The Revival of the American Middle Class

09.14.17
Written by Richard Hokenson 

The Census Bureau reported real median household income of $59,039 in 2016 (see Chart 1). Following the 5.2% gain recorded for 2015, the 2016 increase of 3.2% is the strongest backto-back gain since 1998-1999 (see Chart 2). Most of the media commentary has been negative, e.g. focusing on the fact that inequality remains high and that the top fifth of earners took home more than half of all income.
 
There is scant mention of a Gallup poll  conducted in June which reveals that the breakdown of social class identification in the U.S. has returned to pre-recession levels (see Chart 3). As stated in the Gallup report, “Despite evidence of rising income inequality in recent years, Americans are no more likely now than in the past to identify themselves at the high or low ends of the social class hierarchy. Furthermore, few Americans call themselves upper class, and the percentage who choose the upper-middleclass label is not materially higher than it was from 2000 through 2008.

It is important to note that the Gallup classification is subjective. As stated in the report, “Gallup's class identification question asks Americans to put themselves in one of five categories: upper, upper-middle, middle, working or lower class. This subjective classification differs from objective calculations of social class based on quantifiable measures like income, education, net worth, location of residence, family background or other variables.” Although some might dismiss this as a fluke, the results are corroborated by three other polls:

  • In 2009 and 2010, only 10% of respondents stated that this was a good time to find a quality job. That proportion increased to 59% in a Gallup poll conducted in August of this year.
  • Many people feel that they are getting ahead. In July, 42% of respondents to a Fox News Poll reported personal gains, up from only 23% in 2008.
  • Contrary to much of the commentary in the media, most workers do not believe their jobs will be outsourced abroad. A Gallup poll conducted this year reported that nine of 10 workers feel unthreatened by outsourcing.

Although some will wonder why these results appear to fly in the face of the “facts”, it has long been our opinion that the way in which people perceive themselves is a very important determinant as to how they will behave. This is a very positive development for the U.S. economy.

 
 

This update was researched and written by Richard Hokenson, as of September 14 2017