Middle Class Vs Working Class

 

 

The Versus Series

 

 

While researching a different topic altogether (recall the first word on the Home page is research), I came across the term working class, and it got me thinking: Is there a distinction between the middle class and the working class? Are they used interchangeably, or is there a definition for each that separates them? It’s not uncommon to hear people define themselves as workers, working stiffs, blue and white collar, etc., but where do you draw the line – if you even draw one?

This article, then, is the culmination of the research I’ve done regarding the middle class and working class; their definitions, differences, the qualifiers for each, and why this is important.

 

What is The Middle Class?

What exactly is the middle class?

 

The term “Middle Class” is used EVERYWHERE: in the news, politics, education, entertainment, etc. – but what exactly is it? Can we put our finger on a definition of it?

As a matter of fact, yes we can.

For my part, I believe thestreet.com has a great definition and qualifiers of both, and subsequently, their definition(s) are used.

“Middle class can refer [to] one of two things—a generic, American middle class based on median incomes country-wide, or a more specific, location-based middle class determined by median incomes in a specific area.”

IF we use an income amount country-wide, the problem becomes evident immediately: What passes for middle class in Tennessee doesn’t in Chicago. Therefore, I prefer a location-based evaluation. What’s more, Pew Research Center has a calculator that you can use to put in your information – state, metropolitan area, income before taxes, and number of people in your household – and it will tell you where you are based on your information in relation to others. This is a better metric to determine what middle class is.

 

What is The Working Class?

Working class = despair

 

Working class also has two different definitions: one social/cultural, and the other one financial. The social/cultural definition is essentially anyone who has a so-called “blue collar” job: ironworkers, pipefitters, electricians, mechanics – in short, anyone who works with their hands and is not in an office.

While this definition is worn as a badge of honor by some – especially since a skilled trades shortage has grown – historically, it was used as an insult. Here in the United States, we’ve had a four-decade infatuation with the “white collar,” and during that four-decade love affair, the stereotype was that “white collar” was good and “blue collar” jobs were bad. This current social/cultural shift – while interesting to see, falls short of an adequate explanation. The financial definition is better suited for our purpose.

Referring to thestreet.com again, they write: “Instead, for those of us in economic policy, ‘working class’ has come to fill in the bottom section of the middle class. As Gallup’s Frank Newport describes it, it is a ‘socioeconomic positioning that is below that of what is associated with the middle class but above that which is associated with the lower class.‘” – Emphasis mine.

In other words, you are considered working class when you are not part of the middle class (you are lower)  but are not part of the poor (you are higher).

 

Differences Between The Two

There are differences – and they are substantial

 

Each of the above definitions seems clear enough, but what are the major distinctions – or differences – between them?

Well, for starters, the middle class, at least, defined in purely economic terms, means you make enough money to have some left over after paying bills – i.e. discretionary spending. In other words, after paying your bills, you have some money left to spend where you’d like.

Contrast that with the working class – where you live paycheck to paycheck. You do NOT have any discretionary money to spend – it’s ALL spoken for with bills. You aren’t poor, at least in the economic sense – but you aren’t middle class, either.

 

Before we continue, I must explain living paycheck to paycheck – or, more importantly, what it does NOT mean. There are millions of people in the United States who live paycheck to paycheck today. However, many of them do so because they handle money poorly, overspend, or do not budget accordingly. Moreover, some people make specific and intentional life choices that make their finances unique. In any case, living paycheck to paycheck because you have $1,000 a month in car payments is one thing – it’s another entirely when you barely make enough to pay your rent, food, and basic necessities.

IF you believe you make enough but never seem to have any – or you’re always wondering where your money went – you will probably benefit from reading The Budgeting Series I’ve put together: A 9-article series aimed at helping people understand finances, budgeting, and helping others master money instead of being controlled by it.

 

How Many Americans Are Working Class?

We don’t need complicated math to determine who is working class

 

Given that we have now made a distinction between middle and working class, the obvious question is how many Americans are, in fact, working class?

There isn’t too much data out there concerning working class; it is used interchangeably with middle class by many – so that is a dead end. What I DID find were various surveys of Americans living paycheck to paycheck, and that is the financial metric – for the most part – that’s used to distinguish one from another.

The answers varied. Forbes – referring to a survey done by Payroll.org, reported that a whopping 78% of Americans reported living paycheck to paycheck, Marketwatch had it at 66.2%, CNBC via Survey Monkey said 65% of Americans were living paycheck to paycheck, and Bankrate said the number was 34%.

If we take just those 4 and combine them, we come out with 60%.

No matter which statistic you use, it highlights a problem our current economic model has brought about – and this is a good segue into our next section.

 

How Did It Get This Way?

In order to solve a problem, we need to understand how it became one in the first place

 

There is a lot to say here – some of it conjecture, some anecdotal, and still some driven by data. For my part, though, I see two main ways this is taking place.

First, it tells me that Americans are falling (or descending) from the middle class to the working class. Pew Research Center reported the following:

 

“The growth in income in recent decades has tilted to upper-income households. At the same time, the U.S. middle class, which once comprised the clear majority of Americans, is shrinking. Thus, a greater share of the nation’s aggregate income is now going to upper-income households and the share going to middle- and lower-income households is falling.

The share of American adults who live in middle-income households has decreased from 61% in 1971 to 51% in 2019. This downsizing has proceeded slowly but surely since 1971, with each decade thereafter typically ending with a smaller share of adults living in middle-income households than at the beginning of the decade.”

 

What’s more, I know this to be true anecdotally, too. The number of people I’ve talked to during my lifetime who’ve struggled has risen as the years tick by. There are, of course, several reasons for this, but overall, the point remains: Americans have been falling out of the middle class for decades now.

Second, it tells me that many Americans aren’t even making it into the middle class in the first place. This is likely due to higher costs, stagnated wages, and, of course, the albatross around the neck that is debt. College tuition debt is a staggering 1.74 Trillion, and if you were lied to as a young person (you have to go to college to get a good job) and bit down on this narrative, it’s likely you have this debt.

That debt keeps you from doing things you’d like, but it also greatly diminishes your chances you’ll become middle class, too.

These two distinct things – Americans falling from the middle class and never even getting to be in the middle class in the first place – are clear through anecdotal AND data trends.

 

Why This Is Important

 

Someone might read this and think, “Why is this important?”

Perhaps that’s you today. Maybe you are wondering why this distinction has been created and why I’ve devoted not just an article but also a podcast episode to it.

The answer is the decline of the middle class and the rise of the working class indicates a problem with our current economic theory.

Pew Research Center writes, “The rise in economic inequality in the U.S. is tied to several factors. These include, in no particular order, technological change, globalization, the decline of unions and the eroding value of the minimum wage. Whatever the causes, the uninterrupted increase in inequality since 1980 has caused concern among members of the public, researchers, policymakers and politicians.”

What’s more, the increase of Americans as working class indicates a quasi-return to the Gilded Age: a time where there were the haves and have not. As unions decline (through aggressive anti-union attacks, the weakening of our labor law, and exploitative individuals, companies, and corporations), so too does the middle class. And as the decline happens, we are seeing more people become working class – which, in many ways, looks similar to a time that died long ago. This is an alarming trend – and more people must be aware of it.

Remember, a solution to a problem is only applicable to the degree we understand it – which is another good point to segue into.

 

Exploring Options To Address This Trend

 

If we can recognize what’s going on – and admit it’s a problem, then we can begin to look at potential solutions. There is a lot of talk about strengthening labor law, passing government regulations, and even electing specific politicians. In other words, reliance on the government to change things.

This line of thinking has been around for several decades – with little to no progress. What’s more, even when there is progress, it’s usually challenged and ultimately dismissed.

For example, just this week(August 2024), the Federal Trade Commission’s (FTC) ban on non-compete contracts was halted by a judge. The Department of Labor raised the salary threshold for those available for overtime – and they are being sued for it. The National Labor Relations Board (NLRB) is being challenged by SpaceX (and others) – and, then there is the overturning of the Chevron doctrine.

I’ve written and talked about each of these in the past, but for today, in this article, I bring them up to demonstrate that each of these – and other particulars when it comes to government law – is not always the answer. It is clear – at least to me, anyway – that no matter how much hope and effort we put into many of these measures, it can be quickly dismissed, overridden, exploited, or never implemented.

This doesn’t mean we shouldn’t strive to incorporate regulation and law into the solution process – but it DOES mean that having it as the only solution is not advisable.

So what is? What can be done?

 

Populism

 

Populism is defined by Oxford Languages as “a political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by established elite groups.”

That we have a growing income inequality gulf and more Americans becoming working class as opposed to Middle class tells us a few things – and one of them is class warfare.

Robert Kennedy Jr. and Glenn Beck discuss populism in this video 👇

 

Populism is on the rise – and is ultimately one of the two ways the American public can enact serious and substantial change. The other is organized labor.

 

Organized Labor

 

For my part, people will put up with what they will put up with. IF people want change, they have only to unite.

 

“The only effective answer to organized greed is organized labor.”

Tom Donahue

 

We are seeing tremendous interest in organized labor, and for good reason: people are seeing that corporations have too much power, buy politicians, lobby, and get their preferred legislation passed. What’s more, anti-union advocates are very good at keeping most people at a comfort threshold – where people are just comfortable enough not to really put in the effort needed to successfully fight for more. They often have to lose more than what they are comfortable with (there’s that word, again) to achieve any real progress.

However, those Americans who enter adulthood as working class and never really move out of it? They don’t have the same level of comfort; indeed, they have little and are often in debt. They feel like they can never get ahead, are always on defense, and, as such, they have come to see unions as the only real way to enact change.

And they are right.

 

Outside these two forces – populism and organized labor – I see no other avenue for lasting, positive, and effective change. Victor Hugo gets the last word here:

 

“No army can withstand the strength of an idea whose time has come.”

 

Conclusion

 

Just 80 years ago, we had a robust middle class that received more of their contribution to economic growth. Since 1980, however, we have seen the American middle class dwindle, the working class grow, and income inequality spike. As the middle class is consistently squeezed and reduced, economic certainty becomes less of a reality and more like a thing of the past.

And while there are solutions to this, it will take people coming together for effective change. We have begun to see this, too; since 2022, organizing has grown in popularity and shows no signs of stopping. To be sure, there are numerous problems people have to overcome – and no one has ever given workers something without a fight – but the fight will need to be had. Otherwise, we will see a diminished middle class and a burgeoning working class.

What do you think – and what are your thoughts?

Let me know – and be sure to subscribe.