The Fragile Middle Class: Americans in Debt

A sizable portion of the U.S. middle class--far more than pundits acknowledge--teeters on the brink of economic failure, according to this fascinating, alarming study. Noting that personal bankruptcies have hit record levels (more than one million American households file for them each year), the authors (As We Forgive Our Debtors) zero in on middle-class vulnerability through a detailed survey of 2,452 people across the nation who filed for bankruptcy during the 1990s. Included in their sample are teachers, accountants, computer engineers, sales clerks, executives, entrepreneurs, doctors and dentists--solidly middle-class folk who fell into financial disaster. Employment problems (layoffs, ""skidding"" to a lower-paying job, part-time work) were the biggest factor, as was the overuse of credit cards. Respondents also cited unpayable medical bills, loss of income from illness or accident, the financial burden on single-adult households that result from divorce and home buyers purchasing more than they could afford. Illustrated with tables and graphs, this crisply written report is occasionally dry, but many readers will identify with the down-to-earth case histories. A good number of the profiled personal-bankruptcy filers are full of regret, self-blame and humiliation, contradicting the popular perception that filing is an easy way out of one's economic woes. While the authors offer no comprehensive solutions to this societal malaise, their chilling diagnosis of middle-class affliction demonstrates that we all may be only a job loss, medical problem or credit card indulgence away from the downward spiral leading to bankruptcy. (May)