In a sea of affluence, the young feel a depression

Rober Kuttner

September 11, 1990|By Robert Kuttner

A YOUNG FRIEND of mine recently mentioned that she and her husband -- both recent college graduates -- were hoping to start a family, but they just couldn't afford it. I had heard those words somewhere before.

After a moment, I realized that I'd heard them from my parents. Working up my nerve, I had once asked them why they'd been married so long before they'd had kids. They had explained that they had married in the middle of the Depression, and couldn't afford to have children until economic conditions improved during World War II.

In the Depression, of course, nearly everyone was short of money. But today, the post-yuppie generation feels uniquely thirsty in a sea of affluence.

Opportunities for refined consumption are everywhere. The older generation enjoys nice houses and cheap mortgages; it lives on what seem to be ridiculously modest incomes -- and not because they're thriftier. Instead of a generalized depression, there's a depression of the young.

An average-priced house requires a mortgage of about $150,000, which requires monthly payments for mortgage, insurance and taxes of close to $2,000, which requires a combined annual income of just under $100,000. That's the top 10 percent of the family-income distribution. Good luck.

And when baby comes, child-care expenses come next, unless you happen to be in the true economic stratosphere in which it is possible to live on a single income.

I have a theory about why the political system is paying so little attention to this remarkable generational economic distress. It is not because the young are without political influence. It is because the distress has yet to reach the opinion-leader class in a serious way.

The fragmentation of America as a broad middle-class society means that economic problems are simply not felt politically the way they were a generation or two ago.

Take child care. The professional class is hiring nannies in ever-increasing numbers, and is liking it just fine. In the Boston area, where I live, dozens of agencies have sprouted which will put professional families in touch with young high school graduates from the Midwest and West who are tacitly understood to be refined and Caucasian. The cost is typically $200 to $300 per week salary, plus room and board, cross-country transportation, in some cases a car and an agency fee of a couple of thousand dollars.

All you need is a house with a spare room and an income large enough that you don't miss a few hundred dollars a week. This means, again, the top 10 percent of the income distribution.

But that also describes the political class. So the political class feels no child-care crisis. Ordinary people, in contrast, find themselves in a frantic chase between job demands and inadequate institutional child care. Or when kids reach school age, they face a logistical nightmare keeping kids occupied after school or when sick.

Housing presents a similar class split. According to the Economic Policy Institute, the home-ownership rate among young families (age 29 and younger) declined from 43.5 percent in 1980 to 35.4 percent in 1989.

Given the household arithmetic, it's remarkable that even 35 percent of young families own homes. The reason must be that their own families are helping them out -- another reflection of the splitting of America. Show me a 29-year-old paying his own way to home ownership, and I will show you an investment banker.

Home ownership, like child care, is not seen as the true crisis it is because professional families have the resources to make sure their own kids become homeowners, despite the impossible household arithmetic. In that fashion, the professional class replicates itself -- and is nicely insulated from the broader economic distress afflicting the less well-off young.

I would wager that few members of Congress face these economic crunches in their own families; or few television journalists, doctors, lawyers, bankers, corporate executives -- just as few of them have relatives serving in the U.S. armed forces in Saudi Arabia.

What is the solution? We need national strategies to raise wages for the working young. We need to universalize early child care, just as America in an earlier time invented and universalized free public education. We need a policy that taxes more of the windfall real estate gains of the upper-middle class and upper-middle aged, and spends the revenue on first-time homeownership for families just starting out without much money.

And where are the votes for such policies, given the complacency of the opinion leaders?

Lately, America's working people have been justifiably cynical about politics, and about the possibility of collective action improving their lives. But until ordinary people get serious about politics and help elect representatives who recognize the gravity of these problems, the opinion-leader class will go on buying its way out of these problems, and the rest of America will justifiably feel cheated.

Robert Kuttner writes regularly on economic matters.

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