A couple of weeks ago, writer Neal Gabler wrote a piece in the Atlantic entitled, “The Shame of Middle Class Americans.” Mr. Gabler’s piece brought him a bit of media attention and he proceeded to do interviews in various media outlets including an hour-long discussion on Tom Ashbrook’s On Point program (one of my favorite news programs). Mr. Gabler, who is a fairly successful biographer and media personality, discussed how the middle class in America would find it difficult, including himself, of dealing with an emergency of only $400.
I would encourage everyone to read Mr. Gabler’s article or listen to On Point because he brings up some really important points about middle-class Americans. Here are some of the highlights:
- Most Americans live paycheck and paycheck and unfortunately haven’t saved even a little money to deal with any kind of emergencies.
- Wages in the United States have largely remained stagnant, inflation adjusted, for really the last 40 years. Certainly that presents a difficulty in maintaining and growing the middle-class in the United States or anywhere. Even though a lot of what we buy has gotten cheaper because of globalization (e.g. Americans only spend 5% on food today and spent 15% 40 years ago) the gap in income between classes is a huge issue.
- The woeful savings of Americans is highlighted. Americans can’t save because they use every penny for bills or are just woefully ignorant of finances, something which Mr. Gabler claims to be.
- What is the definition of middle-class? I think this is a conclusion that Mr. Gabler doesn’t necessarily touch upon but is one of the implications I drew from the article. What is middle-class? What makes us successful? What makes have a good life? For many it might be the ability to just pay one’s bills. For others it is the ability to buy anything you want. However, the debate about what it takes middle class and what it should take to be middle class is one that is currently going on in our presidential race and around kitchen tables across America.
- Perhaps the most important lesson is the shame that many Americans feel about their finances. We don’t talk about money. We hide our troubles. We don’t share openly with others. And it is problem that millions live with.
All of these are important issues (there are more) and I think the article does a good job of outlining some of the challenges that lie ahead for many, if not most, Americans.
Where I quibble with the article is really about the author’s financial travails he uses as evidence to supplement his larger point. Mr. Gabler writes about how he knows what it is like to live paycheck to paycheck, to be financially ignorant, to not be able to take a vacation, live on a budget, not go out to eat, etc.
At some level I have some sympathy for that, but as I read in the article a good chunk of Mr. Gabler’s problems are not necessarily the fault of great income inequality, but are self-inflicted wounds. He is not the victim of circumstance. Rather, you could make the case his financial stupidity is what led him down the path of economic despair.
Now don’t get me wrong we all make stupid choices with money. Hell I can chronicle a couple dozen of them that have cost me a few thousand, tens of thousands if you count student loans, of dollars. Yet the example of Mr. Gabler’s life as evidence of the problems with the middle class leave a lot to be desired and undercuts his larger message.
Now to be fair Mr. Gabler says at the outset that he expects no sympathy for the choices he has made and understansd that he made some mistakes. Yet as I read I really am not sure if he realizes some of those mistakes or views them as mistakes. A few of the highlights from the article that I found problematic:
First, the way he perceived his overall monetary situation. Mr. Gabler readily admits he didn’t pick a stable profession (writer). And because of that his income came in fits and starts, even though he is a successful biographer who has presumably made some money. According to his own admission, Mr. Gabler just assumed that he would be always cover his situation. So even though he knew that he had a perilous situation and uneven income he didn’t take the time to set aside money to deal with those down times.
Moreover, his wife chose to leave her profession and stay at home with their children. Her time away from her profession left her less marketable and led to even greater financial hardship.
So even though he knew that he had a perilous economic situation and uneven income he didn’t take the time to set aside money to deal with those down times. To me that isn’t ignorance but just plain being economically blind and at some level arrogant, particularly when you have others depending on you.
Second, the way he handled home ownership. Mr. Gabler noted that he and his wife were able to buy a co-op in Brooklyn and scrape by primarily because of day care and sending his children to private schools. They sacrificed, which I can respect, so that their children could have good education. Moreover, he mentioned how he and his wife moved to East Hampton (yes the Hamptons) bought a house and basically had to carry two mortgages. And because of the perilous financial condition that he is in Mr. Gabler can’t afford a new roof.
Mr. Gabler decided to buy a house without selling the first one, which caused him financial hardship. If you are buying a house you should always sell your first property first and then buy something after that. You can always rent for a bit if needed, a choice that Mr. Gabler decided not to do. Additionally, Mr. Gabler moved to the Hamptons, one of the most expensive areas in America. Now Mr. Gabler notes that East Hampton, NY is a place where people work all year around and it isn’t the tony environment like the rest of the Hamptons.
But it is still the HAMPTONS! He and his wife chose to move to an expensive area. In fact, they choose to stay there. His children are out of the house. There is no necessary reason to for him to stay. The average home in East Hampton, according to Zillow, is over 1 million dollars. Now I am not saying that is what Mr. Gabler’s home is worth. In fact, it is probably much less. However, he is a writer. His job is not dependent on being in his current house, nor is his wife’s job. He could’ve sold his house and moved to a less expensive area. But he CHOOSES to stay and live in that area. Now he may have lots of friends, connections, etc, but it is still his choice. He has cost himself probably tens of thousands of dollars, if not more, because of his housing choices.
Finally, Mr. Gabler’s choices of education for his children created great financial peril. Perhaps, the biggest issue I had with Mr. Gabler was his discussion of education for his children. Mr. Gabler and his wife chose to send his children to private primary and post-secondary institutions. The institutions he lists (Stanford University for example) probably cost him hundreds of thousands of dollars in tuition. According to Mr. Gabler, his children had the RIGHT to go to a school of their choice if they got into it. In fact, he calls colleges extortionists.
I have respect for the fact that Mr. Gabler wanted to send his children to good schools. I also know that college is unaffordable and we have a higher education and student loan crisis. What chaps my hide is the sense of entitlement. When he said his children have the RIGHT to go to a school of their choice and that colleges are extortionists I wanted to tear my hair out. Are you kidding me? His kids don’t have the right to go to the school of their choice. That is a choice you made. You spent hundreds of thousands of dollars to send them to those schools. He could’ve sent his kids to public universities (e.g. SUNY schools which are really good) for much less. He cost himself tons of money and he is crying poverty?
Moreover, Mr. Gabler raided a retirement account to pay for his daughter’s wedding. Instead of having a small ceremony or something that was more cost-effective he CHOSE to spend money that he really didn’t have. The way he writes about his situation it comes off as if he didn’t have a choice or that he shouldn’t have too. He should be able to send his children to the best schools and the like without consequence. That kind of attitude is not only unrealistic, but dangerous.
Recognizing Financial Limits
To be fair I think what Mr. Gabler did is what a lot of Americans believe can/should happen. They believe they can work their way out of it. Children DESERVE and have the RIGHT to go to the best schools. They have the RIGHT to have a great expensive wedding or whatever. In other words, there almost seems to be a sense of entitlement that comes from the article and that others may believe they should have. It is that sense of entitlement that I guess I have the most problem with. Moreover, Mr. Gabler doesn’t admit to his mistakes or I think even view the choices he made as mistakes. Rather, his life is normal. He doesn’t offer his tale of economic woe as a warning to others. Rather, he presents it as a larger discussion of the perils of the middle-class.
There is no doubt that the middle-class faces issues. I am part of that middle-class and I live paycheck to paycheck. I favor a higher minimum wage, paid leave for parents, greater affordability of a college education, and even greater governmental intervention to prevent financial disaster. But that doesn’t mean I am entitled to send my children to whatever school they want to go too or give them anything they want or to live anywhere in the world. My economic resources have limits. And if I go above those limits, which I unfortunately have in the past, I must accept the consequences of my actions and dig myself out. I have no one to blame for my debt and financial disaster but myself. I don’t deserve anything.
The Peanuts Teacher
Now some of you who are reading this are probably thinking I am the teacher from the Peanuts. All you are doing Jason is giving the classic BS story that if you pull yourself up by your bootstraps and work harder everything will work out.
At some level that is true. I do believe that hard work will pay off in the long-term. But I am not that naive to not realize that large swaths of Americans are in a vicious cycle of poverty, debt, lack of education, and other obstacles. Those cycles require government intervention and programs to help people. I am also not naive to know that many people do the right thing, but bad things happen to them. I am not unsympathetic to that point.
But when you have someone like Mr. Gabler, who has made a large amount of money selling books and being a media personality, use his story as an example of the problems with the middle-class it makes the hairs on the back of my neck stand-up. Particularly when he doesn’t admit mistakes or offer lessons for others to follow as to not what to do. It gives an unrealistic picture to what most Americans go through (yes I know he wasn’t trying to portray that). It doesn’t go one step further and provide some important things that readers can do. Instead it inspires comments that sympathize with his plight or others who call him a whiner for telling his story (see here).
The Bottom Line: I think a lot of what it is in Mr. Gabler’s Atlantic piece should be required reading for all. We have a retirement crisis, a savings crisis, and an income inequality crisis. All of which point to an economic system that is off kilter. More importantly, he points to the shame that many Americans feel because of their financial travails. Mr. Gabler should be applauded, at the very least, for telling his story.
However, his story would be much more compelling if it seemed that he not only owned up to his mistakes and learned from them. It also does not absolve people for needing to take the time to learn more about saving, investing, economics, and the like. I mean people spend more time planning their vacation then they do discussing retirement, investing and money in general. It is high time that we speak about this subject more. Not only does America have deep economic problems, but as people we need to take a hard look at our own lives. We need to have some sense of responsibility to learn more about money, talk about it, and make some choices that will set a good financial foundation. If most people can operate a smart phone, download apps, and play video games you can’t tell me they can’t take the time to learn a little more about personal finance.
Additionally, the larger importance of this article is discerning lessons about what we “deserve” or have the “right” to when it comes to money. That is a conversation we aren’t having as much as we should. Maybe it isn’t a conversation we don’t want to have. Maybe we don’t want to face the fact that our ideas of what we “deserve” or a “right” is unrealistic at best and nothing but self-aggrandizing comparing ourselves to others, which unwittingly keeps us in a perpetual cycle of needing to do more, be more, have more up to the point that we measure our lives by the stuff we obtain, not about the relationships we build and the legacy we leave for friends, family, and for the world around us.
It is time we have that conversation, even if it is with ourselves. I know it is one that I struggle with in my own life. I can’t be alone. Perhaps when we have that conversation, along with how we make our economic system more equitable, then we have some perspective about what the “true” middle-class is or what it means to be successful or what do we “deserve” out of life.