A long and familiar list of concerns fuels Americans’ discontent this election season: the economy, taxes, the deficit, health care reform and on and on.
But the Pew Research Center last week put its finger on what’s really at the heart of the country’s continuing struggles: The American middle class is smaller, poorer and more pessimistic than it has been in a long time. That explains a lot of the uneasiness so many people feel these days, and it deserves a lot more substantive debate in the presidential and congressional campaigns.
A large and strong middle class has long been a cornerstone of America’s economic health. Most people once did well enough to maintain an acceptable standard of living, and most had a chance to do better than their parents. That undergirded our quality of life and made the United States the envy of many countries.
It’s all vanishing. If we stay on this trajectory, a majority of residents will not be middle class. (As defined by Pew, the middle class is a household that makes between 67 percent and 200 percent of the national median income.)
Some of Pew’s findings:
Just 51 percent of adults were in the middle class in 2011 – down from 61 percent in 1971.
The middle class’s median wealth dropped 28 percent in the decade since 2000, and its median income fell 5 percent.
The middle class’s share of the nation’s household income has dropped from 62 percent in 1971 to 45 percent now. The lower-income group has stayed about the same, and the upper class has increased its share, from 29 percent to 46 percent.
“The notion that we are a society with a large middle class, with lots of economic and social mobility and a belief that each generation does better than the next – these are among the core tenets of what it means to be an American,” Pew’s Paul Taylor told the Los Angeles Times. “But that’s not necessarily the case anymore.”
The Great Recession and the plunge in housing values whacked the middle class. The wealthy have a smaller percentage of their wealth tied up in their home. As a result, the upper class’s wealth actually climbed a tiny bit – 1 percent – in the decade after 2000, compared with the 28 percent loss for the middle class.
Traditionally, there have been at least two perspectives on Americans’ economic well-being. One was the notion of upward mobility; we were the land of opportunity, where everyone had an equal shot to move up. Study after study has proven that to be a myth now, if it was ever true.
The other was the idea that a rising tide lifts all boats; people might not move into a higher class, but all classes were wealthier than in their parents’ generation. That was true for the half century after World War II. But Pew shows 2000-2010 was the first post-war decade where income fell.
The recession erased all the gains the middle class had made since the early 1980s. Troubles, though, started before that; middle class incomes have been stagnant for the last 15 years or so. That’s why so many voters are restless.
President Obama and Mitt Romney need to end their high-school quality campaigns and tackle this trend for American voters. They should explain how much of this phenomenon they think should be blamed on government, and how much government should be involved in the solution. Without an answer from the next president and Congress, the middle class is likely to erode even more.