After the latest study of America’s fortunes, no one can deny that the middle class is in trouble. But addressing the complex causes behind the decline is difficult
Earlier this month, the Pew Research Center put out a widely reported study with the shocking conclusion that the middle class was no longer the majority in America.
The Pew data went back to 1970 but the middle class likely held the crown even longer, going back to the late 1940s.
To be fair, the conclusion is less stunning to those who have been following the work of the Economic Policy Institute, specifically its State of Working America, and other scholars.
The hollowing out of the middle class beginning in the 1980s was laid out in devastating detail in The Philadelphia Inquirer’s landmark 1990 series, “America: What Went Wrong,” by Donald Barlett and James Steele.
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But Pew offered an unimpeachable centrist, nonpartisan confirmation of what has been happening. It is careful with language, using income rather than class for precision’s sake.
Specifically, Pew found that 120.8 million adults were in middle-income households as of early this year. Meanwhile, those in lower- or upper-income households totaled 121.3 million.
The share of middle-income household adults has fallen from 61 percent in 1971 to 50 percent this year. It is, the report stated, “a demographic shift that could signal a tipping point.”
It is worth asking whether this is more than a psychological nick to America’s achievement of having created the greatest middle class in history. After all, upper-income households increased by 7 percentage points over the decades while lower-income cohorts increased by only 4 percentage points.
Doesn’t this mean that more people are moving up?
Some undoubtedly are.
Pew states, “As the middle-income population hovers near minority status, the population of upper-income adults is growing more rapidly than the population of lower-income adults. From 1971 to 2015, the number of adults in upper-income households increased from 18.4 million to 51 million, a gain of 177 percent. During the same period, the number of adults in lower-income households increased from 33.2 million to 70.3 million, a gain of 112 percent.”
But the overall numbers obscure more troubling trends.
Pew admits that income growth in the middle (and bottom) tiers trails that of earners at the top.
This is well-documented wage stagnation. According to research by The Washington Post, median household income peaked more than 15 years ago for 81 percent of U.S. counties. Even prosperous King County peaked in 1999.
And compared with the best years of the middle class, these households have been falling behind in wealth (assets minus debts).
As Pew puts it, “only upper-income families realized notable gains in wealth from 1983 to 2013, the period for which data on wealth are available.”
Also, 21 percent of adults in upper-income households (12 percent in “middle upper” and 9 percent in the highest) are doing well. But that contrasts with 79 percent in middle, lower-middle and the lowest income households that are struggling more than in the last half of the 20th century. This is hardly reason for celebration.
The very rich are more self-segregated from the rest of America than ever. Economic segregation hurts social mobility. And thanks to the Supreme Court’s Citizens United decision, it has unprecedented power over self-serving politics and policy.
Critics say that the Pew study actually underestimates the decline of middle-income households and that more have fallen downward out of the middle in the Great Recession and its aftermath.
The causes behind the decline of the great middle class are the source of fierce political and academic debate.
Going back to the Bartlett and Steele series, many point to lack of antitrust enforcement that encouraged the decimation of local economies and increased industry consolidation, as well as union busting, the decline of progressive taxation and greed.
Technology and automation, the decline of jobs that once provided good wages to high-school graduates, and lack of pathways for those workers into the tech elite also play a role. Even college graduates face enormous obstacles with lower-paying jobs and high student debt.
A financialized economy that blows bubbles and offshoring of jobs hurt the middle, which depends on housing for most of its wealth.
Some economists focus on “rents” as a major driver of the upward redistribution of income. In econospeak this means such things as patent protections, sky-high CEO pay, the financial plays of Wall Street and “protectionist measures” that artificially raise the pay of an elite group of professionals.
For conservatives, however, the problem is too much government spending, “job killing” regulations and “burdensome” taxes.
If there’s any common ground, it is that rising inequality is not inevitable. But for now, in our cold political civil war, intelligent responses seem nearly impossible.
I came of age at the zenith of the great middle class. It’s a shame this is now only an “I remember when” story.