2012 October 01 Monday
More Americans Identifying As Lower Class

It used to be that living standards went up every year for the vast majority of Americans. It used to be the case that the overwhelming majority of Americans identified themselves as middle class. Not any more One third of Americans now identify themselves as members of lower classes.

The percentage of Americans who say they are in the lower-middle or lower class has risen from a quarter of the adult population to about a third in the past four years, according to a national survey of 2,508 adults by the Pew Research Center.

Not only has the lower class grown, but its demographic profile also has shifted. People younger than 30 are disproportionately swelling the ranks of the self-defined lower classes.1 The shares of Hispanics and whites who place themselves in the lower class also are growing.

31% of whites and 40% of Hispanics now identify as lower class. Since Hispanics are a growing portion of the US population the long term trend is even more strongly toward a bigger lower class. America is going to cease to be a middle class nation. My advice (often repeated): Try to go up. Otherwise you are going down. The middle is shrinking. Avoid the lower classes.

Do you feel helpless to escape from what is going wrong? Move to where opportunity is greater. There are still pockets of high tech and venture capital. Escape from occupations that are going to get automated out of existence. Escape from an also-ran company that has lost out to a dominant player in a sector. Get away from loser jobs, loser companies, loser industries. You've got plenty of decisions to make. Start making decisions that cut your exposure to downsides.

The people with less money feel more stressed.

The survey finds that hard times have been particularly hard on the lower class. Eight-in-ten adults (84%) in the lower classes say they had to cut back spending in the past year because money was tight, compared with 62% who say they are middle class and 41% who say they are in the upper classes. Those in the lower classes also say they are less happy and less healthy, and the stress they report experiencing is more than other adults.

The lower classes are losing their work ethic as they feel increasingly stuck.

As they look to their own future and that of their children, many in the lower class see their prospects dimming. About three-quarters (77%) say itís harder now to get ahead than it was 10 years ago. Only half (51%) say that hard work brings success, a view expressed by overwhelming majorities of those in the middle (67%) and upper classes (71%). While the expectation that each new generation will surpass their parents is a central tenet of the American Dream, those lower classes are significantly more likely than middle or upper-class adults to believe their children will have a worse standard of living than they do.

We've got a cluster of problems. The US government is running up a huge debt burden even before most of the baby boomers retire. Immigration has brought in a large and growing lower skilled population. Growing competition from Asia for natural resources collides with declining mined ore concentrations. The remaining oil costs more to extract and the marginal cost of production is now very close to (high) world oil prices. The rate of innovation doesn't appear to be fast enough to pay for the innovation costs needed just to maintain civilization. Do not take your living standard for granted.

Share |      By Randall Parker at 2012 October 01 10:28 PM  Economics Living Standards

Mike M said at October 2, 2012 11:42 AM:

Randall said:

"The remaining oil costs more to extract and the marginal cost of production is now very close to (high) world oil prices."

"The rate of innovation doesn't appear to be fast enough to pay for the innovation costs needed just to maintain civilization."

The implication for oil is that either oil prices must go up or oil production must go down - oil producers will produce all the oil that people are willing to buy at a price that affords them a profit, but no oil producer will produce oil for which people will not pay prices higher than his production costs.

Innovation is no different than oil in this regard and if it has slowed down, it's because the producers of innovative goods and services (innovators) face a situation where people are unwilling or unable to pay the price of higher production costs. Of course, this can arise from either of two directions: (a) a decrease in the willingness/ability to pay higher prices - a decrease in Demand (technically a shift in the Demand curve), or (b) an increase in the innovators' cost of doing business - a decrease in Supply (or a shift in the Supply curve). Certainly, a great argument can be made for a decrease in Demand over the past 5 years, but according to Randall, the decline in innovation has occurred over a longer time period. It should be obvious to anyone not hiding under for the last 50 years that the exponential increase in regulations by the federal government - can you say Sarbanes Oxley or Dodd Frank or EPA or ObamaCare- has stifled innovation by jacking up the costs of doing business. This has been carefully disguised by the "progressives" as punishing those evil, greedy businessmen, but in fact (as is obvious from Randall's post) it has been an attack on the "vast majority of Americans" who feel that they are now in the lower class. The very people whom the elitists of the Democrat party claim to help have been hurt as a result of their ill-conceived and short-sighted policies.

Randall Parker said at October 2, 2012 7:53 PM:

Mike M,

Most of the world is not America. Most engineers are not in America. Most scientists are not in America. The rate at which Indian IITs and Chinese universities are pumping out bright graduates makes that even truer every year. The Soviet zone collapsed, freeing up engineers and scientists do to more productive work in the Western countries and even in former Soviet block. We've got far more competition and far more engineering going on around the world.

The cost of computers and communications have dropped so far that collaborations across national borders have surged. I know lots of people who videoconference with engineers in other countries. Really, we should be experiencing an explosion in innovations, notwithstanding US government regulations.

An international company that finds US regs are a problem can set up labs in St. Petersburg, Seoul, Sydney, Berlin, Kiev, Milan, Toronto, Delhi, Beijing, Shanghai, Sydney, or Oxford. Speaking as someone who works in a very high tech industry even in America in many fields the effects of government regs on what most engineers do all day is pretty minimal.

We've got two innovation problems:

- Depleting natural resources increase the amount of innovation we need just to stand still with living standards. That problem is becoming bigger every year.

- We've picked the low lying fruit of innovations. The remaining problems are much harder.

EPA internalized a lot of costs that were external costs. I am very happy that car and truck engines must burn much cleaner.

narcer said at October 2, 2012 8:30 PM:

It's a perfect storm of rising evil in all dimensions. The most important tip: don't have children.

Mike M said at October 2, 2012 8:35 PM:

Randall - With all due respect to someone who "works" in a very high tech industry, in terms of being affected by government regulations, those who actually "own" the very high tech industries may have a different perspective. More to my point, government should be doing more to ENCOURAGE innovation by creating an environment where private business can thrive rather than an environment that stifles them. This is particularly true in the area of expanding and developing both current and new resources, energy and otherwise. And it is especially true if, as you claim, we have already picked the low lying fruit. Instead, the federal government discourages both domestic and foreign investors from innovating in the US and this compounds the problem - not only is the remaining fruit higher up in the tree, but the government has refused to let us use ladders to reach it. As you note, international companies can set up in foreign countries - and are doing so in countries that enact laws favorable to their efforts.

tg moderator said at October 2, 2012 8:41 PM:

I noticed during recent visits to Yosemite and Rocky Mountain National Parks that there were few Americans there. Most of my fellow vistors were from Europe, Asia, or the UK. The decline of the middle class must be part of the reason.

Check it out said at October 3, 2012 2:15 PM:

@ Mike M.

More private big business? You must be joking. What the hell do most people have in common with big corporation owners that have bought the government into a neo-fascism?

Yeah,,, more business that pay peanuts to its employees. Usually, the greater the corporation is, the less valued are its employees.

What America needs is free public education, free medical care and about 10,000 less laws that make everything illegal, like setting up a modest business that allows you to climb from lower to middle class.

Mike M said at October 3, 2012 5:39 PM:

Check it out:

Nothing is free - somebody must pay for it. When you say you want free public education or free medical care what you are really saying is that you want someone else to pay for your education and your health care. That would mean that instead of being a maker (of things), you're a taker (of things). Here's a clue - employees of big corporations don't create jobs, the owners create those jobs - it's the owner's initiative, vision, determination and money that creates these jobs - and that's why they deserve the bulk of the profits. As far as doing away with federal regulations that stifle business, I agree.

PS - Where did I say "BIG" in reference to private business? Sounds like you need to take some of those ObamaDollars you're probably getting for sitting on your duff and go get some reading glasses.

Check it Out said at October 4, 2012 2:56 PM:

"Nothing is free - somebody must pay for it. When you say you want free public education or free medical care what you are really saying is that you want someone else to pay for your education and your health care."

No, you dildo, of course nothing is free. We ALREADY pay for it. They are called TAXES, so don't get smart with me. When people talk about free education they usually talk about a system that already exists and WORKS in Europe, Latin America and most of the world. Except of course in the U.S. of A. Finland, one of the best education in the world, provides it for free, that is, paid with the people's taxes. Medical care in Europe and Latin America is free, that is, paid with the people's taxes. Unless of course elitist pricks like you consider that's too socialist and therefore feel the need to pay for them in order to believe that you get higher quality.

"Where did I say "BIG" in reference to private business?"

Again, don't get smart with me. You were talking about "high tech industries" weren't you? You were talking about "energy resources" weren't you? You were talking about "foreign investors" being discouraged by government and "international companies". That MEANS big business, DOESN'T IT, moron. Were we supposed to think that you were talking about your nearest single-owner diner?

You pretend to take responsibility only for your explicit language, but not your IMPLICIT one.

Randall Parker said at October 4, 2012 8:35 PM:

Check it Out, Mike M,

Stop calling each other names. Be forewarned: I am just going to start deleting comment posts that have personal insults in them.

Mike M,

As someone who works in high tech: Government stuff gets visible to engineers because we have to develop solutions or we get told by legal and execs what we can't do because of government. This isn't hidden. It can't be. Management has to educate their engineers on the legal environment so we can give them ideas for work-arounds.

Where innovation happens: If foreigners innovate then in theory everyone benefits, right? We can buy a cancer treatment or a more efficient engine from another country. How much innovation happens in the US matters. But how much innovation happens in the rest of the world matters too, right? We've got trade. So why aren't more solutions coming in from abroad? Where are the cheap EV batteries? Toyota would love to buy them just like GM and VW.

Globally the amount of price signaling going on today is easily an order of magnitude larger than it was in the 1960s. We've got price signals in the former Soviet bloc, in China, much more in India, and far more flowing across borders due to lower trade barriers and cheap telecommunications. In the United States we no longer have the agencies that set prices and controlled entry and exit for train freight, rail freight, or passenger aircraft.

Since we have far more price signals, far larger capital markets, and a far larger global economy we have far larger incentives and funding for innovation. Where's the flood of innovations for our biggest problems?

In some specific areas (especially medical treatments) I see large (and possibly growing) obstacles to innovation in the United States. On the other hand, I also see technological innovations (e.g. in microfluidics) which are going to lower costs for medical innovations. I am still very concerned about US FDA obstacles. But I see the innovation obstacles in medicine as atypical.

BTW, you are making an erroneous assumption about Check it Out's country of citizenship and residence.

Mike M said at October 4, 2012 9:04 PM:

Hey Check Out -

I understand. You ARE a moocher. If you were a member of the taxpaying maker class instead of being one of the so-called 47% (the taker class), you might appreciate that when something is paid for with taxes, it's not free - at least it's not free for the taxpayers. However, as a non-taxpaying moocher, these government services are free for you. Sadly, you've grown to believe that you're entitled to them. From your post, it sounds like you should relocate to one of these other countries you seem to love.

Get smart with you? It's rather obvious that nobody could do otherwise. Hint: It was probably that free public education that makes it difficult for you to communicate.

Owners have a great interest in their employees. It's not in any owner's interest to "squeeze the life out of them". Given the high cost of training new employees, employers seek to keep employees. As far as parasites are concerned, the same argument can be made regarding employees, i.e. the employee is a parasite who want more payment for lees work.

The fact is that both parties (let me spell that out for you since you're a bit slow - the employer and the employee) agree to the trade. The employee trades his labor which he values at less than his wage and the employer trades his money which he values less than the employee's work. Both enter this agreement freely - or is there some jurisdiction in the US that I'm unaware of where slavery is permitted? Just as workers are free to switch jobs when they feel they can demand a higher wage elsewhere, employers are also free to seek out workers who will either produce more work for the same pay (obviously not you) or demand less pay for the same work.

But you know this and you do it yourself you hypocritical bastard! When you fill up your car, do you purposely pull into the station with the highest priced gas (if so, it's you who is the dumbass) or are you one of the parasites you decry who seeks more gas for less payment? Your solution to your unfortunate financial situation is to whine and moan about how bad things are for you and your ilk and buy into the Marxist, class warfare mindset of Barack the Magic Negro. Well, it just doesn't work. Enacting legislation that makes everyone equal end up doing just that, but it's not an equality where everyone is better off. It's one where everyone lives in poverty.

As far as my burgeoise (sic) (ps that means you need to go back to second grade and learn how to spell, moron), it was bourgeois mentality and virtues that permitted and fostered the standard of living you now enjoy (as opposed to the short, nasty and brutish life you probably would have lived centuries ago (or in modern day third world nations). Unlike the marauding moocher class who live paycheck to paycheck, the bourgeoisie have the prudence to trade rather than to invade, to calculate the consequences and to pursue the good with competence. The bourgeoisie also possess the temperance to save and accumulate, to educate themselves in business and in life, to listen to the customer, to resist the temptations to cheat, to ask quietly whether there might be a compromise to a problem. They also have the justice to insist on private property honestly acquired, to pay willingly for good work, to value people for what they can do rather than for who they are, to view success without envy which has made capitalism work since our country was founded. We (the bourgeoisie, not you) also have the courage to venture on new ways of business and to overcome the fear of change and to bear defeat and wake up next morning and face fresh work with cheer, resisting the despairing pessimism of the nuttering nabob such as you. And the bourgeoisie also possess the virtue of love, not only to take care of their own, but also to care for employees and partners and colleagues and customers and fellow citizens, to wish all of humankind well, and to seek God. Finally, the bourgeoisie have hope - hope not only to imagine a better machine or way of doing business, but also the hope to see the future as something other than stagnation or eternal recurrence, to infuse the day's work with a purpose, seeing one's labor as a glorious calling. While the bottom dwelling moochers focus on bringing others down to their level, the rest of us work on improving the world for all. Like JFK said, "a rising tide floats all boats." (But you'll evidently always remain in the galley)

Mike M said at October 4, 2012 9:09 PM:

Randall - I didn't call him any names (at least in the first post) until he unloaded on me with the profanity. Indeed, even my response to his gutter drivel is pretty tepid considering the volume and depth of his vulgarity and even then, they are made not just for the sake of being vulgar, but to emphasize that certain behaviors (buying expensive versus cheap gas) are dumb.

Mike M said at October 4, 2012 9:30 PM:


I appreciate that you are made aware of certain the rules, regulations, restraints, etc. that are imposed on you and your industry by government, but I wonder if you appreciate the true costs of all that stuff, not just that the rule that says we can't make product A out material X, but all other consequences like the research that goes into finding some other suitable material and the costs to negotiate contracts to obtain it, the cost of hiring compliance people to make sure you don't overlook some new regulation or to be sure the MSDS papers for replacement material Y are filed properly, etc. Maybe you do have this awareness, but my experience as a business owner was that while the employees knew there was a regulation and some hassle involved, the employees in department A knew the direct effects on them, but they didn't know the effects on the emploeyes in department B, etc. Thus, nobody except the owners really appreciated the true cost.

I'm not sure that I agree with your statement: "Since we have far more price signals, far larger capital markets, and a far larger global economy we have far larger incentives and funding for innovation." Lousy incentives can exist despite more signals, larger markets and a larger economy. A lousy incentive remains a lousy incentive even though more people are more readily aware of its existence. Maybe I missed your point - it sounds like we need to flesh this one out a bit more.

Zamman said at October 5, 2012 2:18 PM:

Whew! What's with Mike M?
Does he really believe anybody's gonna read all that bla, bla, bla? He should write a book

Mike M said at October 6, 2012 8:37 AM:

In fact, I have written seven books including one made it to the NYT bestseller list - not a #1, but the royalties have kept my fridge filled with cold beer.

Mike M said at October 6, 2012 8:50 AM:

"Does he really believe anybody's gonna read all that bla, bla, bla?"

There are two possibilities:

(1) You were one of the ones who read "all that bla, bla, bla."

(2) You didn't read "all that bla, bla, bla," In which case, you really don't know what I said and whether it's just a bunch of worthless "bla, bla, bla" or whether it's a well argued thesis that may enlighten you.

If (1) is the case and you, you evidently want to silence me based on your disagreement with my opinions, i.e. you're intolerant of other's opinions and covertly abhor free speech (unless it conforms to your own views). In other words, you self identify as a liberal. If (2) is the case, why are you so closed minded? It's obvious that you seek not enlightenment, but simply those who agree with your own prejudices. If you have a problem with posts that involve "lengthy" discussions. perhaps you should stick to Twitter and its 140 character limits.

Moonlight said at October 7, 2012 10:20 AM:

Here's something for you Mike M, oh you wonderful best seller author: There is no more government around, either republican or democrat. The country is reduced to a corporation, of which you are a slave. Oh well, no, not you. You've got the fridge filled with cold beer. (Try to cut down on it while you post garbage on parapundit.com)

It is the big corporation owners who own this country, and you want more of them??? You cannot run a country like a business, Mike. The unrestrained pursuit of profit in fact kills the very soul of a nation. Europeans have realized that the hard way, but you learn no wisdom.

Babyboomers are starting to retire; unemployment is still on the rise; Russia and China are not willing to play America's game anymore and Iran has become nuclear; middle class is shrinking and poverty is on the rise; American youths are idiots and adults now have an infantile mentality; your country has become a corporation; there's no affordable education or medical care.

All that sounds to me like a mix for disaster, because it is an explosive one. I don't know if rejected students will start throwing rocks, or if employees will soon show the owners who really is boss, or if soon there'll be an immigrant invation like you've never heard of, all demanding rights, medical care and education. Nevertheless things cannot continue like you would like them to, for much longer.

dorian said at October 7, 2012 8:30 PM:

Who invited all the commies to the party?

Sam said at October 8, 2012 9:58 AM:

Mike M said,"...The fact is that both parties (let me spell that out for you since you're a bit slow - the employer and the employee) agree to the trade...."

I don't recall anyone consulting me on the 16 Trillion the Fed gave to banks and corporations. James Dale Davidson and Sir Rees-Moog predicted the destruction of the middle class in "The Sovereign Individual" many years ago. Free market my A**.

Randall Parker said at October 8, 2012 8:08 PM:


James Goldsmith more accurately predicted in 1994 why the middle class would wither.

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