobs dropped out of the labor market altogether even as the economy expanded. The authors estimate that if job creation in the 2000s had kept pace with the increase in jobs in the 1990s boom, an additional 7 million jobs would have been created.