Examining the economic challenges facing many Americans

High Wire: The Precarious Financial
Lives of American Families
By Peter Gosselin
Basic Books, 272 pp., $26

Even before the current economic slowdown, the media gave considerable coverage to the growing economic gap between the wealthy and both middle- and lower-income citizens. Much of the discussion has been used to advance a political argument on one or the other side of the political divide, with insufficient analysis of the root causes of these changes.

Los Angeles Times economics reporter Peter Gosselin has filled this vacuum with "High Wire: The Precarious Financial Lives of American Families," a rigorously researched and well-written analysis of the economic challenges facing many Americans. The book is an expansion of both a series of articles he did for the Los Angeles Times and of a paper he wrote for the Urban Institute.

Gosselin, a former reporter for The Boston Globe, combines personal stories with data analysis to make his case that many recent changes in employment, pension, and insurance policies have exposed Americans to a greater risk of intensive economic hardship.

"The basic social contract on which American society has always rested - no matter how imperfectly - has begun to change. The inherent balancing of competing interests that lay at the heart of the bargain has been upset," he writes.

The author blames lax government regulators and business leaders more interested in profits than the public good. The book's narrative does not, however, drift into an "us vs. them" tone that often characterizes books on this subject.

Rather, Gosselin goes to great lengths to explain how the current economic infrastructure increases risk (and its potentially adverse effects) for all but the wealthiest citizens.

For example, he notes how the consolidation in and reorganization of certain industries - usually in the name of efficiency - often displaces people with advanced degrees who had received stellar performance evaluations. Many of these people will have trouble finding full-time positions and will have to rely on consulting or contract work.

"The implications of such a brave new world are disconcerting. How could individuals and families plan and conduct themselves over a working lifetime if they had to assume that each week of successful, secure employment might be their last?," he writes in a chapter titled "Unjobs."

Gosselin also spends a great deal of time discussing how higher education - once a guarantee of higher wages and relative job security - is not only becoming prohibitively expensive but also less of an insurance policy against hard times.

College graduates have an average of $20,000 in student loan debt, according to the Project on Student Debt, a California research organization. As a result, 20-something workers are forced to pay off loans at a time when many of them are at the low end of the salary scale. And the news gets worse as they progress in their careers. The global competition that has long threatened the jobs of those in the manufacturing sector has shifted to higher end technology and management positions.

Also, they face additional headaches because the health insurance, property insurance, and pension systems are structured so that individuals are responsible for managing and financing their lives with fewer of the corporate and governmental cushions that were present in earlier generations. Gosselin notes that many individuals paid to know a lot about finances - including several Nobel Prize-winning economists - have made very costly investment mistakes, which does not bode well for less-informed investors.

President Bush has said the shift toward more individual responsibility makes the nation more of an "ownership society," and that is a net plus. Some critics have quipped that what this really means is that you are on your own.

Gosselin does a great job of diagnosing and chronicling the problems in the current economy. Unfortunately, his solutions, while appealing, are not realistic given the current political and regulatory climate.

His ideas include: creating 30-year mortgage-type loans to finance college education, a tax on higher-income earners to pay for individual development accounts to help young families put money away for their children's college education, and revamping state insurance laws to prevent companies from avoiding coverage of persons or properties at greatest risk.

Journalists, however, need not be in the solutions business. In "High Wire," Gosselin does an effective job at shining a light on an important series of problems. Hopefully, astute policymakers will find politically feasible ways to solve them.

Claude R. Marx is a journalist and author of a chapter on media and politics in "The Sixth Year Itch," edited by Larry Sabato.