Households aren’t forming the way they used to. Young adults are forming households at lower rates than they did a decade ago. This has observable economic consequences. Ed Glaeser of Harvard University estimates that if households were forming at their 2005 rate, the nation’s surplus housing stock would likely disappear and the housing industry would rebound. While the recession has made things worse, this trend predates the recession. Something more fundamental, even cultural, is going on.
The lower middle class is starting to look more like the welfare class. Charles Murray of the American Enterprise Institute is uncovering some of the most consequential — and disquieting — trends in America today. Upper-middle-class Americans are marrying, going to church, finishing school, and getting good jobs at nearly the same rates as they did a generation ago. Not so in the lower middle class, which has suffered steep declines in every single important indicator of socioeconomic well-being. The image of the middle class as the cauldron in which the ingredients of upward mobility are blended together is becoming a relic. Economic factors can explain some of this, but purely economic explanations are inadequate.
The picture only worsens when you consider the effects of the recession on a population saddled with household debt, which a recent study pegs at a precariously high
154 percent of the average family’s income (it was only 85 percent in the 1990s), and the diminishing returns to higher education among young workers (or work-seekers).
When you line up these trends side by side, you see a crisis of aspiration taking shape in America. Young workers are not aspiring to the lives of independence and vocational progress they once did, new enterprises are not driving the economy as they used to, the family as an object of aspiration is on the wane for many, and the middle class not only is stagnating economically but seems to be deteriorating from within.
Together, these trends translate to fewer children tomorrow, greater dysfunction in the lives of more Americans, and a general loss of the enterprising spirit and aptitude needed to make America’s future as good as its past.
It’s difficult to say how related these trends are to each other, whether something deeper ties them together, or whether they proceed from different sources. What does seem evident, though, is that the traditional pillars of upward mobility in America — family, work, and an enterprising spirit — were beginning to crack for some time before the economy tanked. The cracks didn’t happen all at the same time, or in the same way, but their parallel trajectories at least suggest a loss of confidence in the future or, at times, even a kind of nonchalance about it, among too many Americans.
The problem isn’t just that people are dispirited and not trying hard enough. It’s also that the environment in which they live and work every day is dispiriting. Our challenge now may be that these forces are mutually reinforcing: People aren’t aspiring to the American Dream the way they used to, and the American Dream is more challenging to attain than it used to be.
The best of the jobs plans on the table would surely help to some degree, but they are not enough to renew what Michael Novak has called the “spirit of democratic capitalism.” Health-care reform, regulatory relief, a less activist federal government, a more favorable tax code, and entitlement reform would all certainly get more capital off the sidelines and more entrepreneurs into the game. These reforms are necessary and urgent.
But to overcome the stagnation, cautiousness, and even apathy that are diminishing upward mobility and opportunity in America, we need more public leaders in all sectors of our society who can help reconstitute the American Dream for today’s younger generation. With a middle class increasingly characterized by broken homes and declining work engagement, it’s hard to believe we’re going to see more entrepreneurs and productive workers in the future — unless we confront this problem with a toolbox that includes more than policy.
Entrepreneurs and productive workers don’t just happen. They are made — usually upon a bedrock of social and financial capital that has family, community, and networks at its core. Creating that bedrock requires leadership and wisdom.
We need leaders at all levels who are willing to challenge our schools, civil-society organizations, higher-education institutions, and investors and businesses to do all they can to reverse our aspirational decline, just as much as we need politicians to enact the reforms needed to make aspiration worth the effort once again.
— Ryan Streeter is editor of ConservativeHomeUSA, director of fiscal and economic policy at the Sagamore Institute, and a transatlantic fellow of the German Marshall Fund.