Is the American middle class really shrinking? If so, how far and how fast?

The CBPP study is significant, but all it really says is that the rich are getting richer. It does not say the poor or the middle are getting poorer, only that their income has grown, since 1979, at a much slower rate than the income of the rich. (I’m not clear whether these figures are adjusted for inflation; if not, a slow growth in income could translate to a real decline in income.) Does anybody know of a study showing the change in distribution of relative income levels since the 1970s? Showing, in other words, whether the middle class is shrinking or not?

They are adjusted for inflation…i.e., it is real income. I would note two things though:

(1) I believe, though I am not sure where I read it, that most or all of the increase in real income for median income folks can be attributed to more hours being worked by household as a whole while the median wage has essentially remained stagnant.

(2) Some of that 15% gain in real income for the middle quintile between 1979 and 2000 came in the last few years of the '90s boom and so I don’t know how much of it may have been lost in the last 4 years. Unfortunately, these statistics tend to run a few years out-of-date.

(3) I would argue that everything is not so hunky-dory for the middle class even if their real incomes don’t actually drop. We necessarily measure our standard of living relative to those around us. (Otherwise, we could look at even those in poverty and say: “Look, they have running water and electricity…Not even the rich had that 200 years ago…so how can there be any problem?”) There are also issues about getting priced out of certain things by the wealthy. For example, it seems to me that there are now areas of the country where housing prices are so exorbitant that you essentially have to be rich to afford any sort of decent house in these regions. I don’t know how that sort of thing is factored in to the cost of living index.

Perhaps this article can provide some insight:

And here is some more recent info in regards to real hourly wages and related issues:

These figures are apparently based on the Economic Policy Institute’s “State of Working America” issued every 2 years. Here is a link to the latest one although unfortunately only the executive summary, info, and table of contexts seem to be available online.

This article is about “working people” – a phrase which, in American parlance, is sometimes used to include the middle class and sometimes to exclude it. In this case it clearly does not cover the middle class as the article is concerned only with industry and industrial laborers. (At its broadest, I suppose, “working people” could incude anybody and everybody who lacks an independent income and has to work for a living – which means most people, in the U.S. and everywhere else.)

This information does not suggest that the American middle class is shrinking, but rather that middle-class people are being forced to run a Red Queen’s race – working more and more hours just to maintain their accustomed standard of living. Which could portend the middle class shrinking in the near future.

Brain Glutton, you seem a bit fixated on a very narrowly-defined question which is, nonetheless, still rather ill-defined (i.e, what is even meant exactly by “the middle class,” which you admitted from the outset to be a problem).

If you want a definitive answer to an extremely narrowly defined question whose terms are ambiguous, I don’t think you are going to get a satisfactory one. If you are willing to entertain a discussion of the more general issues surrounding this, then I think you can get that…but you don’t seem to want that. (I admit that the road I went down with Shodan’s hijack was a tangent, but I think the rest of this stuff is at least relevant to the questions you are asking if you are willing to relax your attitude a bit.)

Well, that would be if you ignore the economic indicators that are ALREADY up. As I said, you guys have to keep harping on unemployment, because that’s pretty much all you’ve got.

In fact… 1st Quarter GDP Growth Revised Upwards

So… we have GDP growth at 20 year highs, almost a million jobs created in the last three months alone, and increased business spending and investment. New housing starts are also near historical highs, as is productivity growth. Unemployment is at 5.6%, and will probably be 5.4% after the next jobs report.

This is a GREAT economy, even ignoring the fact that the trend lines are all positive, indicating even better things to come. Business investment is still trending upwards, for example, which means there should be even better jobs reports when that trailing indicator catches up. And the recovery is incredibly broad-based. Unlike the tech bubble, this economy is firing on all cylinders - consumer spending, business investment, productivity growth, you name it.

And at the rate jobs are increasing, you’re going to lose your talking point about Bush being the only president since FDR to lose jobs on his watch. He’s got about a million to go, with almost six months left, and job creation that so far is averaging around 300,000 per month.

We were also in uncharted territory here, because of the effect of terrorism on consumer sentiment and business confidence. I believe the reason the recovery was anemic was because the economy had put a price on risk, and it was constraining investment. I know that our company, the biggest in the world, was very cautious about ramping up investment again because of the uncertainty of terrorism.

This also means that if there is another major attack, it could be a huge setback.

Well, let’s be fair. The deficit is not all because of stimulus. About 1.2-1.6 trillion of it is. The rest is new spending due to the war in Iraq, the war on terror, homeland security, etc. Plus, Bush spends money like a drunken sailor. It’s his biggest fault and biggest liability. The only problem Kerry has is, he’d be worse. He’ll just raise taxes to pay for it.

And now let’s end this hijack. If you want to respond, you should start a new thread.

Sorry, but unlike most Dopers, I tend to get a bit obsessive-compulsive about topics under discussion. But I still think this is a very important topic, as originally stated, because it is a topic American commentators have been talking about since the early '80s, and as yet no consensus has emerged. It has been a commonplace in American civics classes for at least 60 years that a strong middle class is the backbone of a healthy society. (And I remember from Western Civ I that the decline of the Roman middle class, defined as the smallholding yeomanry, supposedly was one reason for the decline of the Republic and the rise of the Empire.) So, we need to answer two crucial questions:

  1. What is the middle class? How is it to be defined? Strictly by income level, or also by other cultural factors alluded to in my posts above?

  2. Depending on the answer to question 1 (assuming any consensus answer can be established), has the American middle class been declining or shrinking since the 1970s, or has it not?

The most important question here is: is it economic, or is it social? I would argue for it being a mix of the two.

Bear with me, I’m going to go into some family history, but it will explain where I’m digging up my distinctions.

I don’t like it, but I consider “middle class” $30,000-$200,000 a year (the part I don’t like is the $200,000, I think anyone should have more than enough money with $100,000 a year. The $200,000 is a more accepted figure, based on tax brackets and junk). I suppose you should also adjust a bit for inflation.

All figures are based on Southern California reality. YMMV for more expensive markets (you can barely scrape by as a single person with $50k in Frisco, but the housing market there is wild, and it isn’t where most families are raised. I suppose a place like NoVA would be expensive, obviously NY… you get the point).

The lower number comes from my youth - my dad pulled in around $30,000 a year. I always considered this to be lower middle class. However, it comes with a distinction; we were raised in a middle class social setting. Suburbs (well, it is hard NOT to live in suburbs in Los Angeles, I was born in La Puente - it sounds as lovely as it is - then we moved a city “up” the social food chain). Public school. 2 kids. Dog. Paying mortgage on a house. Cable TV. Mother worked part time once we were old enough to fend for ourselves after school. All that razamataz. My dad was and is blue collar (he’s a mechanic), but he wanted us to live above our means and get a better chance in life than he had, which is something I deeply respect.

By contrast, let’s look at my dad. He was raised in a lower class Mexican family, one of 7 kids. My grandpa worked at a rock quarry. No college for any of them (most fled to the military). Came from a farming family. Typical lower class stuff most “decent folk” wouldn’t give the time of day to and mutter about damn immigrants stealing glamorous American jobs like sorting rocks.

In conclusion, middle class earns enough to buy a house in the suburbs and send the kids to state college (I went to Berkeley, my sister went to Fullerton), have basic luxaries like cable TV and I guess nowadays a computer, and take a vacation every year. Call it, on average, 2-3 kids. Usually public school, occasionally a private religious school for those so inclined.

Having thus defined my definition of the middle class, I don’t believe it is shrinking. If I had to wager money, I’d say that income disparity is growing; some people in the middle class are earning more (both parents working, all that), some are earning less. I’m seeing a growing gap between the “Haves” and “Have Nots” - tech training, housing quality, that kind of stuff. The Haves have access to more and more cheaply - food is more numerous, the online marketplace has put discount prices on everything at their fingertips. They get better jobs, and have more education. The Have Nots don’t have college education and simply can’t get better jobs. Their earnings stagnate while others go up. We may see a larger class gap develop - and I think this is a natural effect of changing our economic basis. We are changing from the industrial age to the service age; the new jobs aren’t factory lines and stuff, they are tech fields - but there will always be someone left behind to pick up your garbage, fix your car, install your track lighting, and serve you your BigMac.

On a long enough timeline, we’ll go through more of the same stuff we went through in the 19th century and the classes will come back together again. But it may be rough until then.

I’m not an economist, I’m just sayin’…

I’ve said it before, and I’ll say it again – stock prices don’t vote, (unemployed) voters do.

Bullshit. You just can’t say, “Kerry would be worse now let’s not argue any more” especially given that all the evidence indicates that he would be a LOT smarter about military adventures.

I agree we are on a hijack here, so I will stick to this one factual correction. Here from CTJ, using the CBO’s numbers, is a breakdown on the cost of the tax cuts (and the relative contributions of them and other things to the deficit). The numbers are: $2.6 trillion for the tax cuts, with current sunsets, between 2002 and 2014. (Of this $1.7 trillion is the direct cost and $0.9 trillion is interest on the debt.) If the sunsets are repealed, as Bush desires, then that cost for the 2002-2014 period jumps to $5.5 trillion, of which $4.1 trillion is direct costs and $1.4 trillion is interest. And obviously, in this case, the costs would continue to mount after 2014. My summary of this as “about a $3 trillion mortgage” was perhaps a bit imprecise but not necessarily in the high direction.

As a final note, I meant to add that the spending of which you speak obviously has a stimulative effect on the economy too, at least in the short term while interest rates remain very low…i.e., before the effects of a higher deficit begin to catch up with us.

If the deficit leads to higher interest rates, how will that affect the middle class?