Troubling
article on Salon about a new book examining the actual financial state of "middle class" Americans. Turns out that quite a few people with college degrees, working in white collar jobs, earning what would seem to be good incomes (up to $70k a year) are actually in fairly dire financial straits. College costs and debts have risen, healthcare costs are skyrocketing and being steadily moved from business to employees, retirement planning is following the same path. This bit caught my eye, given my ongoing dalliance with the idea of grad school.
In the '70s, we were barely taking out student loans. In 1977, collectively students were borrowing about $6 billion. By now, they're borrowing over $85 billion. That's a remarkable number. The number of students enrolled in college grew 44 percent between 1977 and 2003, but student loan volume rose 833 percent in that same time period.
There are fewer grants and scholarships available. If students go through graduate school, they can end up taking out over $100,000 of student loans. And if you go into a field that's not high-paying that can be a real burden on you for 20, 30, 40 years.
We are seeing more people going to college, which is definitely a positive move, but they're getting into a lot of debt to do it. The college degree now is what the high school degree used to be. You really need a basic bachelor's degree in order to be eligible for a lot of jobs.
You can see the math fairly easily there: 4-5 years more time in school = 4-5 years less earning money and 4-5 years more racking up debt. And if the white collar job at the end of that is no better paying (adjusted for inflation) than jobs in industry and manufacturing that were formerly available without college, and that have now been largely moved overseas in the name of higher corporate profits, today's college grad is materially far worse off than his father or grandfather. No wonder people were
treating their houses like ATMs during the last few years when "real estate values always went up." At least they're better off then
people who bought during that period, and are now sitting on hundreds of thousands of dollars in negative equity.
This issue of being middle class ties into a larger sociological topic I've had sitting on my notes file for a couple of weeks. The nut of the matter is that almost all Americans consider themselves to be "middle class," almost regardless of their actual income or financial situation. I can imagine people who are poor, or are living without much income/expenses (like myself) who tell themselves they're middle class in order to boost their ego or salve their pride. Or who just do it reflexively, without considering actual numbers, or who don't really think about it since their income isn't their priority in life (like me). The interesting thing is that this goes both ways. People who are clearly rich, or at least have an income that puts them well above the median, also claim to be "middle class," even when
that's demonstrably false.
Sunday I learned that I am insensitive after I wrote a column arguing that families who earn as much as $200,000 to $250,000 are "rich."
A San Francisco couple earning $205,000 informed me they "shouldn't be considered anything but working middle class." A $215,000 couple told me, "Families making $200,000 a year are not rich. They're not even close to rich." A San Francisco lawyer explained that a $200,000 salary cannot make one rich because a "a 'rich' person does not need to work."
...Clinton promised not to raise "a single tax on middle-class Americans, people making less than $250,000 a year." Obama made a similar pledge for incomes up to between $200,000 and $250,000.
These figures are clearly etched into the national consciousness, as shown by both Democratic contenders adopting them into their tax plans. Americans do not think earning $200k a year makes you anything but middle class. What's the reality? Rather different.
As the cited columnist shows, earning $200k a year puts you into the 93rd percentile in the Bay Area, and the 97th percentile nationally. By what reasonable definition of "middle class" does earning more than 93%, or 97% of people, slot you into it?
I think this goes to the widely (though inconsistently applied) views Americans have of themselves (ourselves?) as "the common man," imbued with a "Protestant work ethic" and all striving to become (or remain) "middle class." They're psychological buzz words, ones that set off a resonance in our national psyche, and how well, if at all, they describe is us irrelevant to the satisfaction we get at their usage. Furthermore, people tend to generalize by their own standards, so most people earning $200k a year think they're middle class, and think that other people live lives somewhat like their own. They're largely ignorant of what sort of life is lived by people who actually are "middle class," and they confuse their "we just vacation in Hawaii, we don't own a second house there" situation for the actual "working a second job on weekends to pay off medical bills" middle class reality.
On the other hand, there is a point to people making $200k who think they're not upper class. And that point comes about from the (almost) historically unprecedented level income inequality in modern day America. If you're earning $200k a year, and the CEO of your company is earning $50m a year, you can't possibly see himself and yourself as of the same class. And you're not. You're earning 3x what an actual middle class family does, "$77,076 -- less if the family does not have to buy its own health care or pay for child care." according to the California Budget, as cited by the afore-linked SF Game columnist. But if your CEO earns 250x what you do, and 750x what a middle class worker does, and he's "upper class," you are indeed nowhere near that class.
Still, I do find it interesting that for most Americans, you need to be Bill Gates, or Tom Cruise, to actually be rich. You need to have several homes, servants, several vehicles you use simply for fun rather than transportation, etc. It's an interesting definition of rich, where a person must have an income not tens or dozens of times your own, but hundreds, or even thousands of times greater, to qualify.
That leads to my second digression, in which I quote part of an email I wrote Malaya on this issue a couple of weeks ago. I'll present it without further comment, and edit it simply to fix some typos:
America, where everyone wants to be rich but no one admits when they are.
This ties into something I was thinking in the shower this morning. How people normalize everything to their own standards, and assume that the rest of the world is moving inexorably towards it. Quite noticeable amongst atheists, who believe everyone else will gradually shed their religion and become secular (Worldwide evidence of this... ?). But capitalists and libertarians and even democracy-ists fall into the same trap. 1) We think our economic/political systems are the best, and 2) that everyone will gradually move into them. (And we're sure there's evidence to back this up.)
The first might be true, but #2 is far less clear. Most of the world is now moving towards capitalism, but Europe has far more central control and economic planning, as does Japan, the Asian tigers, etc. And then you get China with limited capitalism controlled by a semi-tyrannical bureaucracy, India is similar, though more democratic in the selection of the bureaucrats. And the rest of the world is more of a chaotic scramble, with a plutocrat class raking in the pesos/rubles, while most people struggle to survive.
Americans tend to assume that more freedom and democracy is best, but the evidence for this is spotty, and the evidence that it will ever be the majority opinion worldwide is nonexistent. Truth (arguable as that definition is) is largely irrelevant; how well is non-superstition doing in winning the battle amongst competing mental/philosophical memes?
There's a grand unified theory here somewhere, incorporating the fact that people think they're the heroes of their own story, and that their (usually inherited) beliefs about freedom or not, democracy or not, capitalism (to what degree), etc, all factor in. Westerners are full of conceit and hubris and lack objectivity. We're always saying that those poor women born and raised in backwards Islamic/tribal countries would want freedom and want to take off their burkas if they were only given the chance, and that if they don't it's only because they grew up in those societies and are brainwashed by them.
I happen to agree with that, but how is that any different than my inculcated beliefs? Americans only believe what we believe since we grew up believing it. We're just granting our inherited positions higher moral authority since that's a convenient reason for us to perpetuate them for everyone's own good. It's convenient to say freedom and capitalism are better and everyone should aspire to them, but if we only believe that since that's what we grew up believing, how is it any different than arguing that the Bible is the inerrant word of God because the Bible says its the inerrant word of God? (An argument atheists and rationalists rightly find laughable.)
What if it could be "proved" that people live happier, more content lives in largely egalitarian, politically controlling, centrally-planned theocracies? Would that convert Libertarians? Or Communists? Or democracy advocates? Of course not. They'd continue to believe their world view would be better if only everyone would convert to it.
Labels: economics, psychology
