In this political season in the United States — when is it ever not, one wonders? — we hear many of the presidential candidates refer to the so-called “crisis” of the middle class.
It matters not the political party nor ideological stripe of the candidate, we hear copious references to “the disappearing middle class” … the “middle class squeeze” … and that the middle class is “just getting by.”
Considering that the middle class income group represent the single largest block of voters in the country, it isn’t at all surprising that the presidential contenders would talk about middle class issues — and to middle class voters — so frequently.
The question is … is the hand-wringing warranted?
Well, if one believes a new Pew Research study on the subject, it may well be the case.
Based on its most recent analysis of government data going back nearly 50 years, Pew reports that there are now fewer Americans in the “middle” of the economic spectrum than at the lower and upper ends.
This is a major development, and it is new.
Pew defines a middle class household as one with annual income ranging from ~$42,000 to ~$126,000 during 2014. Using that definition, Pew calculates that there are now 120.8 million adults living in middle class households, but 121.3 million who are living in either upper- or lower-income households.
Pew characterizes this new set of figures as a kind of tipping point. And it helps to underscore the narrative wherein certain presidential candidates — you-all know which ones — are tapping into a collective “angst” about the decline in middle-income families, and the notion that they are falling behind compared to upper-income adults while unable to access many of the support services available to lower-income households.
Looking at things in a bit more depth, however, one can find explanations — as well as other data points that go against the “narrative” to some degree. Consider the following:
- Senior citizens have done quite well shifting into the upper category since the 1970s — their share increasing by well over 25% in the upper-income bracket.
- African-Americans have experienced the largest increase in income status over the same period, meaning that their lower-income category share is lower today.
- The rapid rise in the number of immigrants in the late 20th century has pushed down median incomes because those new arrivals, on average, make less in income.
I suspect the Pew study findings will be fodder for more discussion — and perhaps some additional sloganeering — in the upcoming weeks and months. But you can judge for yourself whether that’s warranted by reviewing more findings from Pew’s report here.
If you have your own perspectives about what’s happening with (or to) the middle class, I’m sure other readers would be quite interested in hearing them. Please share your comments here.
One thought on “The disappearing American middle class? The Pew Research Center weighs in.”
There is so much to talk about here. An observation and a question: The large middle class that we know today is a fairly recent development, largely the result of the Second Industrial Revolution that gained momentum in the second half of the 19th century. Before then, most people scratched out a living on farms, plying some craft — cabinetmaker, blacksmith, cooper, etc. — or working for subsistence wages in a textile factory, the engine of the First Industrial Revolution.
As the Second Industrial Revolution picked up steam, we saw the dawn of the Gilded Age, but we also saw urbanization accelerate and people take “jobs” that paid “middle-class” wages.
Then (at least) three things happened: 1) A raft of new transformational technologies emerged. First it was the power grid and telephone. Today, personal computers and the internet have connected billions of people and transformed the entire international economy. 2) Malcolm McLean, a truck driver, invented the intermodal shipping container, causing maritime shipping costs to plummet and rendering geography increasingly irrelevant beginning in the ’60s. And 3) The passage of numerous international trade agreements abolished import tariffs over the last few decades, creating a true global marketplace.
The result: economic osmosis. As our middle class has taken it on the chin, China (alone) has added over 200 million people to its middle class. Low-skill jobs that can’t be outsourced are often “insourced” with immigrants. Middle-class American labor just hasn’t been able to compete.
Two weeks ago, HP Enterprise CEO Meg Whitman announced on CNBC that HP will be moving several thousand American jobs offshore to save money. Alas, it remains to be seen how durable the American middle class will be while wages elsewhere catch up.
And so the question: Why do we think we can reverse this trend with vocational education? That’s what our universities are now: overpriced vocational schools in an age when bankable vocational skills seem to change monthly. First we burden kids with a whopping student-debt load. What they frequently get in return is a skill-set that will become obsolete in a few short years — maybe even before they graduate. What then?
In his book “Antifragile,” Nassim Nicholas Taleb points to World Bank statistics that “show no evidence that raising the general level of education raises income at the level of a country.” Instead, the opposite is true: it’s wealth that leads to a rise in education (at a national level). He then goes on for a chapter citing the evidence for what he calls the education “epiphenomenon.”
It’s easy to see why Americans are restless.