Family income largely stagnant in '80s New study confirms middle-class squeeze

January 17, 1992|By David Lauter | David Lauter,Los Angeles Times

WASHINGTON -- A large majority of two-earner families with children had to work harder simply to stay in place during the 1980s, according to a new congressional study that documents the widely felt syndrome of "middle-class squeeze."

The study illustrates a sharp disparity between those who prospered in the 1980s and those who did not. And it is particularly striking because it looked at the incomes of of families with two wage earners and children -- a group many assumed had fared better during the 1980s than individuals or one-wage-earner families.

Families with incomes of more than $63,000 -- the wealthiest fifth of American families -- saw their incomes increase by 15 percent, the new study shows. By contrast, families whose income was less than $35,000 -- two-fifths of all two-earner families -- saw their incomes stagnate and, in many cases, decline, despite them working longer hours.

Families in the middle of the income ladder were able to increase their incomes slightly during the 1980s, but only because wives greatly increased the hours they worked. Measured in terms of dollars perhour -- or looked at in terms of the hours left for parents to spend time with their children -- those families saw their standard of living fall, the study concluded.

The study, conducted by the staff of the congressional Joint Economic Committee and based on data collected each year by the U.S. Census Bureau, analyzed data up to 1989. Because of that, the picture of family income it provides does not take into account the impact of the current recession, which almost certainly has sharpened the trend that the study has documented.

The new study is certain to fuel an already heated debate over the economic legacy of the 1980s. Republicans have argued that the economic policies of the Reagan and Bush administrations created a decade of economic recovery in which the nation's wealth sharply increased. But Democrats, who control the committee, have charged that the new wealth created during the 1980s was sharply skewed, flowing mostly into the pockets of the already rich.

And with the recession focusing attention on flaws in the economy, that argument appears to be gaining ground.

Pollsters have found that large numbers of Americans feel squeezed as they try to juggle the demands of children with the hours of work needed to sustain a middle-class life. Those feelings are a major factor in the increasing number of people who say that the country is "on the wrong track," pollsters say.

The skewed distribution of 1980s prosperity was "a set of facts that could be swept under the rug until the recession struck," said Brookings Institution economist Gary Burtless, who also has studied family incomes.

But now that individuals are looking more carefully at their economic circumstances, the declining income experienced by many during the 1980s "makes the pessimism of the last eight months very understandable," Mr. Burtless said.

The shifts in income during the 1980s can be traced to two major trends, according to the study's authors.

The first major trend was the sharp decline in hourly wages for most male workers, with the biggest declines hitting already low-paid workers, primarily those without a college education.

Wives, by contrast, generally enjoyed increasing hourly wages during the 1980s and, even more strikingly, large increases in the number of hours worked. The gains were greatest for women at the top of the income ladder. The hourly wages of women in the lowest income group dropped slightly in the 1980s.

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