The gulf isn't as wide as it used to be, but then was it ever?

December 10, 2015 9:16 AM

The American middle class is losing ground. A bonus CBC story in which those of us in Canada can calculate how we compare to the US middle class.
posted by Kitteh (30 comments total)

Most Americans Aren’t Middle Class Anymore
But that might not be as bad as it sounds.
posted by Cool Papa Bell at 9:17 AM on December 10, 2015 [1 favorite]

Note to 538: nice to know how things go overall but frankly i am concerned mainly with my status, that is, how I am doing or not doing. I take little comfort in knowing things are not so bad for many if at the same time they are bad or worsening for me.
posted by Postroad at 9:25 AM on December 10, 2015 [6 favorites]

Demise of the US Middle Class Now Official, Losing The Narrative Of Their Lives
posted by the man of twists and turns at 9:27 AM on December 10, 2015 [1 favorite]

The 538 piece is a bit stupid, because it doesn't talk about the increasing realtive cost burdens of housing, health care, childcare, transportation, etc.

As other posts on the blue have discussed, there has been an increasing American re-urbanization, and the target cities of that migration are places where the cost of living is absurd. So OK, your family makes 80-100k per year, but you still can't afford to buy a house in Seattle or Boston (and don't even think about NYC or SF)…
posted by overeducated_alligator at 10:25 AM on December 10, 2015 [1 favorite]

That 538 piece is focused so much on being contrarian that it misses the implications of its own point. I'm actually way more concerned about polarization between the extreme upper and lower ends of the income spectrum; it's a recipe for instability, repression, and unrest.
posted by Wretch729 at 10:35 AM on December 10, 2015 [8 favorites]

I found this characterization from the 538 piece astounding in an article about household rather than individual income: Moreover, as I wrote last year, it’s important to remember that typical American household has changed dramatically over the past three decades. The U.S. population has grown older, on average, which makes a big difference to median income because retirees often have little income and live off savings. And it has become more diverse; in particular, the rapid rise in the number of immigrants in the late 20th century pushed down median incomes because immigrants, on average, make less money.

So it mentions supposedly relevant changes to the typical American household but doesn't mention that in 1971, less than half of married couples were in households with both spouses working but by 2010 almost 70% of them were. Speaking of "changing dramatically," you'd think that might offset some of the decline from aging retirees or lower-paid immigrants, but it apparently doesn't figure into the "nothing to see here" rhetoric of 538's take.
posted by layceepee at 10:53 AM on December 10, 2015 [14 favorites]

I think it may be even worse for the middle and lower income groups than the numbers reflect. The income figures are per household, not per worker. I would be interested to know what percentage of middle income households had one working adult supporting it as opposed to two. Also, how much of the income tiers includes retirees and how has that changed over time?
posted by stowaway at 11:05 AM on December 10, 2015 [1 favorite]

Jinx, layceepee.
posted by stowaway at 11:06 AM on December 10, 2015

On the CBC link I just entered the income in Canadian dollars. If they are expecting it to be in American ones then that'll change things significantly.

What is interesting to me is the demographic info. If you are a married Asian person between the ages of 30-44 with at least a college degree then chances are you are doing OK (46% upper, 45% middle 9% lower).
posted by any portmanteau in a storm at 11:28 AM on December 10, 2015

So it went from a lump to a slump.
posted by blue_beetle at 11:57 AM on December 10, 2015

Looking at the CBC link, what I find interesting is what seems to be the moving target for a middle class standard over the baby boomer generation. When my wife and I are firing on both cylinders, we're about $160,000 a year combined. Standard Canadian professional couple. And yet, living in Victoria our small bog standard house cost almost $600,000 four years ago. It's worth about half of what my folks' house is, which they bought at the same stage of their lives in the same town, with one income earner. Our house is probably $700,000 now, which means a $4k property tax bill every year on top of a solid mortgage. We have one car, two small children. I'm not paying back my remaining student line of credit much at all. We exist in a solidly middle class state despite our 'upper' status according to the calculator. After childcare, property taxes, heating, etc I'm not banking a whole lot each month, if anything; this is especially true now that my wife is only working half time so she can be with the kids more.

I can't imagine what it's like for the median income families in our town, about $60k from my understanding. You can't hope to own property or get ahead on that. The divide is growing, it's palpable. I'm fortunate in my position, but I have the sense that my kids could easily fall below the line in the future. The accumulation of generational wealth in North America is naturally consolidating in fewer and fewer people.
posted by jimmythefish at 12:55 PM on December 10, 2015 [6 favorites]

I say we all drive over to Charles Murray's house and leave a flaming bag of dog shit on his stoop.
posted by ob1quixote at 12:57 PM on December 10, 2015 [1 favorite]

This site also has a differing take on the story, based on statistical analysis of generational cohorts, earning and median wages. They also recently did an article on whether GDP is a good measure of economic health.

The TL:DR is much like the labor force participation rates moves in recent years a lot of this is linked to changing demographics, which is destiny after all.
posted by bartonlong at 1:06 PM on December 10, 2015 [2 favorites]

It's not impossible to get individual wage data. According to the SSA, it's been increasing since 1991.

You can also check the stats at the Bureau of Labor Statistics. It shows that wages have continually increased. But this is somewhat incomplete because it focuses on wages earned, with no gap for unemployment. Good to know how workers are being compensated, but hard to aggregate into a complete picture of American households, which is how we live.

And speaking to the point on the rise of dual incomes in married households, that should be weighed against the increase in folks living alone. In 1970, married folks used to make up 69% of households. Now it's 51%. Even if you add the increase in unmarried folks living with a partner, that's 70% to 59%. (census) So that change is mitigated simply by the change in which we view marriage and cohabitation as a requirement.
posted by politikitty at 1:27 PM on December 10, 2015 [1 favorite]

not impossible to get individual wage data. According to the SSA, it's been increasing since 1991.

That's not inflation adjusted. In 1990, the median wage of $14,498.74 is $25,866.85 in 2014 dollars. The 2014 median wage was $28,851.21. That's an 11% increase in real dollars after 24 years. I'm too lazy to find out what the inflation-adjusted percentage increase per year is, but it is undoubtedly small.

By contrast, inflation-adjusted GDP has almost between 1990 and 2014, from 6 trillion to 17.3 trillion.
posted by deanc at 1:56 PM on December 10, 2015

(maybe I am wrong and the median wages are inflation adjusted at your link, but I don't see any notes to indicate that, unlike other inflation-adjusted graphs)
posted by deanc at 2:00 PM on December 10, 2015

And yet, living in Victoria our small bog standard house cost almost $600,000 four years ago. It's worth about half of what my folks' house is, which they bought at the same stage of their lives in the same town, with one income earner.

Forgive me, I have no reason to think you're lying or distorting the truth, this is just me being really shocked. But are you telling me that small homes in VICTORIA are $600,000? VICTORIA? I mean, Victoria was very pleasant when I visited, but holy crap.
posted by chrominance at 4:06 PM on December 10, 2015 [1 favorite]

Food prices are predicted to rise sharply this year. Again. I worry that I am not going to be able to afford even dog food in my senior years. Good thing we've got that assisted suicide law coming up in Parliament. Geez.
posted by five fresh fish at 4:06 PM on December 10, 2015 [1 favorite]

I kind of feel like our old definition of "middle class" was: make enough money to send your kids to a decent school, own your home, have some disposable income for a vacation every year, have a bit of money to take care of your parents when they get older, and save for college, no matter where you lived.

Now, if you tell me that middle class is going to be $80k household income, that strikes me as: make enough money to own a home, pray for a good public school, have a staycation every year, hope your parents die quickly, and maybe a revolution occurs by the time your children are college age and are otherwise forced to go into indentured servitude to pay for tuition.

If the way we're defining upper class is by basing it on median income and if you need to earn that much more above the median to have a decent life then we either have a misunderstanding over what 'decent' should be or our economy is horribly out of alignment.

I feel like the problem with the 538 article is not that more people are 'rich' but our definition of 'rich' nowadays just means "you actually have savings and don't live paycheck to paycheck" because so many other people don't get to live that way.
posted by bl1nk at 4:49 PM on December 10, 2015 [13 favorites]

Forgive me, I have no reason to think you're lying or distorting the truth, this is just me being really shocked. But are you telling me that small homes in VICTORIA are $600,000? VICTORIA? I mean, Victoria was very pleasant when I visited, but holy crap.

Compared to Vancouver, it's a bargain.

Exhibit A (Note, not my house).
posted by jimmythefish at 5:00 PM on December 10, 2015

Home Ownership and college attainment aren't markers of middle class. They're parts of the American Dream.

In America less than 1/3 of adults over the age of 25 have a college degree or higher. The highest educated demographic are ages 30-34 at 36%. This is a marker of relative privilege, whether you were born into a family that could pay for it or worked your ass off to earn that privilege.

When we think about home-ownership rates, it was slightly under 63% in '65. It peaked at just over 69% and is now just below 64%. While that means a majority of Americans have always owned a home, it hasn't fundamentally changed all that much. Furthermore, the high prices we're seeing are exactly *why* we thought it was worthwhile to push for homeownership. It was supposed to force savings and provide some retirement capital. But that shifts the cost to the next generation. Many prosperous nations don't consider homeownership to be important, why should we.

I couldn't readily find statistics on vacation, but consumer spending stats do show that we're doing better than we were in the sixties and seventies on being able to spend our income on 'non-necessities'.

Our definition of middle class is flawed. It's a glossed over pretend story of prosperous white Americans, ignoring the economic reality of a large number of folks. We can say that we've failed achieving that American Dream. Or at least are stalling out. But we can't learn from our history if we can't be honest about what it was.

and you are correct deanc. I didn't look at that one closely. Median wage data has consistently risen by more than that. But we have more part-timers (both by choice and economic hardship) and longer periods of unemployment, which is why I didn't want to lean heavily on that. It's a pet peeve how we tend to gloss over the disconnect between wage and income.
posted by politikitty at 5:52 PM on December 10, 2015 [2 favorites]

Our definition of middle class is flawed. It's a glossed over pretend story of prosperous white Americans, ignoring the economic reality of a large number of folks.

Namely, the fact that we had policies that made the middle class accessible to many white Americans but didn't extend the same privileges to many others. And now when we would be otherwise inclined not to shut out those marginalized groups from the middle class, we've thrown up our hands and said, "well, we'd have loved to help the rest of you out now, but the party is over. I guess that sucks that the rest of you missed out!"
posted by deanc at 6:21 PM on December 10, 2015 [3 favorites]

Our definition of middle class is flawed.

Middle class should mean that a person can work 40 hours a week and support a family with the spouse working perhaps part time, ability to own a car, live in a stable home over the long term (home ownership not required, but not a constant cycle of being moved from rental to rental, either), no significant health care debts, a stable retirement, and children, if they choose to attend college or other post-secondary education, should not have any significant education debt.

I don't think that's a flawed perspective at all. What we'd like in the USA is to blur the lines between working class and what in other countries is regarded as "middle class"/bourgeoisie: ie, the working class should have as good a claim/access to national prosperity/wealth as anyone.
posted by deanc at 6:27 PM on December 10, 2015 [2 favorites]

consumer spending stats do show that we're doing better than we were in the sixties and seventies on being able to spend our income on 'non-necessities'.

This is because we have pursued policies that make consumer goods cheaper to keep pace with shrinking incomes, while necessities -- health care, education, etc. -- see rising prices that come out of reach for people with those shrinking incomes.

So you get a bigger TV, but more expensive college/trade school educations. Cheaper toys for your kids, but higher out-of-pocket medical costs when they get injured on their imported bicycle that they saved money on, etc.
posted by deanc at 6:30 PM on December 10, 2015 [5 favorites]

Now, if you tell me that middle class is going to be $80k household income, that strikes me as: make enough money to own a home, pray for a good public school, have a staycation every year, hope your parents die quickly, and maybe a revolution occurs by the time your children are college age and are otherwise forced to go into indentured servitude to pay for tuition.

You're right about everything about except owning the home.
posted by ryanshepard at 6:58 PM on December 10, 2015 [2 favorites]

Yeah, I mean, this isn't that complicated. Real wages have stagnated at the same time as the costs of housing, health care, college, and childcare have soared well above the rate of inflation.

One used to be able to buy a house for perhaps twice a household's income. Now it's 10-15 times. Etc etc etc.

It's sad, but it's only going to get worse until we either have another world war, another depression, or a revolution. Maybe a combination.
posted by Automocar at 7:22 PM on December 10, 2015

Middle class should mean

Thanks for reiterating my point. We have a dream of what middle class should look like. But that dream is an improvement from our entire history.

We need to be better. By trying to expand college for a wider demographic, the cost has exploded and that should change. By encouraging home ownership, we fueled a bubble that has hurt both home owners and prospective buyers. But these were unintended consequences of trying to expand the American Dream.

It's a new challenge of a new era where we are trying not to limit prosperity for the lucky few who look a certain way. It's not evidence we need to turn the clock back.
posted by politikitty at 8:03 PM on December 10, 2015

On the other side of the ledger:

https://research.stlouisfed.org/fred2/graph/?g=2SZ6

real (2015 dollars) per-capita (age 15-64) consumer debt.
posted by Heywood Mogroot III at 8:17 PM on December 10, 2015

“Nearly Half of Youth Say 'American Dream' Is Dead: Harvard Poll,” John McCormick, Bloomberg, 10 December 2015
posted by ob1quixote at 11:06 PM on December 10, 2015

America’s Middle-class Meltdown: Fifth of US adults live in or near to poverty
posted by infini at 8:30 PM on December 11, 2015