Professor Elizabeth Warren

Credit: Richard Chase Professor Elizabeth Warren

Despite today’s booming economy, the number of middle-class families filing for bankruptcy in America is soaring, according to Professor Elizabeth Warren, Teresa Sullivan, and Jay Westbrook, coauthors of a new study, The Fragile Middle Class: Americans in Debt (Yale University Press, 2000). Based on analysis of court records as well as debtors’ own accounts, their book identifies problems leading to financial insecurity, including increasing job instability, divorce, medical debt, the allure and burden of home ownership, and, perhaps most important, exploding consumer debt. The following passage from the book’s conclusion puts the middle class and its current economic fragility in historical context.

“One of the redeeming paradoxes of this country is that a people so individualistic and so competitive nonetheless overwhelmingly identify themselves as members of a single class, the middle class. Some see it as glorious and some as boring, but it is within the perceived reach of nearly all citizens. A clerk and a secretary sharing a one-room apartment in Newark will give the same response to a question about class identification on a survey questionnaire as a hard-charging executive and a management consultant spouse in a fourteen-room manse in Grosse Pointe. The social reality may be considerably more complex, but the perception has a profound importance of its own.

One consequence of the Great Depression was a federal commitment to protect and extend this great, amorphous middle class. Literally hundreds of government programs, from housing subsidies and tax breaks to small business loans, were designed to further that end. Indeed, one way to describe the New Deal as a reaction to the Great Depression is that the federal government became committed to maintaining middle-class stability in the face of economic change and to expanding the ranks of the middle class to include as many Americans as possible. One way to describe the political direction of the country since the Reagan Revolution is the dismantling of that government structure in favor of one with more flexibility, more inequality, more opportunity, and more risk. On that basis, one inevitable cost can be seen to be the increased vulnerability of the American middle class to financial catastrophe. ”

From The Fragile Middle Class: Americans in Debt. Copyright © 2000 by Yale University Press. By permission of the publisher.