The National Catholic Review

The middle class is now a minority in the United States, according to a study released in December by the Pew Research Center, which warns of “a demographic shift that could signal a tipping point.” We hope not to reach another tipping point, at which policymakers would accept the steady loss of middle-class families as inevitable. This would be another sign that we have given up on the idea of a common good, following the near-extinction of labor unions, the pursuit of productivity at the expense of a just wage and the indifference of the federal government to widening economic inequality.

Using data from the Census Bureau, the Pew researchers estimate that the share of adults living in middle-income households fell to just under 50 percent last year from 61 percent in 1970. Upper-income households, or those making more than twice the median (for a family of three, the median is $63,000), rose to 21 percent of the total from 14 percent. Lower-income households, or those making less than two-thirds of the median, also increased, to 29 percent from 25 percent.

Catholic social teaching encourages us to look at concepts like the common good and solidarity as we make public policy decisions, and the trend identified by the Pew Center is worrisome by these standards. A shrinking middle class suggests fewer opportunities for upward mobility. It means a less dynamic economy, with lower consumer spending and fewer people taking the risk of starting small businesses. (Upper-income households are more likely to park their funds in safe investments.) And the eroding of a common ground for most American households could worsen the polarization of our politics, making it more difficult to enact policies that benefit the greatest number of families.

Upper-income households, accounting for an ever-larger share of the nation’s total earnings, may not even grasp that the rest of the country is withering. From 2001 to 2013, the median wealth of households in the middle class fell by 28 percent.

Not surprisingly, polls show ever-greater pessimism about the future and disenchantment with the political process, especially among voters without college degrees—the voters who feel the loss of civic solidarity most keenly and fear ending up on the wrong side of a growing economic divide. Middle-class families are justified in feeling abandoned by both political parties.

We need an acknowledgment of objective reality, as opposed to partisan loyalties. There are ways to support the middle class and promote economic security for all citizens that merit the support of lawmakers across the ideological spectrum. Chief among them is the enactment of policies that ease the economic burdens of starting and raising a family. Paid parental leave and child-care assistance, as well as increases in the child tax credit and earned income tax credit, could help some families attain the economic security needed to climb into the middle class—and could help other families at risk of sliding out of the middle class.

We also need to increase educational opportunities. According to the Pew study, 69 percent of all adults with no more than a high school education were considered middle-class in 1971, with only 17 percent in lower-income households. By last year, only 53 percent were in the middle-income group, with 36 percent in lower-income households. A study from Georgetown University’s Center on Education and the Workforce last year estimated that the number of jobs held by workers with a high school diploma or less declined by 6.3 million during the recession, and “there has been virtually no recovery of these jobs” since. We must recognize that post-secondary education is becoming essential for almost any job that can support raising a family, and we must control costs and provide tuition assistance so that this option is universally available.

Housing costs are also putting a squeeze on the middle class. The Harvard Joint Center for Housing Studies reported last month that, partly due to the foreclosure crisis, 37 percent of all households now rent rather than own, the highest level since the 1960s. Apartments are not being built fast enough to keep up with this new demand, and just over a quarter of these households pay more than half their income for rent. Unless we want a repeat of the foreclosure crisis, we should not treat owning a home as a prerequisite for membership in the middle class. That means reforming exclusionary zoning and other laws that hinder the creation of rental housing within a reasonable distance of secure jobs.

The Gospels give priority to caring for our most vulnerable fellow human beings (Matthew 25), but the erosion of the middle class and the attendant cleaving of American society endanger any consensus on how to promote the common good. The “tipping point” identified by the Pew study should be a call to action, not an admission of defeat.

Comments

John Tobak | 1/8/2016 - 11:20am

The middle class is now a minority in the United States because the Conspiracy above Communism is, and has been for many years, trying to destroy it. Remember what the Communist Manifesto says:

“The distinguishing feature of Communism is not the abolition of property generally, but the abolition of bourgeois property. But modern bourgeois private property is the final and most complete expression of the system of producing and appropriating products that is based on class antagonism, on the exploitation of the many by the few. In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.” ~ Chapter II of the Communist Manifesto

B & M NELSON | 1/5/2016 - 1:54pm

A few items from my observations and experience:

High schools seem to have dropped vocational classes (wood, metal and plastic working, auto mechanics, electrical repairs, etc.). This was a foundation for many high school graduated entering the skilled (and union) trades.

Care for children and the elderly is hampered by immigration policies that make it difficult to bring family members from other countries to help (most people are much more comfortable with a relative living with them than a stranger and it is generally more affordable).

Tim O'Leary | 1/5/2016 - 11:49am

I appreciate several of the proposals above and in the comments. Two points to add to this important and complex debate.

First, the moral imperatives in the Gospels have to be separated from the assumed approaches that are not there. For example, a preferential option for the poor must be distinguished from a preferential option for a government solution (so many of which only hurt the poor, expand the underclass, and put obstacles in place of human advancement). Many government solutions, by their blunt and bureaucratic structure, also directly contradict the principles of subsidiarity, and undercut the local or community safety nets. Yet, this Journal has strongly opposed shifts away from failed government policies despite years of appalling decline. Rep. Paul Ryan's budget reforms were roundly condemned, as were his motives, when he was trying to apply them based on his understanding of Gospel teaching.

Second, the use of income quintiles has several limitations, due to non-income shifts, and the fact that these quintiles are relative and lend themselves to the sins of jealousy and envy. Even if all quintiles have improved actual material wealth, but the wealthier advance faster, it is seen as something negative. The economy is not judged by the benefits it provides but by some people doing a lot better than others. Another problem with quintile analyses is how quickly things can change for an individual unrelated to economic policies. For example, a divorce can immediately move a person down a quintile or two (say, second to third or fourth quintile), without any change in aggregate income. Also, a large influx of immigrants from a lower income country can quickly improve their economic situation while appearing to hurt the relative quintiles. Or an outsourcing of jobs from the US can also have immediate benefit for individuals but worsen the statistics at home. According to OECD stats, the median household income in Mexico was $4,910, compared to $30,616 in the USA.

When it comes to education, there is another unexamined assumption. Why have public high schools failed so miserably to prepare people for the workforce? Surely, the solution is not to shift the problem into the even-more-expensive colleges (who also do a poor job in many ways), but to make high school education more suited to future employment. Make teachers and schools financially more accountable to parents (as in school choice reforms).

Then there is another cause of the loss of the middle class that has not been mentioned - the massive breakdown in the family structure, which includes reduced marriages, increased divorces, a hedonistic culture, loss of religious practice, etc. Government policies have unfortunately played a central role in this destruction. This knowledge used to be bipartisan (remember Democrat Senator Moynihan's warnings) but ideology has now overtaken pragmatism in the big-government wing of American politics.

J Cosgrove | 1/3/2016 - 7:27pm

Maybe the classification scheme is a problem. What actually is middle class? The median income is $63,000 so someone making a $125,000 a year is middle class while someone making $42,000 or less is lower income. There is now a much larger higher percentage in the upper income category than at any time in the history of the country because a substantial percentage of the middle class moved up. Most of the so called loss in the middle class moved up to this higher category. That is hardly a problem. And for these lower income brackets, there is often government assistance so the differences in actual consumption is much less than what incomes seem to indicate.

Another issue that is affecting wages is that there has been a great influx of immigrants into the US workforce in the last 45 years and most of these workers are low income labor. This puts a lot of pressure on wages at the lower end as these immigrants compete for jobs. About 40 million immigrants have come to the US since 1971. The US has the greatest number of immigrants of any country in the world. I would look to this tremendous increase of immigrants into the work force as one of the main causes of stagnation in wages for the lower classes.

Also many of the upper income jobs are in areas that reflect a national or global reach. If what one does can be bought by people all over the world (those in software development or medical areas such as drugs or medical devices), then one is more valuable because the effect of ones work is globally and and these people will be paid more. But if what one does only affects what you do locally (e.g. a teacher, barber or construction worker) then their effect is more limited and less economically efficient. Sounds unfair but this is the world we live in. Some will do better than others because of their skill set and the industry they work in.

But for everyone, what is considered standard is much higher today. We have more conveniences at lower prices so that while the actual wages are not increasing much, what they can buy versus 50 or 75 years ago is dramatically different. The problem is obesity not starvation and the amount of entertainment available is amazing. While health care is uneven, the available care for everyone exceeds what was available to only a few just 40-50 years ago.

William Rydberg | 1/2/2016 - 11:09am

In my opinion the biggest issue is the challenge to Government Statisticians not to ordinary people who have known this intuitively for at least 2 decades.

You see the assumption which gears the (in my humble opinion) paltry social-welfare supports in the USA and Canada is that they arbitrarily take the "bottom" 20%. Becomes a big problem for Bureaucrats that based upon the formula, find such a large proportion of the Citizens there. It's a Hobson's Choice when you consider that the top 20% have crippled the Taxation System's ability to work, through the employment of "Tax Courts" , "Special" Tax arrangements.

My hope is that the investigation by the UK Chancellor of the Exchequer is successful in a move to Tax Ethically not per the Status Quo. Essentially doing what is right. What I am saying here can be found in the Catechism of the Catholic Church (see Commandment 6 and our obligations as loyal Citizens to pay fair tax to government and not involve ourselves in a legal form of tax evasion...

The Optional Memorials of St Basil & St Gregory...

Chuck Kotlarz | 12/31/2015 - 6:24am

Twenty Americans have more wealth (savings, stocks, real estate, etc.) than the entire bottom half of the American population. Seven of the twenty are heirs. Nearly $60 trillion is projected to flow down from estates through 2061. Will millions of non-heir Americans born through 2061 start life $60 trillion in the hole or will the words of America's founding fathers, “all men are created equal”, once again inspire a great nation?

Joseph J Dunn | 12/30/2015 - 5:59pm

"There are ways to support the middle class and promote economic security for all citizens that merit the support of lawmakers across the ideological spectrum. Chief among them..." Then follows a list of ways to redistribute the current pie.

Might we agree that an infusion of $2 trillion into the American economy would promote either investment (by business, into new plant and equipment) or consumption (by companies spending on US new hires, training, etc., or shareholders spending their dividends)? That would benefit the middle class, since 47% of American households own shares of corporate stock and would therefore collect dividends, by the creation of new jobs, and by the upward pressure on wages that occurs when employers are seeking to expand.
The $2 trillion could arrive very quickly, if the US tax code were changed to eliminate the income tax on repatriated profits, which were already taxed by the country in which the profits were earned. Or, is this bit of objective reality too much at odds with political loyalties? In that case, we just leave the money overseas. Just wondering.

Charles Erlinger | 12/31/2015 - 10:36am

We could try it. We might like it. Could it also reduce the incentive for doing corporate inversions?

JOHN WALTON MR | 12/30/2015 - 9:19am

The very same Chapter of Matthew (25) warn of the foolish servant who invested poorly.

The same can be said for those who squander their human intellectual capital..and perhaps worse punishment for their facilitators.

Charles Erlinger | 12/29/2015 - 1:01pm

It is astonishing how many good, well-paying jobs are going unfilled or are filled with foreign nationals (legal residents, many recently graduated from U.S. colleges and universities) at very good salary levels at this very time when there are so many complaints about the lack of good, well-paying, high-quality jobs. These workers are not working for substandard wages, but for salaries and benefits that many U.S. citizens would be very happy to receive. My evidence is from personal contact and experience, not from newspapers, magazines or sample survey statistics. It is also true that some of this work is being done for U.S. firms by persons living outside the U.S. but connected electronically to U.S. based co-workers, in situations that allow for almost seamless team working processes, and all using English language fluently. These workers, both the U.S. citizens and the non-U.S. citizens, seem to spend very little time worrying or whining about what "class" they are in but a lot of time busting their tails keeping up with the advances in their fields and learning the skills and techniques that are most in demand at this moment, not back in the day.

Joseph Manta | 12/29/2015 - 12:51pm

The editors identify a real problem but provide only liberal pablum for the solution - spend more money to provide bandaids without addressing the real problem. That problem is the loss of jobs for the middle class. And the editors suggest nothing to address that problem-how to increase jobs for the middle class. Their answer is to spend more money on projects which in the past have only created a sense of dependency and the eroding of self respect. Yes, we need to provide temporary help for those in need but the real solution, as Pope Francis recognized, is jobs which increase self respect.

Bill Mazzella | 12/28/2015 - 10:47pm

Isn't a large part of the problem due to the outsourcing of jobs. That has to stop along with bringing in workers from other countries who will work for less. Companies even have the gaul to make the replaced workers train those who will deprive them of a living. Greed is predominant and encouraged. All that matters is the share price. Hedge fund managers get outsized money while the middle class dies. Hedge funds are a large part of the problem. Years ago IBM was a model company which made good money while giving people a good wage. Outrageous profits are , well, outrageous. Manhattan is getting gaudy with gentrification. As there is less and less light to see out the Manhattan windows, there is the darkness greed which tells the Middle Class "tough luck." Every politician in the presidential race knows this. Time for concrete action.

Lisa Weber | 12/28/2015 - 7:56pm

Job quality is a major issue, but the biggest issue is the lack of universal coverage for healthcare. People would be more able to start a new business if they did not have to worry about healthcare coverage for themselves and employees. The experience of older workers might be seen as valuable if the greater cost of insuring them were not directly an issue in hiring them. Other countries manage to cover everyone for less than we spend. And as for the objection that it is "socialized medicine," I don't see anyone who qualifies for Medicare lobbying for a chance to buy health insurance on the USA market instead of having Medicare coverage.

Chuck Kotlarz | 12/29/2015 - 6:23am

Demographics suggests health insurance coverage can dramatically impact business levels. Overall Gross State Product in select states with high uninsured rates under perform states with a low uninsured rate by 50%. Mali perhaps has a more globally recognized reputation for business innovation than states with a high percentage lacking health insurance coverage.

Guillermo Reyes | 12/28/2015 - 8:49pm

Hello Lisa

I wish I could agree with you but from my professional vantage point, people arent partcularly interested in their health. No matter how much health coverage people have, the huge number of prescription drugs to treat the usual self-inflicted health maladies will undermine health coverage

Until people start being more concerned about their health, and shun gluttony, sloth, pride...acedia, health insurance coverage is a red herring.

America leads the world when it comes to obesity, cancer, heart disease, metabolic disorders and the lions share of prescription medicine. To paraphrase Laudato Si, our technological evolution is not mirrored in our spiritual regression

Michael Tegeder | 12/28/2015 - 6:22pm

"...abandoned by both political parties."? What two, the Republican and the Even Farther Right Republican parties?

John Brewer | 12/28/2015 - 11:30am

The primary issue with reversing the shrinking middle class is job quality.

The service economy has proven itself to be incapable of supporting middle class incomes. High school-level microeconomics explains why: service businesses don't generate enough gross margin to support middle-class employee wages in addition to proper benefits. Place the blame on greed, weak management, or anywhere you'd like. It doesn't matter the underlying cause; the result is a middle class being slowly destroyed as real incomes decrease year on year.

Government-subsidized housing is nothing but a band-aid on the hemorrhaging middle class. Yes, it may be a necessary triage, but it is not the solution to the problem. The middle class was created on manufacturing jobs - and those manufacturing jobs were the result of new technologies creating new consumer products.

Restoring the US middle class is about investing in the next generation of manufacturing technologies enabling new consumer products. Middle-class wages need to result from 2-and-4-year degrees and jobs with ongoing training for career development. The housing industry can't be the only viable career path for someone with a 2-year college degree. Now is the time for state and Federal economic development to focus on commercializing the next generation of manufacturing technologies for new consumer products - pharmaceuticals, electronics and the like. The is the path to creating companies that can support a vibrant middle class.

Charles Erlinger | 12/27/2015 - 5:34pm

Would it help us all to talk about social problems in more concrete terms? We seem to be programmed to use the vacant vocabulary of social science abstractions, as though our mental lookup table did not contain numbers, or nouns and adjectives that represented designators for food, or shoes and socks and underwear and pants and shirts or baths and showers or the ability to read and write. Would it help us to understand our situation if we talked about fearing to allow our fourth graders to walk or ride their bikes a couple of blocks to school or our teenagers to go to a high school dance (if there are such things anymore) rather than summarizing the situation as a "public safety" or "public health" issue? Would we be able not merely to discuss but to formulate feasible change objectives, and then advocate for them and vote for them and just go out and do them more readily, if we had some idea of exactly in what does our common good consist? We know abstractly that it consists in some kind of proportional share of all of the good things that can, and sometimes do result from the combined efforts of our community when we are acting virtuously (which means not only morally but rationally as well). Would it help if we were acutely aware, when we use the term "equal" that it literally means "the same as" in some senses, such as in numerical expressions or when we are referring to certain abstractions such as human rights, civil rights, legal rights, and similar concepts, and that it can only have a metaphorical interpretation in other situations, such as when talking about concrete differences in pay associated with differences in job performance or skill and experience prerequisites?

Obviously it is not feasible or even desirable to eliminate generalizations and abstractions from our linguistic intercourse, but in speech or writing that has a serious intent to persuade or influence action and behavior, it might be more effective to use terms that are at least readily relatable to the action that the speech or writing seems to be advocating.

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