Disturbing finding about the middle class


The Pew Research Center has released the results of a new survey that finds that fewer Americans self-identify as middle class. This is disturbing but not for the obvious reasons.

FT_14.01.24_middleClass_line_420

On the surface, this may not be a surprise since beginning around 1970 or so, we have seen a steady increase in inequality and stagnation of income for those described as being in the middle and lower classes.

But what is noteworthy is that while objectively the conditions of the middle class has deteriorated, Americans like to think of themselves as being the middle class. If you break up the population in terms of income quintiles (as I did in 2008 and should really update), then one could reasonably count just the middle three quintiles as middle class (upper, middle, and lower middle class) with the top quintile being rich and the bottom quintile being poor. If so, then middle class would be just those families earning between $20,000 and $90,000 and this would be a fixed proportion (60%) of the population. If we define the classes as being split equally into three (upper, middle, and lower), then the middle class would consist of 33%.

But the way people think of their own class affiliation may have little connection to the actual numbers. Since politicians and the media pander to the idea of the middle class as the salt of the earth, it is seen as a desirable group to belong to and so far more people think they belong to it than may be the case. As I said back in 2008

As a result, we have the curious phenomenon that almost everyone, from the quite poor to the quite rich, thinks of themselves as middle class. Thus someone who is earning $30,000 a year feels they are in the same class as, and feel a sense of class solidarity to, someone earning $250,000 a year. Hence they react with a sense of grievance when someone with much higher income than them doesn’t come out ahead because of any change in fiscal policies.

The word class has become perceived as based not only on income but also as a proxy for family background, the nature of one’s job, the social circle one moves in, and lifestyle practices. This vagueness has enabled almost everyone to think of themselves as middle class because in at least one area of their life they may overlap with those much better off than them. So someone who has a good formal education but now works at minimum wage job may still consider himself middle class because he reads newspapers and books, listens to classical music, and is involved in arts and community activities.

So what is significant about the Pew results is that people are giving up clinging to the idea that they are members of the middle class. Maintaining that self-image has just become too difficult and they see themselves as drifting down the economic ladder.

And that is what is disturbing about these results. It may signal a growing sense of despair that things are not going to get better.

Comments

  1. Pen says

    It’s also interesting that the people seem willing to ‘agree’ on splitting the middle from the lower class approximately 50/50 but far fewer than a third of people identify as upper class. Does this reflect a real situation where a small upper class exists in stratospheric heights, far separated from the rest of the population, or is it down to self-perception? If people were objective, would ‘lower class’ represent a third of people, or people with in the lowest third of income – which might well be as high as 80%? What about the uber-class, that tiny percentage we just heard about who own most of the world’s wealth? Are they separate from the upper class or just the top tier of it?

  2. Paladynian says

    Two things in that chart strike me as interesting beyond the obvious.

    First is that the categories lump “lower & lower-middle class” together, as well as “upper-middle & upper class”. The middle class line only represents that one response. Secondly, the # of people calling themselves upper-middle or upper has fallen as well so it seems pretty implausible that many in the Middle line left it because they rose up to the Upper category.

    I am curious as to how many people who previously called themselves upper-middle class have downgraded their estimate to simply middle class. In the worst case, if the full 6 point drop in the Upper line all comprised those people downgrading, then without them inflating that middle class line, Middle would actually be under the Lower class point. If that is what’s happening it makes that downward slide from middle to lower class status even more severe then it already looks. :(

  3. Daniel Schealler says

    I’m no expert, but it feels wrong to break up the class structure that way.

    In my head, it feels like the breakdown should be about how much of the wealth is concentrated in the band, not the head-count.

    So rank everyone by networth or income or whatever in ascending order. Create a running balance column. Starting at zero, fill in the running balance by adding each person’s relevant value to the previous balance entry.

    At the end, get the total and divide it by three to get n.

    The people who’s running balance falls under n are the lower class. The people who’s running balance fall between n and 2n are the middles. The people who are above 2n are the uppers.

    I don’t know what the result of this would be. But my expectation is that there are far fewer people in the upper class than the middle, and similarly from middle to low. A wealth pyramid, essentially. My intuition tells me that the method above would get something like that in it’s results.

    But seriously, screw my intuition, I have no idea what the result would actually be. This is just how I think of the three-tier class structure whenever it’s reduced purely to the criterion of wealth. :)

    Note: There’s probably much better ways of calculating that breakdown than the one I’ve suggested above. I’m just trying to get the idea across, not recommend a way of calculating it. :)

  4. Daniel Schealler says

    Second Note: Yes, I get that it’s self-reported, and I’m suggesting an objective calculation. Apples and oranges.

    Numbers just feel wrong to be broken down like that, is all.

  5. Heidi Nemeth says

    Here’s another socio-economic breakdown as heard from an investment banker:
    net worth below $0 = poor (more than 80% of the population); lower class
    net worth below $10 million = rich; middle class
    net worth above $10 million = very rich; upper class

  6. machintelligence says

    I rather like the definitions I learned about 50 years ago in an introductory Social Science class:
    Lower lower — works with hands, unskilled (ditch digger)
    Upper lower — works with hands, skilled (plumber)
    Lower middle — works with head, no management (secretary)
    Middle middle — works with head, middle management & small business (office mgr. & contractor)
    Upper middle — upper management & professional (company president & lawyer or doctor)
    Lower upper — does not need to work, new money (software millionaires)
    Upper upper — does not need to work, old money (inherited fortunes)
    There seems to be a push for everyone to go to college and join the middle class,which is not a bad thing, but it leaves the ranks of skilled workers rather depleted.
    Some attitudes are highly class correlated, such as delayed gratification and saving for retirement with the middle class and smoking cigarettes with the lower class.
    Income and wealth are also class correlated, but a plumber might out-earn a librarian, and some heirs may have less wealth than a successful neurosurgeon.

  7. dysomniak, darwinian socialist says

    “Middle class” has never been anything but a propaganda term, designed to divide the working class against itself. There are capitalists, and then there’s the rest of us. Everything else is bullshit.

  8. doublereed says

    Krugman’s definition of middle class:

    My answer to both of these would be to say that when we talk about being middle class, I’d argue that we have two crucial attributes of that status in mind: security and opportunity.

    By security, I mean that you have enough resources and backup that the ordinary emergencies of life won’t plunge you into the abyss. This means having decent health insurance, reasonably stable employment, and enough financial assets that having to replace your car or your boiler isn’t a crisis.

    By opportunity I mainly mean being able to get your children a good education and access to job prospects, not feeling that doors are shut because you just can’t afford to do the right thing.

    If you don’t have these things, I would say that you don’t lead a middle-class life, even if you have a car and a few electronic gadgets that weren’t around during the era when most Americans really were middle class, and no matter how clean, sober, and prudent your behavior may be.

    And then his definition of Upper Class (from Gordon Gekko):

    Wake up, will ya, pal? If you’re not inside, you’re outside, okay? And I’m not talking a $400,000 a year working Wall Street stiff flying first class and being comfortable.

  9. astrosmashley says

    Actually, I see this as a good thing. It points to a reduced ‘stigma’ associated with being poor. It is a necessary step toward the kinds of solidarity that see beyong race and ethnicty…

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