Thursday, May 19, 2016

Movin' On Up: The 'shrinking middle class' fallacy

Twenty years ago, as most of my friends prepared for graduation and the next steps in their lives, I was a college drop-out - flunk-out really. I was making barely over minimum wage and working two jobs, sometimes three, to pay bills. There were a good many reasons that I found myself in the predicament that I was in at the time, rather than fitting myself for a cap and gown, but none of them were external. In the intervening time period, a lot of things have changed. Which is why when I hear Bernie Sanders talk about the disappearing middle class, I just have to shake my head.

Bernie is looking at a number in isolation and saying ‘there are less people in this group than there were 30 years ago’. And his followers eat it up, because they want someone to blame for the malaise that affects them: college debt, poor job prospects, flat-lining wages. All of these things are because of the 1% on Wall Street, Bernie will tell you. They hold all that wealth! But wait just a second… If those people aren’t middle class anymore, exactly where did they go?

As Mark Perry of AEI shows us, they are actually becoming upper class citizens. What’s more, the number of people in the lower income bracket is shrinking as well, but you’ll be hard-pressed to hear Sen. Sanders shouting that statistic while he wags his finger at Wall Street. Saying that the only income class of Americans that has grown over the last 50 years is the highest one doesn’t quite mesh with his ‘there isn’t a problem government can’t fix’ platform. But there’s another problem with all of these numbers: they are not longitudinal. They examine what all of America looks like at a given point in time, and do not tell us what any one individual has experienced over that timeframe.

So take me as your example – and I’d argue I’m a pretty representative one. In 1997, I would be squarely in that lowest income bracket. Bernie would say how awful that is that I was not able to experience a middle class lifestyle! But hold on now. I was 21 years old – yes, that make me an adult head of household for these purposes. I had two housemates. I drove a used car (that I adored, mind you). I should have had minimal debt, but I might have had a slight addiction to music that ran up the Mastercard a bit. Suffice it to say though: I wasn’t supposed to be middle class at this point in my life. Looking at that chart for the year marked 1997, I’m on that top line, nonetheless.

Fast forward 10 years, and I finished my undergrad degree, paid off 100% of my non-college debt, and live in a pretty nice condo in one of the five most expensive cities in the country. And now I’m on that bottom line on the graph, the highest income bracket. How is that possible? How in ten years can a person go from lower class earnings to higher class earnings? The answer is simple: I worked my ass off. Because that’s what you can do in America: work hard, get ahead.

Sure, I also made some smart choices: I took jobs with companies that I knew would help me grow professionally. I also chose a profession (albeit less intentionally) that offered a great deal of upward mobility. Even still, I worked a lot of hours, did some pretty undesirable work (think George Clooney in Up in the Air*), and was successful. I only actually spent three years on that middle line. But the lines on a chart don’t show what hard work can do. They just capture talking points for an opportunistic candidate, who ignores the other relevant data points to push his message of class warfare. And make no mistake about it: that is what this is. It is telling people that they deserve better, but someone else - someone with more money - is holding them back.

Let me tell you: had I bought into that message in 1997, I might still be in that lowest bracket. I might be pointing my finger at all those who achieved success as the cause for all that ails me. But I’d be wrong. Just as Bernie is wrong. You probably know of someone just like that, who doesn’t take responsibility for what happens to them and act to move things forward. Are there systemic factors that prevent people from getting ahead? Absolutely. But they can be overcome when you look for the solutions within, and don’t ask the government – or anyone else for that matter - to fix things for you. You have to ask that of yourself first.

Bernie will tell you he has the solutions. Hillary too, as she has hopped on this train as well. But ask yourself when you look at that chart: is there really even a problem?

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