Everyone wants to protect the middle class, even though no one really knows what it is. The good news, though, is that the middle class has stopped declining as a percentage of the population over the past several years. At least according to one definition. In fact, maybe it's actually bad news, depending on your perspective. The only thing that is clear is that we could all be a little bit more specific when we talk about protecting the middle class.
The Pew Research Center defines the middle class as those households earning at least two-thirds of the median income in any given year, but less than twice that amount -- between $40,667 and $122,000 for a family of three in 2013. The center published data last week showing that 51 percent of households came within this range that year, the same percentage as in 2010, adjusted for inflation. Twenty-nine percent were below the range, and 20 percent were above.
There were major differences by race, with more than half of whites and Asians and fewer than half of blacks and Hispanics qualifying as middle class. Household incomes for blacks and Hispanics were twice as likely as whites and Asians to fall below the range.
These conclusions are roughly the same as those drawn by The New York Times, which like Pew, relied on data from the U.S. Census. Defining the middle class somewhat differently -- as those households earning between $35,000 and $100,000 a year, adjusted for inflation -- the newspaper found that the percentage of people in the middle class had held steady at 43 percent since the financial crisis.
For decades, the percentage of people in the middle class has been declining. That decline has now stopped, but whether that's a good thing depends on your definition. Americans have been getting wealthier over the years, a fact that The Times's definition captures by showing that fewer and fewer people fall below its $35,000 threshold (again, adjusted for the change in prices over time). By the newspaper's reckoning, the decrease in the percentage of middle-class people is mainly due to a larger percentage of households bringing in at least six figures, while the share of lower income households has also declined.
Yet although the poor are doing better relative to the lower class of a previous generation, they haven't kept up with the rest of the country. Meanwhile, not only are there are more rich people, but they're also wealthier than rich Americans were a few decades ago. For these reasons, Pew portrays the middle class differently.
Their definition requires recalculating the boundaries of the middle class every year, so that the middle class always includes people in the middle, even if people on average are getting wealthier over time. According to this definition, not only has the middle class has been losing households to the rich, but the percentage of people who are below the middle class has been steadily increasing as well.
Together, the two definitions of the middle class reveal an American society that has become much more unequal even as it has become much wealthier.
Looking over the past several years, one possible explanation for the stabilization of the middle class is that the recession has stalled economic growth along with the dynamics that contribute to an increasingly inequitable distribution of income. After all, economic inequality often rises during booms and falls during busts, which is why some conservatives are uncomfortable with Republicans' newfound concern for the issue.
If so, then these recent numbers showing a stable middle class are somewhat disappointing. And if you take yet a third definition of the middle class -- how many people describe themselves as belonging to it -- disappointment is just what you find. According to Pew, only 44 percent of Americans consider themselves middle class today, compared to 53 percent seven years ago. That's not significantly different, in a statistical sense, from the 40 percent who consider themselves lower class.
All these numbers might begin to feel somewhat meaningless, but our understanding of the middle class and its circumstances is crucially important. Politicians' allegiance to the middle class, from Sen. Rand Paul (R-Ky.) to President Obama, can interfere with good policymaking. The clearest recent example was Obama's decision to abandon a proposal that would have scrapped the 529 program for college savings, which disproportionately benefits the comparatively well off (many of whom still consider themselves middle class).
There will be plenty of discussion about the "middle class" in next year's presidential campaign. Let's hope the candidates don't use those two words as a way to get out of tough questions about the economy.