Wednesday, February 14, 2007

More about the "War on the Middle Class"

"The rich are indeed getting richer (the bastards). As Steven Lagerfeld points out in the Winter 2007 issue of The Wilson Quarterly (not yet online), those 130,000 households at the very top of the earnings pyramid have increased their share of pretax wage and salary income from 2 percent in 1973 to just under 7 percent in 2004. Folks in the top 5 percent of households--those making more than $166,000--have seen their inflation-adjusted annual income jack up by a hefty two-thirds since 1970.

But everyone is getting richer. In real dollars, every quintile has posted significant annual increases over the past 35 years, ranging from $3,000 for the lowest quintile to $13,000 for the middle quintile to over $25,000 for next-to-highest one. And the individuals in those quintiles change all the time, something even The New York Times, which wrings its hands on class matters like an obsessive-compulsive, admits. Urban Institute economists Daniel P. McMurrer and Isabel V. Sawhill estimate that between 25 percent to 40 percent of individuals switch quintiles in a given year and that "rates of mobility have not changed over time." Research tracking individuals in the lowest income quintile in 1968 found that 23 years later, 53 percent were in a higher quintile and that half had spent at least a year in the top income quintile.

More important, basic indicators of wealth and opportunity drive home the reality that the middle class' place at the table is pretty secure--maybe not the best seat in the house, but arguably better than ever. A historically high 70 percent of Americans own their homes (see table 956). And two-thirds of high school graduates go on to college (up from half in 1970) [see table 265]. That wouldn't be happening if the U.S. was fast turning into the Brazil of the North.

But don't expect the "vanishing middle class" storyline to itself vanish. Pols and pundits will use scare stories to drum up business and push minimum wage hikes, tax breaks to pay for the wage hikes, prescription drug coverage, and on and on. We in the middle class like the attention (and the more-than-occasional entitlement). More to the point, there are more of us and we've all got more to lose than we used to. Which also means we've got even more to worry about."

More here.