Pop quiz: Which of the following is true? (a) Over the past 40 years, the middle class has shrunk; (b) Over the past 40 years, the middle class has grown poorer; (c) The middle class just suffered through a “lost decade”; (d) All of the above.
You could be forgiven for answering (d), given the angst-producing state of discourse on the economy, but the truth is that none of these claims about middle-class decline — made most recently by the Pew Research Center (PRC) — are supported by the best evidence. Like other analyses before it, PRC’s recent report “The Lost Decade of the Middle Class” badly misrepresents the economic standing of the middle class. Pew generally does very good work, and I am a fan particularly of its Economic Mobility Project, the research portfolio of which I managed for three years. But “declinist” analyses are both wrong and insidious, and since PRC’s work is especially influential, its errors deserve a careful examination.
The PRC report is cheerily subtitled “Fewer, Poorer, Gloomier.” Let’s take those claims up one by one.
PRC argues that the middle class has been shrinking over the near and the long term. The near-term claim relies in part on comparing the class designations Americans chose for themselves in surveys from early 2008 and again this past July. The share of Americans self-identifying as “middle class” declined from 53 percent to 49 percent over the four years.
It isn’t clear why we should care whether the middle class, so defined, shrinks. It could shrink despite an increase in the number of people who choose “middle class” rather than “lower middle class” or “lower class” if the number who choose “upper middle class” or “upper class” grows even more. What is important is whether the share choosing “lower middle class” or “lower class” grows.
PRC reports that it has done so, rising from 25 percent in 2008 to 32 percent this past July. Other pollsters asked this self-identification question in 1976, 1984, 1987, and 2004, and like PRC in 2008 they all found the lower-than-middle share to be between 24 percent and 27 percent. The question has been asked six times since 2010 (five times by PRC), and the share ranged from 29 percent to 40 percent in those surveys. The venerable General Social Survey has asked people to self-identify as lower, working, middle, or upper class since 1972, and it also found that the share of Americans self-identifying as lower than middle class was relatively high in 2008 and 2010, although the 2008 percentage (53) was lower than the one in 1972, and the 2010 percentage (55) was lower than the one in 1982. The share fell between 1996 and 2004, with the 2004 percentage (48) matching the General Social Survey’s 1989 low.
In short, historical data suggest that the Great Recession has increased the share of the population that considers itself lower than middle class but offers no evidence of a long-term increase or even a steady rise over the “lost decade.” The same conclusion holds if we stick to the narrow question of whether the middle class has shrunk.
The PRC’s second set of analyses, purporting to show that the middle class has shrunk over the long run, are based on the Census Bureau’s Current Population Survey. PRC defines “middle income” in relation to the median income (the income of the household smack in the middle). A household is middle income, according to PRC, if its income is at least two-thirds of, but no more than twice, the median. By this definition, and adjusting incomes for inflation and differences in household size, middle-income households fell steadily from 61 percent of the total in 1970 to 51 percent in 2010.
When Alan Krueger, chairman of the White House Council of Economic Advisors, presented similar figures in January, he too asserted that the middle class had shrunk, claiming a decline from 50 percent to 42 percent between 1970 and 2010. But, as I argued in these pages (“The President’s Depressing Statistics,” February 6), the reason the middle class “shrank” was almost entirely that Americans grew richer over time. There was no statistically discernible increase in the share of Americans poorer than middle class.