The Middle Class: The Future Poor
Who the Middle Class is and how they became The Future Poor
The Middle Class in America can be defined in a number of different ways. Some will look at things like median income. Some look at income ranges. Others look at lifestyle spending. For the purposes of this project, I chose the sub-150 (those making less than $150,000/year). This includes 95% of Americans and stands as a distinct financial marker between the wealthy and the middle and lower income earners.
Why should we be concerned about those making $150,000/year when most people make half or less? This is a serious consideration that I have given a lot of thought to. I caution that it can never be seen as a one to one correlation that higher earning equals a better life or removes someone from consideration of their ethical well-being. What I am considering is a future condition of a large group of people. This also amplifies the situation for those making half or less.
Ethical issues have two qualities to them. The first is a universal quality. As an example, we should work to eliminate and keep people from poverty. The second is particular. Eliminating poverty in context. This is quite different in the U.S. versus developing countries. This is why I am concerned about this particular issue facing us in the U.S. and why it can be a challenge to be ethically concerned about someone with $500,000 in a 401(k).
The middle class or the sub-50/sub-150 are of particular importance because of the future destination. Over the past several decades, this group has slowly been ushered lower and lower. It has gotten to a place where we have essentially set up a pathway for those around 30-50 years of age to enter poverty as they age and exit the workforce. It isn’t so much that their current conditions warrant ethical concern, it is more where they are headed that concerns me. This also has negative impact of those with lower socio-economic status in the U.S. and the global economy.
The current middle primarily consists of people that entered the work force between the years of 1995 and 2015 and primarily in the ages of around 30-50. This is significant because they entered into a new world but were playing by old rules. That created a problem.
The old paradigm was go to college, get a stable job, start a family, buy a home, save some money, work until 65 and retire. Almost every part of that plan cannot be executed by today’s median income. By the time people went to college it was radically more expensive and you had to take on debt - estimates are about $3 trillion. Then the job you got didn’t quite pay well enough. The cost of living and housing rose while the wages stayed flat. This meant there wasn’t a lot of extra money. People now have several careers in their lifetime, not one job they work at for 40 years. Then, the game of retirement shifted to being entirely on the individual to save.
Most of the people in the sub-50/sub-150 were taught the old rules by their social structures. Most of those old rules are still the content of popular financial advice. The result is a situation where the majority of the sub-50/sub-150 will retire at or below a poverty level of income when they retire.
The middle class myth is that it stays put and in many ways it does. However, the world around moves and you find yourself in a completely different place than you originally were. That place is a slow move towards poverty, not prosperity.