Over at the Agenda, the excellent Scott Winship of the Brookings Institution isn’t convinced by claims that the middle class is disappearing:
Krueger’s claim of a shrinking middle class relies on the same peculiar definition. Specifically, “middle class” is defined as having a household income at least half of median income but no more than 1.5 times the median. I re-ran the numbers using the same definition and data source as Krueger and found that the entire reason the middle class has “shrunk” is that more households today have incomes that put them above middle class. That’s right, the share of households with income that puts them in the middle class or higher was 76 percent in 1970 and 75 percent in 2010—two figures that are statistically indistinguishable. For that matter, I am not discovering fire here; Third Way made the same point in early 2007 (page 7). A shrinking middle class is only a problem if it reflects fewer people reaching the middle class.
The whole article is a must-read, as is Winship’s response to his critics.
I do have to say that America has come a long way if all we have to fight about is how well the middle class doing rather than say, poverty. I thought about that on Sunday when I heard Sen. Harry Reid explain that voters know what the Democrats stand for, and that is the middle class. Not the poorest Americans, but the middle class.
That should be no surprise. Think about it this way. In Washington, priorities are often measures by how much the government spends. By this standard, the middle class is ahead of the game. According to OECD data, the U.S. federal tax system is the most progressive of any in the OECD (the top 10 percent in America pay way over 45 percent of income taxes, at least as tax incidence is normally estimated). Yet government spending is rather regressive, meaning that the U.S. taxes the rich and redistributes most of that money not to the poorest Americans but to the middle class. If we add state and local taxes, the tax system is much flatter but the spending remains regressive.
A good example of this is the share of the budget that goes to senior Americans who, contrary to common belief, aren’t the poor ones anymore. (My Washington Examiner column on the issue is here.)
While I find this very disturbing, I shouldn’t be surprised. The middle class, and senior in particular, are a big voting bloc — unlike the poor.
Veronique,
Reply to this commentLinkReport AbuseThe question remains concerning the two income family, and how much of thier income is derived directly or indirectly from the federal government.
It all depends on how you define "middle class" family If you define it as a family in which only one income is required to buy a decent house and one spouse can stay at home to raise children, at least while they are young (i.e. in elementary school), it is clear that the middle class has shrunk considerably. Lot's of folks think they are middle class until one of the parental units loses his or her job. Ouch. If both parents have to work to make ends meet, sorry, that is the working class, not the middle class.
Reply to this commentLinkReport AbuseAnd that depends on your definition of making ends meet. We're a single income family, but we don't do smart phones or cable/satellite. We don't have costly hobbies or collect purses or shoes. We eat out once a month as a family. Friends who look at me wistfully seem to shrug off the desire when they think about what reality would entail.
Reply to this commentLinkReport AbuseIf you own your home, then by my definition you are middle-class. There are many, many families living in high cost-of-living locations that simply cannot afford to live on one income. There are many, many couples that choose not to have children because they cannot pay the mortgage and eat and pay the electric bill, etc. on just one paycheck. You sir, are wealthy indeed. You have made the right choice.
Reply to this commentLinkReport AbuseI'm the Mrs., but thanks. To your point about a home, we don't really own. We have a mortgage on a home that is steadily decreasing in value. Personally, I'd rather be a renter saving up to buy some land with cash.
Reply to this commentLinkReport AbuseHow in the world can something that cannot be defined be adequately measured to determine if it is shrinking? Indeed, the concept of the "middle-class" is such a vague concept as to border on meaningless. It's a wonder how we get caught up in these things.
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