Book Review

04.16.12 5:00 PM ET

David's Book Club: Pinched

Don Peck’s Pinched is the best book yet written about the social effects of the Great Recession.

Peck shows us a new world emerging from the catastrophe of 2008, a new world that most Americans will find harsher than the old.
For example: despite the long, slow relative decline of manufacturing as a source of American jobs, the total number of manufacturing jobs in the U.S. had remained constant at about 18 million for decades. Between 2007 and 2009, the number of manufacturing jobs dropped by 6 million.

While manufacturing is beginning a recovery now, it seems impossible that the sector will regenerate to anything like its former extent.

The new jobs being added to the U.S. economy pay less, on average, than the jobs lost—which is why the average rate of pay in the U.S. remains stagnant or even drops as the number of jobs slowly grows.

At the top of the economic heap, recovery has been more complete. The richest Americans suffered sharp shocks to their wealth when markets collapsed in 2008-2009. As financial markets have revived, so has the wealth of the top 1% (Households earning more than $380,000 per year.)

The top 5% have done OK too. (The top 5% begins a little south of $200,000 in household income.)

For most of the country, however, the outlook is—to borrow Peck’s title—“pinched.” Young people who come of age in the crisis will earn less through their lives than those who came of age during happier times. Men who lose a job in their 40s and 50s face elevated risks of illness and death. Marriages break up. Babies are not born. A sense of unfairness spreads through the society. Politics becomes angrier and more paranoid, for those who take part; while many others drop out of public life entirely, disregarded and alienated.

The young people coming of age into this new society were singularly poorly prepared for it.
Since 1980, American child-rearing has sought to inculcate self-esteem in the young. This effort has succeeded. Today’s young people have measurably higher self-concepts than previous generations—just in time to receive measurably worse rewards. It’s a lethal combination:

Trained throughout childhood to disconnect performance from reward, and told repeatedly that they are destined for great things, many are quick to place blame elsewhere when something goes wrong, and inclined to believe that bad situations will sort themselves out—or will be sorted out by parents or other helpers.

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Prepared for an easier life, the cohort of 20-somethings has been jolted by an economy that no longer supports their aspirations.
Checked, disappointed, rejected, “more and more of them find themselves swimming in a seemingly endless adolescence, whose taste has long since grown brackish, and from which they cannot fully emerge.”

Nor are their elders exempt from the pinch:

[S]ince the recession began, fewer prime-age men have been employed than at any time since the Bureau of Labor Statistics began tracking … in 1948.

Men confront an economy that offers high pay for a few, but deteriorating wages for the many. And they have responded to worsening incentives exactly as a market economist would predict:

In 1967, 97 percent of thirty to fifty-year old men with only a high-school diploma were working; in 2010, just 76 percent were. Declining male employment is not unique to the United States. It’s been happening in almost all rich nations as they’ve put the industrial age behind them.

When men do not work, families weaken and communities decline. It happened in black America in the 1970s, and it is happening now to nonprofessional white America:

The steady disappearance of nonprofessional middle-class jobs is creating the possibility that a larger underclass could form in the United States, one that becomes self-perpetuating and extends across generations.

Here is the intelligent answer to Charles Murray’s emphatic claim that culture—and culture alone—explains changing behaviors in working-class America: It’s neither culture alone nor economics alone, but the interaction of both. Such an answer should be commonsensical. Why would anybody resist it? Yet people do resist it.

Years ago, Daniel Patrick Moynihan coined the aphorism:

The central conservative insight is that culture matters more than politics. The central liberal insight is that through politics, we can change culture.

And the way in which politics can change culture is by changing the workings of the economy. When the middle class flourishes, so does its culture. When wealth concentrates at the top—and opportunities dwindle at the middle—it is the spectacularly rich who set society’s tone. The multiplying ranks of the economically precarious struggle to adapt as well as they can—and that is unlikely to be very well at all.