For the first time in 40 years, the American Middle Class, the target demographic, at least in terms of rhetoric, of the American political establishment, is now made up of fewer people compared to those in the upper and lower income strata combined, due to the decline in American manufacturing, the “globalization” of our economy and reliance on cheaper imports, the polarization of the job market towards favoring those with higher skills and education, and an unmistakable assist from the financial industry which brought us through its greed and recklessness what is now commonly referred to as “The Great Recession.”
After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, a demographic shift that could signal a tipping point, according to a new Pew Research Center analysis of government data.
If you happen to be an upper-income strata to begin with, this news isn’t all bad, since the number of high-income Americans has risen 7%. Likewise, if you happen to be wealthy, you’re getting much wealthier, much faster. People in high income brackets saw their wealth go up 47%, compared to 34% for those defined as “middle income,” those whose household income falls between $41,900 and $125,600 year per year (a rather broad interpretation which some might suggest actually masks a more precipitous decline). Looking at it another way, the upper class now controls about 50% of the nation’s income, up from 29% in 1970. Those in the top income brackets were also far less likely to be impacted by the effects of the 2007-2009 Recession.
The Pew Research Center report released Wednesday put in sharp relief the nation's increasing income divide, which is certain to be a central issue in the 2016 presidential race. It also highlights how various economic and demographic forces have eroded long-held ideals about maintaining a strong, majority middle class.
Other factors influencing the decline are the willingness of an increased population of immigrants to accept low-paying jobs from companies and businesses eager to cut their employee costs to boost their bottom lines. Offsetting the decline, on the other hand, are far greater numbers of women entering the work force. Significantly, Pew’s study did not address the critical factor of economic mobility—the ability of Americans to move up and get ahead, that traditionally formed the basis of the “American Dream.” So issues such as rampant wage stagnation, corporate-friendly economic and tax policy, the offshoring and outsourcing of jobs, and the corporate-influenced, Republican-enabled legislative decimation of unions—formerly the mainstay of the Middle Class—are left unaddressed.
Whether this trend continues will depend in large part on how household structures evolve. Soaring numbers of single-parent households since the early 1970s, for example, have increased those at the bottom of the income spectrum.
Also, trends in marriage rates, immigration, college education and the labor force participation of lower-skilled men in particular will all have a bearing on the future of the middle class in America, said Harry Holzer, an economist and public policy professor at Georgetown University.
The Pew findings, however, are not comforting, he said. “It does suggest, even when you adjust for demographics, it's a little troubling,” Holzer said. “We always expect things to be getting better.”
The Pew study is, for the most part, bare statistical analysis and does not delve deeply into the socio-economic factors that have led to this decline. The fact that more women entering the work force and the need for two incomes to sustain a middle-class lifestyle is an interesting data point but it leaves out the fact of a huge pay disparity that still exists between men and women. It also ignores the fact that many women might not have preferred to enter the workforce if their middle-class husbands and boyfriends made enough money to sustain their families. The study, in short, doesn’t acknowledge the fact that sustaining even “middle income” status is now subject to variables such as the availability of child care, the high cost of health care, housing and food, and other things that many “Middle-Class” households in the 1970’s, for example, took for granted, like the ability to send their children to an affordable college or enjoy a secure retirement. It doesn’t examine the exclusionary effects of generational wealth and the fact that an economy tilted towards the highly educated is de facto an economy tilted towards the wealthy. In other words, it doesn’t address the quality of middle-class life in this country, or the corrosive social effects of growing inequality.
Taking on these issues and finding solutions to them is the job of the Democratic Party. Certainly, no one else is going to do it.