This is a theme I hear a lot in my own family…how the middle class in the US is shrinking, leading to…something bad. I was reading on CNN today, and this article caught my eye…it’s about this very subject. And if you watch the video, it talks about shrinking middle class and less opportunity, with the implication that it’s shrinking into the lower classes. But the data seems to be that it’s ‘shrinking’ because the ‘upper class’ is growing (to be fair the ‘lower class’ is growing too…just slower). Also, the range seems arbitrary to me…I mean, why is ‘middle class’ between ‘$41,900 to $125,600 for a three-person household’? Wouldn’t it depend on where you lived in the US as to what those numbers even mean? At any rate, it seems that, based on that (to me) rather arbitrary definition of what is or isn’t ‘middle class’, that the middle class has shrunk from 61% in 1970 (I’m assuming this is all in adjusted dollars), with the upper class being 14% of American’s and the lower class comprising 25% to today, where the middle class is 50%, the upper class is 21% and the lower class 29%. To me, that means that more people have moved into the arbitrary ‘upper class’ than have moved into the arbitrary ‘lower class’, which sounds like a good thing overall, and that none of this really says much about opportunity in any case.
I figured there is a debate in here somewhere, and wanted to see what 'dopers think of this. Obviously, according to this, the middle class IS ‘shrinking’, but is this just statistics or is it a real problem? I can certainly see how having 29% of the population supposedly in the ‘lower class’ based on the cap for a family of 3 at $41k per year is a bad thing, but if the middle class is moving into the arbitrary ‘upper class’ more than they are moving into the arbitrary ‘lower class’ I’m unsure it’s meaningful. I’d also like the thoughts on whether people in any of these arbitrary classes THINK they are in the ‘lower’, ‘upper’ or ‘middle’ (I assume most think they are in the ‘middle’ class except the super poor and the super rich, but no idea really).
If you consider the middle and upper levels to have a generally adequate income level while the lower class has a generally inadequate income level then the percent of the population with a generally inadequate income level has increased from 25% to 29%.
Consumerism based on Planned Obsolescence cannot really work in the long run.
Curious how we don’t hear the Capitalists, Communists or Socialists saying that accounting should be mandatory in the schools. If everyone really thought like a capitalist what would the Net Worth of the average household be? We might have had a 3-day work week by 1990.
NO, get credit cards and charge them up to pay interest on the stuff that depreciates.
I don’t even know if my high school had an accounting course when I was there. They did the last time I checked the web site but the tuition was $10,000 per year. It wasn’t mandatory though, strictly optional.
I think it depends. If someone is making $41k in one of the fly over states in some rural county somewhere I’d guess that this would be ‘adequate income’ for a family of 3, while someone perhaps making $60k might be hard pressed in some areas of California or New York on that salary for the same family of 3. So, what you are saying is that, overall, the US has gone down 4% wrt ‘adequate income’ since the 70’s, overall?
Yeah, the middle class can be anything that anybody wants it to be. Different journalists, politicians, researchers, and everyone else use different definitions. Absent an agreed-upon definition, there’s no way to establish whether the middle class is growing or shrinking.
One statistic about the well-being of the middle class that isn’t subject to such debates about definition is median income. That shows strong growth in the 80’s and 90’s, but not so good since 2000.
In the Midwest where I live, we have pretty much gone from a manufacturing based economy with good paying union jobs to a service based economy. We are now a right to work state which means the jobs don’t pay much and have no benefits. Just to stay in or near the middle class, both adult members of a family need to work. For hard working people the middle class might well become an unobtainable dream.
In my opinion, the “shrinking of the middle class” is really a function of society increasingly “bifurcating” into two classes - the “haves”, who have professional skills, education, good luck and experience so as to be in demand - and the “have nots”, who do not.
The latter are increasingly relegated to contract work or service jobs that lack prospects of advancement and benefits; the former are increasingly wealthy, compared to their equivalents in the past. The “middle ground” of good paying jobs with reasonable benefits are increasingly vanishing (and with them, the class supported by them).
There is of course other classes - the truly wealthy at the top, and the truly wretched at the bottom - but most people are, I think, going to find themselves relegated into one of the two mentioned above.
What people are finding increasingly upsetting is that the old routes to comfortable middle-classdom increasingly do not work. Education, for example, has become a ‘necessary but not sufficient’ criterion - having a good education, without more, is no guarantee of avoiding a cycle of unfulfilling and low-paid contract work and service jobs.
All of this is pretty anecdotal, but also based on reading a reasonable amount about social mobility etc.
This makes no sense. The purpose of a business is to generate a return for its owners. The reason people make money is for consumption. If people thought like a capitalist everyone would hoard assets and live in poverty. Studying accounting would not have anything to do with what people chose to spend their money on.
You are defining “adequate vs. inadequate” in relation to what other people have, not to what you have. If I am making $50K and you are making $100K, and you get a raise to $150K and I stay the same, we are further apart but I don’t have less.
50 or 60 years ago we did have planned obsolescence. especially for cars. Today cars are lasting longer and longer, and hitting 100K miles is no longer a big deal. Thanks to digital controls reducing the number of moving parts, appliances last longer also. A lot of upgrades today are for better technology or features, not because stuff broke suddenly. Ever since the Japanese whupped Detroit’s ass, quality counts. Yeah, there are a few cover ups and some stuff gets broken, but all in all we’re doing much better.
Pretend the two of you are the only two in the economy. Each period you receive your income and then spend it on a limited amount of food (simple economy, so no saving. You always prefer more food to less). In the first period you can buy 1/3 of the food. In the second period you can purchase 1/4. That’s less.
Projected job growth in the next 10 years, according to the BLS, will be in jobs requiring an advanced degree (beyond a Bachelor’s degree). Jobs in areas that require no formal credential is expected to outpace jobs requiring a high school degree. Growth in female dominated professions are also expected to outpace male dominated professions. Good jobs for men with high school degrees were a major driver of the middle class once upon a time.
As OP points out, the definition of middle class is arbitrary.
That’s why other ways of quantifying the issue make more sense. The U.S. Gini coefficient is increasing – that’s a mathematically rigorous threshold-independent way to quantify the “shrinking middle class.”
Another way is to ask poll questions. “Do you expect to have a more prosperous life than your parents?” is getting far more No answers than ever before.
You wouldn’t feel that way if the guy making $150K snapped up the house you wanted to buy, forcing you to either settle for a lesser house or pay more for the same. In any real-world finite-resource economy you ultimately do have less, because it affects demand and prices and drives up the cost of living.
On the subject of the OP, the high and increasing Gini coefficient indicating a widening income gap is another symptom of the fact that the wealthy are continuing to overtake the middle class.
Some places are raising the minimum wage. The funny part of that is, it punishes everybody who isn’t making minumum wage. Because the minimum wage earners now have more money, prices rise to reflect the new supply & demand balance.
The people who weren’t making minimum wage didn’t get a raise, but still must deal with the higher prices, so they end up on the losing end of the deal. The worst off are the people who were slightly above minimum wage before, and after the hike are now at minimum wage. Once prices re-equilibriate, they’ll find themselves on the bottom rung.
Ask a middle-class person in New York what he thinks of this, paying an obscene amount of money to live in a tiny apartment because the decent places are utterly beyond his reach.
Heck, even my city (Royal Oak, MI) is gentrifying at an alarming rate. For the last couple of years, people have been buying houses and tearing them down to erect big McMansions that cost double what the middle-class house next door does. I had the good fortune to move here right after the housing bubble burst, but if I was moving today I probably couldn’t afford to buy anything near here.
If your argument is that raising the minimum wage makes people worse off through price increases, I’m going to have to say that’s contrary to the literature, e.g.:
Despite the different methodologies, data periods and data sources, most studies found that a 10% US minimum wage increase raises food prices by no more than 4% and overall prices by no more than 0.4%. This is a small effect. …The overall reading of the above evidence on price effects, together with the evidence in the literature on wages and employment effects is that the minimum wage increases the wages of the poor, does not destroy too many jobs, and does not raise prices by too much.
Sure this is an issue to contend with but this confirms the main issue of wage stagnation in general. Upper class continues to take a majority of the income generated rather than give the people that make them their money raises. Minimum wage should not be revisited periodically. It should be connected to inflation and raised yearly.
