The Squeeze on the American Worker

Two new books examine how household finances are growing more precarious despite general prosperity

Editor's Rating:

The Good: A timely investigation of the economic pitfalls faced by working Americans.

The Bad: Some of this ground has been covered by previous accounts

The Bottom Line: A compelling, and disturbing, narrative.

High Wire:The Precarious FinancialLives of American FamiliesBy Peter GosselinBasic Books; 374pp; $26.95

The Big Squeeze:Tough Times for the American WorkerBy Steven GreenhouseKnopf; 365pp; $25.95

To adapt a famous question asked by Ronald Reagan during his 1980 race for the White House, are you better off now than you were four decades ago? The answer for many working- and middle-class families is no, according to Peter Gosselin's High Wire: The Precarious Financial Lives of American Families and Steven Greenhouse's The Big Squeeze: Tough Times for the American Worker.

Gosselin and Greenhouse are award-winning journalists with the Los Angeles Times and The New York Times, respectively. Not surprisingly, both books are well-written with clear themes and telling anecdotes. Neither book is a revelation, of course, since much has already been said in recent years about America's shredded social safety net, middle-class families' ever-more-vexing economic circumstances, and the distressing working conditions faced by low-income employees. Instead, what makes the two volumes timely and important is their powerful, authoritative evidence that a lot of people are rightly anxious about their economic prospects—worries exacerbated by an election season and ongoing economic woes.

Gosselin weaves economic research, intimate portraits of average Americans, and the products of some old-fashioned digging into a compelling narrative. Like Jacob Hacker's 2006 The Great Risk Shift, Gosselin's book is an investigation into the gradual tearing of America's social safety net, from inadequate health insurance to pension plans with holes. Put it this way: If you're feeling anxious about your standard of living, despite a good education and a six-figure income, you're right to be concerned. Writes Gosselin: "My view is that Americans, from the working poor to the reasonably rich, are in danger of taking steep financial falls from which they have a terrible time recovering; that the fraction of Americans facing this danger is on the rise and now constitutes a majority; and that the size of the falls we may take is also growing."

Although High Wire focuses on U.S. society's troubles, the author does not deny that the macroeconomic numbers of the past two decades have been healthy. The embrace of markets, globalization, and deregulation has spurred innovation and efficiencies, he observes. Moreover, he says, the chances of being struck by financial trauma—as a result of a divorce, a separation, a decrease in a spouse's working hours (from unemployment, disability, or illness), or the death of a spouse—fell slightly from the 1970s to 2005.

But over the same period, the fraction of families that saw their income slashed by half or more due to one of these events increased sharply, Gosselin explains. For example, the percentage of families whose income was cut in half as a result of unemployment rose from some 17% to 26%. For divorce or separation, the comparable figures are 30% to 36%. Simply as the result of the birth of a child, 10% of families endured a steep income decline. That's a third greater than the experience of the early '70s and '80s. "For better or worse, the rising risks of a big economic setback are proving to be extremely democratic," he writes. Gosselin doesn't offer a list of reforms, but he does call for less laissez-faire and more social risk-sharing.

Steven Greenhouse agrees with that impulse and proposes several specific changes. The New York Times writer's work complements Gosselin's in many ways, although The Big Squeeze paints a more dire picture of work and living standards in the U.S. To be sure, one chapter highlights a number of companies that have been doing well by their workers, including Costco (COST), Patagonia, and Timberland (TBL). But the overall image is grim: an economy where a rising tide of improved productivity and growth has raised the fortunes of a few, leaving the majority of Americans far behind.

Still, the power of Greenhouse's book lies less in its analysis and more in its reporting, especially on low-wage workers. Greenhouse does have material on the increased demands placed upon highly paid white-collar professionals and the risks such as outsourcing that they face. But his best material vividly focuses on the always difficult and often abusive working conditions of low-paid employees, from the night-shift cleaning crews at Wal-Mart (WMT) to a hotel housekeeper at the Hilton Chicago. Such stories get far too little airing—and rarely are they so well told.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE