Robert J. Samuelson: Middle class comes plodding back

The middle class is back – or so it seems.

That’s the message from the Census Bureau’s latest report on “Income and Poverty in the United States.” The news is mostly good. The income of the median household (the one exactly in the middle) rose to a record $59,039; the two-year increase was a strong 8.5 percent. Meanwhile, 2.5 million fewer Americans were living beneath the government’s poverty line ($24,563 for a family of four). The poverty rate fell from 13.5 percent of the population in 2015 to 12.7 percent in 2016.

The Census report reinforces Gallup polls – reported here a few weeks ago – that Americans have re-embraced their middle-class identities. The Great Recession made people feel economically vulnerable and betrayed. Nearly half of Americans self-identified as belonging to the “working and lower classes” – a huge shift from the nearly two-thirds that, before the recession, had classified themselves as “middle class.” Now, Americans have reverted to tradition. Almost two-thirds again call themselves middle class, Gallup finds.

People are reassured, because the economy’s steady, if plodding, performance seems to embody middle-class virtues: order, predictability and hard work. The critics of the recovery as slow and disappointing (me and many others) may have missed the point. By plodding along for eight years, the recovery allowed people to reclaim jobs and confidence. The Census calculates that there were 14 million more year-round full-time workers in 2016 than in 2009, the recession’s low point.

Still, the middle-class revival story can be overdone. The “Income and Poverty” report is crammed full of statistics that define and speak to some pressing national problems. Not all the evidence is upbeat. Here are three sobering takeaways.

First, men’s median wages for full-time, year-round work have stagnated.

As astounding as it seems, men’s median earnings haven’t really increased since the mid-1970s. Here are the figures. In 2016, the median was $51,640 for year-round, full-time workers. In 1975, the comparable figure was $51,766. (Note: All dollar amounts are adjusted for inflation and expressed in 2016 money. Again, the median wage is the one exactly in the middle of the distribution – half are above, half below.)

The causes of the stagnation aren’t clear, but the erosion of well-paying blue-collar jobs has been blamed on many forces: the decline of unions and the loss of factory jobs; automation and new technologies; trade and international competition. A new theory is demographics: As older baby boomers retire, they’re replaced by younger workers at lower wages.

Whatever the explanation, women seem less affected. Indeed, their wages have outpaced men’s, reflecting the opening of better-paid jobs once off-limits to women. In the 1970s, women’s earnings averaged about 60 percent of men’s; now they’re 80 percent. Whether the remaining 20 percent reflects discrimination or the different career paths of men and women is a subject of dispute.

Second, the upper-middle class is flourishing – but not the lower classes.

If you take $100,000 as a crude threshold of being upper-middle class, then the share of households above the threshold was about a quarter (27.7 percent to be exact) in 2016, up from about a fifth (19.4 percent) in 1990. Black households also experienced rising incomes that boosted them into the upper-middle class, though at lower levels. In 2016, one in seven black households (14.9 percent) had incomes exceeding $100,000, up from one in 12 (8.6 percent) in 1990.

By contrast, upward movement at other income levels was slight. Take the new record median household income of $59,038 as an example of what’s happening in the middle of the income distribution. If incomes were rising rapidly, there would be a large gap between today’s incomes and those of the late 1990s. There isn’t. Today’s income is less than 1 percent higher than the previous record of $58,665 achieved in 1999.

Third, almost three-quarters of the rise of Americans living in poverty since 1990 reflects increases in Hispanic poverty – increases linked to immigration, whether legal or illegal.

There’s no table with this figure; but it reflects simple arithmetic. Let’s do it. From 1990 to 2016, the number of people living below the government’s poverty line rose from 33.6 million to 40.6 million, a gain of 7 million. Over the same years, Hispanics in poverty increased from 6 million to 11.1 million, a gain of 5.1 million and 73 percent of the total 7 million boost.

The message is mixed. It’s true that we have more problems than solutions. Immigration, stagnant wages and household inequality are mere examples. But the middle-class comeback, sketchy and possibly temporary, inspires hope. Amid much pessimism, sometimes events surprise us for the better.