Who Belongs to the Lower Middle Class, and Why Does It Matter?

It’s been a good week, rhetorically, for those who care about reducing inequality. Last Tuesday, in his first papal exhortation, Pope Francis bewailed the unequal distribution of global wealth, using language that sounded, at times, quite Marxist: “But until exclusion and inequality in society and between peoples are reversed, it will be impossible to eliminate violence.” On Wednesday, President Obama cited the Pope’s argument in a speech that laid out his economic priorities for the rest of his second term, adding, “But this increasing inequality is most pronounced in our country. And it challenges the very essence of who we are as a people.”

Rhetoric is one thing; action is another. One difference between the Pope and the President is that the latter has a hand in setting economic policies that could help to solve the problem. Notably, Obama didn’t say much in his speech about his policy plans, other than reiterating his call for a higher federal minimum wage. What else can the government do? A memo issued on Wednesday by the Hamilton Project, part of the Brookings Institution think tank, suggests some answers to this question.

The Hamilton Project focussed on what it termed “lower-middle-class families” with annual incomes between fifteen thousand dollars (roughly the federal poverty level for a two-person household) and sixty thousand dollars, according to the memo. (To know how your own income level compares with the federal poverty level use this government Web site. You will see that in most states, for example, an annual household income of a hundred thousand dollars for a four-person family is four times the federal poverty level.) About thirty per cent of families belong to the lower-middle-class group:


Compared with the poorest families, lower-middle-class families are more likely to be headed by married couples and to benefit from two incomes:


They are also more likely to include a family head who has attended college:


So far, so good: studies have shown that children who live with two parents are more likely to be more economically secure and to be healthy, as well as to graduate from high school; other studies show similarly positive effects for children of college-educated parents. And parents benefit, too.

And yet, many of these lower-middle-class families are still struggling to get by. About sixty per cent of families below the poverty line receive food stamps (shown in the chart below as SNAP, for Supplemental Nutrition Assistance Program); so do more than twenty per cent of lower-middle-class people. All told, more than thirty per cent of lower-middle-class people receive food stamps, unemployment benefits, welfare, or other benefits:


This matters for a couple of reasons. It reframes how we think about the people who access government benefits. Many of them, it turns out, are married, college educated, and working—that is, people whose choices reflect traditional values and whose plight should inspire sympathy from both the political left and right. And it highlights the structural problems that make it difficult for lower-middle-class families to make ends meet and to rise into a higher income bracket. If you’re a married, stay-at-home mom who wants to work, for instance, you face a dilemma: if your husband’s salary is low enough to qualify your family for government benefits, getting a job could actually cost your family more in taxes and lost benefits than staying out of the workforce:


All of this brings us back to Obama’s promise to put in place policies to address inequality—and presumably, by extension, to improve the lot of the working poor. I spoke with Ben Harris, the Hamilton Project’s policy director and one of the authors of the memo, to understand how all these charts might illuminate some options for Obama and other policymakers. He said the Hamilton Project had two proposals: First, how about giving a tax deduction to the second earners in low- to moderate-income families? That would help to mitigate the high marginal tax rates. Second, given the high percentage of lower-middle-class families who use food stamps, why not structure the SNAP program in a way that acknowledges this? Food costs, for example, could be estimated with the assumption that many food-stamp recipients will have to cook prepared food because they work, rather than make meals from scratch.

In recent years, the cultural conversation about inequality has focussed on the rich and poor themselves, the one per cent versus the ninety-nine per cent, the bankers versus the Zuccotti Park campers. But the problem—as the Hamilton Project’s charts make clear—is structural. Over time, we have set up an economic system that breeds inequality. The good news is that the U.S. and many other countries also employ a system, called democracy, in which everyone—the ninety-nine per cent and the one per cent together—can demand that the government work to fix the problem.

That a problem exists should no longer strike anyone as a particularly radical point, especially now that the Pope has said it. And, in fact, he put it better than anyone has: “The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person!” he wrote. “We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose.”

Original Article
Source: newyorker.com
Author: Vauhini Vara