Ask five people to define “middle class,” and you could very well get five different answers… says retired American University economics professor Barbara Bergmann.
The term has been thrown around a lot lately, especially with the downward spiral of the economy and 2008 presidential election. “Barack Obama seemed to indicate it was anybody with an income less than $250,000 a year,” Bergmann says in reference to the President-elect’s proposed tax plan. “It’s become a political thing. Middle class means ‘good folks,’ you know?”
Some say the middle class is made up of people who make somewhere between $30,000 and $50,000 a year. Public assistance officials argue the definition depends on the size of your family. Others say a middle-class income can stretch as high as $70,000 a year. And, yet others believe it’s mostly a state of mind.
But according to the Economic Policy Institute, a nonprofit economic think tank based in Washington, D.C., the definition of “middle class” is exactly how it sounds – the people with incomes in the middle. “You could consider the range to be either in the 40th to 60th percentile of incomes, or the 40th to 80th percentile of incomes… That’s the straight-forward, bare bones definition of the middle class,” says the institute’s economist Heidi Shierholz. In other words, people who make $49,510 to $75,000 a year, or $49,510 to $112,638 a year. Bergmann says if she had to pick a definition, she would have to agree.
Still, Shierholz digs deeper. “People define middle class as people who have a certain set of aspirations… owning a decent house in a safe neighborhood, having good public schools for their kids, being able to take vacations, being able to save for college for the kids, having good wrap-around health insurance, putting away money for retirement… These set of things are what the middle class thinks about.” Unlike the poor, she says, for whom these set of aspirations could be considered unrealistic; or the rich, who may find them easily attainable.
And, according to Shierholz, the people who can realistically focus on these aspirations are losing ground.
‘War On the Middle Class?’
“For a long time now, the growth and prosperity of the country has really gone almost exclusively to the well-off,” Shierholz says. “There’s been this big disconnection between what’s going on at the top, and what’s going on for regular folks.”
News coverage paints the situation with headlines and reports that use the phrase “war on the middle class,” insinuating that current economic policies do not work in favor of people with mid-size incomes. Shierholz hesitates to use the phrase, saying, “War is a weird term… but it’s absolutely the case that middle class families are getting squeezed harder and harder and harder.”
Bergmann, however, disagrees. “The idea that the middle class is suffering, I find rather strange. People don’t speak anymore about the poor, of whom there are plenty.”
“The story is just magnified for poor people.” Shierholz says. “They lost even more ground than middle class folks.”
A new report by Demos and the Institute for Assets and Social Policy, two public policy research and advocacy organizations, finds that 4 million Americans lost economic security between 2000 and 2006. In a press release, Tom Shapiro, Professor of Law and IASP Director, said the middle class is confronting its greatest challenge since the Great Depression.
“Obviously we’re going into an era which is very scary,” says 81 year-old Bergmann. “I mean I remember the Depression around the 30s myself… It was a terrible time, and I hope we’re not headed for that again.”
But, for some, it’s too late. Their Depression has already begun to set in.
The ‘Darkest Hour’
Marina Mathews has been laid off since September 2008. The 41-year-old wife and mother of two worked for 1-800-PACK-RAT, a nationwide portable storage and moving company, as a senior marketing manager. She’d only been there a year before the company announced it was selling-off its company stores and downsizing.
“I think it was economic-based,” she says, attributing much of the problem to a declining real estate market. “I don’t think the sales were there. In the real estate boom, there were a lot of people renting units and storing them. And now that the real estate market has started to kind of dwindle, there just wasn’t a need for what we did anymore.”
Upon receiving her walking papers, the family’s total income of just over $100,000 a year was now dependent upon the $55,000 a year paycheck her husband, Vada Mathews, brought home as a restaurant manager, Marina’s one month’s worth of severance pay and the $380 she now receives each week in unemployment benefits.
Marina says, at first, she didn’t panic. “I felt like with my experience, and some of the people I knew and relationships I had already made in this area, I really felt like we’d be okay.”
But now, more than three months later, the severance money has run out. She did receive a few calls for interviews early on, but turned them down because the positions paid $20,000 to $30,000 less than what she was making. “With [my daughter] going off to college next year. I just can’t afford to make those kind of concessions,” Marina says. The phone has since stopped ringing.
The situation is beginning to take its toll. “Now I’m getting a little panicky because I’m just seeing more and more people are out of work. And, then the reports every month [about] the numbers are starting to rise, the companies are laying off. So, now that makes it more competitive for me, as far as who’s out there looking for the jobs that I may be suitable for. Six months ago there may have been 25 people, now there’s 200 or 300 people,” Marina says.
The family has been forced to cut back. “Before I used to go to the supermarket and just buy food,” says Vada. “Now, when I go, I have to check and see how much money I have before I purchase anything. So, it’s a big difference.”
“I don’t think we eat out as much,” admits Marina. “Almost every night it was like through the drive-thru to find something to eat. And now… it’s like ‘no.’ There’s stuff here to eat. It may not be what you want, but it’s nutritious and it’s good for you. Eat it.”
The kids, 16-year-old Ava Mathews and 14-year-old Todd Mathews, are feeling the pinch, too. “We’ve always been tight on money,” says Ava. “We haven’t always been able to get the things we wanted and stuff like that. So, now that money is even tighter, we just know not to ask for certain stuff because we know we can’t afford it.”
Marina and Vada say they now look to the children to cover some of their own expenses – the small ones, at least. “Todd has a paper route and Ava braids hair,” Mom says. “Now that they have their own money, my husband and I, we’ve come to rely on that because we’ve begun to think, ‘Well, Ava did hair this weekend, so she has $80. Why am I giving her lunch money?'”
When asked about who’s to blame for the current state of the economy, Marina says there’s enough blame to go around. “I definitely equate my darkest hours to the Bush administration. But I think a lot of it, too, was just the frenzy, the excitement of homeownership… and it’s a little bit of people just getting greedy.”
Still, the family remains hopeful about what lies ahead.
Marina says she sends out about an average of three to four resumes a day.
“I know some people send out more,” she says. “But, I try not to just do the blast. I try to tailor the cover letter and try to give a little more care.
“I don’t think this is going to be a forever thing,” she continues. “I’m confident that something is going to break.”
Vada nods in agreement, saying, “I think it’s going to get better. It’s just going to take a little while.”
“This is the one place I feel optimistic,” says Shierholz. Both she and Bergmann believe the answer to jump starting the U.S. economy is in more government spending, through:
- Another, but larger stimulus package
- Extended unemployment insurance benefits
- Safety-net programs, like food stamps and heating assistance for the winter
- Financial aid to states in order to help them balance their budgets and reduce further strain on the economy
- Investments in infrastructure in order to get necessary projects done, while at the same time creating jobs
The ideas closely mirror that of the Obama administration’s rescue plan for the middle class.
Shierholz predicts it’ll be a couple years, at least, before the middle class starts to feel the effects of a more stabilized economy.
Bergmann says, “I just hope it won’t be like the 30s, where the damn thing lasted for 10 years.”