Memo to Mr. and Mrs. Media: No matter how many times you report
that the American middle class is getting “squeezed,” you’re just
flat-out wrong.
This past Sunday’s Parade magazine featured the latest
attempt by the mainstream media to deny the self-evident truth that
the American economy right now is booming. Before dissecting
Parade’s story, it’s worth reviewing the real statistics.
All the traditional measurements are not just solid, but
spectacular: Unemployment is at a low, low 4.7 percent;
the average inflation rate has been under 4 percent for years now;
interest rates that seem high today (prime rate on a 10-year T-bond
right around 5 percent) are, by historical standards, incredibly
low. The economy is producing jobs lickety-split and, just
yesterday, the latest consumer confidence report showed that
measure of public financial optimism to be at its highest rate in
four years.
In the face of this abundance of good news, Parade
produces a tendentious poll that it selectively (mis)interprets to
ask, in big headlines, “Is the American Dream Still Possible?” —
and then to answer that the “comfortable and contented lifestyle”
that once characterized the American middle class “is harder to
achieve and maintain.” After a series of illustrative
semi-hard-luck stories, the article closes by quoting a New Mexico
woman to the effect that “The American Dream is a bygone thing.”
She and her husband, you see, net just $50,000 per year, and they
have a seven-year old daughter who is deaf in one ear and goes to a
private school that costs $3,600 each school year.
What’s the supposed evidence from the poll that things are so
hard? Well, you see, 47 percent of those polled who have household
incomes between $30,000 and $99,000 per year “say that no matter
how hard they work, they cannot get ahead.” And “almost two-thirds
say they live from paycheck to paycheck.” Meanwhile, real median
household income is down, reports Parade. And “the
percentage of households earning $25,000 to $99,999 (roughly
middle-income range) shrank 1.5 percent.” And credit card debt is
at an all-time high, and college tuition is too high, and “the
savings rate for Americans is the lowest it has been in 73 years.”
And so on.
But here’s the rub: The first two figures are for years
2000-2004, so they include the post-tech-crash, 9/11-influenced
recession, but they exclude the huge boom of 2005. Also,
the figure on the supposedly shrinking middle class (wow, a whole
whopping 1.5 percent — oh my!!) leaves out the most crucial
information: In which direction did the shrinking occur? Did the
1.5 percent of Americans who no longer fall in that arbitrary
income range sink below the range — or, more likely, did they rise
above it? If the formerly middle-income earners are now
upper-earners…well, uh, what, exactly, is the problem?
ALSO MISSING IS ANY comparative data. Is it actually unusual for 47
percent of middle-class earners to feel they are running in place
financially rather than “get[ting] ahead”? (How many of those feel
they are falling behind?) Is it unusual for 66 percent to think
they live paycheck to paycheck? If those same questions were asked,
say, 25 years ago and again 15 years ago and the numbers in those
years were much smaller, then that would be a sign of an
increasing feeling of being “squeezed.” But with no old apples to
compare to these new apples, it’s impossible to tell if the new
ones are wormy or just par for the middle-class course.
Then there’s the nearly useless information about the low
“savings rate” in American households. A very quick Google
search yielded a plethora of news articles and columns, from a
variety of sources (i.e., not just conservative ones), explaining
why the official measure of household savings is not terribly
useful — specifically, why it makes matters look far, far
worse than they are. First and most importantly, the measurement
excludes increases in the value of assets such as stocks
and private homes. It also excludes employer contributions to
401(k) plans. In other words, what most Americans consider to be
their nest eggs — especially in this age of record-high home
ownership levels and record-high stock ownership, especially in
retirement plans — doesn’t even count, by official statistics, as
thousands of dollars (or even pennies) saved for a rainy day.
Last year the Federal Reserve reported that the average U.S.
household has a net worth of more than $400,000. In most people’s
minds, that’s a lot of money saved. And last August,
raging-moderate economics columnist Robert J. Samuelson, known for
his doom-and-gloom outlook, noted that the low savings rate is
belied by these statistics: “From 1985 to March of this year,
Americans’ mutual funds and stocks rose from $1.3 trillion to $10
trillion; over the same period, real-estate values jumped from $4.6
trillion to $17.7 trillion. Once you consider these value changes,
most Americans don’t look so irresponsible.”
Finally, Business Week columnist Michael Mandel
complains that the official measurement counts money spent on
education and research-and-development as, well, spending, rather
than as investments. He argues that they amount to a “hidden
savings rate” that should be credited to our economy — and notes
that “the U.S. far outperforms its major industrialized rivals” in
such useful investments.
NOW, BACK TO THE PARADE STORY. The Sunday magazine does
dutifully report, but seems not to understand the import, of
several encouraging statistics. It highlights, for instance, the
supposedly disturbing news (which is actually a measure of the
impressions of those surveyed, not of actual economic data) that 57
percent of what the magazine defines as middle-class respondents
“say they believe that the middle class in America is decreasing.”
But the magazine doesn’t see the contradiction between that
finding and its passing note that, of the 2,200 Americans surveyed
(this was before the pollster then self-selected for the
$30,000-$99,000 range), “fully 84 percent described themselves as
belonging to the middle class.”
If so many Americans self-describe themselves as middle-class,
while a majority of the what the magazine defines as middle-class
respondents think the middle-class is actually shrinking, this
shows nothing more than that the polled Americans have been
bombarded with so much media-driven scaremongering about a
shrinking middle-class that they have begun to believe it’s true.
True, that is, for other people out there, because an
astonishing 84 percent of them, remember, believe that they
themselves are indeed middle-class.
Finally, Parade also reports, but as if the numbers are
a mere anomaly in their tale of woe rather than as if they are the
real story of the poll, the following encouraging
results:
- The average households polled “own a home and at least two
cars, and they are able to take vacations.”
- “Almost three-quarters of the middle-class respondents
surveyed say they take responsibility for their own financial
destiny and believe they will succeed or fail based on their own
efforts.” (“Still,” Parade hastens to add in the very next
sentence, “many are downsizing their dreams.”)
- “More than 52% of middle-class Americans think that they’re
better off than their parents were.”
- “80% say they believe it is still possible to achieve the
American dream.” (!!!)
And no wonder. Americans’ sense of what is “normal” has changed
a great deal over the years. So many things once thought of as
luxuries are now considered necessities. Americans have bigger
homes, more gadgets and trinkets, and more access to more types of
entertainment than ever before. And Americans buy more food at
restaurants (or pre-cooked take-out meals from grocery stores) than
they did 20 years ago (and thus pay more for food, rather than pay
less to cook at home), and probably (I can’t find the statistics)
far more than was the case 30 or 40 years ago.
INDEED, A NEWLY RELEASED SURVEY by ACNielsen shows that Americans
recognize that dining out is an expendable luxury, which means the
“squeeze” for supposed necessities is somewhat self-selected: “In
the United States… consumers cited cutting down on take-out meals
as their most popular cost-cutting method.” (Worldwide, the survey
showed that the supposedly imperiled middle-class wouldn’t suffer
if their finances seemed tight; instead, they would just “cut down
on out-of-home entertainment and spend less on new clothes.”)
In other words, the apparent problem isn’t one of economic
hardship, but of lifestyle choices and changed cultural
expectations. What once would have seemed luxurious now feels, to
many middle-class Americans, to be almost an entitlement.
All of which helps explain why, with the national economy
booming to an incredible degree, President George W. Bush seems to
receive no credit for the good news: Americans don’t realize just
how good things are.
It’s especially hard for them to realize it when the mainstream
media keeps using pretzel-twisted logic and misleading headlines to
convince them that their livelihoods are frighteningly imperiled.
But the truth is that the American Dream isn’t merely alive and
well, it’s actually not even a dream. Instead, the beautiful dream
is reality right here and now — no matter what the headline
writers say.
