Falling Behind: How Rising Inequality Harms the Middle Class

Falling Behind: How Rising Inequality Harms the Middle Class

Falling Behind: How Rising Inequality Harms the Middle Class

Falling Behind: How Rising Inequality Harms the Middle Class

Synopsis

With a timely new foreword by Robert Frank, this groundbreaking book explores the very meaning of happiness and prosperity in America today. Although middle-income families don't earn much more than they did several decades ago, they are buying bigger cars, houses, and appliances. To pay for them, they spend more than they earn and carry record levels of debt. Robert Frank explains how increased concentrations of income and wealth at the top of the economic pyramid have set off "expenditure cascades" that raise the cost of achieving many basic goals for the middle class. Writing in lively prose for a general audience, Frank employs up-to-date economic data and examples drawn from everyday life to shed light on reigning models of consumer behavior. He also suggests reforms that could mitigate the costs of inequality. Falling Behind compels us to rethink how and why we live our economic lives the way we do.

Excerpt

Falling Behind was first published in 2007. Its central thesis is that the rapid growth in income and wealth inequality that began in the early 1970s caused substantial economic damage to middleincome families.

I was grateful for the invitation from University of California Press to reflect on the basic message of Falling Behind in the light of events since then. Did the financial crisis and the ensuing Great Recession cast doubt on my thesis?

In a word, no. But it’s a fair question, since those events did upend the inequality trends at issue. Prior to the early 1970s, incomes had been growing at about the same rate for about three decades—slightly less than 3 percent annually—for families at all income levels. Between the early 1970s and 2007, however, almost all significant income gains in the United States were confined to the top quintile of the earnings distribution, and even those gains themselves were heavily concentrated among the top 1 percent.

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