The Middle Class and Governance

William H. Young

The late historian and social critic Christopher Lasch, on whose work I have often drawn, wrote in The Revolt of the Elites (1995) that “the decline of nations is closely linked to the…decline of the middle class. It is the crisis of the middle class, and not simply the growing chasm between wealth and poverty, that needs to be emphasized in a sober analysis of our prospects.”

President Obama has charged that “over the past few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk.” He blames “policies that stack the deck against middle-class Americans” for unfair inequality. (The White House, Remarks by the President on the Economy in Osawatomie, Kansas, December 6, 2011) But it is economic and social trends and American higher and public education—teaching postmodern multiculturalism rather than skills—that are largely responsible for the worsening plight of the middle class.

Ironically, most portraits of middle-class inequality are, at best, half-truths created through use of statistical abstractions based on snapshots of income in politically selected periods of time. The Census Bureau’s Household Income is the most commonly used economic indicator, often in comparisons of the middle quintile, or the middle three quintiles, with the top quintile. Latest information from the Census Bureau provides the following distribution of household income for 2011.

Quintile          Lower Limit    Upper Limit

Top                   $101,582         Unlimited

Fourth               $62,434           $101,582

Middle               $38,250           $62,434

Second             $20,262           $38,520

Bottom              Unlimited         $20,262

The simplest indicator utilized to show trends is the median household income (half of incomes fall above and half below). Median household income in the United States in 2011 was $50,054 (about the mid-point of the Middle quintile)—down 8.9 percent (in real or inflation-adjusted terms) from its peak in 1999, with most of the decline coming since 2009. (Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2011, September 2012) Real median household income has fallen over the past few years to what it was in 1989, more than two decades ago.

Contrasting the periods 1947‒1979 and 1979‒2010, Alan Krueger, chairman of President Obama’s Council of Economic Advisors, argued in a speech to the Center for American Progress (The White House, Alan B. Krueger, The Rise and Consequences of Inequality in the United States, January 12, 2012) that “all quintiles (fifths) of the income distribution grew together from the end of World War II to the late 1970s, but since the 1970s, income has grown more for families at the top of the income distribution than in the middle.”

Krueger seeks to show that all was well before Ronald Reagan’s election in 1980, which I debunked in Productivity, Finance, and Jobs. The income of the top quintile grew during the 1980s and 1990s as many entrepreneurs created new wealth (and new jobs) during the information technology revolution. Median household income’s peak in 1999 was just before the end of the dot-com boom.

A recent Pew report (“The Lost Decade of the Middle Class: Fewer, Poorer, Gloomier,” Pew Research Center, August 22, 2012) describes the state of the middle class in 2010, which Pew defined as households whose annual income is “two-thirds to double the national median,” which would include most of the middle-three quintiles above:

Upper-income households accounted for 46 percent of aggregate household income in 2010, compared with 29 percent in 1970. Middle-income households claimed 45 percent of aggregate income in 2010, compared with 62 percent in 1970.

Household demographics, reflecting transformation of traditional families, explain much of the change since 1970 in incomes within the top and middle quintile(s). Most importantly, income of the top quintile grew because college-educated women filled more and more jobs, married college-educated men, and continued to work. In the middle quintile, income declined because fewer household members are now well educated, working, and living with a spouse. By 2010, the results were:

  • On average, there were 1.97 earners per household in the top quintile versus 1.29 in the middle quintile. In the top quintile, 77.2 percent of occupants were working full time while in the middle quintile only 61.1 percent were.
  • A bachelor’s degree or higher was held by 60.3 percent of the top quintile, but only 28.3 percent of the middle quintile.
  • Married couples made up 78.4 percent of the top quintile, but only 48.8 percent of the middle quintile. Single-parent families made up only 21.6 percent of the top quintile, but 51.2 percent of the middle quintile.

(Mark J. Perry, “Income inequality can be explained by household demographics,” Carpe Diem, blog.american.com, October 21, 2011)

The number of single-parent households doubled after 1970 because of higher divorce and out-of-wedlock birth rates—largely attributable to gender feminism and cultural Marxism from academia. (See my article Marriage and Family) The proportion of households occupied by a single person living alone increased from 9 percent in 1950 to 28 percent in 2011, lowering the income per household of the middle quintiles. (Eric Klinenberg, “Living Alone is the New Norm,” Time, March 12, 2012)

Finally, a key driver of the change in middle-class incomes is skills. Economist Kevin M. Murphy, the 1997 Clark Medal winner at the University of Chicago Booth School, identified “the growth in demand for skilled labor…as the principal cause of the widening gap in wages between blue- and white-collar workers.” (Peter Passell, “Economist Wins Top Medal for Pay Study,” The New York Times, 14 March 1997)

Those who educated themselves to acquire the greater skills demanded of knowledge workers have moved up into, and raised the household income of, the fourth and top quintiles. The continuing shortage of workers having such skills has increased their higher wages even more.

Our education system (burdened by poor parenting) has failed to meet the shift in demand for skilled labor, condemning many graduates to fall out of the middle class. The most compelling recent evidence of that deficiency is a study for the American Association of Community Colleges (see my article Community Colleges) that analyzed the need in 18,000 jobs for “three essential skills: applied mathematics, locating information, and reading for information.” These skills were required for 98 percent of jobs “in occupations paying a wage sufficient to support a family.” But “community college graduates were, on average, adequately skilled for just 57 percent of those desirable occupations.” And, of course, community college dropouts and mere high school graduates possess even fewer skills.

Speaking of going to college, Illinois-Urbana political scientist Robert Weissberg argues that “modern social science altered the definition of ‘middle class’—just getting the degree, it was claimed, secured the American Dream.” This replaced the old definition based on the bourgeois values of the Protestant Ethic. (“The Disastrous Invention of a New Middle Class,” Minding the Campus, Manhattan Institute, May 28, 2012) This is reflected in President Obama’s misguided higher education goals, which Peter Wood critiques in College for All.

But as NPR’s Adam Davidson writes (“The Dwindling Power of a College Degree,” The New York Times, November 23, 2011), “one of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence.” In Too Much For Too Little, Peter Wood tells us why—the lack of skills is not being meliorated in college for most graduates. Improving education and skills—in high school—is the answer to growing the middle class.

President Obama argues that the middle class will boost itself if only the government can further redistribute income from the successful, a concept with no basis in economic reality, which I addressed in Growth and Governance. Christopher Lasch had the better answer: our middle-class crisis is a more important challenge than inequality. That crisis will only be alleviated by recovery of better education and the family ethos—reversing postmodern multiculturalism—which NAS has long sought.

The current state of joblessness in America intensifies middle-class angst, which I will discuss next week. ______________________________________________________________________________

This is one of a series of occasional articles applying the lessons of Western civilization to contemporary issues relevant to the academy.

The Honorable William H. Young was appointed by President George H. W. Bush to be Assistant Secretary for Nuclear Energy and served in that position from November 1989 to January 1993. He is the author of Ordering America: Fulfilling the Ideals of Western Civilization (2010) and Centering America: Resurrecting the Local Progressive Ideal (2002).

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