The vast majority of Americans consider themselves "middle class." No one can quite agree,though,on what that means.Richard Reeves,along with colleagues at the Brookings Institution,has cataloged no fewer than a dozen economic formulas that seek to define this elastic cohort largely by what people earn each year: household income between X and Y;personal income that's within some percentage of the national median;distance from the poverty line;and so on.Combine the lot,and the range of who might be considered middle class is extraordinarily expansive—including anyone from a single,part-time bartender scratching by on $13,000 a year to a suburban power couple pulling in $230,000,or 90% of American households in all.
Other economists and social scientists stretch the boundaries of membership in different dimensions,based on degrees of wealth or spending power,professional status or education level,what neighborhood you live in,or even on that very American of conceits,self-determination—which is to say,if you think you're middle class,you are.
"I sometimes think there are as many definitions of the middle class as there are Americans claiming to be middle class," says Reeves,a senior fellow at Brookings and director of its Future of the Middle Class Initiative,who quickly throws in one of his favorite noneconomic definitions: "You're middle class if you have two refrigerators.You have a new one in your kitchen,and you have your old one in the garage or basement,where you keep your beer."
The U.S.is a middle-class nation—it was founded on middle-class ideals,he continues.And so defining one's self as middle class is,perhaps counterintuitively,aspirational in some ways."Americans don't like the idea of seeing themselves as upper crust,snobs,snooty,aristocrats,upper class,et cetera," says Reeves,an economist and self-described "recovered Brit" who has written a new book,Dream Hoarders,precisely on that rarefied American upper crust."People also don't like to think of themselves as poor,or even as working class.To the extent that the U.S.has a class consciousness,it tends to be around the middle class."
All of which creates a challenge of measurement.If sizing up the middle class is difficult enough,it's that much harder to say that circumstances within this group have changed.And yet that is precisely what we've devoted the 28 pages in this special report to saying—and showing.Life has gotten harder in recent years for millions of people within the middle class.Put simply: For too many,the American dream has been fading.
Such an assertion may seem to fly in the face of recent economic data and even the long upward slope of history.Between 2013 and 2016,after all,the median income for U.S.families grew 10%,according to the Federal Reserve Board's oft-cited Survey of Consumer Finances.The unemployment rate,meanwhile,is at its lowest level since 1969—the year of the moon landing—as the private sector has generated some 20 million new jobs since 2010.Wages,too,are at last starting to climb after a long stretch of stagnation.All really good signs,no?
And yet for nearly every rah-rah measure in the economy of late,there is an asterisk: a footnote that suggests that a huge and perhaps growing subset of Americans is being left off the dance floor.Consider the most basic: wages.For non-supervisors,average hourly earnings hit nearly $23 in November—a fact that,according to data from the Pew Research Center,gives today's workers slightly less purchasing power than those in January 1973,once inflation is factored in ($23.68 in 2018 dollars).
For years,the company CareerBuilder has conducted,via the Harris poll,a large survey of U.S.workers across the business landscape.In 2017,a striking 40% of the nearly 3,500 respondents said they either always or usually live "paycheck to paycheck"—a level that was up four percentage points from the company's 2013 poll.
Such data is explained in part by recent research by the Federal Reserve Bank of New York,which reveals the $13.5 trillion IOU that American families have kept locked inside their desk drawers.This past September,aggregate household debt balances jumped for the 17th straight quarter,with the debt now more than $800 billion higher than it was at its previous peak in 2008.The loan comparison site LendingTree,drawing on data from the Federal Reserve,reports that as a percentage of disposable income,Americans' non-housing-related debt is higher than it has been since measurement began a half-century ago.Collectively speaking,our outstanding consumer debt,says the site,is equivalent to more than 26% of our income.
With interest rates low,that burden is still a pinch for many,rather than a gouging bite—but unlike with our skyrocketing federal debt,this cascading obligation is still achingly personal,with reminders coming in the mail month after month.In December,the personal finance site NerdWallet reported that average revolving credit card balances for households with debt—the "You Owe This Amount" figure that carries over from one billing statement to the next—totaled $6,929.
Even those without a credit card overhang,or massive student loan debt,find themselves facing a gauntlet of recurring charges each month.The cost of health insurance and medical care have each risen much faster than paychecks have.Over the past decade,out-of-pocket costs to workers from higher insurance deductibles have climbed eight times as much as wages,notes the Kaiser Family Foundation.More than a quarter of adults did without needed medical care in 2017 because they couldn't afford it,says the Fed.
Yes,housing costs nationwide have moderated—but,importantly,not in the places where the jobs are.Want to work for a Silicon Valley startup or a biotech firm in Boston?Six in 10 renters making up to $75,000 a year will pay upwards of 30% of their income in rent in San Jose;four in 10 will do so in Boston,according to Harvard's Joint Center for Housing Studies.
对非常多的美国人来说,住房、医疗保健和大学费用是目前超级通胀影响最明显的领域。布鲁金斯学会的里夫斯说："要定义中产阶层的生活水平,这三个消费领域最合适不过,那就是承担得起一幢不错的房子、有能力送孩子上大学以及无论家里谁病了都有钱去治。"也许正是这样的三重障碍让许多较年轻的美国人觉得他们再也无法达到《Great American Journey》这本书中提到的一个关键里程碑,那就是比父辈生活的更好。美联社-全国民意研究中心公众事务研究部最近的一次调查显示,在15至26岁的美国人中,只有一半人相信自己能做到这一点。
Here—in housing,health care,and the cost of college,too—is where the super-inflation hits hardest for a significant share of the nation today."And it's quite hard to find three areas of consumption that define the middle class standard of living more than affording a decent home,or being able to send your kids to college or cover health care costs should any of your family fall sick," says Reeves of Brookings.This tripartite gap,in particular,may well be what has convinced many younger Americans that they won't ever reach one critical milestone in the Great American Journey—living better than their parents did.(Only half of the 15- to 26-year-olds in a recent poll by the Associated Press–NORC Center for Public Affairs Research thought they would.)
Harvard economist Raj Chetty has done some of the most acclaimed work on this historic decline.In 2016,Chetty and colleagues showed that fewer than half of those born in the 1980s earned more than their parents had at the same age,adjusting for inflation.By contrast,of those born in 1940,more than 90% had accomplished the feat."We can see that there has been a collapse of intergenerational mobility," says Claudia Goldin,a leading economic historian and labor economist at Harvard.
It's all part of the feeling,for millions of Americans,of falling behind—a feeling made all the more frustrating by the sense that the gap between the middle class and the superrich keeps widening … that the laws of economic gravity no longer seem to apply.
And compounding that is one more nagging concern: that the breakneck speed of technological change now disrupting one industry after another—a revolution of A.I.-infused automation—will uproot the one thing that,according to the folks at Pew,virtually everyone agrees is critical to middle-class membership: a secure job.
Each previous era's industrial revolution has,of course,raised the same fears.Reeves thinks "a good starting position is to be skeptical about the claim that this time is different." But the two things worth asking about the current revolution,he says,are: "One,will it be differently quick this time?And two,will it be differently different?"
It's question No.1 that makes him a little nervous: Yeah,sure,with every grand sweep of automation,business models change and new positions get created,and there's a transitional time in between them."So surely the economy will adjust and new jobs will be created," he says,"but will those people who are displaced be the ones to get those jobs?And will they get them fast enough?You're not talking about 20,30,40,50 years of transition between approach A and approach B.You're talking about two,three years.What it means is people need to reskill,retool at a pace that has never before been witnessed in human history."
The closest thing to it,says Reeves,would be like a mobilization during war.So be it: Many Americans feel like they're already in one.
This article originally appeared in the January 2019 issue of Fortune.