Last month a Pew Research Center study made national news. It found that the share of middle-class families, which it defined as those with between 66%+ and 200% of median household income, had dropped greatly and broadly. The center found that of 229 metropolitan areas, 203 had a smaller percentage of middle-class households in 2014 than in 2000. No longer, per the survey, do a majority of American adults have middle-class income.
That however does not mean that American affluence is falling, for three reasons. One, of the 229 there were more gaining upper-class shares (172) than lower-class ones (160). Two, middle class as Pew defined it is only relative to others, without regard to how high that mean or median national income actually is. Three, when you are evaluating nothing but income you have at best a rough approximation of true prosperity, which includes all the resources to which people have access; if as now many things are free or much lower priced than in the past, they are measured little or not at all in income-based analyses.
The Pew piece precipitated various articles bemoaning the “shrinking,” if not “vanishing” or “disappearing,” middle class. They came from the left, which incorrectly blamed American corporations, and the right, which incorrectly blamed Barack Obama. They did, though, have some points worthy of concern. Average family income has dropped $4,000, inflation-unadjusted, in 16 years. Debt as a percentage of annual income has more than doubled since 1989, to 122%. And perhaps saddest of all, median 2014 middle-class retirement savings, despite households getting older in general, sat at only $20,000.
Reestablishing a high middle-class percentage does not look easy from here. We now have 4.7% official unemployment, which cannot get much lower without even more people leaving the labor force. Women are fully integrated into the workforce, and their income, in most families, has done little more than offset how much less their husbands’ good career jobs pay, adjusted for inflation, compared to those a generation or two ago. An increasing share of newly created positions pay too little for even two spouses working full-time at them to be assured of middle-class status as defined above. Work, and income with it, has become increasingly concentrated into fewer and fewer people. The savings rate is unlikely to improve, as the baby boom generation has been as a whole poor at keeping money, and younger millennials simply do not have work opportunities sufficient for them to do what would be best, setting cash aside in their 20s. America may, frankly, simply have less economic equality than it has in the past.
What can we do? The best answer is for us to stop seeing ourselves in classes at all. Over the next ten years or so we can refine a package of amenities within reach of all Americans. They can include sufficient food, shelter, freedom from violent crime, health coverage through Obamacare or otherwise, a home computer with Wi-Fi or other high-speed Internet service and commensurate access to email along with vast numbers of free websites and oceans of information, the opportunity to live in such a way as to benefit from rising life expectancy, availability of low-priced consumer products as now available in Walmarts among other places, adequate heating, air conditioning in most climates, microwave ovens, cell phones, and more. Most of those things would have been beyond the reach of our grandparents when they were our age, and we should not take them for granted. The bulk is in place now, needing little more than national Wi-Fi, an idea now overdue – the rest we should continue to expect.
There is another side, though. Some things we have long associated with the middle class will become indulgences that fewer people will have. Those start with cars, and we should not take it as a sign of impoverishment that Americans, particularly those in cities with good public transportation, will be less likely to own them, or that couples, even if working, will more often share one. Large cash holdings, whether used for savings or consumption, will continue being less the norm. Having children should be a thoughtful choice, with many or even most choosing not to undertake that ever-increasing financial burden. In contrast to postindustrial products such as software, hand-made items, whatever they are, will become luxuries, as will many manufactured ones. And, of course, we can no longer expect that everyone with the ability to work will be able to find it.
The name for this new set of people? If we want one at all, we can call it “sustaining class.” That is where over 80% of Americans will be, with their prosperity gains real but coming more from technology improvements than from better jobs. That is where our future is pointing.