The Myth of the Disappearing Middle Class

TideEngineer08 said:

Interesting reading this morning, from Ben Shapiro:

http://www.nationalreview.com/article/443947/middle-class-income-not-stagnating#pq=QdPRUk

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TheAccountant said:

Not surprised to see this from National Review. This is the type of article and message that gave way to the rise of Trump and Bernie.

"Hey you laid off factory worker - I know you're 45 and struggling to provide for your family but if you look at the data you're not that bad off. There's actually more people who's rich, not you mind you, but you do have a cell phone and satellite TV"

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TheAccountant said:

Not surprised to see this from National Review. This is the type of article and message that gave way to the rise of Trump and Bernie.

"Hey you laid off factory worker - I know you're 45 and struggling to provide for your family but if you look at the data you're not that bad off. There's actually more people who's rich, not you mind you, but you do have a cell phone and satellite TV"

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Intl.Aperture said:

The article isn't talking about the feelings of the unfortunate laid off worker. The piece is aimed more at the mindset adopted by the U.S. as a whole that what we have traditionally defined as the "middle-class" is failing. Devising hypothetical examples of a guy who SHOULD be in the middle class but has lost his job isn't an argument against the larger narrative that the middle class is actually doing fine.

In turn, should we lie to every person who's been laid off and tell them the middle-class is dying just to make them feel better? Or is it more sad that the factory worker is so butthurt by his circumstances that he leans into false narratives to make himself feel a little less worthless? Factories will always close and then new ones will open and markets will shrink with consumer demand in one sector and expand in another. Shapiro also talks about class fluctuation. That we have this idea that the 1% is a certain group of people - where really people move in and out of the 1% constantly. Same with the middle class. The financial brackets and metrics used to measure the middle class show that it is doing well - some people are fortunate and move up in class and some take a hit, which means you are always going to have disgruntled citizens who would rather believe that someone else has bungled the entire economy and cost them their job rather than accept the truth that they work in a consumer driven market and are at the mercy of it's tendencies.

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TheAccountant said:

Yep, keep up with that "butt hurt" message, it'll work next time for the Establishment. People struggling or worried about their livelihood don't care about the "larger narrative", they care about their narrative.

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cbi1972 said:

They can care about their narrative all they want, but that's not bringing coal prosperity back to West Virginia.
They need to figure out some other way to get by.
Being deceived by political rhetoric of either side isn't going to help them.

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To be clear, the US government does have regional economic policies: we just don’t call them regional economic policies. Subsidies for students to consume higher ed are subsidies for towns with universities. The mortgage interest deduction is a subsidy for homeownership generally, which means a subsidy for areas where the obstacles to homeownership are low (suburbs of major cities). Military spending is a subsidy to areas with military bases and contractors. Ag spending is a subsidy to places with intensive agriculture. The list could go on. There are no non-regional subsidies. Even the EITC is a regional subsidy: it subsidizes the choice to work, which often depends on the availability of jobs, which can induce migration. Many of these regional subsidies, like the EITC, are beneficial.


Appalachia does get a lot of government subsidies related to poverty. We do a very good job paying Appalachians to be poor, hungry, and disabled. If they could pose for some poverty-porn photo-ops, all the better.


That’s flippant and cruel of me to write, but it has to be said: handouts are not the equivalent of government investment in productive assets! Quit dumping so much cash into Appalachia in handouts that incentivize intergenerational transmission of poverty, and, instead, maybe invest in things that will give Appalachian communities enduring prosperity: universities, national labs (like the Green Bank Observatory, for example), agency relocations, energy generation facilities, and other lasting investments can help reshape these local economies. No economy was ever launched into prosperity by disability checks. Many have been by economically productive large-scale institutions.


I’m a free-market guy. I want smaller government on the spending and the taxing side. But we also have to recognize that government spending is geographically non-neutral, and the composition of government spending is economically non-neutral. Spending on productive assets (say, chartering a new university) in poor places (say, in eastern Kentucky) is almost certainly a more productive use of money than spending the same amount to provide benefits to mostly non-poor kids (subsidized student loans) so they can subsidize mostly non-poor locations (university-dense cities).

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Handouts boost income. They don’t boost earnings, and they can diminish social standing. Thus, for many Appalachians and Rust Belters, welfare is not seen as welfare-improving, even by its beneficiaries. This explains that guy you see on Facebook who complains about the “Obama economy” one day, and the next moans about how hard it is to get his disability check. Is he to some extent ignorant and hypocritical? Yes, to a degree. But his behavior is very rational if you think that his complaint about the “Obama economy” or “welfare queens,” when he himself receives welfare, is about the lack of improvement to real earnings, as well as the diminished social standing brought about by dependence on the dole. He wants the disability check because he wants to be able to maintain his basic standard of living; but he resents it, because it diminishes his social standing and doesn’t qualify as earnings. This hypothetical person isn’t just some entitled white idiot on your Facebook wall whom you should mock; it’s an internally consistent worldview that, when you actually stop and think about it, is not prima facie unreasonable or horrible.

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LA4Bama said:

This point is a follow up to the point I made above. The more I think about this article the more it bothers me that this author didn't present a more reasonable analysis. National Review is always manipulative, but this one irks me.

In 1965 the average income was about $6500. That's just about $50,000 in today's money. The author gave a range of $50K to 100k, so in 1965, that 6500-13k

The average cost of new car in 1965 was $2650, or in today's dollars about $20,000. But the average price of an actual new car in 2016 is $33,560. Now, the cars today are fully of a lot more technology than in 1960, so you are getting what you pay for, so to speak, but the problem is that an average income needs to track the real cost of living, not some arbitrary inflation rate generated by comparing relatively non-technological items like bread. If I am buying a car in 1965, then to make the comparison correct, I need to say that today I am buying a car, and in addition a car air conditioner, car stereo, ABS, computer, catalytic converter, seat belts, etc., etc., etc.

Compare that to gas. In 1965 gas was $0.31, and after inflation that is $2.35. That's actually not far from the price now, and considering market fluctuations we can say that the price of gas is roughly equivalent today as it was in 1965. But gas is just gas (well, there are a few technical differences and some additive since 1965, but in general the product is still roughly the same as it was in 1965). The car on the other hand has evolved greatly and it is for that reason far more expensive than an average car simply adjusting income for inflation.

We see the same thing, but on a much bigger scale, in lots of field. Medicine is one that comes to mind. Great technology but at extreme cost.

And of course that's not even counting all the things today that didn't even exist in 1965, e.g. the smart phone and the cable subscription.

If the author wanted to be honest he wouldn't just consider income adjusted for inflation, but cost of living adjusted for inflation and adjusted for "normality" (that is, the basic things that "normal" people need to own, such as a smart phone, which is so ubiquitous now that it barely passes as a luxury item at all). On that analysis what passes for middle class would certainly be a whole lot more expensive than what this mere adjustment for inflation calls for.

I'm just going to take a shot in the dark here to make the point. Once you factor in the real cost of living, we probably need closer to 200% of the adjusted income to live near the "norm". So, for example, to live a life near the social median standard of living in 1965 took about $6500-$13,000 per household, today that is about $50,000-100,000. But to truly live with the "normal" things that technology provides, one has to double that... to $100,000-200,000. So the author's range is wrong. Instead of calculating the middle class as those people who made $50,000 and 100,000, he needs to consider it around $100,000 to 200,000 per household.

The people that this author called upper middle class are actually the middle class, and everyone else has dropped below that!

Don't get me wrong; we do have great benefits today and we need to learn to be happy with the simpler things sometimes (as Buzzard's hypocritical oilmen associates were saying). But just because we live in this amazing time doesn't mean the National Review gets to play fast and loose with what it costs to live today and the pressure that puts on real people.

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Bamabuzzard said:

I think a very simple exercise would be to pose the question "In today's society, could one spouse stay home, as many did in the 60's, while the other one worked and have an equivalent lifestyle as to the average middle class family in the 60's?" I'm pretty confident the answer to that is "no".

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Bamabuzzard said:

I think a very simple exercise would be to pose the question "In today's society, could one spouse stay home, as many did in the 60's, while the other one worked and have an equivalent lifestyle as to the average middle class family in the 60's?" I'm pretty confident the answer to that is "no".

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