Reprinted from Campaign For America's Future
A new study by the Pew Research Center spurred a rash of headlines last week about "the dying middle class." But the word "dying" might be more appropriate if we were watching the regrettable but inevitable effects of natural forces at work. We're not. We're seeing the fruits of deliberate action -- and sometimes of deliberate inaction -- at the highest levels of power.
The great American middle was never large enough, even at its height. It always excluded too many people -- sometimes, shamefully, merely for their skin color. And now, instead of growing and becoming more inclusive, it's fading away instead.
It's true that the middle class is dying, but not from natural causes. It's being killed. What -- and, for that matter, who -- is responsible for its slow death?
It's important to understand just how dramatic this decline has been. The Pew study found that the size of the middle class fell in virtually all parts of the country between 2000 and 2014. Nine out of ten metropolitan areas showed a decline in middle-class households.
In a related study, Pew also found that the median income for middle-class households fell by nearly 5 percent between 2000 and 2014. Their median wealth (assets minus debt) declined by 28 percent after the housing market crisis and subsequent Great Recession.
Battleground electoral states like Indiana and Michigan saw the greatest decline in middle-class incomes, a finding that may help explain this year's widespread dissatisfaction with the status quo among some voters.
It's true that some households moved into the upper-income tier, even as others fell into the lower-income range. But that doesn't necessarily make them oligarchs. There is also considerable inequality among the top 20 percent of households, and even among the top 1 percent.
Pew's middle-class range went from an average lower income (in 2014) of $44,083 to $144,250 for a family of four. Households whose earnings were higher than that (adjusted for regional costs) were considered higher-income.
$144,251 sounds like a lot of money -- and it is, especially when 47 million Americans are living in poverty. But that doesn't even qualify for the top five percent in household income, much less the top one percent. A household needed $423,000 in annual income to make it into the top 1 percent in 2014.
It's even worse than it looks.
The middle class isn't what it used to be. Lower- and middle-income wages have been stagnating for a long time. Middle-wage hourly wages only rose 6% between 1979 and 2013, while low-wage workers' wages fell by 5%. At the same time, very high wage earners saw a 41% increase in income. What's more, figures like these substantially understate the long-term decline in disposable income and quality of life experienced by so-called middle class Americans.
In fact, families today can be in the "middle" in terms of income and yet still not make enough to live on. The Economic Policy Institute calculated the amount of money needed to maintain a four-person household in different parts of the country and found that it took between $49,114 and $106,493 per year. $44,083, the lower end of Pew's middle-class income range, was not an adequate income anywhere in the country.
Costs have risen dramatically for many large-dollar items that affect middle class families, including college tuition and out-of-pocket costs under employer healthcare plans. Retirement security has evaporated as corporate retirement plans offer less in benefits.
Household income figures are also distorted by the fact that an ever-increasing percentage of homes have moved from one-income to two-income families. In 1960, 72 percent of two-parent families with children under 18 had a single earner (typically the father). That figure fell to 37 percent by 2010, while the number of two-earner families rose to 60 percent. (Single-parent households face an even harder struggle, with a much greater risk of falling into poverty.)