The last decade has seen significant economic events within the United States and around the world, including the spread of late-stage capitalism and the economic collapse that occurred in 2008. The purpose of the present sample essay provided by Ultius is to compare today’s middle class and poverty income levels with the same of from ten years ago.
The essay will proceed across four parts.
- The first part will define the basic concepts of middle class and poverty.
- The second part will then review the data regarding income level over time for those in poverty,
- The third part will review income level over time for the middle class. From this basis,
- The fourth part will draw out key trends and implications that are represented in the data.
A main conclusion that will emerge is that there has been a general downward slide in income within the United States over the past decade, except for large corporations and the class known as the rich.
Concepts of middle class and poverty
In truth, it is difficult to rigorously define the “middle class” in an objective way. This is because as Blank has indicated,
“the literature on the middle class leads to a conclusion that income levels alone do not define the middle class. Members of the middle class tend to be defined more by their values, expectations, and aspirations than their income level, although income may constrain the manner in which some of their aspirations can be realized” (2).
There are two main variables that must be considered when defining the middle class. The first is that a given person or family must have an income level that at least approximately falls within the median range of income within the nation. This can be called the objective criterion. In addition, though, the given person or family must also have the characteristic aspirations, such as upward mobility and college education for children, that tend are generally associated with the cultural ethos of the middle class.
Turning to poverty now, this can be more easily defined in terms of the specific guidelines that are developed and annually revised by the federal government. As the United States Census Bureau has pointed out, the poverty threshold is calculated on the basis of the size of a family, the number of members in the family, and data regarding food budgets.
A given family’s income is divided by the threshold number for a family of that size; and if the resultant number is less than one, then the family is deemed to be impoverished. The threshold numbers are adjusted annually in order to account for inflation. Conceptually, then, defining poverty is simpler than defining the middle class: this classification is determined almost exclusively by objective income level.
Income levels for the impoverished
According to Webster and Bishaw, data from the American Community Survey of 2005 indicated that
“about 38.2 million people, or 13.3 percent of the U.S. population, had income below the poverty threshold in the last 12 months” (14). Likewise, DeNavas-Walt and Proctor have reported that “in 2013, the official poverty rate was 14.5 percent,” and that “the 2013 poverty rate was 2.0 percentage points higher than in 2007, the year before the most recent recession” (12).
This data clearly indicates that over the past decade or so, the poverty rate within the United States has in fact increased by some degree. This is within a context in which even a stable poverty rate must be viewed as a kind of societal failure, insofar the objective of developed nation must be to steadily reduce the poverty rate until it actually achieves the ideal of zero.
The quotation above refers to a recession. This was, of course, the Great Recession of 2008, which caused a major and long-term economic downturn both within the United States and across the rest of the planet. The fact that the poverty rate within the nation increased over the past decade means that an increasing number of persons and/or families fell below the poverty line calculated by the United States Census Bureau; and at least a significant part of the responsibility for this can perhaps be attributed to the Recession.
This economic event was characterized by an increase in unemployment, as jobs vanished as a result of employers found themselves needing to cut their budgets and reduce operations to the essentials. This in turn would have led to an increase in the poverty rate, insofar as people must work in order to make money, with the result that unemployment would logically produce impoverishment.
Income levels for the middle-class
The extant evidence clearly indicates that the middle class has been shrinking over the past decade, as the middle class is defined in terms of median level income. In the state of Wisconsin, for example, the share of all households that were in the middle class in the year 2000 was 54.6 percent, whereas that number had fallen to 48.9 percent by the year 2013; and likewise, whereas the median income in Wisconsin was $60,344 in 2000 (adjusted for inflation), it was only $51,467 by 2013 (Henderson). The same kind of shift is evident in several other states as well.
And in fact, there is no state at all in which the middle class experienced statistically significant gains during this span of time. By and large, then, the middle class has been unable to act in accordance with its basic aspiration of upward mobility. Much the opposite, the middle class has had to fight quite hard to even maintain a stable position, and such efforts have still not been able to prevent a greater or lesser degree of erosion with respect to the economic prosperity of many households.
A similar point has been made by Erickson has well. The statistics reported by her indicate that between the years 2000 and 2012, median income for all families within the United States fell by 8 percent, while at the same time the price of rent rose by 7 percent, the price of medical care rose by 21 percent, the price of child care rose by 24 percent, and the price of higher education rose by 62 percent.
Even when the calculation was broken down to focus on a relatively more affluent section of all households, the statistics indicated that median income merely stayed the same across this span of time, while the increases in the prices of goods and services were still very much a real phenomenon. In terms of real prosperity, understood in terms of income relatively to the costs of living, the middle class has suffered a quite serious blow over the course of the last decade or so.
It is important to consider this circumstance in terms of the conceptual definition of the middle class that has been developed above. Objectively considered, there will always be a “middle class”, in the trite sense that any given data set will also possess a statistical median. When one speaks of the erosion of the middle class, though, what one means to say is: there are fewer and fewer people who are able to pursue the aspirations traditionally associated with the middle class (Blank).
In principle, these aspirations are synonymous with the American Dream itself: upward class mobility, prosperity earned through hard work, a better life for one’s children than one was able to live oneself, and so on. The economic statistics from the last decade indicate that this dream has stalled as more and more Americans are growing up in poverty.
Indeed, the best thing that could be said is that income levels have stayed the same, while the cost of living has steadily risen; and the more realistic thing to say is probably that the cost of living has risen while real income has actually gone down over time. These are clearly not circumstances that are conducive to the pursuit of middle class aspirations or the American Dream.
Trends and implications
Not everyone has lost, however, over the course of the past ten years. As Plumer has indicated, the financial sector and the corporate sector have by and large recovered from the Recession of 2008; and
“in 2012, the top 10 percent of earners took home more than half of the country’s total income—the highest recorded level ever” (point 3).
In other words, the rich, along with everyone else, were in fact hit by the Recession; but not only did they have enough of a financial buffer to not truly suffer from this impact, they have also managed to bounce back and by and large recover the same status they had prior to the Recession.
This is in stark contrast to how the average person within the United States has fared since then. The median household income—that is, income for the middle class—has fallen by 6.2 percent since the start of the Recession;”labor’s share of the national income has fallen to record lows;” it has become increasingly difficult for people who have lost their jobs to get back into the workforce again; and young people are finding it extremely difficult to find jobs that are compatible with their actual educational and professional qualifications (Plumer).
The upshot of all of this is that the number of people below the poverty line has increased over time, and the middle class has been sliding closer to the status of the impoverished. Likewise, it is clear that the gains that have recently been experienced by corporations and the rich are in no way reflected in the broader American population. Rather, there is a serious split between the fortunes of the economic elite on the one hand, and the fortunes of average people on the other. It is surely this kind of perception that gave rise to the Occupy movement, with their signature slogan regarding the 1 percent versus the 99 percent (Graeber).
The relevant statistics that have been discussed above would seem to indicate that in point of fact, there was actually a good deal of truth to this simple motto.
In short, then, income levels and economic prospects for both the middle class and the impoverished tend to have diminished significantly over the course of the past decade; and even at best, the only thing that could said is that they have more or less stayed the same, with no meaningful improvements being made. It is somewhat unclear whether this is temporary circumstance, or if it is trend that be expected to continue into the indefinite future.
If the latter were the case, then this would be because the extreme polarization of wealth may well be a structural feature of late-stage capitalism itself, with the endgame being a kind of neo-feudal society split between the extremely wealthy on the one hand and the impoverished on the other. Such a development would, of course, signify the death of the middle class, and of the American Dream of which that class has always been the herald.
If this is to be prevented, then serious economic reforms may be required, such that the structures of society begin to serve the interests of the vast majority of people and not just the selected few. It is of course possible that the economy will just fix itself; but this seems more and more unlikely with the passage of time.
In summary, the present essay has compared middle class and poverty level income over the course of the past decade. An important conclusion that has emerged here is that the economic situations of both the middle class and the impoverished have stagnated and/or deteriorated over the course of the past decade.
This is especially striking when juxtaposed with the fact that the financial sector, the corporate sector, and the rich have all more or less recovered from any damage caused to them by the Recession of 2008 and are now doing as well as they ever were. This means that the current state of the economy is producing an increasing inequality of wealth within the nation, with the potential long-term consequence of the abolition of the middle class itself. It would seem that something should be done about this.
Blank, Rebecca M. “Middle Class in America.” Focus 27.1 (2010). Summer 2010. Web. 26 Jul. 2015 .
DeNavas-Walt, Carmen, and Bernadette D. Proctor. Income and Poverty in the United States: 2013. Sep. 2014. Web. 25 Jul. 2015. .
Erickson, Jennifer. “The Middle-Class Squeeze.” Center for American Progress. 14 Sep. 2014. Web. 25 Jul. 2015. .
Graeber, David. The Democracy Project: A History, a Crisis, a Movement. New York Spiegel & Graw.
Henderson, Tim. “The Shrinking Middle Class, Mapped by State.” Pew Charitable Trusts. 19 Mar. 2015. Web. 25 Jul. 2015. analysis/blogs/stateline/2015/3/19/the-shrinking-middle-class-mapped-state-by-state>.
Plumer, Brad. “This is How Everyone’s Been Doing Since the Financial Crisis.” Washington Post. 13 Sep. 2015. .
United States Census Bureau. “How the Census Bureau Measures Poverty.” Poverty. n.d. Web. 25 Jul. 2015. .
Webster, Bruce H., Jr., and Alemayehu Bishaw. Income, Earnings, and Poverty Data from the 2005 American Community Survey. Aug. 2006. Web. 25 Jul. 2015. .