A Touch of Class

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Martini or beer? I mused during the Presidential election, as the candidates bandied about the term “middle class,” as to what those words might really mean. Has the definition changed, particularly since this managed depression seems to be making mincemeat of everything “in the middle”? These elusive words are often tempered with “upper” or “lower,” and “working class,” but these categories seem all but to have disappeared from the lexicon. The concept gets even more difficult when you compare income with buying power in various locations. Try $50,233 – our “median income” – on a lifestyle in New York City’s Manhattan or San Francisco – do you get the top bunk or the small room at the back? Public housing?

A report issued on February 7, 2008 by the Center for an Urban Future, and summarized the next day by AOL, showed exactly how meaningless such numbers are: “Taking into consideration expenses like rent, phone bills and commutes, New Yorkers need to pull down $123,000 in annual salaries to have the same standard of living as someone making $50,000 in Houston.” Does that make me want to take pity on some high-flying New York financial CEO whose salary was just capped by President Obama because his bank is on the federal dole? Are those numbers still remotely relevant in May of 2009?

Many Republicans think the number ratchets up to $5 million to divide rich from middle, while the magic number for Democrats appears to be $200,000 ($250,000 if you use the “no new taxes” dividing line in the American Recovery and Reinvestment Act). Ask the people and, the November 2, 2008 New York Times noted: “According to a poll by the Pew Research Center, a little more than half of Americans consider themselves middle class, including a third of those who make more than $150,000 per year. For many people, to be ‘middle class’ is to work hard, to struggle to succeed, often against unfair forces. Forget the money.”

I wonder if American standards have changed now that we have staggering unemployment rates that only seem to be getting worse. Since so many of our tangible signs of worth aren’t “worth” anymore, could “middle class” just mean “I’ve got a job that supports me” and upper class mean “I don’t need to work”? Paul Krugman, writing his column for the May 4^th New York Times notes: “[S] oon we may be facing the paradox of wages: workers at any one company can help save their jobs by accepting lower wages, but when employers across the economy cut wages at the same time, the result is higher unemployment.”

Just looking at the March unemployment numbers, as the government’s (Bureau of Labor Statistics of the U.S. Department of Labor) April 3^rd statement reflects: “Nonfarm payroll employment continued to decline sharply in March (-663,000), and the unemployment rate rose from 8.1 to 8.5 percent…” With April numbers in (take away another 539,000 jobs… less than the expected 600,000 loss some expected) – we now have over 13.7 officially unemployed non-farm workers – as the raw unemployment numbers increased to 8.9% (multiply by 1.86 if you want to see what those numbers look like with folks who want full time work but have either given up trying or can only get part-time occasional work – almost 25 million real unemployed). The job loss would have met expectations but for government hiring (72,000), some of which was related to the 2010 census.

And while the rate of job loss is slowing, unemployment has spread to virtually all business sectors, from college educated specialists to blue collar generalists. AOL’s May 6^th Daily Finance: “Harvard University Economics Professor Kenneth Rogoff, former chief economist for the International Monetary Fund, said a recovery is approaching but there are no grounds for euphoria, given the likely [lack of] strength of the recovery.” He even thinks another stimulus package will eventually be required.

This is serious stuff. Under the new Obama tax plan, for folks making over $250,000 a year, the mortgage deduction drops as income rises… this makes perfect sense… unless the same level of property that sold for $1 million in New York (not even Manhattan, but let’s say Brooklyn, maybe Manhattan very, very soon) would go for $250K in Indianapolis. New York and California are up in arms, so to speak, over this tax provision that they believe discriminates against states with disproportionately higher costs of living. It’s that middle class thang again.

How about “middle class” in global terms? The Economist (Feb. 14^th) definition: “Some 2.5 billion people globally with about a third of their income left for discretionary spending after providing basic food and shelter, they are neither rich (inheriting enough to escape the struggle for existence) nor poor (living from hand to mouth or season to season), and vary hugely by background, profession and income.” They also care about values and human rights.

What is the “middle” to academics? In the U.S., one source claims: “Development economists sometimes define the middle class as those making more than the bottom fifth of the population but less than the top fifth. In this country, that would include households making between $20,291 and $100,000.” Okay, we need numbers to define tax rates in a progressive (marginal rates increase as you earn more money) system of taxation. But are we really developing any real understanding of exactly who and what we are as Americans?

We are obsessed with labels and categories; Americans believe that you’ve nailed a problem or identified an issue simply by putting stuff in the right box. “Liberal” versus “conservative” (I am so confused!), “socialist” versus “free market economist” (my mind is hurting), “upper class” (you mean it has nothing to do with Virgin Airlines?!) versus “middle class” versus what??? The “working poor”? The “under class”? The unemployed? Unemployed but sleeping in a better car at night?

I am reminded of the infamous words of Supreme Court Associate Justice Potter Stewart, writing on what constitutes hard-core pornography in his concurring opinion (which he later withdrew as untenable) in the 1964 obscenity case of Jacobellis v. Ohio: “I know it when I see it.” We're all gonna need a lot more beer and martinis if this managed depression keeps getting worse!

I’m Peter Dekom, and I approve this message.