Myths And the Middle Class
By Robert J. SamuelsonWednesday, December 27, 2006; Page A19
Almost all Americans see themselves as "middle class." To declare yourself middle class is to say you've succeeded without openly bragging that you're superior -- a no-no in a democratic culture. You're like everyone else, only a little more or less so.
Not surprisingly, a recent poll done for the Economic Policy Institute, a liberal think tank, finds that only 2 percent of Americans put themselves in the "upper class" and a mere 8 percent consider themselves "lower class." The large majority classify themselves as "upper-middle class" (17 percent) or "middle class" (45 percent). The rest (27 percent) see themselves as "working class," a stepping stone to the middle class.
Because the "middle class" isn't really the middle -- it's a huge blob -- describing how "it" feels and thinks is usually an act of simplification, exaggeration or invention. Yet that's routine because politicians and commentators want to show that they grasp the hopes and fears of everyday Americans.
The middle class today is said to be angry and anxious. It's worried about jobs, health insurance and retirement income. The EPI poll explores these discontents. Up to a point, it confirms conventional wisdom. One question asked respondents to agree with one of the following statements:
Most people today face increasing uncertainty about employment, with stagnant incomes, paying more for health care, taxes, and retirement, while those at the top have booming incomes and lower taxes.
Our economy faces ups and downs, but most people can expect to better themselves, see rising incomes, find good jobs and provide economic security for their families.
By an overwhelming 61 to 34 percent, respondents preferred the first statement. They didn't like oil companies (66 to 13 percent), drug companies (49 to 25 percent) and corporate CEOs (35 to 18 percent). One interesting exception to the anti-big-business sentiment was Wal-Mart, whose favorable rating (45 to 29 percent) almost equaled Social Security's (48 to 24 percent). Globalization wasn't especially popular either; by 59 to 32 percent, respondents favored more limits on imports.
So the middle class is furious, as portrayed. Well, not exactly. What's striking is the huge gap between people's views about "the economy" -- an abstraction -- and their own personal situations:
. Although only 32 percent rate the overall economy as "excellent" or "good," 52 percent judge their personal situation as excellent or good (35 percent said "fair" and 13 percent "poor").
. Most Americans (60 to 37 percent) think their own living standards are rising; parents of children under 18 overwhelmingly (54 to 24 percent) think the same will be true for their children.
. Almost 70 percent of Americans say they've attained or will attain the "American Dream," as they define it. More than half say success comes from a good education and hard work, not from connections (18 percent) or being born wealthy (13 percent).
Just as Americans often criticize public education but like their local school (or hate Congress while supporting the local congressman), they rationalize personal economic success with national economic shortcomings.
Both "conservative and liberal elites" are out of touch with typical Americans, say the pollsters who conducted the survey. Conservatives' focus on overall economic performance (say, gross domestic product) minimizes individuals' "hard work" to improve "their living standards against the odds." But liberals underestimate Americans' "emphasis on personal responsibility and overestimate the degree to which [people] see themselves as victims."
Maybe. But there's a simpler explanation for the confusion: Americans' optimism and perfectionism are constantly mugged by reality. Consider why this will continue.
People value stability and security. They also want higher incomes. Unfortunately, the two sometimes collide. In a recent book, "Economic Turbulence," three economists show that the constant turnover of companies and business locations ("establishments") improves economic growth -- but creates disruption and stress. In the five industries studied (trucking, computer chips, financial services, software and food stores), the productivity of the best establishments is often double that of the worst. Replacing the less efficient with the more efficient ultimately lowers costs and raises living standards.
Compounding the stress, the price of entry into the middle class is always rising. The more we can have, the more we must have. Keeping up with the Joneses is the curse of our advances and ambitions. Thirty years ago a middle-class existence didn't include central air-conditioning, computers, cellphones or cable television. It will soon include flat-panel TVs. Similarly, new drugs and surgeries raise the cost of health insurance, reducing coverage and take-home pay. From 1991 to 2005 the cost of fringe benefits (mainly health insurance) rose nearly twice as fast as wages.
Americans cannot escape these realities. The economy will remain precarious if it remains productive. The new technologies and products we celebrate inflict anxiety by redefining middle-class society. The causes of our success are also the sources of our stress. Of course, many of today's complaints (growing inequality, eroding health insurance) are legitimate and, to some extent, might be corrected. But the remedies -- assuming they didn't make matters worse -- would succeed only temporarily, because they would not erase the basic dilemma.
The middle-class "squeeze" never vanishes. Sometimes the economy so outperforms expectations (say, after World War II or during the late 1990s) that it creates a lull. But that merely elevates expectations to more unrealistic levels and ensures later disappointment. The economy pleases most people most of the time -- but can never please everyone all of the time.