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Middle Class Under Fire

Experts discuss causes, solutions of the vanishing middle class

By Emily Keough · February 23rd, 2011 · News

Whether you’re looking at economic indicators, stagnant wages, the persistently high unemployment rate or the continued outsourcing of jobs overseas, it’s hard to quibble that America’s middle class has hit rough times.

“It’s no longer an exaggeration to say that middle-class Americans are an endangered species,” columnist Arianna Huffington said recently.

Local experts weighed in on the topic during a panel discussion Feb. 15 at an Avondale church. The event, “The Vanishing Middle Class in Cincinnati: Myth or Reality?”, was sponsored by the Woman’s City Club, a longtime civic organization.

George Vredeveld, director of the University of Cincinnati’s Economics Center for Education and Research, believes the question hinges on first defining exactly what the middle class is and who belongs to it. After researching the issue for about six weeks, Vredeveld said he still doesn’t have a definitive answer.

“The only thing I discovered is that the middle class is somewhere between the upper and lower class,” he says. Using research from the U.S. Census Bureau, though, Vredeveld noted the median household income in the United States is $50,000.

Also, Vredeveld quoted Jared Bernstein, economic policy advisor to Vice President Joe Biden and the Obama administration’s executive director of the middle-class task force, who said, “The vice president often describes the ‘middle class’ as any family that can’t afford to miss more than two or three paychecks without financial difficulty.”

Although worker productivity has continually risen since the mid-1970s, wages haven’t kept pace, added Daisy Quarm, an associate professor of sociology at UC. According to the Economic Policy Institute, productivity has been on the rise since 1975, and has been ever since.

“But the people in the middle, the workers, at 80 to 90 percent, are not benefitting very much from that increased productively,” she said.

The difference between then and now is that when productivity was growing in the 1970s, so was the median income. Although that means fewer jobs and more disadvantages for workers in the manufacturing sectors, it can also be a positive factor when goods are produced at competitive prices, Vredeveld said.

According to a study conducted from 1967 to 2009, the Census Bureau found that out of the five income quintiles, the bottom four quintiles aren’t improving their position relative to income distribution.

In other words, they’re getting less of the economic pie.

“Every single one of them, over this long period, is losing in terms of how much of the total income they’re getting,” Quarm said. “The one quintile that does improve over that period is the highest quintile.”

That quintile reaps two-thirds of the benefits, she added: “You may think things have always been going on like that, the rich getting richer, but it hasn’t. In fact, between World War II and the early 1970s, there was a period of growing equality.”

The public largely believes the changes are due to two factors that are out of its control: economic globalization and technological advancements. But that’s not entirely accurate, Quarm said.

“These factors alone cannot account for the change,” she said. “My evidence is, if globalization and/or technology were the total cause of the increase of inequality of income wealth in the U.S., then we would expect the same pattern in other industrialized countries, and we don’t (see that). Compared to other industrialized countries, the U.S. has one of the most unequal distributions of income in the world.”

Vredeveld differs in his outlook. He stated, “The vanishing middle class and income distribution are two different things, but others will disagree.”

There is, however, some good news.

The increase in inequality primarily is the result of specific government actions, panelists said. That means people have the ability to change those actions and reverse the situation, if they choose.

Fine-tuning his earlier statement, Vredeveld added, “The easiest way that government policy can make a difference is in income distribution, temporarily, and in job creation. Both are incredibly important when it comes to the economic welfare.”

Other changes in government actions that have affected income and wealth inequality are the decline of minimum wage, the explosion of executive pay, the decline in unionization and taxing wages, not wealth.

“The government has increased taxes on wages but not on wealth,” Quarm said. “They’ve increased Social Security tax, reduced inheritance tax and reduced capital gains. We’ve had big cuts that have disproportionally benefited the rich.”

Each of these these factors are determined by politicians which, in turn, are decided by citizens’ decisions at the ballot box.

Another panelist, Terry Grundy, community impact director at United Way of Greater Cincinnati and adjunct associate professor of community planning at the University of Cincinnati, believes we have the ability to make positive economic change in our city.

“I’m not an economist, I’m not a sociologist, so I can’t tell you in economic terms if the middle class is being squeezed hard or not,” Grundy said. “But I can tell you one thing, the middle class is vanishing from the city of Cincinnati.”

Since the 1950s, the city of Cincinnati’s population has been getting smaller and poorer, which isn’t sustainable. “This is the ‘Detroit-izing’ of cities,” he added.

The largest percent of the city’s population don’t have a choice to live where they want because they cannot afford it. In order to solve this, Cincinnati’s rebirth lies in attracting new demographics.

Underscoring his point, Grundy said, “Ward, June, Wally and Beaver have left and they’re not coming back.”

Among the demographics that Cincinnati needs to attract so it can jumpstart the economy are empty nesters, young professionals and new Americans. Also, the city is in high-demand for a group dubbed “the Bohemian cluster,” which Grundy said includes artists, gays, lesbians and the multiply-pierced.

“The question to these urbanist matters are, are we going to succeed in attracting those demographics in this city and hold the ones that we have? If not, last one to leave turn out the lights,” Grundy said. “This is an argument of who should be taking care of these problems and the burden of maintaining people in Cincinnati.”
 
 
 
 

 

 
02.23.2011 at 12:33 Reply
A comment from another reader: I would ask the writer a basic question--why are the middle class folks leaving Cincinnati? Is it because the jobs have gone away (or is it because some people are not willing to do the lower level jobs that say Mexicans are willing to do at the low wages, perhaps preferring to live on whatever public assistance they can get, and perhaps those are the only ones staying in urban Cincinnati). Or do people leave the urban area and move to the suburbs to escape crime and other problems (and how is that related to the public assistance problem). Or is it because the ones who are working are no longer willing to carry the tax burden of paying for those who are unmotivated to work? Look at the inner city public schools--the disruption caused by kids who don't want to be there--and how that pulls down the whole school. Who in their right mind who cares for their kids would not want to escape this? The writer's solution--empty nesters, gays, etc--that is pretty dead end because they will not be raising families--they don't care about schools, some may not even care about jobs if they are living on retirement checks. I can't see this working--because they will simply be the prey animals for the predatory urban thugs. I have long believed that the main source of this country's urban problem was welfare--it was all too easy to find the loopholes (the big one being that welfare was only paid to mothers of kids whose fathers were not in the home). This made the fathers just the roving sperm bank, and the mothers realized the more kids the more money they received. The kids then grew up without any decent role models--they fell into bad habits. This snowballed because without the role models they didn't put any effort into academics or the concept of starting at a low level job and working upward by working hard and doing a good job. Then the Al Sharptons and Jesse Jacksons came along to blame all this on the evil white man (a convenient excuse, and a money maker for the rabble rousers). This encouraged the urbanites to keep making the same mistakes rather than fix the real problem (as Bill Cosby advised, and was condemned for). I think welfare was the worst thing that could have ever happened to American blacks--in some ways the effects were worse than slavery and worse than drugs. It traps them into a permanent low class status--always before in American history you either worked or starved--this was a good incentive to become ambitious and explore the road to success. Now there is another choice--live a meager existence on welfare, but without having to exert yourself or be responsible. The whole situation is then compounded by lack of enforcement of border security and immigration laws. The Mexicans are willing to do the menial jobs for a low wage, displacing the blacks who would have done them perhaps if the wages were somewhat higher. The low minimum wage is because we have plenty of Mexicans (a high supply of labor) so the wages remain artificially depressed. This is good for the Republican supporters (business interests) and the Democrats will not do anything about the immigration problem because they look at the Mexicans as future Democrats, despite the damage it is doing to the lower strata of black workers. Darrell Nolen Senior AMIO Analyst USCG Atlantic Area Intelligence Division

 

02.24.2011 at 01:40
Wow, I think you just used this article to rant about welfare. The actual cash payments for welfare have been greatly reduced. There are still quite a few benefits via food stamps, in particular for woment with multiple children. If welfare was at the root of this problem shouldn't we have seen an influx of people making their way out of poverty after the 90's welfare reform?

 

02.25.2011 at 11:37
I agree with most of your thoughts stpiorocks.....and some of yours raving girl. I think we need to look hard at those receiving welfare and other benefits, who are contributing NOTHING. Its draining the entire country. Put those folks to work SOMEWAY / SOMEHOW. People need to earn their keep(so to speak). ...those who are unmotivated to work...THE BIG PROBLEM!...you hit the nail on the head STP!

 

02.24.2011 at 01:43 Reply
And I can guarntee too you won't attract any of the Bohemian cluster without a light rail or good longterm city transportation plan...why would they choose to live here when they can pick another city tht's more progressive and is not. Pain in the ass to navigate?

 

02.24.2011 at 01:51
Yeah, I feel you on the light rail. Transportation infrastructure will only grow in importance as we face the future will less and less oil. This isn't some tree-hugger pipe dream. This is our future.

 

02.24.2011 at 01:48 Reply
Citibeat, I have been a loyal reader since I moved here 1994. Since 1994, I think Cincinnati has come a long way. We will never be Chicago or New York. I think that's ok. I would like to see a little more celebration of our successes and a little less complaining. Regardless of this minor complaint, over all I love your work. Thanks -Happy downtown resident, recreational cyclist, IT professional, thrilled MPMF supporter, and multi-pierced lesbian

 

02.25.2011 at 11:41 Reply
Quick question raving girl....curious about your stats in regards to welfare being greatly reduced...I guess you're talking about cash payments. What do you think of those receiving welfare who are selling / trading welfare benefits for cash to purchase drugs / alcohol.

 

 
 
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