Sunday, February 28, 2016

Lower Class, Middle Class, Upper Class?

Last general election season (as hard as it is to believe that I wrote it that long ago) I took a look at the Middle Class and trends over time in our post Lex Anteinternet: Middle Class.  I was looking at this topic again the other day, but for a different reason.

I started that post off with this observation:
This being an election season, there's a lot of news about the "shrinking middle class".  Given the historical focus of this blog, I got to thinking about that and wondered where the "middle class" fit in historic terms in this country, and in the Western World in general.  Who were they, and what percentage of the population were they?  It turns out to be a much more complicated topic than a person might suppose.  That doesn't mean that it isn't shrinking in the US, it is, and that is indeed disturbing.  At the same time, the middle class is increasing globally, which is a good thing.  Not much noticed in the news, for example, is the fact that for the first time in Mexico's history the middle class is the largest class in that country, having replaced the poor in that category. Nonetheless, even defining what the middle class is is surprisingly tricky.  Indeed, defining the poor is tricky too, or the wealthy, with definitions varying depending upon where you are in the world.  That later fact probably explains much of the difficult Western nations have grasping the concerns of poorer ones, fwiw.
In looking at this topic again, and again struggling with who the middle class is, I ran across some interesting information that perhaps should somewhat inform how we look at this.  It's interesting.  Particularly in this election year when class distinctions seem to be running rampant through some campaigns, namely the Sanders and Trump campaigns, with it being widely assumed that the (white) "working class" is taking a huge pounding in our economy.  It's worth asking, what do the statistics show?

As noted, defining who is who is a little difficult, but I'll go, for purposes of this, with what Pew does.  For a single person, you enter middle income at $24,173 and you climb into upper income at $74,521.  For a married couple (household of two) that changes, however, and the combined incomes need to reach $34,186 to be middle income, and you climb out of that at $102,560.  For the archetypal family of four you enter middle income at $48,387 and climb out of it at $145,081.

Those numbers are lower than people suspect, I suspect.  And the much discussed figure of $250,000 is actually where the "1%" kicks off.

Now, as it turns out, a very large percentage of middle income Americans pop up into the upper income bracket from time to time, and often in and out of it.  I guess that's probably not too surprising.  It's more likely, actually, for a person who has an upper middle class occupation, or a bottom upper class occupation, to have a fluctuating income.  Some incomes fluctuate wildly from year to year, but they generally fall into the upper class and upper middle class range. So a person can have an upper middle class income one year, and then the next, if it's a good year, will be in the 1% range of the upper class.  Pretty darned common.

What is surprising, however, is that a majority, although only barely that, of white Americans are upper income.  Additionally, since the 1970s, the elderly, married couples, and blacks improved their economic status more than other groups.

I don't think people realize that at all. So let's look at that again.

Most, although barely most, white Americans are in the upper class.  It may be that the "working class whites" are mad and voting for Donald Trump, but most, but barely most, American whites are not in that class.  And some who are not, are upper class.  Probably quite a few are.

Let's look at the trends even closer.

As noted, blacks' economic status has improved since 1971, in spite of the common assumption to the contrary.  Indeed, even a light look at the conditions most blacks lived in at that time, as compared to now, shows how true that is.

Married people did well.

Married people with a college education did particularly well.

Hispanics slipped, however.  But more on that in a moment.

The percentage of Americans that are "middle class"  is 50% of the overall population now.  In 1971 it was 61% of the population.  A real drop of over 10%.  Scary, maybe.

The percentage of the population that was lower class in 1971 was 16% in 1971 and is 20% now, an increase of 4%, with that percentage climbing up steadily since 1971.  The lower middle class, those just above poverty, has been 9% all along, however.

10% of the population was upper middle class in 1971, but now that figure is 12%.  The upper class made up 4% of Americans in 1971 and now makes up 9%.


So, looking at the middle Middle Class, that percentage has retreated as a percent of the overall American population by 11% since 1971. But that loss reflects an increase of 5% in the upper class and an increase of 2% in the upper middle class.  So, yes the middle class has retreated, but it's loss of 11% reflects a 7% increase in the wealthy and nearly wealthy.  The balance of the loss would reflect an increase in the poor and fighting off poverty.

Taking it further what we are seeing is that the two oldest demographics in the country, loosely defined, whites and blacks, are actually doing very well and doing increasingly well provided that they receive a college education and are married.  Amongst the unmarried, men do well, and women do not.  More whites are now upper class than any other percentage of the economy, which is a stunning occurrence given that they remain the largest demographic, loosely defined.  Having said that, there are certainly poor whites and a large number of middle class whites.

Poverty, however, in increasingly defined in the United States by Hispanic ethnicity and by being an unmarried woman.  Being an unmarried female with children is virtually a way to guarantee impoverished status.

Setting aside gender for a moment, even the ethnicity is due some closer analysis, however.  Hispanics are probably not "slipping" into poverty but born into it, often in another country.  As an ethnicity, they share the same status as Italians and Irish once did, that is they're regarded as a race simply because they're a different culture.  They tend, in increasing rates, not to identify themselves as a race at all, and if the statistics were reexamined and they were classified as whites, which might be a better more realistic way to do it, the analysis set out above would instantly change and the majority of white Americans would clearly not be upper class, but actually middle class.

Anyhow, people tend to immigrate as they're poor or oppressed.  In the case of Hispanics, it tend to be due to poverty.  So, the increase since 1971 readily reflects that in 1971 most Hispanics tended to be native born Americans, but now a large number are immigrants.  They'll rise up out of their poverty.

The situation with unmarried women is different, however.  In 1971 births out of wedlock were regarded as shameful and the marriage culture in the country was strong in all demographics.  Following a series of Supreme Court decisions from the quite liberal Supreme Court of the time state law provisions that reinforced marriage as an institution, if only collaterally, and with the massive change in divorce laws that eliminated the necessity of fault in divorces, the predictions set forth in Humanae vitae by Pope Paul VI came true and continue to amplify throughout the culture and accelerate.  The ironic result of that is that the demographic that liberal politicians and social reformers claimed to be helping have been massively hurt.  Unmarried women with children and their children have sunk into poverty, while the two oldest demographics in the nation have risen steadily, if married, with one now having more wealthy members than middle class members, albeit only barely.

So then, why don't people recognize this?

That is, why are enraged largely white demographics going for Socialist (of some sort) Bernie Sanderes and Populist but super wealthy Donald Trump?  A lot of the cries sound in economics and demographics, but it would appear that those cries are misplaced.

Well, they likely are, quite frankly.  But that doesn't mean that they don't reflect something.  So let's take a look at how this all plays out in terms of perception.

First, oddly enough, as white Americans have evolved from middle class to upper middle class and upper class, they haven't realized that, by and large.  Most white Americans, including the classic family of four, think they're middle class even if they're upper class.  A family of four with a breadwinner bringing in $250,000 a year is wealthy, but that same family is unlikely to think of itself that way.  Why?

Well, there are a bunch of reasons for that.

For one thing, as whites have expanded into the upper class in large numbers, the ethnic and cultural divide that separated the two classes has decreased enormously.

At one time, to be a member of the upper class had a very distinct class distinction. This is still the case the further up the ladder you get, but not nearly to the extent that was once the case. As university education and shear numbers have pushed the numbers up, and specialization in labor has pushed wages up, the boundaries are now not very clear at all. So plenty of Americans who are middle class live near and associate with Americans who are upper class.

Added to this, the fact that people move in and out of the upper class, and some Americans do that nearly annually, further breaks down that distinction.

And breaking it down further, entire groups including geographic groups have moved classes or up within classes, therefore not seeing that they've moved.  I'm certain that a person could find entire classes of kids who went to school in the 1970s and graduate in the 1980s from middle class families that have largely crept into the upper class and upper middle class, more or less together, and therefore don't realize that they've changed classes at all.

And as this has occurred, entire middle class neighborhoods that were at one time in the middle of the middle class are now upper middle class or even mixed upper class, and don't realize it.

Indeed, I saw that emphasized in an analysis trying to prove the opposite, that a lot of the middle class have slipped into the lower middle class or poverty and don't know it. And that may very well be true.  That is, demographics that have slipped down remain in the suburbs and still have barbecues in the summer and whatnot, but now are struggling economically.  I'm sure that's correct, but likewise I'm sure that the opposite is also true. There are a lot of people having barbecues in "middle class" neighborhoods that do that as its the middle class thing.  They would never have evolved socially into upper class, classic, behavior, as they're middle class in culture and don't realize that they're upper class.

Indeed, that emphasizes the cultural aspect of things. Culturally, Americans are middle class.  And we always have been.  That doesn't really change for most people as they move up in class.  And if it does, it takes several generations for that really to take root.  And as large numbers have moved up, the cultural distinctions that once existed have often ceased to exist.  Indeed, this is comparable to such economic class movements amongst immigrant populations which serves as an example. When the Irish in the US, or the Italians, moved from impoverished to Middle Class, they didn't cease being Irish or Italian, at least not right away.

Another aspect of this is, however, that being upper class, unless you are in the very high incomes, isn't what it once was, as odd as it may seem.

If a huge number of people are in the upper class, for one thing, the question then becomes if it is the "upper class"?  Maybe not.  Maybe, and significantly, the middle class simply makes more money than it used to. So perhaps the definition of middle class actually reflects what people feel.  Statisticians may say that they're upper class, but maybe they really aren't.  Maybe the definition needs to be changed.

Indeed, not only have a lot of people moved up out of the middle class into the upper class, but a lot of people in the middle class are no longer near the bottom of it.  Lower middle class as a segment of the population has remained stagnant for decades.  What is likely missed is that at one time an awfully large percentage of the middle class lived darned near the bottom of the demographic and were in danger of slipping into poverty constantly.

But additionally the economic nature of being upper class, unless you are very high in income, has changed a lot.

Current Americans,  including even lower class Americans, have an incredible number of demands on their income.  Some of this, indeed a lot of this, is purely voluntary, but even at that, the phenomenon is real.

Housing, a real basic, is much more expensive now than it was in former times.  A person can witness this simply by driving through nearly any community that has some age to it.  There's nearly always a section of town with small houses, followed by slightly larger houses, all of which are older.  The "slightly" larger houses are middle class houses of their eras, and the small ones are often the houses of the poor.

Now, significant in that is that even a lot of the poor in many areas in the country could still purchase a house.  It wasn't a great house, but it was a house. This is not very much the case any longer.  And middle class homes, as we've explored hear in the past, have grown in size over the years. They've also grown in t he command they put on a person's income.

Indeed, people used to commonly buy a house, once they were married, that they often occupied for life, and they didn't change them often.  Now, this tends not to be the case, but what does tend to be the case is that people are willing to go into much greater debt than they  once were for a house.  If a significant percentage of a person's income is tied up in mortgage payments they don't have that much left, and their purchasing power, therefore, probably doesn't feel very upper class.

This is also true of automobiles for many people.  Cars have always been expensive actually, contrary to the myth to the contrary, but people's willingness to buy new cars and lots of cars has changed over the years, although that seems to be changing recently.

Up until relatively recently, say thirty or so years ago, quite a few families had one car.  This changed as women in particular entered the workplace in increasing numbers, thereby requiring separate transportation, but that then meant that families owned two cars.  Teenagers and young adults still in the household often had a care as well, but that car often tended to be "old", in context.  I say in context as cars broke down and became "old" much quicker than they now do, but they accordingly lost their value pretty quickly too.

Now things are much changed.

I still tend to retain vehicles for a really long time myself, as I like what I like and generally don't seek to change things much.  But most people do not seem to operate this way, so most working people tend to buy new vehicles fairly rapidly even though the old ones do not really seem to wear out.  Teenagers now drive, in many instances, nearly new vehicles, which is a huge change from when I was young.  I didn't drive a new vehicle until I was working as a lawyer and I've owned exactly three of them my entire life, even tough I've owned a lot of cars.

And then there's the blizzard of things that people own.  Iphones, electronics, this and that.  A lot of things don't cost much, but added up they cost a lot.

This is quite a bit different from families in the 1970s which had two cars, one phone, and one television, which was quite common.  Indeed, when I was a kid I found families having more than one television to be quite exotic.  Having two televisions, or even more, has gone from being a symbol of wealth to routine, but that means that people have routine expenses once associated with the wealthy, to some degree (it also reflects that the price of some things has declined in real terms).  It can be taken two ways.  On the one hand, wealth has brought all these things into common use, and even the lower class often have some of these items.  On the other, if you live in a world where this is the norm, the expenses associated with it are also the norm, and therefore there is not as much money to go around even with a higher income.

Indeed, in a world where the number of cars in a typical household didn't vary much from the middle class to the upper class, and where the difference in economic status could be readily told by the nature of a house and the type of cars, rather than middle class homes now resembling upper class ones, and upper class resembling the 1% houses of old, and everyone having a plethora of items, the situation is quite different.

Take these examples.  I knew a couple of truly wealthy people when I was young and I am still aware of where their houses are. Today, I couldn't tell you if those houses are occupied by upper class or upper middle class people (upper class, I suspect).  Those same well off people I'm noting interestingly had tended towards buying one, and I do mean one, high end automobile which they then hung on to for the rest of their lives.  In two cases, the cars were Mercedes. In the third, the car was an American luxury car, but I've forgotten what it was.  Something like a Cadillac.

Now a lot of people have high end cars and they don't keep them.  Indeed, I'm really a personal anomaly as my newest vehicle (I'm excluding my wife's vehicle, as she really likes vehicles and has a relatively new (but used when we bought it) vehicle is a 2007 Dodge 3500 diesel truck.  I love it.  But my daily driver is a 1997 Jeep TJ.  I don't intend to replace either of these vehicles ever, although the TJ isn't a good example as Jeepers tend to get a Jeep and customize it, and hang onto it.  The truck is a good example, however, as a decade from now I hope I still have it.  Indeed, I hope it last me the rest of my life.  I don't want another one.

Another reason, I suspect, that this demographic reality is little appreciated is that being "rich", or upper class, is equated in the popular mind with not working, or not working much.  The "idle rich" is a common mental image, even though very few in the upper class are in that demographic.

The idle rich, as a class, did once exist, although they were probably never really the majority of the upper class.  As a class, they existed in force, if in small numbers, in the late 19th and early 20th Century when the culture of being very well off actually precluded a person from working.  This was more so in Europe than in the United States, but even here a really wealthy person, particularly if their wealth was vested rather than earned, tended not to work and culturally was not supposed to, save for a few very limited occupations.  That was the basis of the distinction between the Rich and the Neveau Rich.  The newly rich had tended to earn that money, and were sort of looked down for that as a result.

Now, that's all passed, and indeed it passed long ago.  As more people have moved into the upper class more in the upper class at all levels work, and frankly those in the just upper class, as opposed to the 1% of top incomes, have no choice as a rule. So, upper class often means that a person is in a high paying, but hard working, profession or occupation.  Around here, as odd as it may seem to some, there are a lot of experienced oil field hands who are "upper class" by income, or at least there were until the vast number of recent layoffs.  These people make a good income, but they have to work, and they have to work hard.

Indeed, even with the traditional occupations that people associate with wealth this is really true.  Often that assumption is completely erroneous to start with.  Lots of doctors and lawyers, for example, are solidly middle class and not upper class.  People's assumptions, expectations, and concepts of themselves are often wildly off the mark.

All of which ties into an election year like the current one.  The GOP is seeing sort of a "working class" revolt in its ranks, and the Democrats are as well.  But some of those angered voters are doing better than perhaps they realize, in historical terms.  And the country overall may be as well.  That doesn't mean that economics aren't worth looking at, but when they are looked at, they should be looked at realistically.  Turning the country back to a perceived better age or towards a more radical future might be quite a bit off the mark, looking back towards where we've come from.

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