Ironically, their ample compensation allows them to avoid the poor-quality services they’ve designed for everyone below them.
If we define middle class by the security of household income and what that income can buy rather than by an income level, what do we conclude?
le choice but to conclude the middle class is decaying, both in the percentage of the workforce that qualifies as “middle class” according to traditional standards and in the quality of life of those who do qualify.
There’s a longstanding way to understand the middle class quality of life: it’s supposed to be superior to the indignities of being poor. If you’ve been poor (and I’ve been down to my last $100), even for short periods, you know the indignities and frictions of being poor (and by poor I don’t mean on welfare, I mean working poor, with unreliable incomes and low wages). Being middle class meant being able to escape the hassles and indifferent services that await the poor. Fast-forward to today: what day-to-day tasks and interactions are easy and cost-free for the middle class? How many are nightmarish, complicated, frustrating, and costly?
Virtually all of them. Being “middle class” is no longer a buffer to the indignities and friction of a dysfunctional, costly status quo that only serves the wealthy with anything resembling what was once afforded the middle class. No wonder what remains of the middle class is so anxious to qualify for “elite” airline miles programs and similar “special” service, because it approximates what every middle class person once expected as the norm.
In terms of the quality of life and of services, the bottom 95% is now poor. Can you really contest this, or is contesting a matter of hurt pride?
What qualifies as middle class? I’ve defined it by characteristics rather than income: starting with What Does It Take To Be Middle Class? (December 5, 2013), I’ve used 12 minimum standards of membership that were implicit characteristics of the conventional middle class a generation ago:
1. Meaningful healthcare insurance ($5,000 deductible plans don’t qualify, and neither does government-provided low-income coverage such as Medicaid.)
2. Significant equity (25%-50%) in a home or other real estate
3. Income/expenses that enable the household to save at least 6% of its income
4. Significant retirement funds: 401Ks, IRAs, etc.
5. The ability to service all debt and expenses over the medium-term if one of the primary household wage-earners lose their job
6. Reliable vehicles for each wage-earner
7. If a household requires government assistance to maintain the family lifestyle, their Middle Class status is in doubt.
8. A percentage of non-paper, non-real estate hard assets such as family heirlooms, precious metals, tools, etc. that can be transferred to the next generation, i.e. generational wealth.
9. Ability to invest in offspring (education, extracurricular clubs/training, etc.) without going into debt to pay for the extracurricular activities.
10. Leisure time devoted to the maintenance of physical/spiritual/mental fitness.
11. Continual accumulation of human and social capital (new skills, networks of collaborators, markets for one’s services, etc.)
12. Family ownership of income-producing assets such as savings bonds, etc. To these core attributes we might add the host of services that are being cut back or eliminated en masse listed in yesterday’s guest post,‘Workarounds’ Galore: How Real Americans Deal with ‘Real’ Inflation: attending sporting events, regular haircuts, dry-cleaning, membership in service clubs and country clubs, and dozens of other once-standard benefits of
The decay of this standard of living is not just quantitative, it’s qualitative. The quality of life
Do you get excellent service from automated Corporate America customer service? You must be joking if you answer “yes.” The point here is the quality has been stripped out of Corporate America’s products and services to maximize quarterly profits.
Many of the most richly compensated people in our economy are those who figure out ways to eliminate costs by degrading quality and service. Ironically, their ample compensation allows them to avoid the poor-quality services they’ve designed for everyone below them. Of related interest:Honey, I Shrunk the Middle Class: Perhaps 1/3 of Households Qualify December 28, 2015 What Does It take to Be Upper Middle Class? June 22, 2016 What’s Eroding the Middle Class? January 2016 What Killed the Middle Class? March 24, 2016
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