December 2006 | EPI Book

Talking Past Each Other
What Everyday Americans Really Think (and Elites Don’t Get) About the Economy

by David Kusnet, Lawrence Mishel, and Ruy Teixeira

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See also a related report, The economic disconnect: How both the Left and the Right get it wrong

TABLE OF CONTENTS

Acknowledgements

Foreword: It’s Still “the Economy, Stupid”

Introduction: The great disconnect

Detailed Findings
Facing the New Economy
Paycheck Economics
Getting Ahead or Running in Place?
Building Wealth
Globalization
Immigration
Preparing for the New Economy
Health care
Representation in the Workplace

Conclusion

How to “Speak American” When You’re Talking About Economics

About the Authors

About EPI

FOREWARD

It’s

“the Economy, Stupid”

Throughout the 2006 election campaign, President Bush and his allies complained that they weren’t getting the credit they deserved for what they considered to be a strong and growing economy. On the Friday morning before Election Day, when the U.S. Department of Labor announced that the unemployment rate had fallen to its lowest rate since May 2001, Bush couldn’t contain his optimism about the economy—and the elections. Campaigning in Missouri for Senator Jim Talent (who would be defeated), Bush boasted: “If the Democrats’ election predictions are as good as their economic predictions, we’re going to have a good day on November the seventh.”

The President and his supporters didn’t have a “good day” four days later, as Republicans lost control of the U.S. Senate and House of Representatives. But, in the weeks before the election, many of the nation’s leading pundits echoed the administration’s analysis. The economy, they agreed, was doing well, and, if the President’s party was trailing, then the voters must be concentrating on concerns other than the economy—the Iraq War, the Congressional scandals, or simply the “six-year itch” that afflicts administrations entering the second half of their second terms. “Not a Pocketbook Election” was the headline on a column by William Schneider, the respected senior political analyst for CNN.

Just as the election results confounded the President’s predictions, the findings of the exit polls on Election Day offered a counterpoint to the conventional wisdom, which held that most voters weren’t worried about the economy and were basing their decisions on other issues. Most surveys taken just before or on the day of the election found that the economy was second only to the Iraq War as an important issue on people’s minds, that Americans were anxious about the issues of jobs and incomes, and that these economic anxieties were translating into votes against the President’s party.

Thus, on Election Day, 39% of the voters deemed the economy “extremely important” to their votes, and, by a margin of 59% to 39%, they said they were voting for Democrats for the House of Representatives, according to exit polling conducted by Edison Media Research and Mitofsky International for a combination of broadcast and cable television networks. Revealing the depth and breadth of economic anxieties, 81% of the voters told the exit pollsters that they had just enough to get by financially or were falling behind, and 68% thought the next generation would have it worse. Indeed, economic anxieties were driving the most volatile voters from the Republican to the Democratic camps. According to the national exit poll, voters without four-year college educations supported Democratic candidates for the House by 53% to 45%, compared to a 51% to 48% margin in 2004.

In races for the Senate and House, especially in major industrial states, Democratic candidates used populist appeals to woo and win working class voters. For instance, in Ohio, where Sherrod Brown struck an explicitly populist note, 42% of the voters said the economy was extremely important—and these voters supported Brown over the Republican incumbent Mike DeWine by an overwhelming 71% to 29% margin. Similarly, Bob Casey defeated Rick Santorum for Senator in Pennsylvania, where 38% said the economy was extremely important, and Claire McCaskill defeated Jim Talent in Missouri, where 45% said the economy was extremely important.

The voters’ concern with economic issues; the potency of populist appeals; and President Bush’s complacency about the economy’s condition and the voters’ attitudes towards it—all confirm the central theses of this report. Americans are anxious about national economic trends that extend well beyond the official employment rate. There is a “new insecurity” that includes concerns about layoffs, off-shoring, stagnant wages, cuts in health coverage, and the decline of guaranteed pension benefits. And the nation’s decision-making and opinion-leading elites tend to be out of touch with the ways in which everyday Americans think and talk about their concerns about the economy.

This report is based upon the findings of focus groups and national surveys that the Economic Policy Institute conducted in 2005 and 2006 under the sponsorship of the Rockefeller Foundation’s Economic Resiliency Group, as well as a study of the findings of public opinion research about American’s attitudes about the economy over the past quarter century. The purpose of this research was not to take a snapshot of public opinion in 2006 but rather to paint a portrait of how Americans think about the economy, allowing for changing economic, social, and political conditions. We sought to uncover and analyze Americans’ underlying attitudes about the economy—basic ways of thinking that persist in the midst of upturns, downturns, and administrations of both major parties. Beyond the anxiety of the first half of this decade and the prosperity of the second half of the last decade, these attitudes have been more profoundly influenced by the transformative impact of what has come to be called the “New Economy”—the new ways of working and doing business that have emerged in response to new technologies, international trade and investment, and the deregulation of many major industries.

In many important ways, the utterances of political and governmental elites on both sides of the spectrum—conservatives and liberals—do not reflect the ways that everyday Americans think about the economy. Most Americans tend to be simultaneously pessimistic and optimistic about the economy. Most people are pessimistic about how national economic trends are affecting people like them. They are concerned about insecurity, inequality, and the difficulty of attaining and maintaining a middle class standard of living. But, at th
e same time, most people are optimistic about their own economic prospects and their families’ futures. They still believe that, if people study hard, work hard, and sacrifice for their families, they can achieve the American Dream.

In general, conservatives have been out of touch with American attitudes by under-estimating people’s pessimism about the national economy. Meanwhile, liberals have been out of touch by under-estimating people’s optimism about their own situations.

If these findings point to a new synthesis about how policy makers should talk about and act upon the economy, it is this: The nation should provide greater economic security to hard working families so that they can make the most of expanded economic opportunity. Now, as in the eras of the Homestead Act and the G.I. Bill, Americans need to stand on a solid foundation so that they can reach for their futures. Policy makers who listen to the people will best be able lead in the years ahead.

INTRODUCTION

The great disconnect

“The economists don’t know what they’re talking about.”

A participant made that statement during a focus group conducted recently by the public opinion analyst Celinda Lake. This sentiment was echoed by participants in several focus groups and national surveys that the Economic Policy Institute conducted with middle-class people in 2005 and 2006.

These focus groups discussed Americans’ economic insecurities—their daily struggles to make ends meet, provide for their children’s futures, save for their own retirements, and prepare for potential emergencies, without plunging deeper into debt.

But the focus group discussions also revealed a widening gap between the ways that everyday Americans and influential elites talk about the economy. When the man at the focus group attacked “the economists,” he wasn’t only talking about professional economists, he meant just about everyone involved in the national debates and decisions about economic policy, across the political spectrum—from Bush Administration officials to their critics in Congress, and from corporate executives to academic experts of every viewpoint.

This disconnect is of profound importance. The elites are making and discussing eco-nom ic policies in an environment in which—though they may not realize it—they are poorly informed about the views of the very people who will be affected by those policies. This is of particular importance now that a relatively optimistic elite discourse about strong growth in the gross domestic product and other positive macroeconomic indicators coexists with a sharply negative assessment of economic conditions among the public.

On one level, the gap between everyday Americans and the policy-making, opinion-shaping, agenda-setting elites shouldn’t be surprising. After all, participants in national debates discuss the issues from the perspective of public policies and economic theories. But everyday Americans understand economic issues from the vantage point of their own experiences and the lens of their own values. No wonder it often seems that, when they talk about economics, everyday Americans and influential elites seem to be describing two very different worlds and speaking two very different dialects. This report is an effort to begin bridging the gap between everyday Americans’ understandings of economic issues and the official economic discourse. The issues that the people and the policy makers are trying to discuss are too important for them to be talking past each other.

We prepared this report by reviewing much of the survey research (including our own from spring 2006), news coverage, and informed analysis of Americans’ attitudes towards economic issues over the past decade-and-a-half. We took this long view because it helps us to look beyond the blips in public opinion produced by transient economic and political developments, as well as other events such as international crises or natural disasters, to try to understand the essential elements of how Americans think and talk about the economy.

While we suggest many areas where further research would be useful, certain conclusions do suggest themselves:

New Economy, New Insecurity

For the past three decades, everyday Americans have been struggling to make sense of the wrenching economic changes that are transforming their lives and their livelihoods. The New Economy has generated the New Insecurity: Americans can no longer count on lifelong, full-time jobs, with regular raises, stable health coverage, and secure pensions.

These insecurities are different from those that worried working Americans for more than a half century after the start of the Great Depression. For most people today, their greatest anxiety is not that they will lose their job and be unable to find another, and their greatest hope is not that they will be able to get and keep a job. Instead, they have more complex concerns: Will their jobs be outsourced to a subcontractor or off-shored to another country? Will a full-time, permanent job be converted into a part-time or temporary job? Will their health insurance be cut back or their premiums or co-payments increased? Will they receive regular raises or earn merit raises? Will they be able to stretch their paychecks to cover their family’s expenses? Will their employer continue to provide pensions that offer guaranteed retirement benefits? And can they keep their skills current so that they can hold onto their current job and qualify for a promotion or for a new and better job? These uncertainties are more complicated than what worried their parents and can be summarized as a concern about both regular wages and other aspects of “job quality.”

Globalization: The gap between elite opinion and public opinion

The New Insecurity also contributes to the gap between elite opinion and public opinion about globalization.

Among corporate, policy-making, and opinion-shaping elites, it is virtually an article of faith that globalization is an unalloyed blessing. Except for the unions, political leaders who are close to the unions, maverick economists, and the executives of a dwindling number of manufacturing companies whose operations are located almost entirely in the United States, the nation’s elites have overwhelmingly supported every trade agreement that has been considered by Congress, as well as similar measures such as “Fast Track” negotiation prerogatives for the President and China’s membership in the World Trade Organization. Opponents of these measures have been branded as “protectionist”—a label that the elites hold in contempt.

Most Americans, however, are much m
ore doubtful and closely divided about globalization. While people say they support expanded trade in general, they believe that globalization has not benefited working people and are closely divided about actual trade agreements, from NAFTA to CAFTA. Most Americans insist upon including strong labor and environmental protections in these agreements—the very issue that has been the stumbling block for most opponents of the most controversial trade deals. By an even more overwhelming margin, Americans demand that there be much education, training, retrain-in, and other forms of assistance for workers who are being displaced by international competition.

Over the past two years, the offshoring of technical and professional jobs has made many more Americans anxious about globalization, including highly educated and well-paid white-collar employees—a group that previously tended to support trade agreements. But official discourse has yet to acknowledge these anxieties, except to say that highly educated professionals need to become even better educated.

Optimism and anxiety: “I’m OK,” but “I worry about people like me”

By nature, Americans are self-reliant and optimistic. As with people everywhere, Americans are reluctant to acknowledge economic problems that might suggest they have failed personally. But Americans are also well aware of their own economic struggles; they are compassionate towards those who face similar, or even more severe, challenges; and, per-haps, they acknowledge their own economic insecurity by expressing their sympathy for those who are having a hard time.

Thus, Americans square their optimism and their anxieties by talking about the economy in two different ways:

1. 1) When it comes to their own individual and family situations, most people say that they are succeeding (and expect their kids to succeed), thanks to their hard work and personal sacrifice in the face of great obstacles. This allows them to tell a story where they and their families are the heroes and where their difficulties redound to their credit.
2. 2) But, when they talk about how the economy is actually performing for “people like me” or for the entire nation or for the next generation as a whole, people are more forthright and forthcoming about the challenges that they themselves face. Now, they are not pitying themselves; they are expressing concern for their children, their friends, their neighbors, their co-workers, and their fellow citizens.

At odds with conservative and liberal elites

Because people are acutely aware of the micro-economy—their own efforts to stretch their paychecks to pay their bills each month—they understand the economy differently from

Bush Administration officials, corporate executives, Wall Street analysts and conservative economists who stress positive macro-economic statistics—economic growth, relatively low unemployment rates, and seemingly stable prices. But, because people pride themselves on their can-do spirit and sense of individual responsibility, they are also skeptical of liberal public officials, opinion leaders, and academic experts who address Americans as if they were passive victims. They fail to tell a comprehensive and comprehensible story about how the economy does not reward hard work, and seem to take it for granted that most people still believe that benevolent corporations, the federal government, or labor unions can and should help them in the ways they want.

“It’s the economy, stupid.” Usually.

There is one more disconnect between everyday Americans and the opinion-leading elites. Except in times of extreme economic hardship, the political and media elites tend to believe that most Americans are less concerned about economic problems than about other concerns, especially moral and social issues and national security. This view could not be farther from the truth. Political scientist Mark Smith found that, from 1950-72, an economic problem was the dominant problem mentioned by the public only 5% of the time, while from 1973 onward, an economic problem was the dominant problem an amazing 65% of the time. So much for the conventional wisdom that economic issues have faded in importance to the public.

So is the saying, “It’s the economy, stupid,” always an accurate guide to the impact of public opinion on politics? Of course not. While economic issues are indisputably central to people’s lives—and to how they evaluate public officials and political candidates—their political importance compared to other concerns does vary, depending upon current events and the special concerns of segments of society and, often, the great majority of people.

For instance, in 1968, the nation was embroiled in an unpopular war in Vietnam, as well as social disorder at home. Thus, even though the economy was prosperous, the voters elected the Republican candidate, Richard Nixon, as president over the incumbent Democratic vice president, Hubert Humphrey. Similarly, in 1976, in the aftermath of the Watergate scandal, the voters favored the Democratic challenger, Jimmy Carter, over the Republican President, Gerald Ford, even though an economic recovery was underway.

Just as economic issues do not always dominate the nation’s decision-making, they also are not always politically paramount for different segments of the population. For instance, many affluent Americans do not vote for conservative candidates, even though their policies may be in their economic interests, because these voters have liberal views on social issues. Meanwhile, many working class voters have rejected liberal candidates, despite agreeing with them on economic issues, because these voters have more conservative views on some social issues.

Raising the salience of economic issues

Thus, for public officials, political candidates, and leaders of business, labor, and advocacy groups, the challenge in discussing economic issues is not only to be persuasive, but also to increase their political importance to the general public or segments of the population—or, as public opinion analysts often say, to “raise the salience” of these concerns.

This is especially important for advocates of the economic policies favored by liberals and the labor movement. For several decades, most public opinion surveys have found that a substantial majority of Americans favor raising the minimum wage, extending health insurance, increasing funding for public education, college opportunity and job training and retraining, and making the tax system more progressive. But these proposals—and the candidates who support them—have not always prevailed, often because their opponents have raised other issues that have seemed more urgent to many voters. Therefore, for those who favor many elements of a liberal economic agenda, the challenge is not simply to persuade people to support these proposals but also to make them more urgent to those who are already inclined to support these issues.

Profound ambivalences: “It’s up to me” yet “we’re all in this together”

Now as in the past, the most interesting debates about economic issues are taking place not only among Americans, but also within Americans. The same person may well be anxious and optimistic, self-reliant, and socially conscious, eager for economic opportunity, but also yearning for economic security.

This ambivalence has always been part of public opinion in this country. As the political analysts Lloyd Free and Hadley Cantril famously pointed out years ago, Americans tend to be ideologically conservative and operationally liberal, firm believers in free enterprise and also strong supporters of government programs such as Social Security, Medicare, public education, student loans, and environmental protection, to name only a few.

The New Insecurity has strengthen
ed both sides of Americans’ ideological divide. Be-cause the New Economy places a premium on individual initiative and because there is less reason to rely on large corporations, government programs or labor unions, a growing number of Americans would agree with another participant in one of our focus groups who summed up his view of his family’s economic challenges by saying, “It’s up to me.”

But off-shoring jobs, vanishing health coverage, pension plans in peril, and a gyrating stock market are also convincing many Americans—often the same people who profess their optimism and self-reliance—that they also need certain forms of economic security that can only be attained by casting their lot with their fellow citizens. With President Bush’s proposed partial privatization attracting more opposition than support—and even before Hurricane Katrina reminded people of the vicissitudes of life, nature, and the economy—Business Week magazine reported that an overwhelming majority of Americans, including non-Hispanic white men who supported President Bush in 2000 and 2004, want “a middle class security blanket that gives them protection as they build wealth.”

This report begins to explain why Americans are simultaneously saying “I’m on my own” yet “we’re all in this together.” Before the elites can lead the people, they need to listen to them, even though what they are saying may sound contradictory and confusing.

ACKNOWLEDGEMENTS

This report grows out of collaboration with other grantees of the Rockefeller Foundation’s Economic Resiliency Group (ERG) who helped orient the focus group and polling work, provided feedback on our assessment of the prior research and on the focus group and polling results. In particular we wish to thank: Katherine McFate (formerly of the Rockefeller Foundation and now at the Ford Foundation); Dean Baker (Center for Economic and Policy Research); Bruce Herman (National Employment Law Project); Mark Greenberg (Center for Law and Social Policy); Steve Savner (Center for Community Change); Greg LeRoy (Good Jobs First); Andy Van Kluenen (The Workforce Alliance); and Tom Schlesinger (Financial Markets Center). We also wish to thank Lake Research Partners and Greenberg, Quinlan, Rosner Research for their work on the focus groups and polling work done for the ERG, especially Dan Gotoff, Celinda Lake, Stan Greenberg, and Matt Hogan. We also wish to thank Ellen Levy for her thoughtful editing.

ABOUT THE AUTHORS

David Kusnet was chief speechwriter for former President Bill Clinton from 1992 through 1994. Kusnet is the author of Speaking American: How the Democrats Can Win in the Nine-ties (Thunder’s Mouth, 1992) and is writing a book about workplace conflicts in today’s America, Love the Work, Hate the Job, for John A. Wiley and Sons. Kusnet writes a column about political rhetoric for The New Republic‘s Web site, and his articles and reviews have appeared in The New York Times, Washington Post, Los Angeles Times, Boston Globe, Baltimore Sun, Newsday, New Republic, American Prospect, Nation, Dissent, Commonweal, Salon, and other newspapers and magazines. He is a visiting fellow at the Economic Policy Institute and has a B.A. in political science from Yale University.

Lawrence Mishel is the president of the Economic Policy Institute and was the research director from 1987 to 1999. He is a labor market economist and holds a Ph.D. in economics from the University of Wisconsin. His articles have appeared in a variety of academic and non-academic journals. His areas of research are labor economics, wage and income distribution, industrial relations, productivity growth, and the economics of education. He is principal author of EPI’s flagship publication, The State of Working America, which provides a comprehensive overview of the U.S. labor market and living standards. He is also one of the principal authors of How Does Teacher Pay Compare? Methodological Challenges and Answers and The Charter School Dust-Up: Examining the Evidence on Enrollment and Achievement, as well as a co-editor of The Class Size Debate.

Ruy Teixeira is a joint fellow at the Center for American Progress and The Century Foundation and is also a fellow of the New Politics Institute. He is the author of five books, hundreds of articles, both scholarly and popular, and the monthly Web feature, What the Public Really Wants. His books, including The Emerging Democratic Majority; America’s Forgotten Majority: Why the White Working Class Still Matters; and The Disappearing American Voter, have generated praise across the political spectrum and have been on both The Economist‘s and the Washington Post‘s “best books of the year” lists. Teixeira’s most recent writings include The Politics of Definition (with John Halpin) and The Next Frontier: A New Study of Exurbia. Teixeira has been a visiting fellow at the Brookings Institution and has also held leadership roles at the Progressive Policy Institute and the Economic Policy Institute. He holds a Ph.D. in sociology from the University of Wisconsin-Madison.

ABOUT EPI

The Economic Policy Institute was founded in 1986 to widen the debate about policies to achieve healthy economic growth, prosperity, and opportunity. Today, despite rapid growth in the U.S. economy in the latter part of the 1990s, inequality in wealth, wages, and income remains historically high. Expanding global competition, changes in the nature of work, and rapid technological advances are altering economic reality. Yet many of our policies, attitudes, and institutions are based on assumptions that no longer reflect real world conditions.

With the support of leaders from labor, business, and the foundation world, the Institute has sponsored research and public discussion of a wide variety of topics: globalization; fiscal policy; trends in wages, incomes, and prices; education; the causes of the productivity slowdown; labor market problems; rural and urban policies; inflation; state-level economic development strategies; comparative international economic performance; and studies of the overall health of the U.S. manufacturing sector and of specific key industries.

The Institute works with a growing network of innovative economists and other social-science researchers in universities and research centers all over the country who are willing to go beyond the conventional wisdom in considering strategies for public policy. Found-in scholars of the Institute include Jeff Faux, former EPI president; Lester Thurow, Sloan School of Management, MIT; Ray Marshall, former U.S. secretary of labor, professor at the LBJ School of Public Affairs, University of Texas; Barry Bluestone, Northeastern University; Robert Reich, former U.S. secretary of labor; and Robert Kuttner, author, editor of The American Prospect, and columnist for Business Week and the Washington Post Writers Group.

For additional information about the Institute, contact EPI at 1333 H St. NW, Suite 300, Washington, DC 20005, (202) 775-8810, or visit www.epi.org.

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