What, exactly, is the middle class?
The Pew Research Center defined the middle class as those whose annual income was two-thirds to double the national median —in 2019, a range from $40,500 to $122,000.
National Public Radio reported in 2016 the term middle class historically has meant something less concrete in the United States — the American Dream. According to Pew Research, 2015 was the first recorded year since 1970 when people in the middle-income bracket no longer comprised the majority of people in the U.S. This indicates a correlation between the middle class and realizing the American Dream.
Over the past several decades, America has become less of a middle-class society as the wealthy have captured most of the economic gains. Despite gains in national income, middle-class income apparently has decreased.
According to Eleanor Krause and Isabel Sawhill at the Brookings Institution, there are a number of reasons for this:
Participation in the workforce by less-educated, prime-age adults, especially men, has declined.
Stagnant incomes have meant fewer Americans grow up to be better off financially than their parents.
For some, a sense of well-being has eroded because the American Dream has become a more distant prospect for today’s children.
Middle-class families are more fragile and dependent on two incomes.
Income gains for middle-class families can be attributed to increases in women’s earnings.
The Organization for Economic Co-Operation and Development reported in 2019 those in the middle classes suffer economically because of the rising costs of education, health care and housing. “Societies with a strong middle-class experience higher levels of social trust and also better educational outcomes, lower crime incidence, better health outcomes and higher life satisfaction,” the report stated.
The middle class constitutes the heart beat of the economy, the indispensable workforce of the nation.
A free market economy provides the mechanism for middle-class Americans to innovate and become entrepreneurs. Those willing to take risks can improve their socioeconomic status. Low-income people generally are unable to become innovators, while upper income people have less incentive to innovate and disrupt their life benefits.
Government policies influence the ability of the middle class to succeed. Restrictive policies on licensing, resource regulations, taxes and fees, wage requirements and randomly declaring businesses and employees essential versus non-essential disproportionately affect the middle class. Failure to maintain law and order is devastating to middle class businesses, as was witnessed during the summer and fall of 2020.
The economy is not a fixed pie from which citizens are given a piece. With freedom to innovate, the economic pie expands, as was demonstrated the past few years in the United States. Venture capitalist Nick Hanauer said: “Rich businesspeople like me don’t create jobs. Rather, they are a consequence of an exosystemic feedback loop animated by middle-class consumers. When the middle class thrives, businesses grow and hire and owners profit.”
“Save the Middle Class” should be a rallying cry for all who desire to realize the American Dream.