2014 Government Regulations & Business Summit
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In the U.S., “middle class” is not just an income category. It’s a cultural norm.
That is why people get upset when they read reports that the middle class’ share of total income is shrinking. And it is one reason we get into such vicious debates about what it means not to raise taxes on the middle class. Almost all of us believe we should be among the exempt.
A recent Pew Research Center survey asked people to classify themselves as upper class, upper-middle class, middle class, lower-middle class or lower class. The results were nothing like the neat income quintiles that economists and Census Bureau reports use. Forty-nine percent called themselves middle class, 15 percent upper-middle class, and 25 percent lower-middle class. With a few gradations, in other words, 89 percent of Americans identify with the middle class.
Politicians want to make sure everybody has a chance to be middle class – and, equally important, that all people who think of themselves that way feel appreciated and protected. So if a middle-class lifestyle includes owning a home or going to college, policy entrepreneurs find a ready audience for ideas designed to make those goals easier to obtain – with results that are, at best, mixed.
Here, another result from the Pew survey suggests potential dangers ahead.
The poll asked whether Americans need certain things to be considered middle class. Forty-five percent of respondents said it is necessary to own a home, 37 percent said you must have a college education, 66 percent said you need health insurance – the most recent focus of expansive public policy. A whopping 86 percent said you have to have “a secure job.”
“The wording ‘secure job’ means a steady or stable job,” said Wendy Wang, a research associate on Pew’s Social & Demographic Trends project. A comparable survey in 1991 used the phrase “white-collar job” and not surprisingly drew a much lower positive response: about 30 percent. Pew researchers decided to change the wording and, in doing so, picked a term that reflects the times. “Job security is something that the middle class may be concerned about these days,” Wang said.
That concern represents a significant change since the onset of the recession. Contrary to many news-media claims, U.S. employees had enjoyed several decades of rising job security before the 2008 crisis. In polls since the 2008 financial crisis, Gallup Inc. has found that about 30 percent of workers were worried about being fired or having their wages or hours reduced. Over the previous decade, the numbers never topped 20 percent and were usually lower.
Suppose policymakers decide to follow the polls and try to guarantee everyone “a secure job” in order to promote the middle class. If the economy remains sluggish and the public anxious, it is easy to imagine a turn away from the current focus on job creation toward a new emphasis on job security. This seems particularly likely in a second Barack Obama administration that would be looking for initiatives that don’t add to federal spending. We might see regulations, for example, to make it harder to fire long-term employees. The Obama campaign has already excoriated Republican nominee Mitt Romney for job cuts when he was at Bain Capital Partners LLC.
To see the potential results of such policies, you don’t have to look to Europe’s persistent unemployment. Examine the professoriate. While outsiders imagine higher education as a sheltered enclave of secure jobs, the actual state of American faculty members is much more uncertain. Tenure-track employment is no longer the norm. Part-time work is.
About 30 percent of faculty members are either tenured or on the tenure track, compared with about 57 percent in 1975. The rest are “contingent faculty.”
It’s a two-tiered system that depends heavily on people whose main jobs are doing something else. And it is what you get when you guarantee permanent employment but need flexibility as conditions change. How well it works for academia depends on whom you ask. But it certainly doesn’t deliver secure jobs. •