Are people who make $200k middle-class?
The other day, The New York Times released a collection of first-person testimonials, entitled "What Middle-Class Families Want Politicians to Know." There was a hiccup though: Nearly everyone included in the piece was making over six figures. In a country where half of all households make less than $60,000 a year, it was an odd way to define "middle class." This certainly tells us something about the socioeconomic blinders of the Times. But there is another worthwhile lesson about the nature of American inequality buried in the episode.
The term "middle class" has always been one of the watchwords in American politics. Look no further than "Middle-class Joe." But a lot of times when it's cited, the implied definition seems to be more experiential than statistical: A sense that what you have is good, but that you also struggle; what you have isn't secure, and if you start falling there just won't be any bottom. If we define "middle class" in this way, it suggests the Times interviewees — if still not representing the median "middle-class" person — arguably should be included under the umbrella.
Consider Jessica Wang, whose family makes $150,000 a year in San Francisco: "We cannot buy a home here, our cars are both over 10 years old, and we don't eat out more than a couple of times per month. We have a college fund for our son, but no real savings." Or the Dunhams of Minnesota, who make between $200,000 and $400,000, but also live under mountains of debt and work brutal hours: "Each of us lives in constant terror of falling asleep in a chair or behind the wheel or at the operating table and causing harm to someone or having something awful happen to our children because we couldn't stay awake."
Making $150,000 to $200,000 a year will put you squarely in the top 5 percent of American wage-earners. But even the fairly good wage growth for that cohort is dwarfed by the gains of the top 1 percent in recent years. As MSNBC host Chris Hayes once noted, this inequality is fractal: The 0.1 percent is way out ahead of the 1 percent, the 0.01 percent is way out ahead of the 0.1 percent, and so forth.
By some metrics, wealth inequality is even worse, with the top 1 percent hoarding an even greater share of the country's net assets than of its income. Certainly, the top 5 or top 10 percent have a lot of the wealth too. But as Rebecca Rosen once pointed out in The Atlantic, most of this wealth is tied up in housing and savings for education. Thanks to wage stagnation and rising costs of living, there is a savings crisis throughout the country, including many people way up the income ladder.
Needs like housing and education are all yoked together. The country is not only becoming more unequal, the number of places where good jobs can be found is shrinking to a small number of big cities and urban hubs. That drives demand for those particular patches of land — a "commodity" that doesn't operate according to normal self-correcting market forces — through the roof, which in turn drives up the cost of other basic necessities, such as child care. Families must pay top dollar to live in the places that give them access to economic opportunity.
Our peculiar system of funding K-12 education through local property taxes means that buying ridiculously expensive homes is also how these Americans access good educations for their children. Then they must save for college, yet another necessary expense whose price tag has only climbed higher. Add it all up, and in many instances, even families in the top 5 percent see money come in one door and then right back out the other.
"Having those 'things' is of course an improvement over not having them," Rosen wrote. "But only for the very, very rich (or the very, very unusual) is there any real escape from the pressure-cooker of American household finances." If anything, the pressure cooker is getting worse: The wage premium that people with a college degree get over people without essentially stopped growing after 2000. For the bottom two-thirds of earners with a college degree, wages have fallen since then.
The last thing that needs to be made abundantly clear is that all of this has happened for one simple reason: The U.S. economy has been built by and for, not even the top 1 percent, but the top 0.1 or even 0.01 percent.
It's the massive reduction in high-end tax rates since the middle of the last century that's allowed this class of uber-wealthy Americans to extract vast sums of wealth from the economy, killing vast swaths of jobs in the process. It was the smashing of unions and the country's turn away from full employment policies that allowed business owners to demand ever more education and appeasement from workers, even as they squashed everyone's wages. It's the massive money holdings of these Americans that allow them to bid the price of limited urban land into the stratosphere. Everything in our economy has been reoriented to serve the very tippy top, leaving the rest of us — including those making $120,000, $200,000, or even $400,000 — all feeling like we're perpetually scrambling up a very steep and rocky slope.
None of this is to say the Times' "middle class" are the real victims; the 95 percent of Americans below them are doing even worse. It is, to be clear, about the economic forces working on them, and the political realities that flow from that.
Undoubtedly, the top 5 percent or so would need to see their taxes go up to finance things like Medicare-for-all and full employment and an expanded safety net. But this is also an argument for focusing voters' enthusiasm for tax hikes for the wealthy on the very, very top, and only hiking taxes further down when it's absolutely necessary to hold off inflation. It's also an argument for providing things like child care and student debt relief and education as universal public goods for everyone, without any income cutoffs.
An economic alliance of the bottom 99 percent, or even the bottom 99.9 percent, against the very top remains the smartest play in American politics.