New research, however, has called into question the “Easterlin paradox.” We now have better data to assess the effect of income on happiness. Those data tell us that happiness increases in line with household income up to about $75,000. Beyond that, we get less of a happiness bump from each additional buck, but it does continue to rise.
4. Almost all Americans think they’re middle class.
If Americans are asked what class they think they’re in, most will say the middle class. But if asked to choose between the upper, middle, working and lower class, only 45 percent say the middle class, according to the General Social Survey. Roughly the same share choose the working class.Few pick upper or lower.
More striking, this pattern hasn’t changed since the 1970s. The United States is now a much richer country, more Americans attend and complete college, and more work in white-collar jobs. Yet, perhaps because of sluggish income growth over the past generation, the share of Americans that consider themselves middle class hasn’t budged.
5. In the long run, the decline of middle-class living standards is inevitable.
There are grounds for worry. It’s possible that middle-class wages will continue to stagnate, given the powerful economic forces at work. And employment growth — the source of middle-class income gain in recent decades — might not help, either. After rising steadily in the 1980s and 1990s, job growth stalled in the 2000s, even before the 2008 crash.
Yet there are reasons for hope. Technological advances and globalization will continue to bring us new goods and services and lower prices, and they’ll create some jobs even as they destroy others. And stagnating wages and job growth are not foreordained.
Our best bet for increasing employment over the long run is more and better education. Just three-quarters of a typical American cohort completes high school, and the share getting a four-year college degree has risen only modestly since the 1970s. Expanded public support for early education would be particularly valuable; it helps parents balance work and family and improves school readiness for children in disadvantaged households.
In addition, we ought to explore new ways public policy can compensate for stagnant or slowly rising household incomes. One way would be to extend the earned income tax credit well into the middle class and to index it so that it rises along with average compensation levels across the economy. This would provide all households that have earnings with a bit more money. And because average compensation tends to rise with per capita GDP, it would help to restore the link between the growth of the economy and increases in household incomes.
Lane Kenworthy is a professor of sociology and political science at the University of Arizona and the author of “Progress for the Poor.”