1 00:00:01,494 --> 00:00:04,243 (dramatic music) 2 00:00:34,119 --> 00:00:35,049 - I'm Mary Ann Mason, 3 00:00:35,049 --> 00:00:36,567 I'm the Dean of the Graduate Division, 4 00:00:36,567 --> 00:00:39,009 and I'm pleased, along with the Graduate Council, 5 00:00:39,009 --> 00:00:42,739 to present Elizabeth Warren, who is this year's speaker 6 00:00:42,740 --> 00:00:45,810 in the Jefferson Memorial Lecture series. 7 00:00:45,810 --> 00:00:47,990 As a condition of this bequest, 8 00:00:47,990 --> 00:00:50,460 we're obligated to tell you how the endowment 9 00:00:50,460 --> 00:00:53,829 supporting the lectures came to UC Berkeley. 10 00:00:53,829 --> 00:00:57,500 The Jefferson Memorial Lectures were established in 1944 11 00:00:57,500 --> 00:01:00,579 through a bequest from Elizabeth Bonestell, 12 00:01:00,579 --> 00:01:03,199 and her husband, Cutler L. Bonestell. 13 00:01:03,200 --> 00:01:05,299 A prominent San Francisco couple, 14 00:01:05,299 --> 00:01:07,819 the Bonestells cared deeply for history, 15 00:01:07,819 --> 00:01:10,669 and had hoped that the lectures would encourage students, 16 00:01:10,670 --> 00:01:13,275 faculty, visiting scholars and others 17 00:01:13,275 --> 00:01:16,609 to study the legacy of Thomas Jefferson 18 00:01:16,609 --> 00:01:20,959 and to explore the values inherent in American democracy. 19 00:01:20,959 --> 00:01:24,699 Past lecturers, Ambassador Jeane Kirkpatrick, 20 00:01:24,700 --> 00:01:27,560 Senator Alan Simpson, Representative Thomas Foley, 21 00:01:27,560 --> 00:01:30,710 Walter LaFeber and Archibald Cox have delivered 22 00:01:30,709 --> 00:01:33,839 Jefferson Memorial Lectures on early American history 23 00:01:33,840 --> 00:01:37,310 about Jefferson himself and on American institutions 24 00:01:37,310 --> 00:01:41,879 and policies in economics, education and the law. 25 00:01:41,879 --> 00:01:44,259 And now a few words about Elizabeth Warren. 26 00:01:44,260 --> 00:01:47,650 One of America's leading commentators on consumer issues 27 00:01:47,650 --> 00:01:51,630 and the law, Elizabeth Warren has been an outspoken critic 28 00:01:51,629 --> 00:01:53,869 of America's credit economy, 29 00:01:53,870 --> 00:01:56,579 which she has linked to the continuing rise in bankruptcy 30 00:01:56,579 --> 00:01:58,159 among the middle class. 31 00:01:58,159 --> 00:01:59,929 No one in the audience, I'm sure. 32 00:01:59,930 --> 00:02:02,770 Her critical analysis of Congress's latest revision 33 00:02:02,769 --> 00:02:05,039 of America's national bankruptcy law 34 00:02:05,040 --> 00:02:07,530 has received wide attention in the media 35 00:02:07,530 --> 00:02:10,439 as well as in academic and policy circles. 36 00:02:10,439 --> 00:02:13,259 At Harvard Law School, Warren's courses include 37 00:02:13,259 --> 00:02:16,729 contract law, bankruptcy and commercial law. 38 00:02:16,729 --> 00:02:19,239 She said recently that she has spent decades 39 00:02:19,240 --> 00:02:22,430 writing in academic books and teaching an entire generation 40 00:02:22,430 --> 00:02:25,129 of law students about the rules of money. 41 00:02:25,129 --> 00:02:28,960 Those rules include the formal statutes of commercial law, 42 00:02:28,960 --> 00:02:30,560 the policies inherent in them, 43 00:02:30,560 --> 00:02:33,500 and the ethical problems that they can produce. 44 00:02:33,500 --> 00:02:35,629 Warren is a frequent contributor to articles in 45 00:02:35,629 --> 00:02:37,828 The New York Times, The Washington Post, 46 00:02:37,828 --> 00:02:41,500 and Women's eNews, and her commentary appears regularly 47 00:02:41,500 --> 00:02:43,840 on National Public Radio's news program, 48 00:02:43,840 --> 00:02:45,390 All Things Considered, 49 00:02:45,389 --> 00:02:48,319 and on the internet forum, The Huffington Post. 50 00:02:48,319 --> 00:02:51,579 After earning a BS from the University of Houston in 1970, 51 00:02:51,580 --> 00:02:52,990 Warren was awarded a J.D. 52 00:02:52,990 --> 00:02:56,659 from Rutgers University-Newark in 1976. 53 00:02:56,659 --> 00:03:00,129 She joined the faculty of Harvard University in 1992 54 00:03:00,129 --> 00:03:01,329 and has served as the 55 00:03:01,330 --> 00:03:04,680 Leo Gottlieb Professor of Law since 1995. 56 00:03:04,680 --> 00:03:06,530 Prior to Harvard, Warren taught at 57 00:03:06,530 --> 00:03:08,370 the University of Pennsylvania Law School, 58 00:03:08,370 --> 00:03:09,770 the University of Texas Law School, 59 00:03:09,770 --> 00:03:11,560 the University of Houston Law Center, 60 00:03:11,560 --> 00:03:14,150 the University of Michigan, and Rutgers School of Law. 61 00:03:14,150 --> 00:03:16,830 Warren has channeled her expertise in commercial law 62 00:03:16,830 --> 00:03:20,100 into numerous other professional activities. 63 00:03:20,099 --> 00:03:21,509 She acted as chief adviser 64 00:03:21,509 --> 00:03:23,609 to the National Bankruptcy Review Commission 65 00:03:23,610 --> 00:03:26,160 from 1995 to '97. 66 00:03:26,159 --> 00:03:27,759 She served three terms on 67 00:03:27,759 --> 00:03:29,599 the Federal Judicial Center Committee 68 00:03:29,599 --> 00:03:33,189 on Judicial Education, 1990 to '99, 69 00:03:33,189 --> 00:03:36,680 and since 1995, Warren has been the United States advisor 70 00:03:36,680 --> 00:03:40,260 to the Transnational Insolvency Project. 71 00:03:40,259 --> 00:03:43,120 In presenting its nomination of Professor Warren 72 00:03:43,120 --> 00:03:45,370 for the lectureship, the selection committee 73 00:03:45,370 --> 00:03:47,930 spoke of Warren's prominence as a commentator 74 00:03:47,930 --> 00:03:51,520 in public discourse on bankruptcy and other consumer issues. 75 00:03:51,520 --> 00:03:53,920 A scholar of great originality 76 00:03:53,919 --> 00:03:56,869 and insight into commercial law and a law teacher 77 00:03:56,870 --> 00:03:59,520 and lecturer of exceptional distinction. 78 00:03:59,520 --> 00:04:02,550 According to committee chair Harry N. Scheiber, 79 00:04:02,550 --> 00:04:04,837 the Riesenfeld Professor of Law and History, 80 00:04:04,836 --> 00:04:07,036 "At a time when the social safety net 81 00:04:07,037 --> 00:04:09,787 "is no longer taken for granted by Americans, 82 00:04:09,787 --> 00:04:11,727 "its unremitting attack in Washington 83 00:04:11,727 --> 00:04:13,637 "and many state capitals, 84 00:04:13,637 --> 00:04:15,687 "Elizabeth Warren's unique importance 85 00:04:15,687 --> 00:04:17,716 "as a researcher and writer, 86 00:04:17,716 --> 00:04:19,947 "concerned with changing income distribution 87 00:04:19,947 --> 00:04:22,976 "and the imperiled condition of the nation's social welfare 88 00:04:22,976 --> 00:04:25,336 "makes this lecture one of special importance 89 00:04:25,336 --> 00:04:27,219 "to the campus community." 90 00:04:27,220 --> 00:04:29,847 I should say personally that I read her book last year, 91 00:04:29,846 --> 00:04:31,439 "The Two-Income Trap", 92 00:04:31,439 --> 00:04:33,579 and I would put it among my very favorites 93 00:04:33,579 --> 00:04:36,409 of policy books that both made sense 94 00:04:36,410 --> 00:04:38,100 and are going to change policy. 95 00:04:38,100 --> 00:04:39,710 So it gives me very great pleasure 96 00:04:39,709 --> 00:04:41,646 to welcome Elizabeth Warren. 97 00:04:41,646 --> 00:04:44,813 (audience applauding) 98 00:04:55,899 --> 00:04:58,300 - Thank you, Dean Mason. 99 00:04:58,300 --> 00:05:01,920 Thank you, members of the Berkeley faculty, 100 00:05:01,920 --> 00:05:04,240 Berkeley students and Berkeley friends. 101 00:05:04,240 --> 00:05:07,889 It's an honor to be invited to give the Jefferson Lecture, 102 00:05:07,889 --> 00:05:09,579 especially following the footsteps 103 00:05:09,579 --> 00:05:12,135 of such esteemed people. 104 00:05:12,136 --> 00:05:15,020 And it's also a particular pleasure to be here. 105 00:05:15,019 --> 00:05:19,479 I appreciate the hospitality, it has been extraordinary, 106 00:05:19,480 --> 00:05:21,009 and the good weather, 107 00:05:21,009 --> 00:05:23,899 since I was on a plane that had to be de-iced 108 00:05:23,899 --> 00:05:25,442 before it could take off, 109 00:05:26,459 --> 00:05:28,579 it really does seem that I've landed in heaven. 110 00:05:28,579 --> 00:05:33,149 So it's a special treat to be here today. 111 00:05:33,149 --> 00:05:34,479 I want to say, 112 00:05:34,480 --> 00:05:37,497 I like to talk about the things that I care about 113 00:05:37,497 --> 00:05:39,620 and that I'm passionate about, 114 00:05:39,620 --> 00:05:42,819 and I only get nervous about the fact that 115 00:05:42,819 --> 00:05:45,420 I may not tell you all the things that I want to make sure 116 00:05:45,420 --> 00:05:47,802 that you know and I may not be able to say it 117 00:05:47,802 --> 00:05:50,019 as clearly or distinctly, 118 00:05:50,019 --> 00:05:52,216 because I want you to hear these things, 119 00:05:52,216 --> 00:05:55,590 but today, I feel a special anxiety 120 00:05:55,589 --> 00:05:59,629 as I get ready to do this because the only two conversations 121 00:05:59,629 --> 00:06:02,420 that I have had running throughout the day today 122 00:06:02,420 --> 00:06:05,463 have been how appalling it is to use PowerPoints, 123 00:06:07,500 --> 00:06:10,699 and about boring lectures and falling asleep during them. 124 00:06:10,699 --> 00:06:15,699 So having my confidence boosted before I came in here, 125 00:06:15,942 --> 00:06:19,822 I will approach this somewhat gingerly. 126 00:06:21,360 --> 00:06:25,213 What I wanted to talk about today is I wanted to start 127 00:06:25,213 --> 00:06:30,213 by talking about what I think is the single most 128 00:06:30,781 --> 00:06:35,060 important economic shift of the second half 129 00:06:35,060 --> 00:06:38,170 of the 20th century in the United States, 130 00:06:38,170 --> 00:06:42,699 and that is that millions of mothers 131 00:06:42,699 --> 00:06:46,103 poured into the full-time paid workforce. 132 00:06:47,370 --> 00:06:49,817 A woman in 1970 133 00:06:53,040 --> 00:06:56,850 who had a 16 year old child 134 00:06:56,850 --> 00:07:01,110 was less likely to be in the workforce 135 00:07:01,110 --> 00:07:05,340 than a woman in 2003 136 00:07:05,339 --> 00:07:09,810 who had a six month old child at home. 137 00:07:09,810 --> 00:07:13,600 It was a profound shift in America. 138 00:07:13,600 --> 00:07:16,500 The median family in America, 139 00:07:16,500 --> 00:07:19,600 a married couple family in America, 140 00:07:19,600 --> 00:07:23,450 went over a 30-year period, median, middle, 141 00:07:23,449 --> 00:07:27,599 from being a one-income household to a two-income household, 142 00:07:27,600 --> 00:07:29,780 a significant shift. 143 00:07:29,779 --> 00:07:34,599 And so if we had known, let's say, 30 years ago, 144 00:07:35,800 --> 00:07:39,710 35 years ago, we've been sitting here in 1970, 145 00:07:39,709 --> 00:07:42,329 and as part of the Jefferson Lecture, 146 00:07:42,329 --> 00:07:44,106 I'd had my crystal ball and I'd said, 147 00:07:44,107 --> 00:07:48,067 "Here's what's going to happen over the next 30 years. 148 00:07:48,067 --> 00:07:50,076 "Mothers are going to pour into the workforce, 149 00:07:50,076 --> 00:07:51,637 "take on full-time work, 150 00:07:51,637 --> 00:07:53,127 "they're gonna get better education, 151 00:07:53,127 --> 00:07:54,406 "they're gonna have more work experience, 152 00:07:54,406 --> 00:07:55,757 "their incomes are going to rise. 153 00:07:55,757 --> 00:07:57,716 "They won't get all the way to where men are, 154 00:07:57,716 --> 00:08:00,089 "but they're gonna make substantial advances." 155 00:08:00,089 --> 00:08:03,049 Now let's speculate on what the family will look like 156 00:08:03,050 --> 00:08:08,050 30 years hence, that is, in 2000, 2005, 2007. 157 00:08:08,290 --> 00:08:10,170 Well the first thing I would have estimated 158 00:08:10,170 --> 00:08:12,319 is that people would stop living in suburbs 159 00:08:12,319 --> 00:08:13,199 that are far out. 160 00:08:13,199 --> 00:08:15,680 I would have guessed everyone would live close in, 161 00:08:15,680 --> 00:08:18,110 that no mother of a six month old child 162 00:08:18,110 --> 00:08:21,120 would commute an hour and 40 minutes to work. 163 00:08:21,120 --> 00:08:22,689 I would have been, of course, 164 00:08:22,689 --> 00:08:25,730 very wrong in that first estimate. 165 00:08:25,730 --> 00:08:29,360 The second thing I would have guessed is that families 166 00:08:29,360 --> 00:08:31,932 will be very wealthy. 167 00:08:32,919 --> 00:08:37,562 They're going to have lots of savings, no debt, 168 00:08:38,609 --> 00:08:40,710 and plenty of vacations, right? 169 00:08:40,710 --> 00:08:42,369 If you've got two people in the workforce, 170 00:08:42,369 --> 00:08:44,410 there's gonna be a lot of extra income. 171 00:08:44,409 --> 00:08:46,279 They're gonna be secure, 172 00:08:46,279 --> 00:08:47,269 there won't be a lot of bankruptcy, 173 00:08:47,269 --> 00:08:49,210 there won't be a lot of default, 174 00:08:49,210 --> 00:08:51,100 nobody's gonna be dealing with debt collectors, 175 00:08:51,100 --> 00:08:55,340 that's what it's gonna look like come the new era. 176 00:08:55,340 --> 00:08:56,800 So let's see what happened. 177 00:08:56,799 --> 00:08:58,209 This is all inflation adjusted, 178 00:08:58,210 --> 00:08:59,043 everything I'm gonna do today 179 00:08:59,043 --> 00:09:00,620 is gonna be inflation adjusted, 180 00:09:00,620 --> 00:09:03,700 so we can just make that assumption as we go forward. 181 00:09:03,700 --> 00:09:06,900 This is what happened to median income for married families 182 00:09:06,899 --> 00:09:08,600 and this is gonna be my period 183 00:09:08,600 --> 00:09:10,590 to the extent the data permitted. 184 00:09:10,590 --> 00:09:14,887 It's basically gonna be one generation, 1970 to 1971, 185 00:09:14,886 --> 00:09:16,053 to 2005, 2006. 186 00:09:17,259 --> 00:09:19,809 What happened in a single generation, 187 00:09:19,809 --> 00:09:22,319 from your mom and dad to you, okay, 188 00:09:22,320 --> 00:09:23,970 is what we're talking about here. 189 00:09:23,970 --> 00:09:27,870 And you see how income goes up for families. 190 00:09:27,870 --> 00:09:29,500 But there was an underlying message 191 00:09:29,500 --> 00:09:31,259 that was not nearly so good, 192 00:09:31,259 --> 00:09:35,409 and that is income went up for married couples, 193 00:09:35,409 --> 00:09:38,539 but the green line, the one underneath, 194 00:09:38,539 --> 00:09:43,209 you notice that income for males, fully employed males, 195 00:09:43,210 --> 00:09:45,250 in fact, didn't rise at all. 196 00:09:45,250 --> 00:09:46,960 And if you actually look at the numbers, 197 00:09:46,960 --> 00:09:48,690 a fully employed male today, 198 00:09:48,690 --> 00:09:50,910 once we had adjusted for inflation, 199 00:09:50,909 --> 00:09:55,909 makes about $800 less than his father made a generation ago, 200 00:09:56,899 --> 00:09:59,289 talking about median earners here. 201 00:09:59,289 --> 00:10:02,039 Okay, so what that begins to tell us 202 00:10:02,039 --> 00:10:06,069 is the first part of the story, family income rose, 203 00:10:06,070 --> 00:10:09,080 but as I said, it was rising only 204 00:10:09,080 --> 00:10:11,030 because women were going into the workforce. 205 00:10:11,029 --> 00:10:16,029 In other words, the bump we got is not a bump 206 00:10:16,529 --> 00:10:17,819 on top of the bump we were getting 207 00:10:17,820 --> 00:10:20,210 because men were also earning more over this period of time 208 00:10:20,210 --> 00:10:22,790 as they had been in the seven years that preceded, 209 00:10:22,789 --> 00:10:25,250 but is a bump that comes only because 210 00:10:25,250 --> 00:10:28,750 they put a second worker into the workforce. 211 00:10:28,750 --> 00:10:31,110 All right, but my prediction should still hold. 212 00:10:31,110 --> 00:10:33,409 After all, families are getting richer 213 00:10:33,409 --> 00:10:35,923 in the sense of more income over time. 214 00:10:36,970 --> 00:10:38,480 What happened? 215 00:10:38,480 --> 00:10:41,800 Savings went down in this same time period. 216 00:10:41,799 --> 00:10:46,179 So the one-income family in 1970 was putting away 217 00:10:46,179 --> 00:10:49,399 about 11% of their take-home pay. 218 00:10:49,399 --> 00:10:51,829 Think about it, week after week, month after month, 219 00:10:51,830 --> 00:10:54,060 they're putting away about 11%. 220 00:10:54,059 --> 00:10:59,059 By the year 2006, you notice the line goes below zero. 221 00:10:59,620 --> 00:11:02,830 This is a concept only Alan Greenspan would love, 222 00:11:02,830 --> 00:11:04,340 negative savings. 223 00:11:04,340 --> 00:11:08,810 The American family today puts away nothing, 224 00:11:08,809 --> 00:11:11,949 and frankly has been putting away nothing 225 00:11:11,950 --> 00:11:14,000 for the last five or six years. 226 00:11:14,000 --> 00:11:16,759 There's nothing there, there is no savings. 227 00:11:16,759 --> 00:11:20,439 So savings didn't go up the way I predicted. 228 00:11:20,440 --> 00:11:25,070 Oh, but something went up, and that's revolving debt. 229 00:11:25,070 --> 00:11:26,040 I picked revolving debt, 230 00:11:26,039 --> 00:11:27,269 I could have picked any of them, 231 00:11:27,269 --> 00:11:29,850 revolving debt just basically means credit cards 232 00:11:29,850 --> 00:11:32,490 where you can carry a balance outstanding. 233 00:11:32,490 --> 00:11:33,700 We could have picked consumer debt, 234 00:11:33,700 --> 00:11:36,970 which would also include car loans and payday loans 235 00:11:36,970 --> 00:11:39,350 and a few other kinds of debt, 236 00:11:39,350 --> 00:11:40,182 we could have included mortgage, 237 00:11:40,182 --> 00:11:43,039 and we would have gotten much the same picture. 238 00:11:43,039 --> 00:11:46,459 Revolving debt is a percentage of annual income. 239 00:11:46,460 --> 00:11:49,009 Notice there's supposed to be some decimal points in there 240 00:11:49,009 --> 00:11:50,000 that aren't showing up very well, 241 00:11:50,000 --> 00:11:52,399 I don't know what happened in the translation of the program 242 00:11:52,399 --> 00:11:57,019 but basically in 1970, the median family in America 243 00:11:57,019 --> 00:12:02,019 was carrying about 1.4% of its annual income 244 00:12:02,139 --> 00:12:05,279 in revolving debt, store charges. 245 00:12:05,279 --> 00:12:08,938 So there was a tiny little fraction on average. 246 00:12:08,938 --> 00:12:13,938 By the year 2005, the median family is carrying about 15% 247 00:12:15,600 --> 00:12:18,750 of its annual income in revolving debt, 248 00:12:18,750 --> 00:12:21,049 okay, just true there at the average. 249 00:12:21,049 --> 00:12:25,129 So savings have gone down, revolving debt has gone up, 250 00:12:25,129 --> 00:12:27,210 and it gives us this picture, 251 00:12:27,210 --> 00:12:29,389 if we put the whole thing together here. 252 00:12:29,389 --> 00:12:32,069 And that is the left side, 1972, 253 00:12:32,070 --> 00:12:35,270 the family, blue, is saving 11% 254 00:12:35,269 --> 00:12:37,932 and carrying debt about 1.4%. 255 00:12:39,029 --> 00:12:42,360 By the year 2005, is carrying credit card debt 256 00:12:42,360 --> 00:12:47,039 equal to one in every seven dollars that it earns, 15.6%, 257 00:12:47,039 --> 00:12:50,649 and its savings rate is negative, eight tenths of a percent. 258 00:12:50,649 --> 00:12:55,649 So think about what that means. 259 00:12:55,870 --> 00:12:59,970 That means, over the last 30 years, in terms of a shift, 260 00:12:59,970 --> 00:13:03,759 the family spent everything that mom's income 261 00:13:03,759 --> 00:13:06,059 added to the family fisc, 262 00:13:06,059 --> 00:13:08,759 spent everything they used to save, 263 00:13:08,759 --> 00:13:12,000 that 11% that they used to put away, 264 00:13:12,000 --> 00:13:16,700 and went into debt another 15% of income on top of that. 265 00:13:16,700 --> 00:13:18,843 They spent it all. 266 00:13:20,049 --> 00:13:22,399 Now, whoops, I'll do it a little faster, 267 00:13:22,399 --> 00:13:24,459 what did they spend it on? 268 00:13:24,460 --> 00:13:26,580 This was the question that really drove me 269 00:13:26,580 --> 00:13:29,446 in my research over the last few years. 270 00:13:29,446 --> 00:13:30,980 Where do they spend the money? 271 00:13:30,980 --> 00:13:34,039 Because what's interesting here is that 272 00:13:34,039 --> 00:13:35,709 everybody has an answer on this one. 273 00:13:35,710 --> 00:13:38,080 People can tell me exactly what they spent it on, 274 00:13:38,080 --> 00:13:43,080 people are sure, and so I started to find out. 275 00:13:43,389 --> 00:13:46,490 The federal government has actually been keeping data 276 00:13:46,490 --> 00:13:49,539 on how Americans spend their money. 277 00:13:49,539 --> 00:13:51,480 This is done through the Commerce Department, 278 00:13:51,480 --> 00:13:52,312 large parts of this, 279 00:13:52,312 --> 00:13:54,009 and some of it's due to the Labor Department, 280 00:13:54,009 --> 00:13:56,529 they've been keeping this for more than a century 281 00:13:56,529 --> 00:14:01,529 so that you can look at data on canned meat consumption 282 00:14:02,480 --> 00:14:06,519 going back to the late 1800s and early 1900s. 283 00:14:06,519 --> 00:14:08,829 You can check out alcohol consumption, 284 00:14:08,830 --> 00:14:11,129 you can check out cracker consumption, 285 00:14:11,129 --> 00:14:12,370 it's not all about food, 286 00:14:12,370 --> 00:14:15,440 it's about cars and rugs and furniture 287 00:14:15,440 --> 00:14:17,170 and all sorts of things that the government has been 288 00:14:17,169 --> 00:14:18,370 collecting data on. 289 00:14:18,370 --> 00:14:21,909 So I found this source for all the data, 290 00:14:21,909 --> 00:14:23,709 right down the bottom in that list, 291 00:14:23,710 --> 00:14:26,973 I don't know what the type is called, like .01 type, 292 00:14:27,990 --> 00:14:29,870 it tells what the government office is 293 00:14:29,870 --> 00:14:32,779 that's responsible for this and if you have any questions, 294 00:14:32,779 --> 00:14:36,023 what you're looking for, so glory be to the internet, 295 00:14:36,023 --> 00:14:40,080 found a phone number and found a live human being who, 296 00:14:40,080 --> 00:14:41,560 and I started trying to ask about 297 00:14:41,559 --> 00:14:42,949 how you could stabilize this stuff, 298 00:14:42,950 --> 00:14:43,810 and look at it over time, 299 00:14:43,809 --> 00:14:46,089 we all understand how you could do inflation adjustment, 300 00:14:46,090 --> 00:14:48,767 he said something about, I said something that, 301 00:14:48,767 --> 00:14:51,987 "Can you disaggregate this so that you can look at families 302 00:14:51,986 --> 00:14:54,469 "matched for family size?" 303 00:14:54,470 --> 00:14:56,279 That's really the question here. 304 00:14:56,279 --> 00:14:59,896 And the guy said, "Well", he said, 305 00:14:59,897 --> 00:15:03,867 "I guess if you cared, I could run the data." 306 00:15:04,809 --> 00:15:09,309 And, all of a sudden, my little heart starts beating faster 307 00:15:09,309 --> 00:15:11,616 and I'm panting into the phone and I said, 308 00:15:11,616 --> 00:15:13,230 "You can actually run the data?" 309 00:15:13,230 --> 00:15:14,062 And he said, "Yeah." 310 00:15:14,062 --> 00:15:16,120 He said, "What kind of family do you want to look at?" 311 00:15:16,120 --> 00:15:19,259 And I said, "I want to look at a mom, dad and two kids", 312 00:15:19,259 --> 00:15:20,639 because we have such variations, 313 00:15:20,639 --> 00:15:23,643 there's so many more one person family households now 314 00:15:23,643 --> 00:15:26,970 and variations, "I want to look at a mom, dad and two kids." 315 00:15:26,970 --> 00:15:29,048 That will help me stabilize both on age 316 00:15:29,048 --> 00:15:31,376 and family composition. 317 00:15:31,376 --> 00:15:34,956 "I want to look at a mom, dad and two kids in the 1970s, 318 00:15:34,956 --> 00:15:39,826 "1970, 1971, and I want to look at a mom, dad and two kids 319 00:15:39,826 --> 00:15:42,759 "in 2003", and I'm trying to gather these data, 320 00:15:42,759 --> 00:15:44,759 and I want to compare them. 321 00:15:44,759 --> 00:15:46,669 We lump together some expenses, 322 00:15:46,669 --> 00:15:48,120 and I want to be able to compare them over time, 323 00:15:48,120 --> 00:15:49,220 we'll adjust for inflation, 324 00:15:49,220 --> 00:15:51,040 and figure out how much more people are spending. 325 00:15:51,039 --> 00:15:52,049 He said, "Great." 326 00:15:52,049 --> 00:15:53,416 So he said, "What's the first one you want to do? 327 00:15:53,417 --> 00:15:54,250 "What's the first run?" 328 00:15:54,250 --> 00:15:55,110 Because you gotta test this stuff out see 329 00:15:55,110 --> 00:15:57,517 to see if you're getting it right, and I said, "Clothes, 330 00:15:57,517 --> 00:15:59,480 "how much money are people spending on clothes today?" 331 00:15:59,480 --> 00:16:03,603 Because all I ever hear about our designer toddler outfits, 332 00:16:04,816 --> 00:16:09,598 the Gap, $200 sneakers, 333 00:16:09,597 --> 00:16:12,009 all of the fancy things that people are 334 00:16:12,009 --> 00:16:13,909 spending on themselves and their children in terms of, 335 00:16:13,909 --> 00:16:16,230 we have a closet full, and look, 336 00:16:16,230 --> 00:16:17,730 I think this is probably why. 337 00:16:17,730 --> 00:16:19,710 I can't get a parking place at the mall. 338 00:16:19,710 --> 00:16:22,470 All the dressing rooms are always full. 339 00:16:22,470 --> 00:16:25,980 So it must be that we're spending too much on clothing. 340 00:16:25,980 --> 00:16:29,879 So he calls me back when he gets the first data runs 341 00:16:29,879 --> 00:16:31,909 and emails them and he says, "Okay", 342 00:16:31,909 --> 00:16:33,240 he said, "I've got your number." 343 00:16:33,240 --> 00:16:35,350 And I said, "Good, what's the number?" 344 00:16:35,350 --> 00:16:37,680 And he said, "32%." 345 00:16:37,679 --> 00:16:39,799 And I said, "So they're spending 32% more?" 346 00:16:39,799 --> 00:16:42,856 And he said, "No, they're spending 32% less today 347 00:16:42,856 --> 00:16:44,809 "than they spent a generation ago", 348 00:16:44,809 --> 00:16:46,489 in inflation adjusted dollars. 349 00:16:46,490 --> 00:16:48,769 And of course, it's like one of these things, 350 00:16:48,769 --> 00:16:51,539 the first, I have to tell you, this is really awful, 351 00:16:51,539 --> 00:16:53,429 the first eight times I talked with him 352 00:16:53,429 --> 00:16:56,269 after he gave me this one, I knew he had the numbers wrong. 353 00:16:56,269 --> 00:16:58,720 Finally, we ran this six different ways 'til Christmas, 354 00:16:58,720 --> 00:17:01,180 I finally believe that the numbers were right, 355 00:17:01,179 --> 00:17:02,549 and then we start to thinking, 356 00:17:02,549 --> 00:17:03,939 well, you know, it makes sense. 357 00:17:03,940 --> 00:17:06,080 Everybody shops at discount today, 358 00:17:06,079 --> 00:17:08,259 nobody pays full price in a department store, 359 00:17:08,259 --> 00:17:11,079 we import a lot more of our clothes than we used to, 360 00:17:11,079 --> 00:17:13,779 men don't wear expensive suits, except for my husband, 361 00:17:15,069 --> 00:17:17,519 people don't wear leather shoes, 362 00:17:17,519 --> 00:17:20,359 little children wear sandals and go barefoot a lot, 363 00:17:20,359 --> 00:17:21,869 on and on and on. 364 00:17:21,869 --> 00:17:26,057 And so the numbers hold that clothing expenses for a family 365 00:17:26,057 --> 00:17:26,891 climbed up to 32%. 366 00:17:26,891 --> 00:17:29,120 So, okay, food, let's do food, 367 00:17:29,119 --> 00:17:31,839 and let's be sure to put in eating out, 368 00:17:31,839 --> 00:17:34,809 because we all know with mom not at home anymore, 369 00:17:34,809 --> 00:17:36,849 it's gotta be that families are spending a fortune 370 00:17:36,849 --> 00:17:38,689 on eating out, and besides that, 371 00:17:38,690 --> 00:17:41,145 in 1972, nobody ate kiwis, 372 00:17:41,145 --> 00:17:43,829 and nobody paid for water, right? 373 00:17:43,829 --> 00:17:47,247 And my grandparents would be appalled by this, right? 374 00:17:47,248 --> 00:17:51,269 So how much more is today's family spending on food 375 00:17:51,269 --> 00:17:52,710 than they spent a generation ago? 376 00:17:52,710 --> 00:17:54,700 Same sort of matching, including eating out, 377 00:17:54,700 --> 00:17:58,950 and the answer is they're spending 18% less on food 378 00:17:58,950 --> 00:18:01,253 than they spent a generation ago. 379 00:18:02,630 --> 00:18:07,183 And once again, welcome to the world of big-box stores 380 00:18:08,089 --> 00:18:10,009 where people are buying on very thin margins, 381 00:18:10,009 --> 00:18:12,690 supermarkets, people eat a lot more pasta 382 00:18:12,690 --> 00:18:15,410 and they eat a lot less meat than they used to, 383 00:18:15,410 --> 00:18:18,750 there are lots of reasons that it's actually gone down 384 00:18:18,750 --> 00:18:21,220 in terms of what we spend on food. 385 00:18:21,220 --> 00:18:23,569 Okay, so, I'm beginning to get the hang of this, 386 00:18:23,569 --> 00:18:26,356 I said, "Appliances, nobody had an espresso machine 387 00:18:26,356 --> 00:18:28,817 "a generation ago, nobody had a separate popcorn popper, 388 00:18:28,817 --> 00:18:30,019 "no one had a microwave oven." 389 00:18:30,019 --> 00:18:32,730 And by the way, for each of these, 390 00:18:32,730 --> 00:18:35,069 one of the fun parts of being able to do research, 391 00:18:35,069 --> 00:18:36,029 can't do this in a lecture, 392 00:18:36,029 --> 00:18:37,809 you can't burden the lecture with this, 393 00:18:37,809 --> 00:18:39,863 but it's to get all the quotes, 394 00:18:40,700 --> 00:18:43,809 to get Robert Frank and Julie Scherer and all these people 395 00:18:43,809 --> 00:18:45,079 who are explaining why Americans 396 00:18:45,079 --> 00:18:46,629 are in so much financial trouble, 397 00:18:46,630 --> 00:18:48,390 and each time of course they're explaining about 398 00:18:48,390 --> 00:18:49,940 how much we spend on clothing, 399 00:18:49,940 --> 00:18:51,519 how much we're spending on food, 400 00:18:51,519 --> 00:18:53,069 and how much we're spending on appliances. 401 00:18:53,069 --> 00:18:56,230 So yeah, just in your own mind, pack all those in. 402 00:18:56,230 --> 00:18:58,049 And of course, you know where I'm going. 403 00:18:58,049 --> 00:19:03,049 52% less on appliances than they spent a generation ago. 404 00:19:03,400 --> 00:19:05,700 And you get the rest of the pattern. 405 00:19:05,700 --> 00:19:09,778 Per car average, yeah, we can talk about SUVs, 406 00:19:09,778 --> 00:19:14,579 the size of a living room and Corinthian leather 407 00:19:14,579 --> 00:19:16,236 or whatever it is you think, 408 00:19:17,140 --> 00:19:19,160 with televisions in the back, 409 00:19:19,160 --> 00:19:23,810 the reality is the per car cost of owning a car in America 410 00:19:23,809 --> 00:19:26,659 has gone down 24% in 30 years. 411 00:19:26,660 --> 00:19:28,100 Principle reason for it, 412 00:19:28,099 --> 00:19:30,829 Americans today keep a car more than two years longer 413 00:19:30,829 --> 00:19:33,250 than they kept it 30 years ago, 414 00:19:33,250 --> 00:19:36,000 and repair costs have dropped significantly. 415 00:19:36,000 --> 00:19:39,319 So the per car, this is what people really spend, 416 00:19:39,319 --> 00:19:42,230 not what they projected might have spent, 417 00:19:42,230 --> 00:19:43,799 have gone down dramatically. 418 00:19:43,799 --> 00:19:45,899 Whoop, I'm getting a little fast here. 419 00:19:45,900 --> 00:19:47,603 So the question is, 420 00:19:47,603 --> 00:19:49,670 it's a little trigger-happy with this thing, 421 00:19:49,670 --> 00:19:53,580 so the question is if all those things went down, 422 00:19:53,579 --> 00:19:57,000 if clothing and food and appliances and cars went down, 423 00:19:57,000 --> 00:19:58,329 and by the way, I could and a lot of this 424 00:19:58,329 --> 00:19:59,819 with a lot more consumer goods, 425 00:19:59,819 --> 00:20:04,819 electronics went up, surprise, surprise, 300 bucks, okay? 426 00:20:04,819 --> 00:20:08,453 Dog food went up, baby food went down, 427 00:20:08,453 --> 00:20:12,859 cigarettes went down, liquor went up, we should watch that, 428 00:20:12,859 --> 00:20:15,479 dry cleaning went down. 429 00:20:15,480 --> 00:20:20,339 The point is there's either wash or a negative 430 00:20:20,339 --> 00:20:22,939 in terms of kind of ordinary consumption, 431 00:20:22,940 --> 00:20:25,830 the idea that we are an over-consuming society, 432 00:20:25,829 --> 00:20:28,669 what most people talk about when they're consuming. 433 00:20:28,670 --> 00:20:31,480 So where is the family spending more money 434 00:20:31,480 --> 00:20:32,890 than they spent a generation ago? 435 00:20:32,890 --> 00:20:36,200 Well, let's start with a three-bedroom, one-bath house, 436 00:20:36,200 --> 00:20:39,283 that the median income family is paying for. 437 00:20:40,170 --> 00:20:43,300 And there it is, inflation adjusted dollars, 438 00:20:43,299 --> 00:20:48,299 a 76% increase in what a family spends on a mortgage. 439 00:20:49,220 --> 00:20:51,576 That's the mortgage payment, month in, month out. 440 00:20:51,576 --> 00:20:52,950 Now think about that. 441 00:20:52,950 --> 00:20:57,080 We have much lower mortgage rates than we had 30 years ago, 442 00:20:57,079 --> 00:20:59,139 for those of you who are old enough to remember, 443 00:20:59,140 --> 00:21:01,520 but the difference is when you take out a mortgage 444 00:21:01,519 --> 00:21:05,129 for much more money, the low interest rate 445 00:21:05,130 --> 00:21:08,210 will not make up for that difference. 446 00:21:08,210 --> 00:21:10,610 And I want to emphasize here, 447 00:21:10,609 --> 00:21:14,819 the median sized house that we're talking about here 448 00:21:14,819 --> 00:21:17,279 did grow slightly in this period. 449 00:21:17,279 --> 00:21:22,279 It grew from 5.8 rooms to 6.1 rooms. 450 00:21:22,410 --> 00:21:25,300 So this is not about, and on average, 451 00:21:25,299 --> 00:21:28,869 this family, this median family either 452 00:21:28,869 --> 00:21:32,029 picked up a second bathroom or a third bedroom, 453 00:21:32,029 --> 00:21:33,113 but not both. 454 00:21:34,079 --> 00:21:35,486 So for those of you who want to say, 455 00:21:35,487 --> 00:21:38,200 "Oh but I've driven by the McMansions", 456 00:21:38,200 --> 00:21:42,007 "everybody has to have granite countertops and spa bathrooms 457 00:21:42,007 --> 00:21:43,547 "and media rooms, I've seen them, 458 00:21:43,547 --> 00:21:44,950 "I've seen them, I've seen them", 459 00:21:44,950 --> 00:21:47,370 and compare that with Levittown, 460 00:21:47,369 --> 00:21:49,119 which is more than 30 years ago, 461 00:21:49,119 --> 00:21:52,079 but to give the idea, all that tells us 462 00:21:52,079 --> 00:21:55,129 is that the new housing market has shifted 463 00:21:55,130 --> 00:21:57,000 from the entry level house, 464 00:21:57,000 --> 00:22:01,069 which is what was being built in the 1950s and 1960s to, 465 00:22:01,069 --> 00:22:03,490 on average, when you buy a new house today, 466 00:22:03,490 --> 00:22:06,400 it is your third to fourth house purchase, 467 00:22:06,400 --> 00:22:08,080 that is, you've moved up and moved up 468 00:22:08,079 --> 00:22:10,049 until you can afford this bigger house, 469 00:22:10,049 --> 00:22:12,036 in other words, housing is not being built 470 00:22:12,036 --> 00:22:14,330 for 70% of American families, 471 00:22:14,329 --> 00:22:17,199 it's being built for the top 20% of American families, 472 00:22:17,200 --> 00:22:18,309 that's what we see when we see 473 00:22:18,309 --> 00:22:20,319 the new construction that's underway. 474 00:22:20,319 --> 00:22:23,039 For the average family today, 475 00:22:23,039 --> 00:22:25,680 they are about 50% more likely to be in a house 476 00:22:25,680 --> 00:22:27,570 more than 25 years old 477 00:22:27,569 --> 00:22:31,099 and have all of the attendant expenses for maintenance, 478 00:22:31,099 --> 00:22:35,649 but just looking at the mortgage, 76% more for a mortgage 479 00:22:35,650 --> 00:22:37,790 than they had a generation ago. 480 00:22:37,789 --> 00:22:40,649 Okay, well what's the next one they spent money on? 481 00:22:40,650 --> 00:22:42,040 Health insurance. 482 00:22:42,039 --> 00:22:44,133 This is my family that's healthy. 483 00:22:44,980 --> 00:22:49,160 And my family, because I've loaded the dice here, 484 00:22:49,160 --> 00:22:52,519 that's lucky enough to have an employer 485 00:22:52,519 --> 00:22:54,250 who sponsors health insurance, 486 00:22:54,250 --> 00:22:57,220 so I'm gonna make an apples-to-apples comparison 487 00:22:57,220 --> 00:23:00,759 of employer-sponsored health insurance, 488 00:23:00,759 --> 00:23:03,349 how much more two does today's family pay? 489 00:23:03,349 --> 00:23:08,119 And the answer is they pay 74% in inflation adjusted dollars 490 00:23:08,119 --> 00:23:10,939 more than they did a generation ago. 491 00:23:10,940 --> 00:23:13,920 Third one, cars, increase of 52%. 492 00:23:13,920 --> 00:23:15,480 Okay, Warren, how did you get cars 493 00:23:15,480 --> 00:23:17,120 both above the line and below the line? 494 00:23:17,119 --> 00:23:22,032 Well, I teach commercial law, but the answer is, 495 00:23:22,032 --> 00:23:25,509 the median family with two people in the workforce 496 00:23:25,509 --> 00:23:27,400 has moved from being a one-car family 497 00:23:27,400 --> 00:23:29,230 to being a two-car family. 498 00:23:29,230 --> 00:23:30,589 Families living out in the suburbs, 499 00:23:30,589 --> 00:23:32,310 even if they keep a parent at home 500 00:23:32,310 --> 00:23:34,826 can't get by on one car much of the time, 501 00:23:34,826 --> 00:23:36,569 they've got to have two cars 502 00:23:36,569 --> 00:23:38,579 in order to be able to get to the doctor, 503 00:23:38,579 --> 00:23:40,579 to be able to get to the grocery store. 504 00:23:40,579 --> 00:23:43,730 So families spend more because they have more cars 505 00:23:43,730 --> 00:23:45,640 than they used to have. 506 00:23:45,640 --> 00:23:49,020 Fourth-biggest, remember, I've got my mom, dad and two kids 507 00:23:49,019 --> 00:23:50,460 and of course the big difference was 508 00:23:50,460 --> 00:23:52,069 mom was at home a generation ago, 509 00:23:52,069 --> 00:23:56,099 today she is out in the workforce is childcare. 510 00:23:56,099 --> 00:23:59,109 Now I put childcare at a 100% increase. 511 00:23:59,109 --> 00:24:01,919 In fact, you may remember from third grade 512 00:24:01,920 --> 00:24:03,730 that you can't divide by zero, 513 00:24:03,730 --> 00:24:06,390 so I could have picked 1,000% or 1%, 514 00:24:06,390 --> 00:24:07,759 or whatever I wanted to pick here, 515 00:24:07,759 --> 00:24:10,839 it is a new expense picked up by the two-income family 516 00:24:10,839 --> 00:24:13,709 that was simply not there for the one-income family. 517 00:24:13,710 --> 00:24:17,890 And we have one more expense, and it's taxes. 518 00:24:17,890 --> 00:24:21,990 What's happened with taxes is that progressive tax system, 519 00:24:21,990 --> 00:24:24,849 as mildly progressive as it is, 520 00:24:24,849 --> 00:24:28,559 the first dollar that the second earner earns is taxed 521 00:24:28,559 --> 00:24:31,240 after the last dollar of the first earner, 522 00:24:31,240 --> 00:24:34,710 so it means that the tax rate for this economic unit 523 00:24:34,710 --> 00:24:39,380 has gone out by about 25% in this period of time. 524 00:24:39,380 --> 00:24:43,040 Okay, so there it is, downs and ups. 525 00:24:43,039 --> 00:24:44,990 And I hope there are two things you notice about 526 00:24:44,990 --> 00:24:46,470 the downs and ups. 527 00:24:46,470 --> 00:24:50,950 The first one is the downs frankly are all smaller purchases 528 00:24:50,950 --> 00:24:54,090 than the ups are, and that's bad news. 529 00:24:54,089 --> 00:24:58,279 And the second is the downs are all flexible purchases, 530 00:24:58,279 --> 00:25:01,009 that is, lose your job, get sick, 531 00:25:01,009 --> 00:25:04,475 have a tough month with various expenses, 532 00:25:04,476 --> 00:25:06,070 you cut back on the downs, 533 00:25:06,069 --> 00:25:07,850 don't buy appliances this month, 534 00:25:07,851 --> 00:25:10,470 cut back on food, it's not that you quit eating, 535 00:25:10,470 --> 00:25:11,740 but you know, there's a difference between 536 00:25:11,740 --> 00:25:13,640 macaroni and cheese and steak. 537 00:25:13,640 --> 00:25:16,960 Families have flexibility in all the things that shrunk, 538 00:25:16,960 --> 00:25:19,900 they shrunk the things where flexibility is, 539 00:25:19,900 --> 00:25:21,220 but look at those other expenses, 540 00:25:21,220 --> 00:25:24,600 those other expenses are big, fixed, relentless expenses. 541 00:25:24,599 --> 00:25:27,240 And so this gets to what I think of 542 00:25:27,240 --> 00:25:32,240 as the heart of what my research is about up to this point 543 00:25:32,950 --> 00:25:35,870 and that is what these families look like, 544 00:25:35,869 --> 00:25:38,364 and I do look at this the way a commercial lawyer does, 545 00:25:38,365 --> 00:25:40,549 if this were a little business, 546 00:25:40,549 --> 00:25:42,490 what these families look at. 547 00:25:42,490 --> 00:25:47,370 The single income family back in the early 1970s 548 00:25:47,369 --> 00:25:48,599 earned less money, 549 00:25:48,599 --> 00:25:50,369 that's the first thing you'll notice here, right? 550 00:25:50,369 --> 00:25:52,812 They're making about $32,000. 551 00:25:52,813 --> 00:25:56,070 This is all inflation adjusted dollars again. 552 00:25:56,069 --> 00:25:57,549 And you notice, of course, 553 00:25:57,549 --> 00:25:59,430 they're making a whole lot more money, 554 00:25:59,430 --> 00:26:01,701 making about $63,000, 555 00:26:01,701 --> 00:26:04,303 about $73,000 in the early 2000s. 556 00:26:06,779 --> 00:26:09,649 But notice those five expenses that I gave you 557 00:26:09,650 --> 00:26:13,560 on the preceding chart, that's the part that's in red. 558 00:26:13,559 --> 00:26:18,539 The early family is spending right at half its income 559 00:26:18,539 --> 00:26:20,269 on these big fixed expenses, 560 00:26:20,269 --> 00:26:23,349 these expenses that are very difficult to cut down, 561 00:26:23,349 --> 00:26:25,192 to trim back, to cope with. 562 00:26:26,035 --> 00:26:29,550 And that family, by the early 2000s, 563 00:26:29,549 --> 00:26:33,500 has committed three quarters of their income 564 00:26:33,500 --> 00:26:38,500 in order to meet those five basic expenses. 565 00:26:38,529 --> 00:26:43,529 In fact, you'll notice the math we've done here, the family, 566 00:26:43,869 --> 00:26:46,869 the two-income family, the mom, dad and two kids, 567 00:26:46,869 --> 00:26:48,669 the prototype of the family that's supposed to be 568 00:26:48,670 --> 00:26:50,330 working in America, 569 00:26:50,329 --> 00:26:52,829 the one that's supposed to be making it all, 570 00:26:52,829 --> 00:26:56,372 by the time they pay their five basic expenses, 571 00:26:57,289 --> 00:27:01,829 they have less money left over, fewer total dollars, 572 00:27:01,829 --> 00:27:05,072 than their one-income parents had a generation ago. 573 00:27:06,019 --> 00:27:08,809 And now from the point of view of a commercial law scholar, 574 00:27:08,809 --> 00:27:12,139 if I were simply looking at them and these were businesses, 575 00:27:12,140 --> 00:27:14,830 this is, Business A is on the the far side 576 00:27:14,829 --> 00:27:17,500 and Business B is on the near side, I'd say, well, 577 00:27:17,500 --> 00:27:20,049 Business B is gonna go broke a lot more often 578 00:27:20,049 --> 00:27:24,970 than Business A because they have so much less flexibility, 579 00:27:24,970 --> 00:27:28,495 so much more debt, they're much more deeply leveraged, 580 00:27:28,494 --> 00:27:31,629 and they're gonna have more of a harder time economically. 581 00:27:31,630 --> 00:27:36,630 And in fact, that's about what's happened to these families. 582 00:27:36,789 --> 00:27:41,149 So there's the heart, now I want to shift this a little bit 583 00:27:41,150 --> 00:27:43,650 to say that's the economics of what's happened. 584 00:27:43,650 --> 00:27:45,019 We've seen it on the income side, 585 00:27:45,019 --> 00:27:46,446 we've seen what happened on the expense side, 586 00:27:46,446 --> 00:27:49,279 and we've seen what it did to the American budget, 587 00:27:49,279 --> 00:27:53,710 how it changed and made this a riskier economic unit, 588 00:27:53,710 --> 00:27:56,420 but now what I want to do is I want to press on how 589 00:27:56,420 --> 00:28:01,420 this family in the 2000s faces in fact even more risk 590 00:28:02,099 --> 00:28:04,409 than these numbers suggest. 591 00:28:04,410 --> 00:28:06,100 All right, first part, let's think about it 592 00:28:06,099 --> 00:28:07,669 from the income side. 593 00:28:07,670 --> 00:28:12,670 The family of the early 2000s now has to have two incomes 594 00:28:14,160 --> 00:28:16,100 in order to keep its health insurance, 595 00:28:16,099 --> 00:28:20,392 to make its house payment, to keep its cars on the road. 596 00:28:21,740 --> 00:28:24,390 That means, just statistically speaking, 597 00:28:24,390 --> 00:28:28,470 if the risk of losing your job had stayed exactly the same 598 00:28:28,470 --> 00:28:31,819 over the last generation, the family on the right 599 00:28:31,819 --> 00:28:35,230 has twice the risk of the family on the left 600 00:28:35,230 --> 00:28:37,539 of not being able to make the mortgage payment. 601 00:28:37,539 --> 00:28:39,819 Yes, they've diversified, they won't go to zero, 602 00:28:39,819 --> 00:28:40,789 but the point is, they won't have enough 603 00:28:40,789 --> 00:28:42,759 to make the mortgage payment. 604 00:28:42,759 --> 00:28:46,329 So what we've got now is we've got families 605 00:28:46,329 --> 00:28:49,210 who don't have to bring in 52 checks 606 00:28:49,210 --> 00:28:52,450 in order to be able to make the monthly mortgage payment, 607 00:28:52,450 --> 00:28:54,730 they got to bring in 104. 608 00:28:54,730 --> 00:28:59,200 And if either of them loses their job, 609 00:28:59,200 --> 00:29:00,430 they don't make the mortgage payment, 610 00:29:00,430 --> 00:29:02,269 they're flat out of luck. 611 00:29:02,269 --> 00:29:03,609 Let me say this another way, 612 00:29:03,609 --> 00:29:05,299 'cause I want to give it one more twist. 613 00:29:05,299 --> 00:29:09,309 The family on the left has has a hidden resource here. 614 00:29:09,309 --> 00:29:12,740 They have another worker, the added worker effect. 615 00:29:12,740 --> 00:29:16,420 If dad, and that's how it usually was, loses his job 616 00:29:16,420 --> 00:29:20,490 or has a heart attack and can't go to work for three months, 617 00:29:20,490 --> 00:29:22,519 the family on the left has somebody they can send in 618 00:29:22,519 --> 00:29:23,670 to the workforce. 619 00:29:23,670 --> 00:29:26,500 Now she doesn't make as much money as she does 620 00:29:26,500 --> 00:29:27,710 by the year 2000, 621 00:29:27,710 --> 00:29:28,890 she doesn't have as much education, 622 00:29:28,890 --> 00:29:31,060 she doesn't have as much on-the-job training, 623 00:29:31,059 --> 00:29:32,440 but, and here's the key, 624 00:29:32,440 --> 00:29:34,450 every dollar she earns is a new dollar. 625 00:29:34,450 --> 00:29:37,350 It's an unbudgeted dollar that was not part 626 00:29:37,349 --> 00:29:38,879 of what they originally had. 627 00:29:38,880 --> 00:29:40,680 So for example, the family on the left 628 00:29:40,680 --> 00:29:42,910 that collects unemployment insurance, 629 00:29:42,910 --> 00:29:47,060 combined with the additional income that mom can bring in 630 00:29:47,059 --> 00:29:49,339 for a temporary period of employment, 631 00:29:49,339 --> 00:29:51,490 they got a chance, they'll go down some, 632 00:29:51,490 --> 00:29:52,870 but they got a chance to pull through 633 00:29:52,869 --> 00:29:55,359 and come back up on the other side. 634 00:29:55,359 --> 00:29:58,240 The family on the right, if something goes wrong, 635 00:29:58,240 --> 00:29:59,089 there's no place to go, 636 00:29:59,089 --> 00:30:02,019 they've already got their other person not only at work 637 00:30:02,019 --> 00:30:03,329 but already fully budgeted, 638 00:30:03,329 --> 00:30:05,939 they've already given up that income fully 639 00:30:07,226 --> 00:30:09,100 in order to survive. 640 00:30:09,099 --> 00:30:11,709 But the risk of losing your job, 641 00:30:11,710 --> 00:30:15,400 the risk of losing income didn't stay steady 642 00:30:15,400 --> 00:30:18,500 between the early 1970s and today. 643 00:30:18,500 --> 00:30:21,690 I draw here on Jacob Hacker's work, 644 00:30:21,690 --> 00:30:25,680 some of you may be familiar with it, "The Great Risk Shift". 645 00:30:25,680 --> 00:30:29,080 What Jacob has done in this has looked at 646 00:30:29,079 --> 00:30:34,079 a family's chance of a 20% or greater drop in income. 647 00:30:34,400 --> 00:30:37,180 And he starts back in 1970, 648 00:30:37,180 --> 00:30:40,560 Jacob is a good friend and will stick with the same years 649 00:30:40,559 --> 00:30:44,409 I want to go with, and he goes up to 2003, 650 00:30:44,410 --> 00:30:48,080 and you notice how income volatility 651 00:30:48,079 --> 00:30:50,139 has gone up in this period of time. 652 00:30:50,140 --> 00:30:52,186 So now we've got that family, 653 00:30:52,185 --> 00:30:56,889 not only struggling because they got to have 104 paychecks, 654 00:30:56,890 --> 00:30:58,830 struggling because the odds that one of them 655 00:30:58,829 --> 00:31:01,109 will be laid off has gone up from where it was 656 00:31:01,109 --> 00:31:02,039 a generation ago. 657 00:31:02,039 --> 00:31:04,119 Okay, so that's where they are on the income side, 658 00:31:04,119 --> 00:31:05,339 in terms of risk. 659 00:31:05,339 --> 00:31:08,959 This is risk this little unit has to bear. 660 00:31:08,960 --> 00:31:10,629 Let's think about health. 661 00:31:10,628 --> 00:31:13,429 Okay, same argument I could make as before. 662 00:31:13,430 --> 00:31:14,750 They now have double the chance 663 00:31:14,750 --> 00:31:17,390 that someone will be in a car accident, 664 00:31:17,390 --> 00:31:18,520 one of their two workers, 665 00:31:18,519 --> 00:31:21,019 and won't be able to go to work and therefore 666 00:31:21,019 --> 00:31:23,599 make enough money to pay a mortgage payment, 667 00:31:23,599 --> 00:31:26,869 but this family now faces additional risks 668 00:31:26,869 --> 00:31:29,459 on the health side as well. 669 00:31:29,460 --> 00:31:30,990 What additional risks do they face? 670 00:31:30,990 --> 00:31:32,670 Well, I'll pop forward to one, 671 00:31:32,670 --> 00:31:35,630 and that is the increased odds 672 00:31:35,630 --> 00:31:37,693 that they won't have health insurance. 673 00:31:37,692 --> 00:31:41,299 Those odds have gone up over the past 20 years, 674 00:31:41,299 --> 00:31:42,970 but the ones I like to think about, 675 00:31:42,970 --> 00:31:43,900 I keep coming back to this one 676 00:31:43,900 --> 00:31:45,730 because it's my favorite slide, 677 00:31:45,730 --> 00:31:48,000 the ones I like to think about 678 00:31:48,000 --> 00:31:51,349 are that the world of healthcare has changed in 30 years. 679 00:31:51,349 --> 00:31:52,719 So let me just give you an example. 680 00:31:52,720 --> 00:31:56,450 In 1971, a woman who was healthy 681 00:31:56,450 --> 00:31:58,299 and gave birth to a healthy baby, 682 00:31:58,299 --> 00:32:00,193 ordinary delivery, non-cesarean, 683 00:32:00,193 --> 00:32:02,985 stayed in the hospital for five days 684 00:32:02,986 --> 00:32:05,280 after the day the baby was born, 685 00:32:05,279 --> 00:32:06,410 that's what insurance paid for, 686 00:32:06,410 --> 00:32:07,790 that's what the hospital expected. 687 00:32:07,789 --> 00:32:09,200 You could go home earlier if you wanted to 688 00:32:09,200 --> 00:32:11,400 but you're entitled to five days in the hospital. 689 00:32:11,400 --> 00:32:13,370 If you had a cesarean, 10, 690 00:32:13,369 --> 00:32:15,062 that you got to stay in 1971. 691 00:32:15,063 --> 00:32:18,580 And you know what the numbers are in 2006? 692 00:32:18,579 --> 00:32:20,371 24 hours, okay? 693 00:32:20,372 --> 00:32:23,259 24 hours, and keep in mind, in some places, 694 00:32:23,259 --> 00:32:25,069 that's by legislation, 695 00:32:25,069 --> 00:32:27,169 because they were trying to push them out faster. 696 00:32:27,170 --> 00:32:31,170 How have we made gains in hospital efficiency 697 00:32:31,170 --> 00:32:32,529 over the past 30 years? 698 00:32:32,529 --> 00:32:34,029 You send home the sick people. 699 00:32:34,980 --> 00:32:37,339 It really works, there is a policy, 700 00:32:37,339 --> 00:32:40,059 we never want to talk about this in the United States, 701 00:32:40,059 --> 00:32:42,399 it's known in the trade, in the hospital trade, 702 00:32:42,400 --> 00:32:44,623 is send them home quicker and sicker. 703 00:32:46,970 --> 00:32:51,400 They save money by letting the family provide nursing care 704 00:32:51,400 --> 00:32:52,480 instead of having the hospital, 705 00:32:52,480 --> 00:32:55,809 so you still have your surgery done at the hospital, 706 00:32:55,809 --> 00:32:59,549 but it's the family that will take care of you post-surgery. 707 00:32:59,549 --> 00:33:04,549 And so today we witness the spectacle of my mother-in-law, 708 00:33:06,394 --> 00:33:10,450 a woman in her 80s where someone's trying to explain to her 709 00:33:10,450 --> 00:33:13,490 how it is that she can wash a tube 710 00:33:15,099 --> 00:33:18,269 and rinse things out and give injections, 711 00:33:18,269 --> 00:33:19,859 my sister-in-law was just asked to do this 712 00:33:19,859 --> 00:33:21,979 when my brother had some surgery, 713 00:33:21,980 --> 00:33:25,160 we're gonna train the family to take care, 714 00:33:25,160 --> 00:33:27,130 only they're both at work. 715 00:33:27,130 --> 00:33:30,830 And the consequence of this means that for these families 716 00:33:30,829 --> 00:33:33,279 with everybody in the workforce, somebody gets sick, 717 00:33:33,279 --> 00:33:34,289 you just take off work, 718 00:33:34,289 --> 00:33:35,970 'cause somebody's gonna have to take care of them, 719 00:33:35,970 --> 00:33:37,490 somebody's gonna have to 'cause you're not gonna get 720 00:33:37,490 --> 00:33:39,920 this extra period of nursing care. 721 00:33:39,920 --> 00:33:42,350 It's just another way to give one more push. 722 00:33:42,349 --> 00:33:44,569 How about if a kid gets sick, a child? 723 00:33:44,569 --> 00:33:46,460 I mean something really serious, 724 00:33:46,460 --> 00:33:48,720 grandma falls and breaks a hip. 725 00:33:48,720 --> 00:33:51,120 A generation ago, there was someone at home 726 00:33:51,119 --> 00:33:52,639 to provide that nursing care, 727 00:33:52,640 --> 00:33:54,580 for that extra eight weeks that grandma needed 728 00:33:54,579 --> 00:33:56,149 some extra help. 729 00:33:56,150 --> 00:33:59,820 Today, the illness of a family member 730 00:33:59,819 --> 00:34:02,789 has a direct income impact for people 731 00:34:02,789 --> 00:34:04,819 who aren't lucky enough to have jobs that pay you 732 00:34:04,819 --> 00:34:06,450 even when you're not at work. 733 00:34:06,450 --> 00:34:10,300 So the consequence is we end up with these families, 734 00:34:10,300 --> 00:34:11,650 the child gets sick, 735 00:34:11,650 --> 00:34:14,710 I read these stories over and over in my bankruptcy files, 736 00:34:14,710 --> 00:34:16,670 the child gets sick, 737 00:34:16,670 --> 00:34:18,470 mom stays at the hospital with the child 738 00:34:18,469 --> 00:34:19,712 until she loses her job. 739 00:34:20,610 --> 00:34:24,360 There are income effects now from any illness 740 00:34:24,360 --> 00:34:26,420 anywhere in the family. 741 00:34:26,420 --> 00:34:31,099 So we end up with a family once again bearing more risk 742 00:34:31,099 --> 00:34:33,490 that someone will get sick, 743 00:34:33,490 --> 00:34:36,050 and we can just keep multiplying this. 744 00:34:36,050 --> 00:34:38,519 What are the odds of spending $10,000 745 00:34:38,519 --> 00:34:39,690 in an emergency room today 746 00:34:39,690 --> 00:34:41,860 compared to spending $10,000 in an emergency room 747 00:34:41,860 --> 00:34:43,454 a generation ago? 748 00:34:43,454 --> 00:34:45,610 One more that I just have to mention 749 00:34:45,610 --> 00:34:48,500 that we can't quantify yet but I'm watching it 750 00:34:48,500 --> 00:34:50,650 is that insurance itself has changed 751 00:34:50,650 --> 00:34:53,372 in terms of how much of the medical cost 752 00:34:53,371 --> 00:34:55,659 is actually covered. 753 00:34:55,659 --> 00:34:57,929 We now have floating around in America, 754 00:34:57,929 --> 00:34:59,269 I just, I don't know what else to call it 755 00:34:59,269 --> 00:35:01,009 except faux insurance, 756 00:35:01,010 --> 00:35:02,470 people who think they're insured 757 00:35:02,469 --> 00:35:05,889 until they actually get sick and need their insurance 758 00:35:05,889 --> 00:35:08,139 and it turns out that, well, 759 00:35:08,139 --> 00:35:09,029 yeah, you have insurance, 760 00:35:09,030 --> 00:35:12,400 I love the Utah policy that our 761 00:35:12,400 --> 00:35:16,750 Secretary of Health Education and Welfare 762 00:35:16,750 --> 00:35:19,797 comes out and says, "I got everybody in Utah insured, 763 00:35:19,797 --> 00:35:22,922 "except it doesn't cover hospitalization. 764 00:35:22,922 --> 00:35:24,257 (audience laughing) 765 00:35:24,257 --> 00:35:26,007 "And it doesn't cover specialists." 766 00:35:26,849 --> 00:35:27,967 And you call that, 767 00:35:27,967 --> 00:35:29,780 and of course, it doesn't cover prescription drugs, 768 00:35:29,780 --> 00:35:32,240 and it doesn't cover supplies and it doesn't, 769 00:35:32,239 --> 00:35:35,199 there's more than it doesn't cover than it does cover. 770 00:35:35,199 --> 00:35:39,222 So all of this is being pushed back on the family. 771 00:35:40,349 --> 00:35:42,009 So let me take one more twist on it, 772 00:35:42,010 --> 00:35:45,350 so we've got changes in jobs, changes in health insurance, 773 00:35:45,349 --> 00:35:46,299 changes to healthcare, 774 00:35:46,300 --> 00:35:48,000 what it cost to do health and care, 775 00:35:48,000 --> 00:35:51,260 and I just want to put one more tweak into it 776 00:35:51,260 --> 00:35:54,480 and that is to talk about the special risks 777 00:35:54,480 --> 00:35:56,570 facing families with children. 778 00:35:56,570 --> 00:35:58,583 I've made this my iconic family, 779 00:35:59,579 --> 00:36:02,592 but I want to make two points about the iconic family here, 780 00:36:02,592 --> 00:36:06,250 the mom, dad and two kids. 781 00:36:06,250 --> 00:36:08,929 This is how it works for mom, dad and two kids. 782 00:36:08,929 --> 00:36:12,759 Think how it works for either a mom and two kids 783 00:36:12,760 --> 00:36:14,523 or a dad and two kids. 784 00:36:15,980 --> 00:36:17,480 They are now competing, 785 00:36:17,480 --> 00:36:20,563 I actually met a woman, it was a wonderful exchange, 786 00:36:20,563 --> 00:36:23,677 I was sitting on an airplane right after the book came out, 787 00:36:23,677 --> 00:36:25,470 "The Two-Income Trap" and I had it on my lap 788 00:36:25,469 --> 00:36:27,502 and this woman next to me said, "Have you read that book?" 789 00:36:27,503 --> 00:36:30,500 (audience laughing) And I said, "Mm-hmm." 790 00:36:30,500 --> 00:36:33,820 And she said, "I'm a divorced mother", 791 00:36:33,820 --> 00:36:34,880 and she said, "I'm an accountant." 792 00:36:34,880 --> 00:36:36,336 She said, "I make a good income, 793 00:36:36,336 --> 00:36:39,239 "I make above a median income in the United States today." 794 00:36:39,239 --> 00:36:42,126 She said, "I could make it, I could support my two kids 795 00:36:42,126 --> 00:36:44,273 "on what I get for child support. 796 00:36:45,516 --> 00:36:47,936 "I could do it if I were only competing 797 00:36:47,936 --> 00:36:50,476 "against other one-income households, 798 00:36:50,476 --> 00:36:53,646 "for the basics, for housing, for healthcare, 799 00:36:53,646 --> 00:36:55,299 "for all the things we're buying." 800 00:36:55,300 --> 00:36:57,570 But she said, "I'm competing against two-income households." 801 00:36:57,570 --> 00:36:58,680 And she said, "I just can't do it." 802 00:36:58,679 --> 00:37:01,690 She said, "I can't hang on, I can't make it." 803 00:37:01,690 --> 00:37:03,559 So that's the first part I want you to see, 804 00:37:03,559 --> 00:37:06,289 the one-income family gets the lower income, 805 00:37:06,289 --> 00:37:09,119 still faces high expenses, still wants the house 806 00:37:09,119 --> 00:37:12,389 and so on and so forth, and faces all the same risks 807 00:37:12,389 --> 00:37:16,129 with no one to back up and provide that second income, 808 00:37:16,130 --> 00:37:18,930 but I want to step forward to say something else 809 00:37:18,929 --> 00:37:22,779 about families with children and that is 810 00:37:22,780 --> 00:37:24,500 this goes back to Hacker's work, 811 00:37:24,500 --> 00:37:28,820 percentage increase in volatility by family type 812 00:37:28,820 --> 00:37:31,940 from 1970 to 2003. 813 00:37:31,940 --> 00:37:34,650 And notice what Hacker points out here. 814 00:37:34,650 --> 00:37:36,180 For those of you can't read the wording 815 00:37:36,179 --> 00:37:37,899 all the way over to the far side, 816 00:37:37,900 --> 00:37:40,170 green is single without children, 817 00:37:40,170 --> 00:37:41,619 that's how much income volatility, 818 00:37:41,619 --> 00:37:43,599 and look, that's substantial income volatility 819 00:37:43,599 --> 00:37:47,409 that we've got there, in the high 30s. 820 00:37:47,409 --> 00:37:51,670 Single with children, a little above 40%. 821 00:37:51,670 --> 00:37:55,230 Married without children, you get about a 70% volatility. 822 00:37:55,230 --> 00:37:59,400 And married with children pushes up to about 95% 823 00:37:59,400 --> 00:38:03,300 increase in volatility over the past generation. 824 00:38:03,300 --> 00:38:05,400 Now, are families struggling with this? 825 00:38:05,400 --> 00:38:07,300 Well, let me show you some of my data. 826 00:38:08,579 --> 00:38:10,259 Oh, not my data, government data, 827 00:38:10,260 --> 00:38:12,146 I never know what the next slide is going to be, 828 00:38:12,146 --> 00:38:14,250 keeps me on my toes. 829 00:38:14,250 --> 00:38:15,980 The next one is to disaggregate 830 00:38:15,980 --> 00:38:17,500 a little bit more about housing, 831 00:38:17,500 --> 00:38:19,489 we talked just a little bit about it before. 832 00:38:19,489 --> 00:38:20,519 This is one of those charts, 833 00:38:20,519 --> 00:38:22,289 it doesn't fit perfectly with what I'm talking about 834 00:38:22,289 --> 00:38:24,029 because the years aren't quite right, 835 00:38:24,030 --> 00:38:26,360 this is some government data I found. 836 00:38:26,360 --> 00:38:28,599 Only goes back to 1983, 837 00:38:28,599 --> 00:38:33,500 but notice what it shows, that increase in housing costs, 838 00:38:33,500 --> 00:38:35,150 what families are paying for mortgages, 839 00:38:35,150 --> 00:38:36,970 not my part in general, 840 00:38:36,969 --> 00:38:38,639 they've done it the other way around, 841 00:38:38,639 --> 00:38:40,529 what they're paying for the house itself, 842 00:38:40,530 --> 00:38:42,360 what the cost of the house is. 843 00:38:42,360 --> 00:38:47,180 We saw a 50% increase among the families with no children, 844 00:38:47,179 --> 00:38:49,869 inflation adjusted and what housing costs, 845 00:38:49,869 --> 00:38:52,529 but you notice among families with children, 846 00:38:52,530 --> 00:38:54,230 it's 100% increase, 847 00:38:54,230 --> 00:38:57,929 a full 100% increase in inflation adjusted dollars 848 00:38:57,929 --> 00:39:00,960 for what a home costs for families with children. 849 00:39:00,960 --> 00:39:02,682 Now we're gonna save plenty of time here for Q and A 850 00:39:02,682 --> 00:39:04,210 because I think that's more fun 851 00:39:04,210 --> 00:39:06,780 than having to listen to a lecture, 852 00:39:06,780 --> 00:39:08,930 but I'll tell you at least how I read this chart. 853 00:39:08,929 --> 00:39:10,429 Families are going to schools. 854 00:39:11,409 --> 00:39:13,859 People without children don't have to buy schools, 855 00:39:13,860 --> 00:39:16,329 and so they buy from a wider pool of homes, 856 00:39:16,329 --> 00:39:19,130 they can look at a lot of homes in a lot of neighborhoods. 857 00:39:19,130 --> 00:39:22,099 Families with children are buying what they believe 858 00:39:22,099 --> 00:39:24,009 is a shrinking resource, that is, 859 00:39:24,010 --> 00:39:26,120 places where you can have decent public schools 860 00:39:26,119 --> 00:39:27,849 and send your children to public schools. 861 00:39:27,849 --> 00:39:31,335 And in fact, we can triangulate these data in other ways, 862 00:39:31,335 --> 00:39:32,985 so that you'll love this. 863 00:39:32,985 --> 00:39:35,759 I wonder, I was gonna it's gonna say it would happen 864 00:39:35,760 --> 00:39:36,970 only outside Boston, 865 00:39:36,969 --> 00:39:38,859 but I bet it also happens outside Berkeley, 866 00:39:38,860 --> 00:39:41,360 we just have the data outside Boston, 867 00:39:41,360 --> 00:39:46,360 a five point increase in third grade reading scores 868 00:39:48,440 --> 00:39:51,710 between two side-by-side municipalities 869 00:39:51,710 --> 00:39:55,360 in the Boston suburbs that are otherwise matched for access 870 00:39:55,360 --> 00:39:57,230 to public transportation and size of houses, 871 00:39:57,230 --> 00:39:58,360 they've measured for everything, 872 00:39:58,360 --> 00:40:02,410 sidewalks, crime rates, racial composition, 873 00:40:02,409 --> 00:40:03,440 everything you want to look at, 874 00:40:03,440 --> 00:40:05,970 five points in third grade reading scores 875 00:40:05,969 --> 00:40:09,349 translates into tens of thousands of dollars of difference 876 00:40:09,349 --> 00:40:10,759 in housing prices. 877 00:40:10,760 --> 00:40:13,053 Parents are buying schools. 878 00:40:14,050 --> 00:40:15,550 There was a great one out of San Diego, 879 00:40:15,550 --> 00:40:17,050 study out of San Diego, 880 00:40:17,050 --> 00:40:18,830 where they were having parents do preferences 881 00:40:18,829 --> 00:40:19,663 on where they buy, 882 00:40:19,663 --> 00:40:23,393 parents would rather live near a toxic dump 883 00:40:23,393 --> 00:40:25,699 than live in a place where they thought 884 00:40:25,699 --> 00:40:27,239 the schools were underperforming, 885 00:40:27,239 --> 00:40:28,639 where they thought their children would not have 886 00:40:28,639 --> 00:40:31,250 as good a chance in school, and I think that's what we're, 887 00:40:31,250 --> 00:40:33,239 that's a large part of what we're seeing here. 888 00:40:33,239 --> 00:40:35,646 So parents say, "I've gotta have those good schools, 889 00:40:35,646 --> 00:40:40,516 "I gotta get out there, I gotta push, I gotta get forward." 890 00:40:41,949 --> 00:40:44,919 They're spending more as we've talked about, 891 00:40:44,920 --> 00:40:48,590 so what happens to them when they push this hard? 892 00:40:48,590 --> 00:40:51,559 Well, there comes in just a little touch of 893 00:40:51,559 --> 00:40:54,989 what I want to talk about with the safety net. 894 00:40:54,989 --> 00:40:57,649 What's happened to the American safety net 895 00:40:57,650 --> 00:40:59,340 for these families? 896 00:40:59,340 --> 00:41:01,930 Well, the first part is the personal safety net, 897 00:41:01,929 --> 00:41:03,069 the part you build yourself. 898 00:41:03,070 --> 00:41:05,340 We've already looked at the data on that. 899 00:41:05,340 --> 00:41:07,670 Less savings, more debt, 900 00:41:07,670 --> 00:41:09,829 more people without health insurance 901 00:41:09,829 --> 00:41:11,489 than we've ever had before. 902 00:41:11,489 --> 00:41:13,460 And by the way, I should make a point on this, 903 00:41:13,460 --> 00:41:15,309 more people without health insurance, 904 00:41:16,480 --> 00:41:18,840 it's really been important to see here 905 00:41:18,840 --> 00:41:22,190 how much lack of health insurance in the 1970s, 906 00:41:22,190 --> 00:41:25,184 the typical modal uninsured person 907 00:41:25,184 --> 00:41:30,184 was an unmarried male, no children, 23 years old. 908 00:41:30,489 --> 00:41:35,489 Today, modal is a 35 year old married person 909 00:41:35,699 --> 00:41:39,599 with two children, has no health insurance, 910 00:41:39,599 --> 00:41:42,029 this is the largest group when you start looking 911 00:41:42,030 --> 00:41:44,810 at the groups who have no health insurance. 912 00:41:44,809 --> 00:41:47,809 In 2001, 913 00:41:47,809 --> 00:41:52,809 1.4 million people lost their health insurance. 914 00:41:53,760 --> 00:41:58,760 Of those, 800,000 earned more than $75,000 a year, 915 00:41:59,788 --> 00:42:03,980 that is moved from the insured to the uninsured ranks 916 00:42:03,980 --> 00:42:05,150 that we have data for. 917 00:42:05,150 --> 00:42:06,789 So what we're starting to see is 918 00:42:06,789 --> 00:42:08,539 people who have no health insurance, 919 00:42:08,539 --> 00:42:10,579 the people who've lost that part of their safety net 920 00:42:10,579 --> 00:42:13,815 are increasingly among in the middle class. 921 00:42:13,815 --> 00:42:16,989 We could pick some others that shift between 922 00:42:16,989 --> 00:42:21,250 the defined benefit plan and the defined contribution plan, 923 00:42:21,250 --> 00:42:24,980 for those of you who who keep up with the pension lingo. 924 00:42:24,980 --> 00:42:27,449 What it basically means is the shift 925 00:42:27,449 --> 00:42:32,139 so that you put in money, and you take the risk 926 00:42:32,139 --> 00:42:33,779 of how long you'll live, that is, 927 00:42:33,780 --> 00:42:35,320 whether or not you'll outlive your money 928 00:42:35,320 --> 00:42:38,626 versus the defined benefit plan which is 929 00:42:38,626 --> 00:42:41,019 you get a certain amount until you die. 930 00:42:41,019 --> 00:42:44,860 We've moved very much to the former from the latter, 931 00:42:44,860 --> 00:42:47,430 so you have a real chance to outlive. 932 00:42:47,429 --> 00:42:49,769 Those are on the personal side. 933 00:42:49,769 --> 00:42:51,829 If you take a look on the public side, 934 00:42:51,829 --> 00:42:55,630 we've had the same kind of erosion of the safety net, 935 00:42:55,630 --> 00:42:59,300 and that is unemployment benefits 936 00:42:59,300 --> 00:43:01,870 no longer is a proportion of income, 937 00:43:01,869 --> 00:43:05,239 are nearly as high as they were 30 years ago, 938 00:43:05,239 --> 00:43:07,689 so they're not providing the same kind of safety. 939 00:43:09,269 --> 00:43:12,880 I would make a pitch that what we pay for public education 940 00:43:12,880 --> 00:43:15,360 to launch our children into the middle class 941 00:43:16,239 --> 00:43:18,079 has eroded sharply. 942 00:43:18,079 --> 00:43:19,869 And I'll make the pitch this way, 943 00:43:19,869 --> 00:43:21,279 I'm giving you lots of different pieces 944 00:43:21,280 --> 00:43:24,263 that we can talk about here, but here's the way it goes. 945 00:43:25,239 --> 00:43:29,959 In 1970, it took 12 years to educate a child 946 00:43:29,960 --> 00:43:31,820 to go forward into the middle class. 947 00:43:31,820 --> 00:43:32,653 How do I know that? 948 00:43:32,652 --> 00:43:35,869 I know that from looking at Gallup polling data 949 00:43:35,869 --> 00:43:38,190 about what parents thought it took to make it 950 00:43:38,190 --> 00:43:39,269 in the middle class. 951 00:43:39,269 --> 00:43:42,170 And the answer was a high school diploma, 952 00:43:42,170 --> 00:43:43,269 a good work ethic, 953 00:43:43,269 --> 00:43:45,360 there were parents who believed in college, 954 00:43:45,360 --> 00:43:47,380 but they believed that you could make it 955 00:43:47,380 --> 00:43:49,510 in the middle class with a high school diploma 956 00:43:49,510 --> 00:43:51,890 and a willingness to work hard. 957 00:43:51,889 --> 00:43:54,239 Roll that forward to the year 2002, 958 00:43:56,230 --> 00:43:58,170 here's a great number for you, 959 00:43:58,170 --> 00:44:02,159 twice as many people in America by 2002 960 00:44:02,159 --> 00:44:06,092 believe that the moon shot landing was faked, 961 00:44:07,409 --> 00:44:10,722 and they filmed in Burbank, California, 962 00:44:12,239 --> 00:44:15,179 than believe you can make it into the middle class 963 00:44:15,179 --> 00:44:17,522 in America without a college diploma. 964 00:44:19,420 --> 00:44:24,420 Americans who differ on everything have adopted wholesale 965 00:44:24,429 --> 00:44:29,169 in a single generation that there is a single ticket 966 00:44:29,170 --> 00:44:32,940 to the middle class, and that is a college diploma. 967 00:44:32,940 --> 00:44:35,389 Now, all by itself, would I be opposed to this? 968 00:44:35,389 --> 00:44:36,222 Are you kidding? 969 00:44:36,222 --> 00:44:39,840 I'm in the education biz, I think this is fabulous. 970 00:44:39,840 --> 00:44:41,019 Everyone should go to college, 971 00:44:41,019 --> 00:44:42,724 my dog should get a college education, 972 00:44:42,724 --> 00:44:46,890 I'm for college educations, I think that's terrific. 973 00:44:46,889 --> 00:44:49,900 The difference is when you look at middle class families, 974 00:44:49,900 --> 00:44:54,900 if you needed 12 years back in 1970, taxpayer paid for it. 975 00:44:55,289 --> 00:44:56,860 You got it all for free. 976 00:44:56,860 --> 00:44:59,833 All you had to do was show up, live there and show up. 977 00:45:00,690 --> 00:45:04,700 By the year 2000, if you need a college diploma, 978 00:45:04,699 --> 00:45:07,189 you've gotta pay for it yourself, by and short. 979 00:45:07,190 --> 00:45:09,320 Berkeley, other state supported schools, 980 00:45:09,320 --> 00:45:12,013 I guess that means you guys are not paying any tuition? 981 00:45:13,050 --> 00:45:14,630 Room, board, books, right? 982 00:45:14,630 --> 00:45:15,910 It's not very much, 983 00:45:15,909 --> 00:45:18,029 I guess you borrowed maybe a dollar or two 984 00:45:19,150 --> 00:45:20,280 in order to do this, 985 00:45:20,280 --> 00:45:22,340 but notice what that means, 986 00:45:22,340 --> 00:45:25,530 it means the launch, what the parents have to do 987 00:45:25,530 --> 00:45:29,850 to get this next generation in the middle class has shifted 988 00:45:29,849 --> 00:45:32,029 from being something that everybody pays for, 989 00:45:32,030 --> 00:45:33,800 the taxpayer pays for, 990 00:45:33,800 --> 00:45:37,500 to something only the families with children are paying for. 991 00:45:37,500 --> 00:45:38,949 I'll make the same point, by the way, 992 00:45:38,949 --> 00:45:41,143 on the other end of the education spectrum. 993 00:45:42,068 --> 00:45:44,280 In 1970, I actually went back and looked at this data, 994 00:45:44,280 --> 00:45:46,830 it surprised me, almost no one 995 00:45:46,829 --> 00:45:49,212 sent their children to preschool. 996 00:45:50,090 --> 00:45:52,180 And in fact, if you go back and read the articles, 997 00:45:52,179 --> 00:45:55,399 you read Dr. Spock from the 1970s editions, 998 00:45:55,400 --> 00:45:57,410 1960s, 1970s editions, 999 00:45:57,409 --> 00:45:58,769 they can play with the neighborhood children, 1000 00:45:58,769 --> 00:46:02,820 they'll be fine, and only a tiny fraction 1001 00:46:02,820 --> 00:46:06,300 of American children are in preschool. 1002 00:46:06,300 --> 00:46:08,234 Today, it's totally flipped. 1003 00:46:08,233 --> 00:46:12,340 Basically through all the education folks, 1004 00:46:12,340 --> 00:46:14,870 early childhood specialists, they are completely in for 1005 00:46:14,869 --> 00:46:17,232 children under two years have preschool. 1006 00:46:18,199 --> 00:46:22,609 And once again, who pays for the two years of preschool? 1007 00:46:22,610 --> 00:46:24,599 It's paid for by the family. 1008 00:46:24,599 --> 00:46:26,119 So one way you could look at this 1009 00:46:26,119 --> 00:46:27,900 is in the space of a generation, 1010 00:46:27,900 --> 00:46:32,280 we went from 12 years being enough to push that kid forward 1011 00:46:32,280 --> 00:46:34,370 to adding two more years, that's 14, 1012 00:46:34,369 --> 00:46:37,819 and four more years, that's 18 years of education 1013 00:46:37,820 --> 00:46:39,870 in order to push those kids forward, 1014 00:46:39,869 --> 00:46:43,259 only the difference now is the family privately 1015 00:46:43,260 --> 00:46:45,890 pays for a third of the education themselves. 1016 00:46:45,889 --> 00:46:47,619 And we could have some great fun 1017 00:46:47,619 --> 00:46:49,402 with what the education costs. 1018 00:46:51,190 --> 00:46:53,950 Recently, it's been about three years ago, 1019 00:46:53,949 --> 00:46:58,878 Chicago, city of Chicago publicly supported 1020 00:46:58,878 --> 00:47:03,744 preschool programs, there was already some tax dollars in it 1021 00:47:03,744 --> 00:47:05,000 but the parents had to pay tuition. 1022 00:47:05,000 --> 00:47:07,900 I always loved this one, the tuition was larger 1023 00:47:07,900 --> 00:47:10,691 than the tuition at the University of Illinois. 1024 00:47:10,690 --> 00:47:12,939 That's what the parents were supposed to come up with 1025 00:47:12,940 --> 00:47:16,630 to put their three year old into the system 1026 00:47:16,630 --> 00:47:18,240 that was gonna get them the education 1027 00:47:18,239 --> 00:47:20,139 that was gonna get them ultimately launched 1028 00:47:20,139 --> 00:47:22,072 into the middle class. 1029 00:47:22,072 --> 00:47:26,029 So in that sense, we shrink part of what's available 1030 00:47:26,030 --> 00:47:27,960 to support families with children 1031 00:47:27,960 --> 00:47:29,360 so that they can move forward, 1032 00:47:29,360 --> 00:47:31,559 so they can launch this next generation. 1033 00:47:31,559 --> 00:47:33,409 So how have families responded to this? 1034 00:47:33,409 --> 00:47:34,909 This is where I said I'll come to 1035 00:47:34,909 --> 00:47:36,929 at least a little bit of my data here. 1036 00:47:36,929 --> 00:47:38,692 Let me tell you about bankruptcy. 1037 00:47:39,614 --> 00:47:42,209 What's happened with bankruptcy? 1038 00:47:42,210 --> 00:47:43,150 What this one's about, 1039 00:47:43,150 --> 00:47:45,630 I'll tell you what the bright colors on here, 1040 00:47:45,630 --> 00:47:49,390 this is about bankruptcy filing rates per thousand 1041 00:47:49,389 --> 00:47:50,822 in the population. 1042 00:47:51,750 --> 00:47:55,563 And this is in 200 and 2001, 1043 00:47:55,563 --> 00:47:59,019 I love this data, it's got 2003 on these data. 1044 00:47:59,019 --> 00:48:02,110 Married couples are the far one in the light blue, 1045 00:48:02,110 --> 00:48:07,099 about 7.4 married couples per 1,000 married couples, 1046 00:48:07,099 --> 00:48:09,402 so each is being within their own group, 1047 00:48:10,239 --> 00:48:12,039 filed for bankruptcy. 1048 00:48:12,039 --> 00:48:16,300 Unmarried men, about 6.3 per 1,000. 1049 00:48:16,300 --> 00:48:20,650 Unmarried women, about 7.2 per 1,000. 1050 00:48:20,650 --> 00:48:23,740 But the trick here for all three of these groups 1051 00:48:23,739 --> 00:48:26,239 is they are all childless groups. 1052 00:48:26,239 --> 00:48:29,109 So I've got them, all you've got them in their graphics, 1053 00:48:29,110 --> 00:48:32,849 they're couples, men, men alone, women alone, 1054 00:48:32,849 --> 00:48:34,440 and none of them have children. 1055 00:48:34,440 --> 00:48:37,300 These are the bankruptcy filing rates in the United States 1056 00:48:37,300 --> 00:48:39,220 in the early 2000s. 1057 00:48:39,219 --> 00:48:40,592 Now let's add in children. 1058 00:48:43,969 --> 00:48:47,019 Turquoise, again, is married couples, 1059 00:48:47,019 --> 00:48:49,079 only this time with children. 1060 00:48:49,079 --> 00:48:53,793 It's jumped, the filing rate has jumped to 15 per 1,000, 1061 00:48:53,793 --> 00:48:57,410 and among women heads of household, 1062 00:48:57,409 --> 00:48:59,079 no husband in the household, 1063 00:48:59,079 --> 00:49:00,920 it has jumped to 23 per 1,000. 1064 00:49:00,920 --> 00:49:03,880 You notice by the way, unmarried men with children 1065 00:49:03,880 --> 00:49:06,140 fall out statistically because there aren't enough 1066 00:49:06,139 --> 00:49:09,589 to be able to say something that's statistically valid 1067 00:49:09,590 --> 00:49:11,539 about what's going on here. 1068 00:49:11,539 --> 00:49:16,539 So what this one tells me is that families with children 1069 00:49:17,090 --> 00:49:20,720 are under enormous financial stress. 1070 00:49:20,719 --> 00:49:23,789 I watch them, I study them from the bankruptcy end 1071 00:49:23,789 --> 00:49:26,179 of the spectrum which is where they end up, 1072 00:49:26,179 --> 00:49:27,879 and let me tell you a little bit about 1073 00:49:27,880 --> 00:49:30,240 why they file for bankruptcy. 1074 00:49:30,239 --> 00:49:35,239 90% of those families file for one of three reasons; 1075 00:49:36,110 --> 00:49:40,430 Job loss, medical problem in the family, 1076 00:49:40,429 --> 00:49:42,679 sometimes the wage earner, sometimes a child, 1077 00:49:43,829 --> 00:49:46,269 or family breakup, either a death in the family 1078 00:49:46,269 --> 00:49:47,789 or a divorce in the family. 1079 00:49:47,789 --> 00:49:50,099 In fact, nearly half the families 1080 00:49:50,099 --> 00:49:52,819 have at least two of those three, 1081 00:49:52,820 --> 00:49:57,023 and about 20% have been hit by three out of three. 1082 00:49:59,170 --> 00:50:01,860 That's how it is that they end up in bankruptcy. 1083 00:50:01,860 --> 00:50:05,050 Now let me give you an idea of what these numbers mean 1084 00:50:05,050 --> 00:50:08,250 so I can put it in a little bit different context. 1085 00:50:08,250 --> 00:50:10,159 These families that are filing for bankruptcy, 1086 00:50:10,159 --> 00:50:15,159 families with children, more children live in homes 1087 00:50:15,217 --> 00:50:19,610 that will file for bankruptcy this year 1088 00:50:19,610 --> 00:50:22,623 than live in homes that will file for divorce. 1089 00:50:23,789 --> 00:50:25,869 That is, there are more children in America, 1090 00:50:25,869 --> 00:50:29,179 and this has been true by the way since the late 1990s, 1091 00:50:29,179 --> 00:50:31,750 every year, more children are going through 1092 00:50:31,750 --> 00:50:35,429 their parents' bankruptcy than are going through 1093 00:50:35,429 --> 00:50:36,739 their parents' divorce. 1094 00:50:36,739 --> 00:50:38,609 So let me say that to you a different way. 1095 00:50:38,610 --> 00:50:40,300 You know anybody who got divorced any time, 1096 00:50:40,300 --> 00:50:42,093 say in the last six or seven years, 1097 00:50:43,079 --> 00:50:45,880 you know some children who live in homes 1098 00:50:45,880 --> 00:50:47,733 where mom and dad have split up, 1099 00:50:48,826 --> 00:50:52,510 then you, statistically speaking, know more, 1100 00:50:52,510 --> 00:50:55,040 random cross-sections of America, 1101 00:50:55,039 --> 00:50:57,659 you know more who went bankrupt. 1102 00:50:57,659 --> 00:51:00,199 Why do you think you don't know more that went bankrupt? 1103 00:51:00,199 --> 00:51:01,849 And that's because you can't hide divorce, 1104 00:51:01,849 --> 00:51:03,730 but you can sure hide bankruptcy. 1105 00:51:03,730 --> 00:51:05,652 And that's what people have done. 1106 00:51:06,489 --> 00:51:08,219 There's an enormous stigma 1107 00:51:08,219 --> 00:51:10,429 attached to filing for bankruptcy. 1108 00:51:10,429 --> 00:51:13,069 When we interviewed the families 1109 00:51:13,070 --> 00:51:16,360 who had filed for bankruptcy, quite frankly, 1110 00:51:16,360 --> 00:51:19,640 I was shameless about this, we paid them $50 1111 00:51:19,639 --> 00:51:23,609 if they would take extensive telephone surveys for us 1112 00:51:23,610 --> 00:51:27,530 about bankruptcy, and so we got very high response rates, 1113 00:51:27,530 --> 00:51:30,000 but one of the key things we learned early on 1114 00:51:30,000 --> 00:51:33,536 is that people would say, "Don't use the word, 1115 00:51:33,536 --> 00:51:35,676 "partly because I can't bear to hear it, 1116 00:51:35,677 --> 00:51:37,737 "and partly because I'm afraid the child will pick up 1117 00:51:37,737 --> 00:51:40,487 "an extension phone, or someone will walk into the room 1118 00:51:40,487 --> 00:51:45,487 "and hear me say it, and we don't want anyone to know." 1119 00:51:45,489 --> 00:51:49,529 About 85% of the families that were filing for bankruptcy 1120 00:51:49,530 --> 00:51:54,100 were hiding it from their own parents, from their siblings, 1121 00:51:54,099 --> 00:51:56,469 from their best friends, and in some cases, 1122 00:51:56,469 --> 00:51:57,669 from their own children. 1123 00:51:59,400 --> 00:52:01,950 Many of them said they had other stories. 1124 00:52:01,949 --> 00:52:03,949 Yeah, they were giving up the house, 1125 00:52:03,949 --> 00:52:06,069 and moving in with Bob's mom 1126 00:52:06,070 --> 00:52:08,763 because Bob's mom's health was not good. 1127 00:52:10,159 --> 00:52:12,336 Yeah, that's a story you can tell. 1128 00:52:12,336 --> 00:52:13,617 "We're moving across country 1129 00:52:13,617 --> 00:52:15,930 "because there are better job opportunities." 1130 00:52:15,929 --> 00:52:18,259 Yeah, they're moving across country 1131 00:52:18,260 --> 00:52:20,500 hoping they can get a job, 1132 00:52:20,500 --> 00:52:24,380 but going to live in rather reduced circumstances. 1133 00:52:24,380 --> 00:52:27,724 So those are the families who are filing for bankruptcy, 1134 00:52:27,724 --> 00:52:31,230 in part, the reflection of what's happened 1135 00:52:31,230 --> 00:52:32,920 to this safety net. 1136 00:52:32,920 --> 00:52:34,260 So I just want to wrap this up 1137 00:52:34,260 --> 00:52:36,909 and open it up for some questions and answers 1138 00:52:37,869 --> 00:52:41,599 because I just want to make three or four big points 1139 00:52:41,599 --> 00:52:44,179 at the end here about about what we're talking about 1140 00:52:44,179 --> 00:52:47,699 with these families in financial trouble. 1141 00:52:47,699 --> 00:52:50,282 First I want to make is a point about the poor. 1142 00:52:51,469 --> 00:52:55,605 I've hammered on the middle class over and over and over, 1143 00:52:55,605 --> 00:52:59,599 and I've done it because for everybody who cares about 1144 00:52:59,599 --> 00:53:01,710 poor families in America, 1145 00:53:01,710 --> 00:53:04,579 you should be riveted on these data. 1146 00:53:04,579 --> 00:53:08,880 Middle class families under enormous economic stress 1147 00:53:08,880 --> 00:53:10,583 have fewer resources to give 1148 00:53:10,583 --> 00:53:12,380 when we talk about how it is 1149 00:53:12,380 --> 00:53:14,690 that we're going to help the poor. 1150 00:53:14,690 --> 00:53:18,579 More importantly, they frankly have less appetite to give, 1151 00:53:18,579 --> 00:53:20,690 when they see themselves as already stretched, 1152 00:53:20,690 --> 00:53:23,170 when they see themselves facing foreclosure notices 1153 00:53:23,170 --> 00:53:26,670 and bill collectors, they back off. 1154 00:53:26,670 --> 00:53:30,680 And more critically, a middle class that looks like this, 1155 00:53:30,679 --> 00:53:34,460 a middle class where people are falling out and into poverty 1156 00:53:34,460 --> 00:53:38,750 is a middle class that has less room to bring the poor up 1157 00:53:38,750 --> 00:53:41,989 and provide them the opportunities to join the middle class. 1158 00:53:41,989 --> 00:53:44,009 I think people who talk about the intractability 1159 00:53:44,010 --> 00:53:46,870 of poverty now are absolutely right, 1160 00:53:46,869 --> 00:53:50,230 there are social issues far beyond my expertise, 1161 00:53:50,230 --> 00:53:53,512 but this is an element of it that no one's talking about. 1162 00:53:53,512 --> 00:53:56,480 There's no place for the poor to go, 1163 00:53:56,480 --> 00:53:59,460 and not much help coming from the middle class today 1164 00:53:59,460 --> 00:54:01,443 compared with even a generation ago. 1165 00:54:02,349 --> 00:54:03,712 The second point I want to make about 1166 00:54:03,713 --> 00:54:06,163 what these data speak to me about 1167 00:54:06,163 --> 00:54:10,190 is that I fear we're moving from a three class society 1168 00:54:10,190 --> 00:54:11,813 to a two class society. 1169 00:54:12,789 --> 00:54:16,846 America has always been sort of one of those 1170 00:54:16,846 --> 00:54:20,900 perfect distributions, some poor, some rich, 1171 00:54:20,900 --> 00:54:25,150 and a big, big solid middle class 1172 00:54:25,150 --> 00:54:27,660 stuck right there in the middle. 1173 00:54:27,659 --> 00:54:30,402 Americans identify with the middle class, 1174 00:54:31,679 --> 00:54:33,119 it affects our democracy, 1175 00:54:33,119 --> 00:54:35,299 it's part of what gives us our political stability, 1176 00:54:35,300 --> 00:54:38,000 it's what affects our economy and drives our economy, 1177 00:54:38,000 --> 00:54:39,670 it affects our self-identity, 1178 00:54:39,670 --> 00:54:41,738 it affects who we are in this world, 1179 00:54:41,737 --> 00:54:43,500 but I fear that what's happening 1180 00:54:43,500 --> 00:54:45,469 and what these data are about 1181 00:54:45,469 --> 00:54:48,949 is that we actually are gonna see a larger upper class. 1182 00:54:48,949 --> 00:54:53,899 We're seeing, not just the rich rich, but the sort of rich, 1183 00:54:53,900 --> 00:54:57,840 the ones who have the same jobs, bringing in two incomes, 1184 00:54:57,840 --> 00:55:01,269 who don't get sick, who don't lose a job, 1185 00:55:01,269 --> 00:55:03,036 who in that income volatility, 1186 00:55:03,036 --> 00:55:05,129 and the things that go wrong in the medical world, 1187 00:55:05,130 --> 00:55:07,940 who don't divorce, who don't have a death in the family, 1188 00:55:07,940 --> 00:55:10,780 who don't hit any of life's bumps, 1189 00:55:10,780 --> 00:55:12,500 they stay with the upper group. 1190 00:55:12,500 --> 00:55:13,840 They put away some savings, 1191 00:55:13,840 --> 00:55:17,122 they don't get deep in debt, they do okay, 1192 00:55:17,121 --> 00:55:22,121 and then the rest is just one long trail of underclass 1193 00:55:22,340 --> 00:55:25,610 that stays on a constant debt treadmill. 1194 00:55:25,610 --> 00:55:26,769 Sometimes it's a little more, 1195 00:55:26,769 --> 00:55:29,739 sometimes it's a little less, but never out of debt, 1196 00:55:29,739 --> 00:55:32,049 never any real economic security. 1197 00:55:32,050 --> 00:55:33,660 I could change my metaphors, 1198 00:55:33,659 --> 00:55:35,230 people who are just costantly living 1199 00:55:35,230 --> 00:55:36,820 on the edge of a clif, 1200 00:55:36,820 --> 00:55:40,500 some falling over, some scratching back up a little, 1201 00:55:40,500 --> 00:55:43,840 but never with the kind of security 1202 00:55:43,840 --> 00:55:47,559 that for the first three quarters of a century, 1203 00:55:47,559 --> 00:55:51,279 were associated with being middle class. 1204 00:55:51,280 --> 00:55:53,570 I worry about what that means. 1205 00:55:53,570 --> 00:55:56,530 I worry that the middle class, 1206 00:55:56,530 --> 00:55:59,187 which used to mean solid and boring 1207 00:55:59,186 --> 00:56:03,686 and not worth studying, only worth making fun of, you know, 1208 00:56:03,686 --> 00:56:07,373 "My parents were hopelessly middle class", sort of remarks, 1209 00:56:08,349 --> 00:56:11,920 that that's kept us from seeing a problem 1210 00:56:11,920 --> 00:56:14,769 in the middle class that threatens 1211 00:56:14,769 --> 00:56:18,030 not just these families with children that I've identified, 1212 00:56:18,030 --> 00:56:22,343 but really threatens the fabric of our country. 1213 00:56:23,190 --> 00:56:26,393 We have a middle class today that is newly weakened, 1214 00:56:27,239 --> 00:56:31,859 and I think what this means is that it's time to realign 1215 00:56:31,860 --> 00:56:36,860 both our academic and our political interests and alliances 1216 00:56:37,650 --> 00:56:40,389 to talk more about what's happening to these families. 1217 00:56:40,389 --> 00:56:41,609 So with that, I'm gonna quit, 1218 00:56:41,610 --> 00:56:44,485 and take as many questions as people have. 1219 00:56:44,485 --> 00:56:47,617 (audience applauding) 1220 00:56:47,617 --> 00:56:50,450 (dramatic music)