What's Happening to the Middle Class?

April 14th, 2014

Making Ends Meet

British comedian Ronnie Barker once told a joke about the out-of-work contortionist who could no longer make ends meet. Unfortunately, for an increasing number of Americans, making ends meet is no laughing matter.

According to a Pew Research Center/USA Today survey released in January, “The share of Americans who identify with the middle class has never been lower.” In 2008, during the initial months of the global financial crisis—the “Great Recession”—53 percent of Americans self-identified as middle class. Today, 44 percent do so. Simultaneously, “the share of the public who says they are in the lower or lower-middle classes rose . . . from 25% in 2008 to 40% today.”

The slim four percentage points separating those who see themselves in the middle class from those who see themselves below it appear to reflect a growing perception of widening income inequality in the United States. Former US president Jimmy Carter, for example, told the Associated Press last fall that “members of the middle class [today] resemble the Americans who lived in poverty when [I] occupied the White House” in the late 1970’s. According to another Pew survey, majorities of both major political parties—68 percent of Democrats and 61 percent of Republicans—“believe the gap between the rich and everyone else has increased in the last 10 years.”

Defining ‘Middle Class’

No single, settled definition of the middle class exists. In a speech last summer, President Obama outlined what he described as “the cornerstone of what it means to be middle class in America. A good job with good wages. A good education. A home to call your own. Affordable health care that’s there for you when you get sick. A secure retirement even if you’re not rich. More chances for folks to earn their way into the middle class as long as they’re willing to work for it. And, most importantly, the chance to pass on a better future for our kids.” Pew Research confirms most Americans do consider these things traits of a middle-class lifestyle, especially secure employment (86 percent).

In recent years, notes USA Today, middle-class income “has been described as between $32,900 and $64,000 a year (a Pew Charitable Trusts study), between $50,800 and $122,000 (a U.S. Department of Commerce study), and between $20,600 and $102,000 (the U.S. Census Bureau’s middle 60% of incomes).” Even the Census Bureau does not officially define the phrase. It does report that in 2012, the median US household income was $51,017. That figure represents an eight percent decrease from December 2007; it’s equal to the median income in 1995. As Timothy Smeeding, an economics professor at the University of Madison-Wisconsin, says, “Middle- and lower-income families are getting a smaller slice of a smaller economic pie.”

Former secretary of labor Robert Reich contrasts the current situation with the “shared prosperity” of President Eisenhower’s post-war era: “During those years, the economy doubled in size and everybody’s income doubled. Even if you were in the bottom fifth of the income earners you did actually better. . . . [But] something happened . . . to change the historic relationship between economic growth and the growth in productivity on the one hand and wages. Beginning in the late ’70s and really to a greater and greater degree over the last three decades, . . . most of the new wealth in society went right to the top.” Research by economists Thomas Piketty and Emmanuel Saez documents that 95 percent of income gains after the Great Recession have gone to the richest one percent of American families.

Middle-Class Anxiety

Gene Beaupre, political scientist at Xavier University, points out that “middle class” is defined not only by income but also by attitude: “It defies numbers. It’s a mind-set that says, ‘I’m part of the working fabric of American culture.’ ” But more and more, numbers are at least challenging that mindset. “It’s not unusual,” says Reich, “that many average people who are working harder than ever, worried about their jobs, worried about paying their . . . bills, living from paycheck to paycheck, are . . . beginning to say to themselves, ‘There is something fundamentally wrong here.’ ”

Reich’s litany of middle-class concerns corresponds to some objective indicators. Why, for example, are people worried about jobs? Because 8.7 million jobs disappeared during the Great Recession, half of those from the traditionally middle-class construction and manufacturing sectors. And the fact that a record 48 million Americans use the Supplemental Nutrition Assistance Program (formerly called “food stamps”) is evidence those bills Reich mentions are worth worrying about. With wage-earners’ average pay having slipped one percent and factory workers’ pay having fallen by three percent since 2009, many middle-class paychecks don’t stretch as far as they once did. “If you look at how much [food and gas] prices are going up,” says one Mississippi mother of four, “you get in the hole really quick. It’s a constant squeeze.”

Middle-class Americans face longer-term worries, too. A Wells Fargo survey last year found that “nearly half of middle-class workers said they are not confident that they will be able to save enough to retire comfortably,” and 37 percent plan to work until they are too sick or die. Middle-class belief in college education as a path to success persists, but public universities’ tuition and fees have risen nearly 130 percent over the last two decades—in 2008, the amount was about $6,500 per year—leading to more middle-class student debt. In a recent Rutgers University study, only 19 percent of respondents agreed that “job, career and employment opportunities will be better for the next generation.”

“The middle class was always synonymous with economic security and stability,” says public policy researcher Tamara Draut. “Now it’s synonymous with economic anxiety.”

How Much Inequality Is Too Much?

The concerns of today’s middle class have implications for the entire, consumer-driven American economy. Research by economists Steven Fazzari and Barry Cynamon demonstrates that only the top five percent of earners are truly powering the recovery, sluggish though it is, from the Great Recession. Fazzari argues this disparity is likely unsustainable: “It’s going to be hard to maintain strong economic growth with such a large proportion of the population falling behind. We might be able to muddle along—but can we really recover?”

Economic inequality may also exacerbate already sharp political divisions in 21st-century America. Writing in The Wall Street Journal, professor William Galston worries that economic inequality will foster civic fragmentation: “Members of the rising professional/managerial class share fewer and fewer experiences with middle-class Americans—let alone the working class and the poor. . . . The simultaneous rise of economic and political polarization is more than a coincidence. Politicians cannot come together if society is coming apart, and America cannot advance if its middle class is in retreat.”

Again, majorities of Republicans and Democrats do agree economic inequality is on the rise. And 93 percent of Democrats, 83 percent of independents, and 64 percent of Republicans agree some government action is needed to address that gap. But agreement breaks down over policy prescriptions: “Three-quarters of Democrats favor raising taxes on the wealthy and corporations to expand programs for the poor. . . . Republicans, by about two-to-one (59% to 29%), believe the government could do more . . . by lowering taxes on the wealthy and corporations in order to encourage more investment and economic growth.”

Although Robert Reich’s recent documentary film about the income gap is titled “Inequality for All,” he allows that “some inequality is necessary if we’re going to have a capitalist system that creates incentives for people to work hard and to invent. . . . The question is, . . . When do you reach a point where inequality is simply too much?”

Possible Christian Perspectives

Christians can join the conversation about complex economic questions with perspectives and priorities shaped by the gospel. Jesus declared he came so people “could live life to the fullest” (John 10:10). While he was concerned about people’s spiritual well-being, his teachings and miracles of feeding and healing demonstrate he was also concerned about their material well-being.

At the same time, Jesus emphasized God’s special concern for those who are poor (Luke 4:18-19; 6:20-21), an emphasis the early church shared (James 2:5; 1 John 3:16-17). Whatever remedies Christians advocate for the middle class must seek the welfare of all people, especially, as Jesus said, “the least of these brothers and sisters of mine” (Matthew 25:40).

Christ commands his followers to pray, not for comfortable prosperity while others have none, but for daily bread, enough resources to meet basic needs. And God gives wealth as a tool for doing the “good works . . . prepared beforehand to be our way of life” (Ephesians 2:10, NRSV)—including the work of making sure no one’s basic needs go unmet.

Be sure to check out FaithLink, a weekly downloadable discussion guide for classes and small groups. FaithLink motivates Christians to consider their personal views on important contemporary issues, and it also encourages them to act on their beliefs.

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