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Elisa Gurule, 34, is not sure what future she has in the auto industry. Her current job, installing seat belts and windshields at a Chrysler assembly plant in Sterling Heights, Mich., pays $17.53 an hour. (Geoff Robins For The Globe and Mail)
Elisa Gurule, 34, is not sure what future she has in the auto industry. Her current job, installing seat belts and windshields at a Chrysler assembly plant in Sterling Heights, Mich., pays $17.53 an hour. (Geoff Robins For The Globe and Mail)

America’s two-tiered future: The deterioration of the once-mighty middle class Add to ...

“I can definitely tell they’re better off,” he says. “The other tier-two guy and I, we’re both working on our tiny little houses hoping people don’t come in and scrap our copper pipes.”

When Mr. Crawford’s car breaks down, he fixes it himself. He has no vision care plan from GM, so when his glasses broke, he took them to a jeweller to have them soldered back together.

He often dreams of buying a new car, but can’t afford the monthly payments or higher insurance, so the Buick Veranos and Chevrolet Sonics he helps build are out of reach.

So the 30-year-old spends $100 to buy a new steering wheel cover, or speakers or new floor mats. “It feels new for a second, you know?”

Newer vehicles are not the only luxury that is out of reach for an increasing number of U.S. families. Boats were once a popular discretionary purchase for many middle-class people; the National Marine Manufacturers Association explicitly touts the connection, declaring on its website: “Boaters are middle-class Americans who own boats made by middle-class Americans.”

But like the auto sector, the industry has been caught in a cycle of declining sales and falling employment. Sales of new power boats, which reached a high of 311,700 in 2001, have fallen by more than half, NMMA numbers show. In 2011, Americans put just 142,830 new power boats in the water. Some 135,000 jobs at boat manufacturers and dealers and marinas were lost during the recession.

RE-ENERGIZING THE MIDDLE CLASS

There is no boat in Elisa Gurule’s future.

Ms. Gurule, 34, is not sure what future she has in the auto industry. Her current job, installing seat belts and windshields at a Chrysler assembly plant in Sterling Heights, Mich., pays $17.53 an hour.

That’s better money than she made when she was waiting on tables before joining Chrysler as a tier-two employee in 2011 – enough to buy one of the Chrysler 200 cars she helps put together. But at that wage, she still has to make tough choices about what to give up.

She and two sisters are trying to scrape together some extra cash to help a fourth sister buy a car so that she can travel to her new job at another Chrysler plant near downtown Detroit.

The Romney campaign’s criticisms of the auto bailout carry no weight with Ms. Gurule, because, as she notes, without Mr. Obama, she would not have a job.

But while there is a consensus that Mr. Obama is far more sensitive to concerns about inequality than Mr. Romney is, neither man has presented a compelling vision in this campaign on how to reverse the middle-class decline.

Tax policies are critical, and if done right, tax cuts may be a useful tool. But other changes to macroeconomic and fiscal policies are needed to get the middle class thriving again, Prof. Smeeding and other experts argue.

They point out that boosting economic growth will help. There is also the not-so-small matter of the millions of Americans who still owe more on their mortgages than their homes are worth.

A rebound in the housing market will alleviate some of the post-crash hangover. But a more concerted effort by policy makers to help out families who are stuck in homes they can’t afford to sell might help – for example, by freeing people to move to regions where their job prospects are better.

Making university education more affordable would also likely provide a long-term boost to the fortunes of the middle class, some economists say.

Top wage earners – and not just the 1 per cent vilified in the Occupy Movement, but the top 10 to 15 per cent – need to pay higher taxes, argues Frank Levy, an MIT professor who studies living standards and the economics of education.

That would help make university education more accessible by boosting revenues for cash-strapped state governments that cut funding to universities during the recession. “Denying people access to education – pricing it out of people’s reach – is exactly the wrong thing you want to do,” he noted.

Ms. Gurule was able to obtain an English degree at Wayne State University in Detroit, but four years of study left her with student loans of $38,000 that she will have trouble paying back because of the monthly payments on her new car.

She has a quick answer when asked if she’s leading a middle-class lifestyle.

“Hell no. I hope I’m working class.”

With a report from New York bureau chief Joanna Slater

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