The Myth of the Declining Middle Class

 

Consumption statistics totally disprove the myth of the declining US middle class.

The average US house size has more than doubled since 1960 while the average US household size has fallen from 3.3 people to 2.5.

The US home ownership rate has gone up over the same period:

https://dqydj.com/historical-homeownership-rate-united-states/?fbclid=IwAR0sADiMMgWTqm1Bt6rQbOF4-_GmH_lKBVX7HLJFmeThfumm2ae35Uf3tVk

When considering increases in home prices, we should probably adjust for changes in house size which would explain much of the increase.

Additionally, Housing affordability isn't just determined by house prices. It's also determined by interest rates and deposit requirements.

In inflation-adjusted terms, the median monthly mortgage payment is roughly half of what it was in the 1980's when US mortgage rates peaked at around 18%.

Over the same period, the percentage of US households without at least one motor vehicle declined from 22% to 9%.

These changes have occurred despite increasing urbanization over the same period. Housing prices are typically higher in urban areas than in rural areas and public transport is typically mor common in urban areas.

If we look at signs of financial distress we see a similar pattern.

It's difficult to compare bankruptcy figures long term because in 2005 Congress made it much harder to declare bankruptcy but between 2010 and 2019, personal bankruptcies in the US roughly halved. 2020 shows a further decline but that may well be due to COVID-related income support measures and bankruptcy moratoriums.

https://www.statista.com/.../number-of-non-business.../


US foreclosures were at a 35 year low BEFORE COVID foreclosure moratoria.

https://www.google.com/search?q=us+foreclosures+by+year&tbm=isch&ved=


Meanwhile,the effective Federal tax rate for middle class Americans (here the middle quintile of taxpayers) has fallen by almost a third since 1979 from 19% to 12.8%. This includes income tax; payroll taxes and excises. It doesn't include state or local taxes. Anecdotally, there's been a shift in state and local taxation from income tax to excises (sales taxes and "sin taxes" on alcohol and tobacco) and user fees. Since, indirect taxes (like excises) tend to fall disproportionately on the poor and middle class, this has probably offset some of this decline.

https://www.taxpolicycenter.org/statistics/historical-average-federal-tax-rates-all-households?fbclid=IwAR2j7qv1wE71cwdCag3P9Ma-NNDFGD3S7yBGf59G7EuUCC-ocEJmAbsSx6E


Does this mean poverty isn't an issue in the US?

Absolutely not. The poverty rate and especially the child poverty rate in the US is higher than in most other developed countries and so too is the absolute poverty rate.

But:

a. there's no evidence that it's getting worse over the long term (although the withdrawal of COVID-related income support measures probably means poverty rates, which fell sharply last year, will increase again this year. Thank Joe Manchin for a lot of that.)

b. poverty is heavily concentrated among nonwhite Americans and especially single-parent nonwhite families. The chances of middle class white Americans falling into extreme poverty are actually pretty low.

c. The idea that the American middle class is suffering unprecedented hardship has a bunch of negative consequences. For example, I've seen it cited as a justification for US withdrawal from Afghanistan. (Of course, Good Ol' Uncle Joe just signed off on an increased defense budget). It's also used to argue against action on climate change; infrastructure investment; foreign aid, accepting refugees and immigration and to argue for more "middle class tax cuts".

d. You know who loves this narrative? The far right because it feeds into their whole White Genocide theory.



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