prime mortgage crisis, are expected to soar to as many as two million by the end of 2008. Two million would represent one in sixty-two households. Even as wages stagnated in recent years, many government officials triumphantly boasted that consumer spending had continued to rise. But this increase was largely due to soaring incomes at the top. From 1979 to 2005, a period when national output more than doubled, after-tax income inched up just 6 percent for the bottom fifth of American households after accounting for inflation, while it rose 21 percent for the middle fifth. For the top fifth, income jumped 80 percent and for the top 1 percent it more than tripled, soaring by 228 percent. A 2007 report by the Congressional Budget Office found that the top 1 percent of households had pre-tax income in 2005 that was more than two-fifths larger than that of the bottom 40 percent. (After taxes, the top 1 percent’s income in 2005 was still nearly 10 percent greater than the bottom 40 percent’s.) As Paul Krugman wrote, “It’s a great economy if you’re a high-

level corporate executive or someone who owns a lot of stock. For most other Americans, economic growth is a spectator sport.” The nation appears to be on the threshold of recession, and as a result, America’s workers are likely to be squeezed not just by stagnant wages but also by rising unemployment. One of the most worrisome  and puzzling  aspects of the economic expansion that began in November 2001 is that wages have remained stubbornly flat, after factoring in inflation, even though the jobless rate has been low by historical standards. That wages have gone nowhere in a tight labor market underlines the American worker’s declining ability to command higher wages, and now with unemployment increasing, workers’

leverage to push for higher wages is bound to grow even weaker.

The squeeze is of course worst for those on the lowest rungs, including millions of workers who are part of our everyday lives: fast food workers, cashiers, child care workers, hotel maids, and nurse’s aides. Nearly 33 million workers  almost one-fourth of the American workforce  earn less than ten dollars an hour, meaning their wages come to less than the poverty line for a family of four ($20,614 in 2006). Despite strong economic growth, the number of Americans living in poverty jumped by 15 percent from 2000 to 2006  an increase of 5.4 million to 36.5 million. For millions of low-income workers, the promise of America has been broken: the promise that if you work hard, you will be rewarded with a decent living, the promise that if you do an honest day’s work, you will earn enough to feed, clothe, and shelter your family.

Not only do workers on the bottom rungs lack money, but they often lack basic benefits. Three out of four low-wage workers in the private sector do not have employer-provided health insurance, while eight out of nine do not participate in a pension plan. Three-fourths of low-wage workers do not receive paid sick days, so if they need to miss two days’ work because they are sick or their child is sick, they receive no pay for those days  and often risk getting fired. A study sponsored by the Ford, Rockefeller, and Annie E. Casey foundations, “Working Hard, Falling Short,” concluded, “More than one out of four American working families now earn wages so low”  defined as income of less than twice the poverty line for a family of four ($41,200 in 2006)  “that they have difficulty surviving financially.” The study continued, “While our economy relies on the service jobs these low-paid workers fill . . . our society has not taken adequate steps to ensure that these workers can make ends meet and build a future for their families, no matter how determined they are to be self-sufficient.” In her book Nickel and Dimed, Barbara Ehrenreich described these workers as “the major philanthropists of our society.” Ehrenreich wrote, “They neglect their own children so the children of others will be cared for; they live in substandard housing so that other homes will be shiny and perfect.” Across America more than 50 million people live in near poor households, those with incomes between $20,000 and $40,000 a year. Katherine Newman, a Princeton sociologist, has described this large but often overlooked group as “the missing class.” The mass of workers who are barely getting by is likely to grow only larger, because the Bureau of Labor Statistics forecasts that low-wage jobs will account for six of the top ten categories in overall job growth between now and 2014: janitors, nursing home aides, waiters, home-health aides, retail sales workers including cashiers, and food-prep and fast food workers. America’s ailing health care system is a big part of the worsening squeeze.

From 2000 to 2006, the number of Americans without health insurance climbed by 8.6 million, to 47 million. One study found that more than two-fifths of moderate-income, working-age Americans went without health insurance for at least part of 2005. Not only that, for employees who want coverage, companies are requiring them to pay more for it, and as a result, the cost of family coverage has soared 83 percent in just six years. As health costs consume more and more of the nation’s economic output  they account for 16 percent of gross domestic product, or GDP, up from 5 percent in 1960  that necessarily leaves less money for wage increases.

Pensions, the other pillar of employee benefits, are under assault as never before. In May 2005, a bankruptcy judge allowed United Airlines to default on its pension plans and dump them on the federal agency that protects retirement benefits. Because that agency guarantees pensions only up to a certain amount, many United pilots will receive only half what they expected when they retire. United’s move was the biggest pension default in American history, releasing it from paying $3.2 billion in obligations over the following five years. One of United’s lawyers predicted that more and more companies would use this “strategic tool” to increase their competitiveness. Since then, US Airways and Delta have followed suit. When Delphi, the auto parts giant, filed for bankruptcy in October 2005, its chief executive, Robert S. Miller, threatened to slash the company’s pensions unless the workers agreed to massive wage concessions.

As part of this assault on pensions, Hewlett-Packard, IBM, Verizon, Sears, Motorola, and many other companies have embraced a riskier, far less generous type of retirement plan, 401(k)s, while turning away from the traditional plans that promised workers a specific monthly benefit for life after they retired. When Hewlett-Packard took that step, a company spokesman said, “Pension plans are kind of a thing of the past.” With pensions growing ever scarcer, more and more workers are convinced that they won’t have enough money to retire. Ominously, some economists have begun to warn that millions of Americans might have to continue working into their seventies.