One third of Americans now count themselves part of the lower-middle or lower classes, according to a report from Pew Research Center, including nearly 40 percent of young people between the ages of 18 and 30.
The numbers are jarring not only for the grim picture they paint of the current economy, but because the broad majority Americans historically have resisted thinking of themselves of anything but solidly middle class.
More troubling is that the pessimism reflected in the report doesn’t appear to be a simple result of the recent downturn. “It’s clear something’s going on before the recession,” says Rich Morin, one of the authors of the report, who worked on a similar survey Pew conducted in early 2008. “If you asked people even before the technical recession began, a significant proportion said we were in one.”
In that earlier survey, only 25 percent of Americans adults, age 18 to 64, classified themselves as lower class.
The study continues a parade of grim statistical jeremiads from Pew signaling a long-range economic downward slide, one that isn’t stopping after two years of supposed recovery.
Last month the research center released a report titled “The Lost Decade of the Middle Class”; today it reviewed U.S. Census Bureau data showing that median income has dropped by 4.1 percent since we’ve been in recovery, only a tenth of a percentage point less than it fell during the recession.
Economists generally include the middle 60 percent of the country in the middle class, a definition that encompasses households bringing in between $25,000 and $100,000 a year. The rest of us tend to stretch the distinction even further. “Most people tend to think of themselves as middle class unless they're Warren Buffett or really poor," economist J.D. Foster of the Heritage Foundation told Reuters last year.
Even President Barack Obama draws the line at those making less than $250,000; above that, and you are a target for his proposed tax hikes on the rich. (Read more: What's It Take to Be Middle Class?)
To compensate for the statistical drift toward the middle class, Morin and his co-author, Seth Motel, grouped those who identified as “lower class” or “lower-middle class” into a single designation, as the 2008 Pew study did.
If measuring people’s self-perceptions seem fuzzy, what surveys about economic classes tell us are not, Morin says. People respond according the actual facts of their paycheck, he says, but how they respond also reveals how you are engaging with the economy. “It is truly the way you feel about yourself and you define yourself,” says Morin.
That’s why, Morin says, we should be particular concerned about younger Americans. “That’s a real worry,” he says, noting that “the eternal optimism of youth” usually is enough to get 20-somethings through a few down years. “An increase to 39 percent [from 25 percent] in just four years is a remarkable finding.”